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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, 1997
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.
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(Exact name of registrant as specified in its charter)
Colorado 84-1088819
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(State of Organization) (IRS Employer Identification No.)
P.O. Box 3309, Englewood, Colorado 80155-3309 (303) 792-3111
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(Address of principal executive office and Zip Code) (Registrant's telephone
no. including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Limited Partnership
Interests
Indicate by check mark whether the registrant, (1) has filed all reports
required to be filed by Section 13 or l5(d) of the Securities Exchange Act of
l934 during the preceding l2 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days:
Yes X No ___
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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 ((S)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
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Information contained in this Form 10-K Report contains "forward-
looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. All statements, other than statements of historical facts,
included in this Form 10-K Report that address activities, events or
developments that the General Partner or the Partnership expects, believes or
anticipates will or may occur in the future are forward-looking statements.
These forward-looking statements are based upon certain assumptions and are
subject to a number of risks and uncertainties. Actual results could differ
materially from the results predicted by these forward-looking statements.
PART I.
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ITEM 1. BUSINESS
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Jones Programming Partners 2-A, Ltd. (the "Partnership") is a Colorado
limited partnership that was formed in March 1992 pursuant to the public
offering of limited partnership interests in the Jones Programming Partners
Limited Partnership Program. Jones Entertainment Group, Ltd., a Colorado
corporation engaged in the development, production, acquisition and distribution
of its original entertainment programming, is the general partner of the
Partnership (the "General Partner"). The Partnership was formed to acquire,
develop, produce and distribute original programming to be owned by the
Partnership. The Partnership generates revenues from the licensing of its
Programmingprogramming. The General Partner's principal responsibilities to the
Partnership are or have been the acquisition of programming projects for the
Partnership, the negotiation of production and distribution agreements for
Partnership programming, reviewing budgets, monitoring expenditure of
Partnership funds, administering production and distribution agreements, and
accounting and reporting to the limited partners. The General Partner charges
the Partnership for direct costs incurred on the Partnership's behalf. See
further discussion of such costs charged to the Partnership by the General
Partner in Item 8, Financial Statements, Note 4. During 1996, the Partnership
had two programming projects: "Charlton Heston Presents: The Bible," and "The
Whipping Boy." It is not anticipated that the Partnership will invest in any
additional programming, but instead will focus on the distribution and sale of
its existing programming. Following is a description of these programming
projects.
Charlton Heston Presents: The Bible
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In May 1992, the General Partner, on behalf of the Partnership,
entered into an agreement with Agamemnon Films, an unaffiliated party, to
produce four one-hour programs for television, entitled "Charlton Heston
Presents: The Bible" (the "Bible Programs"). The production costs of the Bible
Programs were approximately $2,370,000, which included a $240,000 production and
overhead fee paid to the General Partner. In return for agreeing to fund these
production costs, the Partnership acquired all rights to the Bible Programs in
all markets and in all media in perpetuity. The Partnership subsequently
assigned half of its ownership of the Bible Programs to an unaffiliated party
for an investment of $1,000,000 toward the production costs for the Bible
Programs. After consideration of the reimbursement, the Partnership's total
investment in the Bible Programs was $1,369,764 and its net investment, after
consideration of amortization, was $19,300 as of December 31, 1997. From
inception to December 31, 1997, the Partnership has recognized $1,478,865 of
revenue from this film, of which $623,391 was retained by the distributors of
the film for their fees and marketing costs and $780,651 was received by the
Partnership as of December 31, 1997. The remaining $74,823 was received by the
Partnership in the first quarter of 1998. The Partnership plans to recover its
remaining investment of $19,300 in this film from net revenues generated from
domestic and international home video markets or from the sale of the
Partnership's interests in the film.
The Whipping Boy
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In August 1993, the Partnership acquired the rights to the Newbury
Award-winning book, "The Whipping Boy." "The Whipping Boy" was produced as a
two-hour telefilm which premiered in the North American television market on The
Disney Channel. The film's final cost was approximately $4,100,000. As of
December 31, 1997, the Partnership had invested $2,661,487 in the film, which
included a $468,000 production
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and overhead fee paid to the General Partner. The film was co-produced by the
General Partner and Gemini Films, a German company. The completed picture was
delivered to The Disney Channel in the second quarter of 1994. From inception to
December 31, 1996, the Partnership has recognized $2,273,736 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
$173,736, $8,325 has been retained by the distributors of the film for their
fees and marketing costs and $165,411 hads been received by the Partnership as
of December 31, 1997.
During the fourth quarter of 1996, the General Partner reassessed the
anticipated total gross revenue remaining from the distribution of "The Whipping
Boy" in available international and domestic television and home video markets.
Based on revised estimated television and home video sales projections provided
by an independent consultant, a reduction was made to the Partnership's estimate
of total gross revenue to be recognized from the future distribution of the
film. Accordingly, based on the reduced revenue projections for the film, a
determination was made by the General Partner that the Partnership's net
investment in "The Whipping Boy" of $952,731 exceeded the film's estimated net
realizable value of approximately $375,000 as of December 31, 1996. As a
result, a loss from write-down of film production cost of $575,000 was incurred
to reduce the unamortized cost of the film to its estimated net realizable value
as of December 31, 1996. The film's estimated net realizable value was
calculated based on an estimate of anticipated revenues remaining over the life
of the film from international and domestic television and home video
distribution, net of estimated distribution fees and costs, as of December 31,
1996. These revenue projections were estimated based on the film's prior
distribution history, the remaining international and domestic territories
available to the film for future television and home video distribution, and the
General Partner's and the independent consultant's previous distribution
experience with other films. The Partnership's net investment in the film,
after consideration of amortization and the write-down discussed above, was
$345,436 as of December 31, 1997. The Partnership plans to recover its
remaining investment in this film from net revenues generated from domestic and
international home video and television markets or from the sale of the
Partnership's interests in the film to an unaffiliated third party.
