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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 SEPTEMBER 30, 1999.
[ ] 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.
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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, ENGLEWOOD, COLORADO 80112
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Address of principal executive office
(303) 792-3111
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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
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JONES PROGRAMMING PARTNERS 2-A, LTD.
(A Limited Partnership)
INDEX
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<CAPTION>
Page
Number
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Statements of Financial Position as of
December 31, 1998 and September 30, 1999 3
Unaudited Statements of Operations for the Three
and Nine Months Ended September 30, 1998 and 1999 4
Unaudited Statements of Cash Flows for the
Nine Months Ended September 30, 1998 and 1999 5
Notes to Unaudited Financial Statements as of
September 30, 1999 6-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-9
PART II. OTHER INFORMATION 10
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JONES PROGRAMMING PARTNERS 2-A, LTD.
(A Limited Partnership)
UNAUDITED STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
December 31, September 30,
ASSETS 1998 1999
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<S> <C> <C>
CASH AND CASH EQUIVALENTS $ 128,275 $ 113,615
ACCOUNTS RECEIVABLE 62,588 17,711
INVESTMENT IN AND ADVANCES FOR FILM PRODUCTION,
net of accumulated amortization of $3,881,251 and $3,882,999 as of
December 31, 1998 and September 1999, respectively (Note 3) 150,000 148,252
---------- ----------
Total assets $ 340,863 $ 279,578
========== ==========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
LIABILITIES:
Accounts payable to affiliates $ 7,511 $ 1,284
Accrued liabilities 7,825 5,900
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Total liabilities 15,336 7,184
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PARTNERS' CAPITAL (deficit):
General partner-
Contributed capital 1,000 1,000
Distributions (33,267) (34,686)
Accumulated deficit (11,728) (10,843)
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Total general partner's deficit (43,995) (44,529)
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Limited partners -
Contributed capital, net of offering costs (11,229 units
outstanding as of December 31, 1998 and September 1999) 4,823,980 4,823,980
Distributions (3,293,328) (3,433,691)
Accumulated deficit (1,161,130) (1,073,366)
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Total limited partners' capital 369,522 316,923
---------- ----------
Total partners' capital 325,527 272,416
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Total liabilities and partners' capital $ 340,863 $ 279,578
========== ==========
</TABLE>
The accompanying notes to these unaudited financial statements
are an integral part of these unaudited financial statements.
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JONES PROGRAMMING PARTNERS 2-A, LTD.
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
------------------------------ -----------------------------
1998 1999 1998 1999
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<S> <C> <C> <C> <C>
GROSS REVENUES $ 7,513 $ 17,830 $ 145,167 $ 149,415
COSTS AND EXPENSES:
Costs of filmed entertainment - 120 19,828 1,748
Distribution fees and expenses 3,757 - 72,320 39,704
Operating, general and administrative expenses 6,030 5,048 23,602 21,581
--------- --------- --------- ---------
Total costs and expenses 9,787 5,168 115,750 63,033
--------- --------- --------- ---------
OPERATING INCOME (LOSS) (2,274) 12,662 29,417 86,382
--------- --------- --------- ---------
OTHER INCOME (EXPENSE):
Interest income 3,894 457 15,033 2,330
Other income (expense), net - (63) 20 (63)
--------- --------- --------- ---------
Other income, net 3,894 394 15,053 2,267
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NET INCOME $ 1,620 $ 13,056 $ 44,470 $ 88,649
========= ========= ========= =========
ALLOCATION OF NET INCOME:
General partner $ 16 $ 130 $ 445 $ 886
========= ========= ========= =========
Limited partners $ 1,605 $ 12,926 $ 44,025 $ 87,763
========= ========= ========= =========
NET INCOME PER LIMITED
PARTNERSHIP UNIT $ .15 $ 1.15 $ 3.92 $ 7.81
========= ========= ========= =========
WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS OUTSTANDING 11,229 11,229 11,229 11,229
========= ========= ========= =========
</TABLE>
The accompanying notes to the unaudited financial statement
are an integral part of these unaudited financial statements.
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JONES PROGRAMMING PARTNERS 2-A, LTD.
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30,
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1998 1999
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 44,470 $ 88,649
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Amortization of filmed entertainment costs 19,828 1,748
Net change in assets and liabilities:
Decrease in accounts receivable 74,823 44,877
Decrease in accounts payable to affiliates (3,850) (6,227)
Decrease in accrued liabilities (120,410) (1,925)
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Net cash provided by (used in) operating activities (14,883) 127,122
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CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners (425,343) (141,782)
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Net cash used in financing activities (425,343) (141,782)
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DECREASE in cash and cash equivalents (410,460) (14,660)
Cash and cash equivalents, beginning of period 526,005 128,275
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Cash and cash equivalents, end of period $ 115,545 $ 113,615
========= =========
</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 December 31, 1998 and September 30,
1999 and its results of operations and its cash flows for the nine
month periods ended September 1998 and 1999. Results of operations for
these periods are not necessarily indicative of results to be expected
for the full year.
(2) TRANSACTIONS WITH AFFILIATED ENTITIES
Jones Entertainment Group, Ltd. ("General Partner") is entitled to
reimbursement from the Partnership for its direct and indirect expenses
allocable to the operations of the Partnership, which shall include,
but not be limited to, rent, supplies, telephone, travel, legal
expenses, accounting expenses, preparation and distribution of reports
to investors and salaries of any full or part-time employees. Because
the indirect expenses incurred by the General Partner on behalf of the
Partnership are immaterial, the General Partner generally does not
charge indirect expenses to the Partnership. The General Partner
charged $2,954 and $1,652 to the Partnership for direct expenses to the
Partnership for the three months ended September 1998 and 1999,
respectively. For the nine month periods ended September 30, 1998 and
1999, $8,389 and $5,027, respectively, of direct expenses were charged
to the Partnership.
(3) INVESTMENT IN AND ADVANCES FOR FILM PRODUCTION
"CHARLTON HESTON PRESENTS: THE BIBLE"
In May 1992, the General Partner, on behalf of the Partnership, entered
into an agreement with Agamemnon Films, an unaffiliated party, to
produce four one-hour programs for television, entitled "Charlton
Heston Presents: The Bible" (the "Bible Programs"). The production
costs of the Bible Programs were approximately $2,370,000, which
included a $240,000 production and overhead fee paid to the General
Partner. In return for agreeing to fund these production costs, the
Partnership acquired all rights to the Bible Programs in all markets
and in all media in perpetuity. The Partnership subsequently assigned
half of its ownership of the Bible Programs to an unaffiliated party
for an investment of $1,000,000 toward the production costs for the
Bible Programs. After consideration of the reimbursement, the
Partnership's total investment in the Bible Programs was $1,369,764. In
June 1998, the Partnership fully amortized its net investment in this
film. From inception to September 30, 1999, the Partnership has
recognized $1,918,574 of revenue from this film, of which $817,856 was
retained by the distributors of the film for their fees and marketing
costs and $1,083,007 was received by the Partnership. The Partnersip
aniticipates payment for the remaining $17,711 in November 1999.
"THE WHIPPING BOY"
In August 1993, the Partnership acquired the film rights to the Newbury
Award-winning book "The Whipping Boy." "The Whipping Boy" was produced
as a two-hour telefilm, which premiered in the North American
television market on The Disney Channel. The film's final cost was
approximately $4,100,000. As of September 30, 1999, 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 September 30, 1999, the Partnership
has recognized $2,275,893 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
$175,893, $8,497 was retained by the distributors of the film for their
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fees and marketing costs and $167,396 was received by the Partnership.
The Partnership's net investment in the film, after consideration of
amortization and write-downs, was $148,252 as of September 30, 1999.
The Partnership plans to amortize its remaining investment in this film
from net revenues generated from domestic and international home video
and television markets or recover its remaining investment from the
sale of the Partnership's interests in the film. As of September 30,
1999, there were no outstanding receivables.
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JONES PROGRAMMING PARTNERS 2-A, LTD.
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's principal sources of liquidity are cash on hand and amounts
received from the domestic and international distribution of its programming.
As of September 30, 1999, the Partnership had approximately $114,000 in cash.
The Partnership had an outstanding receivable from unaffiliated distributors
totaling approximately $18,000 as of September 30, 1999. It is not
anticipated that the Partnership will invest in any additional programming
projects, but instead will focus on the distribution and/or sale of its
existing programming projects.