General Matters
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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 or by selling its
remaining interests in its programming. The General Partner currently is taking
steps to begin marketing the Partnership's programming library. Any sale of all
or substantially all of the Partnership's assets will be subject to the approval
of the Partnership's limited partners prior to closing of the sale. 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 its programming.
There is competition within the television programming industry for exhibition
time on cable television networks, broadcast networks and independent television
stations. In most cases, potential customers of the Partnership's programming
also produce their own competitive programs. In recent years, the number of
television production companies and the volume of programming being distributed
have increased, thereby intensifying this competition. Acceptance of the
programming in certain distribution media may be limited and the programming
will compete with other types of television programming in all domestic and
international distribution media and markets. The success of programming is
also dependent in part on public taste, which is unpredictable and susceptible
to change. In international markets, the Partnership 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.
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Future distribution revenues from the Partnership's programming will
rely heavily on the existence and size of remaining distribution markets and
media, if any, that have not been exploited by the Partnership in its previous
distribution efforts in the domestic and international theatrical, home video,
television, and ancillary markets. There can be no assurance that the
distribution efforts made by the Partnership, the General Partner or
unaffiliated parties on behalf of the Partnership for the programming will be
sufficient to recover the Partnership's investment or produce profits for the
Partnership.
ITEM 2. PROPERTIES
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See Item 1.
ITEM 3. LEGAL PROCEEDINGS
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None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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None.
PART II.
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ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK
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AND RELATED SECURITY HOLDER MATTERS
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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, 1998, the number of equity security
holders in the Partnership was 543.
ITEM 6. SELECTED FINANCIAL DATA
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<TABLE>
<CAPTION>
For the Years Ended December 31,
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1997 1996 1995 1994
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<S> <C> <C> <C> <C>
Gross Revenues $ 215,834 $ 329,875 $ 324,489 $2,673,557
Costs of Filmed Entertainment 199,899 281,451 303,817 2,123,180
Distribution Fees and Expenses 92,702 105,707 159,045 285,043
Loss on Write-down of
Film Production Cost - 575,000 - -
Operating, General and Administrative
Expenses 78,965 31,701 19,296 23,135
Operating Income (Loss) (155,732) (663,984) (157,669) 242,199
Net Income (Loss) (118,640) (575,789) (220,238) 247,629
Net Income ( Loss) per Limited
Partnership Unit (10.46) (50.76) (19.42) 21.83
Weighted Average Number of Limited
Partnership Units Outstanding 11,229 11,229 11,229 11,229
General Partner's Deficit (40,337) (33,479) (22,050) (14,177)
Limited Partners' Capital 731,588 1,410,494 2,541,978 3,321,467
Total Assets 965,564 1,555,607 2,670,155 3,456,501
General Partner Advances 8,622 29,106 2,446 -
</TABLE>
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
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FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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The following discussion of the Partnership's financial condition and
results of operations contains, in addition to historical information, forward-
looking statements that are based upon certain assumptions and are subject to a
number of risks and uncertainties. The Partnership's actual results may differ
significantly from the results predicted in such forward-looking statements.
Results of Operations
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1997 Compared to 1996
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Revenues of the Partnership decreased $114,041, from $329,875 in 1996 to
$215,834 in 1997. This decrease in revenues was primarily related to a $97,214
decrease in the domestic home video and non-theatrical sales of "The Whipping
Boy," from $129,510 in 1996 to $32,296 in 1997. In addition, sales of "Charlton
Heston Presents: The Bible" (the "Bible Programs"), decreased $16,827, from
$200,365 in 1996 to $183,538 in 1997.
Filmed entertainment costs decreased $81,552, from $281,451 in 1996 to $199,899
in 1997. This decrease was due primarily to the result of the decrease in film
revenues from "The Whipping Boy" and the "Bible Programs" as discussed 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 $13,005, from $105,707 in 1996 to
$92,702 in 1997. This decrease was the result of decreased home video sales of
the "Bible Programs" under the Partnership's distribution agreement with J/G
Distribution Company, an affiliate of the General Partner. Distribution fees
and expenses relate to the compensation due and costs incurred by unaffiliated
parties in selling the Partnership's programming in the domestic and
international markets. The timing and amount of distribution fees and expenses
vary depending upon the individual market in which programming is distributed.
Loss on write-down of film production decreased from $575,000 from in 1996 to $0
in 1997. This decrease was the result of a write-down of the Partnership's net
investment in "The Whipping Boy" to the film's net realizable value of
approximately $375,000 as of December 31, 1996. A write-down of the
Partnership's net investment in its programming was not deemed necessary by the
General Partner during the year ended December 31, 1997.
Operating, general and administrative expenses increased $47,264, from $31,701
in 1996 as compared to $78,965 in 1997. This increase was due primarily to an
increase in direct costs allocable to the operations of the Partnership that
were charged to the Partnership by the General Partner in 1997 as compared to
1996. The increase in direct costs allocable to the Partnership's operations
resulted mainly from the increased involvement of General Partner personnel
required to properly administer the second cycle distribution and potential sale
of the Partnership's programming.
Interest income decreased $51,103, from $88,195 in 1996 to $37,092 in 1997. This
decrease was due primarily to $65,528 in interest income recognized during 1996
related to the amortization of the discount on the promissory notes receivable
from the General Partner due to the Partnership's June 1995 sale of the film
"Household Saints" to the General Partner as compared to $14,207 in interest
income recognized during 1997 related to the promissory notes receivable. This
decrease was also partially attributable to lower levels of invested cash
balances existing during 1997 as compared to 1996.
1996 Compared to 1995
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Revenues of the Partnership increased $5,386, from $324,489 in 1995 to $329,875
in 1996. This increase in revenues was primarily related to a $117,579 increase
in the domestic home video and non-theatrical sales of "The
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Whipping Boy," from $11,931 in 1995 to $129,510 in 1996. This increase was
partially offset by a decrease in sales of "Charlton Heston Presents: The Bible"
(the "Bible Programs"), which totaled $200,366 in 1996 as compared to $312,559
in 1995.
Filmed entertainment costs decreased $22,366, from $303,817 in 1995 to $281,451
in 1996. This decrease was due primarily to the result of the decrease in film
revenues from the "Bible Programs" as discussed 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 $53,338, from $159,045 in 1995 to
$105,707 in 1996. This decrease was the result of decreased home video sales of
the "Bible Programs" under the Partnership's distribution agreement with J/G
Distribution Company, an affiliate of the General Partner. Distribution fees
and expenses relate to the compensation due and costs incurred by unaffiliated
parties in selling the Partnership's programming in the domestic and
international markets. The timing and amount of distribution fees and expenses
vary depending upon the individual market in which programming is distributed.
Loss on write-down of film production increased from $0 in 1995 to $575,000
in 1996. This increase was the result of a write-down of the Partnership's net
investment in "The Whipping Boy" to the film's net realizable value of
approximately $375,000 as of December 31, 1996.
Operating, general and administrative expenses increased $12,405, from $19,296
in 1995 as compared to $31,701 in 1996. This increase was due primarily to an
increase in audit fees resulting from a distribution audit performed on behalf
of the Partnership's films as well as increased 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.
Loss on sale of film production decreased $122,860 from in 1995 to $0 in 1996.
This decrease was the result of the sale of the film "Household Saints" to the
General Partner on June 30, 1995. The loss resulted from the Partnership's
recognition in 1995 of imputed interest on two non-interest bearing promissory
notes received from the General Partner as part of the sale agreement. No such
sales of Partnership film productions occurred in 1996.
Interest income increased $27,904, from $60,291 in 1995 as compared to $88,195
in 1996. This increase was due primarily to $65,528 in interest income
recognized during 1996 related to the amortization of the discount on the
promissory notes receivable from the General Partner due to the Partnership's
June 1995 sale of the film "Household Saints" to the General Partner as compared
to $43,125 in interest income recognized during 1995 related to the promissory
notes receivable. This increase was also partially attributable to higher
levels of invested cash balances existing during 1996 as compared to 1995.
Financial Condition
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Liquidity and Capital Resources
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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, 1997, the Partnership had $526,005 in cash. It is not
anticipated that the Partnership will invest in any additional programming
projects, but instead will focus on the distribution and sale of its existing
programming projects. The Partnership had outstanding amounts receivable
totaling $74,823 as of December 31, 1997. These amounts were received by the
Partnership in the first quarter of 1998.
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
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bearing promissory note which was paid in full on June 30, 1996 and $389,166 in
the form of a non-interest bearing promissory note which was paid in full on
June 30, 1997.
For the year ending December 31, 1997, the Partnership declared distributions to
partners totaling $567,124, of which $141,781 was paid in May 1997, $141,781 in
August 1997 and $141,781 in November 1997, with the remaining $141,781 paid in
February 1998. These distributions were made using cash on hand, interest
income, proceeds received from the sale of "Household Saints" and cash provided
by operating activities. Given the near completion of the second cycle
distribution of the Partnership's programming, quarterly distributions will be
suspended in 1998. The Partnership will retain a certain level of working
capital, including any necessary reserves, to fund its operating activities.
Any amounts in excess of the Partnership's working capital needs received from
continued second cycle distribution of the Partnership's programming may be
periodically distributed to partners. In addition, future distributions will
also be made from proceeds received from the sale of the Partnership's assets.
The General Partner, on behalf of the Partnership, is currently beginning to
engage in efforts to sell the Partnership's interests in its programming
projects. Estimates of value obtained from independent consulting firms in late
1996 and early 1997 are being used by the General Partner in planning sales
strategies. There can be no assurance that the ultimate negotiated sales prices
of the programming projects sold to unaffiliated parties will be at least equal
to the films' estimated fair market value based on the three estimates obtained.
If the General Partner or one of its affiliates exercises its right to purchase
a programming project, however, the sales price for such a transaction will be
equal to the average of three separate independent appraisals of the programming
project's fair market value. Any sale of all or substantially all of the
Partnership's assets will be subject to the approval of the Partnership's
limited partners prior to closing of the sale.
The General Partner cannot predict at this time when or at what price the
Partnership's interests in its programming projects ultimately will be sold.
However, any direct costs incurred by the General Partner on behalf of the
Partnership in soliciting and arranging for the sale of the Partnership's
programming project will be charged to the Partnership. It is anticipated that
proceeds from the sale of the Partnership's interests in its programming will be
distributed to the partners in the future when the Partnership's interests in
the programming are sold. Based on the independent estimates of value obtained
for the Partnership's programming projects, it now appears likely that the
distributions of the proceeds from the sale of the Partnership's programming
projects together with all prior distributions paid to the limited partners will
not be sufficient to return to the limited partners 100% of their initial
capital contributions made to the Partnership.
The General Partner believes that the Partnership has, and will continue to
have, sufficient liquidity to fund its operations and to meet its obligations so
long as quarterly distributions are limited. Cash flow from operating
activities will be generated primarily from the Partnership's programming
projects as follows:
"Charlton Heston Presents: The Bible"
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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
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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
in June 1992 and the Partnership granted it the sole and exclusive right to
exhibit and distribute, and to license others to exhibit and distribute, the
Bible Programs in all markets, all languages, and all media in perpetuity. J/G
Distribution Company holds the copyright for the benefit of the Partnership (50
percent interest) and GoodTimes (50 percent interest). J/G Distribution Company
is currently distributing the Bible Programs in the retail home video market.
As of December 31, 1997, cumulative gross sales made by J/G Distribution Company
totaled $2,457,564, of which $1,228,782 has been retained by J/G Distribution
Company for its fees and marketing costs, with the remaining $1,228,782
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, 1997, the Partnership had
received both $539,568 due from J/G Distribution and the $250,000 from A&E. The
remaining $74,823 due from J/G Distribution was received in the first quarter of
1998.
The Partnership plans to recover its remaining net investment in the Bible
Programs of $19,300 from net revenues generated from domestic and international
home video markets or from sale of the Partnership's interests in the film.
"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, 1997, 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.
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In March 1995, the General Partner, on behalf of the Partnership, entered into
an agreement with an unaffiliated party granting rights to distribute "The
Whipping Boy" in the non-theatrical domestic markets. Non-theatrical markets
include 16mm sales and rentals, in-flight, oil rigs, ships at sea, military
installations, libraries, restaurants, hotels, motels or other institutional or
commercial enterprises. As of December 31, 1996, gross sales made under this
agreement totaled $37,916, of which $8,325 was retained by the distributor for
its fees. The remaining $29,591 had been received by the Partnership as of
December 31, 1997.
In May 1995, the General Partner, on behalf of the Partnership, entered into a
distribution agreement with an unaffiliated party granting rights to distribute
"The Whipping Boy" in the domestic home video market for a period not to exceed
five years. As of December 31, 1997, net sales made under this agreement
totaled $135,121 which had been received by the Partnership as of December 31,
1997.
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.
During the fourth quarter of 1996, the General Partner reassessed the
anticipated total gross revenue remaining from the distribution of "The Whipping
Boy" in available international and domestic television and home video markets.
Based on revised estimated television and home video sales projections provided
by an independent consultant, a reduction was made to the Partnership's estimate
of total gross revenue to be recognized from the future distribution of the
film. Accordingly, based on the reduced revenue projections for the film, a
determination was made by the General Partner that the Partnership's net
investment in "The Whipping Boy" of $952,731 exceeded the film's estimated net
realizable value of approximately $375,000 as of December 31, 1996. As a
result, a loss from write-down of film production cost of $575,000 was incurred
to reduce the unamortized cost of the film to its estimated net realizable value
as of December 31, 1996. The film's estimated net realizable value was
calculated based on an estimate of anticipated revenues remaining over the life
of the film from international and domestic television and home video
distribution, net of estimated distribution fees and costs, as of December 31,
1996. These revenue projections were estimated based on the film's prior
distribution history, the remaining international and domestic territories
available to the film for future television and home video distribution, and the
General Partner's and the independent consultant's previous distribution
experience with other films.
The Partnership plans plans to recover its remaining net investment in this film
of $345,436 primarily from net revenues generated from domestic home video and
television and home video distribution or from sale of the Partnership's
interests in the film.
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ITEM 8. FINANCIAL STATEMENTS
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JONES PROGRAMMING PARTNERS 2-A, LTD.
------------------------------------
FINANCIAL STATEMENTS
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AS OF DECEMBER 31, 1997 AND 1996
--------------------------------
INDEX
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Page
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Report of Independent Public Accountants 11
Statements of Financial Position 12
Statements of Operations 13
Statements of Partners' Capital (Deficit) 14
Statements of Cash Flows 15
Notes to Financial Statements 16
10
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Jones Programming Partners 2-A, Ltd.:
We have audited the accompanying statements of financial position of
Jones Programming Partners 2-A, Ltd. (a Colorado limited Ppartnership) as of
December 31, 1997 and 1996, and the related statements of operations, partners'
capital (deficit) and cash flows for each of the three years in period ended
December 31, 1997. 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, 1997 and 1996, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1997 in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Denver, Colorado,
March 9, 1998
11
<PAGE>
JONES PROGRAMMING PARTNERS 2-A, LTD.
------------------------------------
(A Limited Partnership)
STATEMENTS OF FINANCIAL POSITION
--------------------------------
<TABLE>
<CAPTION>
December 31,
-------------------------
ASSETS 1997 1996
------ ----------- -----------
<S> <C> <C>
CASH AND CASH EQUIVALENTS (Note 2) $ 526,005 $ 537,638
ACCOUNTS RECEIVABLE (Note 5) 74,823 76,090
INVESTMENT IN AND ADVANCES FOR FILM PRODUCTION,
net of accumulated amortization of $3,666,515 and $3,466,616
as of December 31, 1997 and 1996, respectively (Notes 2, 4 and 5) 364,736 564,635
NOTE RECEIVABLE FROM GENERAL PARTNER,
net of unamortized discount of $0 and $14,207 as of
December 31, 1997 and 1996, respectively (Note 5) - 374,959
OTHER ASSETS - 2,285
----------- -----------
Total assets $ 965,564 $ 1,555,607
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
-------------------------------------------
LIABILITIES:
Accounts payable to affiliates $ 8,622 $ 29,106
Accrued distributions to partners 141,781 141,781
Accrued liabilities 123,910 7,705
----------- -----------
Total liabilities 274,313 178,592
----------- -----------
PARTNERS' CAPITAL (DEFICIT) (Note 3):
General Partner -
Contributed capital 1,000 1,000
Distributions (30,431) (24,759)
Accumulated deficit (10,906) (9,720)
----------- -----------
Total general partner's deficit (40,337) (33,479)
----------- -----------
Limited Partners -
Net contributed capital (11,229 units
outstanding as of December 31, 1997 and 1996) 4,823,980 4,823,980
Distributions (3,012,602) (2,451,150)
Accumulated deficit (1,079,790) (962,336)
----------- -----------
Total limited partners' capital 731,588 1,410,494
----------- -----------
Total partners' capital 691,251 1,377,015
----------- -----------
Total liabilities and partners' capital (deficit) $ 965,564 $ 1,555,607
=========== ===========
</TABLE>
The accompanying notes to these financial statements
are an integral part of these financial statements.
12
<PAGE>
JONES PROGRAMMING PARTNERS 2-A, LTD.
------------------------------------
(A Limited Partnership)
STATEMENTS OF OPERATIONS
------------------------
<TABLE>
<CAPTION>
For the Years Ended December 31,
---------------------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
GROSS REVENUES (Notes 2 and 5) $ 215,834 $ 329,875 $ 324,489
COSTS AND EXPENSES:
Costs of filmed entertainment (Note 2) 199,899 281,451 303,817
Distribution fees and expenses
(Notes 2 and 5) 92,702 105,707 159,045
Loss on write-down of
film production cost (Note 5) - 575,000 -
Operating, general and
administrative expenses (Note 4) 78,965 31,701 19,296
--------- --------- ---------
Total costs and expenses 371,566 993,859 482,158
--------- --------- ---------
OPERATING LOSS (155,732) (663,984) (157,669)
--------- --------- ---------
OTHER INCOME (EXPENSE):
Loss on sale of film production (Note 5) - - (122,860)
Interest income 37,092 88,195 60,291
--------- --------- ---------
Total other income (expense), net 37,092 88,195 (62,569)
--------- --------- ---------
NET LOSS $(118,640) $(575,789) $(220,238)
========= ========= =========
ALLOCATION OF NET LOSS:
General Partner $ (1,186) $ (5,758) $ (2,202)
========= ========= =========
Limited Partners $(117,454) $(570,031) $(218,036)
========= ========= =========
NET LOSS PER LIMITED
PARTNERSHIP UNIT $ (10.46) $ (50.76) $ (19.42)
========= ========= =========
WEIGHTED AVERAGE NUMBER
OF LIMITED PARTNERSHIP UNITS
OUTSTANDING 11,229 11,229 11,229
========= ========= =========
</TABLE>
The accompanying notes to these financial statements
are an integral part of these financial statements.
13
<PAGE>
JONES PROGRAMMING PARTNERS 2-A, LTD.
------------------------------------
(A Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
-----------------------------------------
For the Years Ended December 31,
---------------------------------------
1997 1996 1995
---------- ---------- ----------
GENERAL PARTNER:
Balance, beginning of period $ (33,479) $ (22,050) $ (14,177)
Distributions (5,672) (5,671) (5,671)
Net loss for period (1,186) (5,758) (2,202)
---------- ---------- ----------
Balance, end of period $ (40,337) $ (33,479) $ (22,050)
========== ========== ==========
LIMITED PARTNERS:
Balance, beginning of period $1,410,494 $ 2,541,978 $3,321,467
Distributions (561,452) (561,453) (561,453)
Net loss for period (117,454) (570,031) (218,036)
---------- ---------- ----------
Balance, end of period $ 731,588 $1,410,494 $2,541,978
========== ========== ==========
TOTAL PARTNERS' CAPITAL (DEFICIT) $ 691,251 $1,377,015 $2,519,928
========== ========== ==========
The accompanying notes to these financial statements
are an integral part of these financial statements.
14
<PAGE>
JONES PROGRAMMING PARTNERS 2-A, LTD.
------------------------------------
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
------------------------
<TABLE>
<CAPTION>
For the Years Ended December 31,
---------------------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(118,640) $(575,789) $(220,238)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Amortization of filmed entertainment costs 199,899 281,451 303,817
Amortization of discount (14,207) (65,528) (43,125)
Loss on sale of film production - - 122,860
Loss on write-down of film production - 575,000 -
Decrease (increase) in accounts receivable 1,267 (15,486) 113,759
Decrease (increase) in other assets 2,285 (619) (1,666)
Increase (decrease) in accrued liabilities 116,205 1,705 (1,430)
Increase (decrease) in accounts payable to affiliates (20,484) 26,660 2,446
--------- --------- ---------
Net cash provided by operating activities 166,325 227,394 276,423
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from note receivable from
General Partner 389,166 500,000 -
Proceeds from sale of film production - - 500,000
Net decrease in production advances - - 7,181
--------- --------- ---------
Net cash provided by investing activities 389,166 500,000 507,181
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners (567,124) (567,124) (567,124)
--------- --------- ---------
Net cash used in financing activities (567,124) (567,124) (567,124)
--------- --------- ---------
INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS $ (11,633) $ 160,270 $ 216,480
CASH AND CASH EQUIVALENTS, beginning of period 537,638 377,368 160,888
--------- --------- ---------
CASH AND CASH EQUIVALENTS, end of period $ 526,005 $ 537,638 $ 377,368
========= ========= =========
SUPPLEMENTAL SCHEDULE OF NON-CASH
ACTIVITIES:
Note receivable from sale of film production,
net of discount $ - $ - $ 766,306
========= ========= =========
</TABLE>
The accompanying notes to these financial statements
are an integral part of these financial statements.
15
<PAGE>
JONES PROGRAMMING PARTNERS 2-A, LTD.
------------------------------------
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(1) ORGANIZATION AND BUSINESS
-------------------------
In March 1992, Jones Programming Partners 2-A, Ltd. (the
"Partnership"), was formed as a limited partnership pursuant to the
laws of the State of Colorado to engage in the acquisition,
development, production, licensing and distribution of original
entertainment programming. Jones Entertainment Group, Ltd. is the
"General Partner" of the Partnership.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
-------------------------------------------
Cash and Cash Equivalents - The Partnership considers all highly-
-------------------------
liquid investments with a maturity when purchased of three months or
less to be cash equivalents.
Film Revenue Recognition - The Partnership recognizes revenue in
------------------------
accordance with the provisions of Statement of Financial Accounting
Standards No. 53 ("SFAS No. 53"). Pursuant to SFAS No. 53, revenues
from domestic and international licensing agreements for programming
are recognized when such amounts are known and the film is available
for exhibition or telecast, and when certain other SFAS No. 53
criteria are met. Advances received for licensing or other purposes
prior to exhibition or telecast are deferred and recognized as revenue
when the above conditions are met.
Investment in and Advances for Film Productions - Investment in and
-----------------------------------------------
advances for film production consists of advances to production
entities for story rights, production, and film completion costs, and
is stated at the lower of cost or estimated net realizable value. In
addition, film production and overhead fees payable to the General
Partner have been capitalized and included as investment in film
production. Film production costs are amortized based upon the
individual-film-forecast method. Estimated losses, if any, will be
provided for in full when determined by the General Partner. (See Note
5.)
Distribution Costs - Commissions, distribution expenses and marketing
------------------
costs incurred in connection with domestic and international
distribution are recorded at the time that the related license fees
are recorded as revenue by the Partnership.
Use of Estimates - The preparation of financial statements in
----------------
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
(3) PARTNERS' CAPITAL (DEFICIT):
----------------------------
The capitalization of the Partnership is set forth in the accompanying
Statements of Partners' Capital (Deficit). Currently, nNo existing
limited partner is or will be obligated to make any additional
contributions to the Partnership. The General Partner purchased its
interest in the Partnership by contributing $1,000 to Partnership
capital.
16
<PAGE>
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. Since inception, the Partnership has paid total production and
overhead fees to the General Partner of $808,000.
As of December 31, 1997, the General Partner, on behalf of the
Partnership, has incurred home video and telecast distribution costs
totaling $61,939 relating to "The Whipping Boy," of which $20,907 was
reimbursed by the Partnership out of film distribution proceeds earned
during 1996. The General Partner generally will be entitled to
reimbursement of these remaining costs from the Partnership contingent
on the receipt of proceeds from future home video and telecast
distribution of the film. Future proceeds received from the
distribution of "The Whipping Boy" will be recognized as revenue by
the Partnership, net of any remaining distribution costs reimbursed to
the General Partner.
The General Partner is entitled to reimbursement from the Partnership
for its direct and indirect expenses allocable to the operations of
the Partnership, which shall include, but not be limited to, rent,
supplies, telephone, travel, legal expenses, accounting expenses,
preparation and distribution of reports to investors and salaries of
any full or part-time employees. Because the indirect expenses
incurred by the General Partner on behalf of the Partnership are
immaterial, the General Partner generally does not charge indirect
expenses to the Partnership. The General Partner charged direct
expenses of $35,028, $16,548, and $10,865 for direct expenses to the
Partnership for the years ended December 31, 1997, 1996 and 1995,
respectively.
The Partnership reimburses affiliates of the General Partner for
certain allocated administrative personnel expenses. These expenses
generally consist of salaries and related benefits. Allocations of
personnel costs are generally based on actual time spent by affiliated
associates with respect to the Partnership. Such allocated expenses
totaled $19,005, $14,678, and $10,035 for the years ended December 31,
1997, 1996 and 1995, respectively.
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 in June 1992 and the
Partnership granted it the sole and exclusive right to exhibit and
distribute, and to license others to exhibit and distribute, the Bible
Programs in all markets, all languages, and all media in perpetuity.
J/G Distribution Company holds the copyright for the benefit of the
Partnership (50 percent interest) and GoodTimes (50 percent interest).
J/G Distribution Company is currently distributing the Bible Programs
in the retail home video market. As of December 31, 1997, cumulative
gross sales made by J/G Distribution Company totaled $2,457,564, of
which $1,228,782 has been retained by J/G Distribution Company for its
fees and marketing costs, with the remaining $1,228,782 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, 1997, the Partnership
had received both $539,568 due from J/G Distribution and the $250,000
17
<PAGE>
from A&E. The remaining $74,823 due from J/G Distribution was received
in the first quarter of 1998.
(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 $19,300 as of December 31, 1997.
From inception to December 31, 1997, the Partnership has recognized
$1,478,865 of revenue from this film, of which $623,391 was retained
by the distributors of the film for their fees and marketing costs and
$780,651 has been received by the Partnership as of December 31,1997.
The remaining $74,823 was received in the first quarter of 1998.
"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". The average fair market value of the Partnership's interest
in the film based on the three independent appraisals was
approximately $300,000. Closing of the sale occurred on June 30, 1995.
The purchase price was paid $500,000 in cash at closing and $889,166
in the form of two non-interest bearing promissory notes of $500,000
and $389,166 payable on June 30,1996 and June 30, 1997, respectively.
Because both promissory notes were non-interest bearing, the
Partnership recognized imputed interest of $122,860 based on an
approximate 11 percent imputed interest rate, thereby reducing the
notes' carrying value to $766,306 and incurring a loss on sale of the
film of $122,860. This loss is being 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 term of the
notes. For the years ended December
18
<PAGE>
31, 1997 and 1996, interest income of $14,207 and $65,528,
respectively, 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, 1997, the Partnership had
invested $2,661,487 in the film, which included a $468,000 production
and overhead fee paid to the General Partner. The film was co-produced
by the General Partner and Gemini Films, a German company. The
completed picture was delivered to The Disney Channel in the second
quarter of 1994. From inception to December 31, 1997, the Partnership
has recognized $2,273,736 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
$173,736, $8,325 has been retained by the distributors of the film for
their fees and marketing costs and the remaining $165,411 has been
received by the Partnership as of December 31, 1997.
During the fourth quarter of 1996, the General Partner reassessed the
anticipated total gross revenue remaining from the distribution of
"The Whipping Boy" in available international and domestic television
and home video markets. Based on revised estimated television and home
video sales projections provided by an independent consultant, a
reduction was made to the Partnership's estimate of total gross
revenue to be recognized from the future distribution of the film.
Accordingly, based on the reduced revenue projections for the film, a
determination was made by the General Partner that the Partnership's
net investment in "The Whipping Boy" of $952,731 exceeded the film's
estimated net realizable value of approximately $375,000 as of
December 31, 1996. As a result, a loss from write-down of film
production cost of $575,000 was incurred to reduce the unamortized
cost of the film to its estimated net realizable value as of December
31, 1996. The film's estimated net realizable value was calculated
based on an estimate of anticipated revenues remaining over the life
of the film from international and domestic television and home video
distribution, net of estimated distribution fees and costs, as of
December 31, 1996. These revenue projections were estimated based on
the film's prior distribution history, the remaining international and
domestic territories available to the film for future television and
home video distribution, and the General Partner's and the independent
consultant's previous distribution experience with other films.
The Partnership's net investment in the film, after consideration of
amortization and the write-down discussed above, was $345,436 as of
December 31, 1997.
(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
19
<PAGE>
production cost amortization and loss from write-down of film
production cost recognized under generally accepted accounting
principles and the amount of expense allowed for tax purposes. Film
production cost recognized under generally accepted accounting
principles exceeded the amount of expense recognized for tax purposes
by approximately $174,000 for the year ended December 31, 1997. For
the year ended December 31, 1996, film production cost recognized for
tax purposes exceeded that allowed under generally accepted accounting
principles by approximately $396,000.
20
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
------------------------------------------------------
ON ACCOUNTING AND FINANCIAL DISCLOSURE
--------------------------------------
None.
PART III.
--------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------------------------------
The Partnership itself has no officers or directors. Certain
information concerning directors and executive officers of the General Partner
of the Registrant is set forth below. Each of the directors serves until the
next annual meeting of the shareholders of the General Partner and until their
successors shall be elected and qualified.
Name Age Positions with the General Partner
- ---- --- ----------------------------------
Glenn R. Jones 68 Chairman of the Board, Chief Executive Officer,
and President
Steven W. Gampp 46 Vice President/Finance and Treasurer
Keith D. Thompson 31 Chief Accounting Officer
Elizabeth M. Steele 46 Secretary
Wilfred N. Cooper, Sr. 67 Director
J. Rodney Dyer 62 Director
Robert Kearney 61 Director
David K. Zonker 44 Director
Mr. Glenn R. Jones has served as Chairman of the Board of Directors
and Chief Executive Officer of the General Partner since its inception and he
has served as President of the General Partner since April 1994. Mr. Jones is
also the Chairman of the Board of Directors and Chief Executive Officer of the
General Partner's principal shareholder, Jones 21st Century, Inc., a subsidiary
of Jones International, Ltd. 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.
Additionally, Mr. Jones is a member of the Board of Governors for the American
Society for Training and Development, and a member of 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. 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 President's Award from the Cable Television Public Affairs Association in
recognition of Jones International's educational efforts through Mind Extension
University (now Knowledge TV); the Donald G. McGannon Award for the advancement
of minorities and women in cable from the United Church of Christ Office of
Communications; 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 Cableforce 2000 Accolade awarded by Women in Cable in recognition
of the General Partner's innovative employee programs; the Most Outstanding
Corporate Individual Achievement Award from the International Distance Learning
Conference for his contributions to distance education; 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. Steven W. Gampp was elected Vice President/Finance and Treasurer
of the General Partner in January 1997. Mr. Gampp serves as the Chief Financial
Officer of Jones International, Ltd., an affiliate of the General Partner. Mr.
Gampp was employed by Nu-West Industries, Inc., a publicly-held phosphate
fertilizer manufacturer for seven years, most recently as the Vice President,
Secretary and Treasurer. Mr. Gampp is a Certified Public Accountant and is a
member of both the American and the Colorado societies of Certified Public
Accountants.
21
<PAGE>
Mr. Keith D. Thompson was elected the Chief Accounting Officer of the
General Partner in March 1997. Mr. Thompson is also the Chief Accounting
Officer of other affiliates of the General Partner. Mr. Thompson has also been
associated with Jones International, Ltd., an affiliate of the General Partner,
since October 1994, most recently as Controller from July 1997 to present. From
July 1989 to October 1994, Mr. Thompson was an auditor for Deloitte & Touche
LLP. Mr. Thompson is a Certified Public Accountant and is a member of both the
American and the Colorado societies of Certified Public Accountants.
Ms. Elizabeth M. Steele is Secretary of the General Partner. She is
Vice President/General Counsel and Secretary of Jones Intercable, Inc., and is
also the Secretary of other affiliates of the General Partner. 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. 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. Robert Kearney was appointed a director of the General Partner in
July 1997. Mr. Kearney is a retired executive officer of Bell Canada. Prior to
his retirement in December 1993, Mr. Kearney was the President and Chief
Executive Officer of Bell Canada. He served as Chairman of BCE Canadian Telecom
Group in 1994 and as Deputy Chairman of BCI Management Limited in 1995. During
his career, Mr. Kearney served in a variety of capacities in the Canadian,
American and International Standards organizations, and he has served on several
corporate, professional and civic boards.
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
affiliates of the General Partner. 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.
ITEM 11. EXECUTIVE COMPENSATION
--------------------------------
The Partnership has no employees; however, various personnel are
required to operate its business. Such personnel are employed by the General
Partner and, pursuant to the terms of the Partnership's limited partnership
agreement, the cost of such employment can be charged by the General Partner to
the Partnership as a reimbursement item. See Item 13.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
--------------------------------------------------
OWNERS AND MANAGEMENT
---------------------
As of March 4, 1998, no person or entity owns more than 5 percent of
the limited partnership interests in the Partnership.
22
<PAGE>
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. No such fee was paid to the General Partner in 1997.
As of December 31, 1997, the General Partner, on behalf of the
Partnership, has incurred home video and telecast distribution costs totaling
$61,939 relating to "The Whipping Boy," of which $20,907 has been reimbursed by
the Partnership out of film distribution proceeds. The General Partner
generally will be entitled to reimbursement of these remaining costs from the
Partnership contingent on the receipt of proceeds from future home video and
telecast distribution of the film. Future proceeds received from the
distribution of "The Whipping Boy" will be recognized as revenue by the
Partnership, net of any remaining distribution costs reimbursed to the General
Partner.
In connection with the distribution of "Charlton Heston Presents: The
Bible," J/G Distribution Company, an affiliate of the General Partner, is
entitled to certain distribution rights and fees. See Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations for a
description of these distribution rights and fees. As of December 31, 1997,
gross sales made by J/G Distribution Company totaled $2,457,564, of which
$1,228,782 has been retained by J/G Distribution Company for its fees and
marketing costs, with the remaining $1,228,782 belonging 50 percent to the
Partnership and 50 percent to Goodtimes. As of December 31, 1997, the
Partnership had received $539,568 due from J/G Distribution, with the remaining
$74,823 received in the first quarter of 1998.
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 and certain of its affiliates with respect to the Partnership.
In 1997, the General Partner charged $35,028 of direct expenses to the
Partnership.
The General Partner may also advance funds to the Partnership.
Advances from the General Partner to the Partnership totaled $8,622 as of
December 31, 1997. As the Partnership reimburses such advances from the General
Partner on a timely basis, no interest on outstanding advances was charged to
the Partnership during 1997.
The Partnership reimburses affiliates of the General Partner for
certain allocated administrative personnel expenses. These expenses generally
consist of salaries and related benefits. Allocations of personnel costs are
generally based on actual time spent by affiliated associates with respect to
the Partnership. Such allocated expenses totaled $19,005 for the year ended
December 31, 1997.
23
<PAGE>
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)
(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.
24
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
JONES PROGRAMMING PARTNERS 2-A, LTD.,
a Colorado limited partnership
By Jones Entertainment Group, Ltd.,
its General Partner
By: /s/ Glenn R. Jones
----------------------------------------
Glenn R. Jones
Chairman of the Board, Chief Executive
Dated: March 10, 1998 Officer and President
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
By: /s/ Glenn R. Jones
----------------------------------------
Glenn R. Jones
Chairman of the Board, Chief Executive
Officer and President
Dated: March 10, 1998 (Principal Executive Officer)
By: /s/ Steven W. Gampp
----------------------------------------
Steven W. Gampp
Vice President/Finance and Treasurer
Dated: March 10, 1998 (Principal Financial Officer)
By: /s/ Keith D. Thompson
----------------------------------------
Keith D. Thompson
Dated: March 10, 1998 Chief Accounting Officer
(Principal Accounting Officer)
By: /s/ Wilfred N. Cooper, Sr.
----------------------------------------
Wilfred N. Cooper, Sr.
Dated: March 10, 1998 Director
By: /s/ J. Rodney Dyer
----------------------------------------
J. Rodney Dyer
Dated: March 10, 1998 Director
By: /s/ Robert Kearney
----------------------------------------
Robert Kearney
Dated: March 10, 1998 Director
25
<PAGE>
By: /s/ David K. Zonker
----------------------------------------
David K. Zonker
Dated: March 10, 1998 Director
26
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 526,005
<SECURITIES> 0
<RECEIVABLES> 74,823
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 965,564
<CURRENT-LIABILITIES> 274,313
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 691,251
<TOTAL-LIABILITY-AND-EQUITY> 965,564
<SALES> 0
<TOTAL-REVENUES> 215,834
<CGS> 0
<TOTAL-COSTS> 371,566
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 37,092
<INCOME-PRETAX> (118,640)
<INCOME-TAX> 0
<INCOME-CONTINUING> (118,640)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (118,640)
<EPS-PRIMARY> (10.46)
<EPS-DILUTED> (10.46)
</TABLE>