Given the near completion of the second cycle distribution of the
Partnership's programming, as previously announced, regular quarterly
distributions were suspended beginning with the quarter ended September 30,
1998. However, upon further evaluation by the General Partner of the cash
reserves and cash operating needs of the Partnership, an additional
distribution of $141,782 was declared for the three months ended March 31,
1999, and was paid in May 1999. The Partnership will retain a certain level
of working capital, including any necessary reserves, to fund its operating
activities. It is anticipated that any future distributions will only be made
once proceeds are received from the sale of the Partnership's assets,
although the General Partner will continue to make quarterly evaluations of
the Partnership's working capital position and needs.
The General Partner, on behalf of the Partnership, is currently considering
the sale of the Partnership's interests in its programming projects. If the
General Partner or one of its affiliates exercises its right to purchase the
Partnership's interests in a programming project, however, the sales price
for such a transaction will be at least equal to the average of three
independent appraisals of the programming project's fair market value. The
General Partner has no obligation to purchase any assets of the Partnership.
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
but expects to initiate sales effort in the first quarter of 2000. The
projects may be sold as a group or on a one by one basis, at the discretion
of the General Partner. Any direct costs incurred by the General Partner on
behalf of the Partnership in soliciting and arranging for the sale, or sales,
of the Partnership's programming projects will be charged to the Partnership.
It is anticipated that the net proceeds from the sale, or sales, of the
Partnership's interests in its programming will be distributed to the
partners after such sale. Based on the General Partner's estimates of value
and indications of value obtained from unaffiliated parties, it is probable
that the distributions of the proceeds from the sales of the Partnership's
programming projects, together with all prior distributions paid to the
limited partners, will return to the limited partners less than 70% of their
initial capital contributions to the Partnership.
The General Partner believes that the Partnership has, and will continue to
have, sufficient liquidity to fund its operations and to meet its
obligations. Cash flow from operating activities will be generated from the
Partnership's programming projects "The Whipping Boy" and "The Bible".
IMPACT OF THE YEAR 2000 ISSUE (UNAUDITED)
The Year 2000 issue is the result of many computer programs being written
such that they will malfunction when reading a year of "00." This problem
could cause system failure or miscalculations causing disruptions of business
processes.
In conjunction with its affiliates, the General Partner has initiated an
assessment of its computer applications
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to determine the extent of the problem. Based on this assessment, the General
Partner has determined that its computer applications supporting business
processes, including accounting and investor services, are designed to handle
the Year 2000 appropriately. The General Partner believes there will be no
financial impact to the Partnership due to the Year 2000 issue.
RESULTS OF OPERATIONS
Revenues of the Partnership increased $ 10,317, from $7,513 to $17,830 for
the three months ended September 30, 1998 and 1999, respectively. Revenues of
the Partnership increased $4,248, from $145,167 to $149,415 for the nine
months ended September 30, 1998 and 1999, respectively. These increases were
primarily the result of an increase in the distribution of the Bible
Programs. Revenues from the Bible Programs increased $10,200, from $7,511 to
$17,711 for the three months ended September 30, 1998 and 1999, respectively,
and increased $3,030, from $144,638 to $147,668 for the nine months ended
September 30, 1998 and 1999, respectively. Revenues from "The Whipping Boy"
for the three and nine month periods ended September 30, 1999, were
immaterial.
Filmed entertainment costs increased $120, from $0 to $120 for the three
months ended September 30, 1998 and 1999, respectively. Filmed entertainment
costs decreased $18,080, from $19,828 to $1,748 for the nine months ended
September 30, 1998 and 1999, respectively. The increase for the three months
ended September 30, 1999, as compared to the same period in 1998, was the
result of the amortization of the revenue received for the Whipping. The
decrease for nine months ended September 30, 1999, as compared to the same
period in 1998, was the result of the full amortization of the capitalized
production costs relating to the Bible programs during 1998. Filmed
entertainment costs are amortized over the life of the film in the ratio that
current gross revenues bear to anticipated total gross revenues.
Distribution fees and expenses decreased $3,757, from $3,757 to $0 for the
three months ended September 30, 1998 and 1999, respectively. Distribution
fees and expenses decreased $32,616, from $72,320 to $39,704 for the nine
months ended September 30, 1998 and 1999, respectively. The decrease for the
three month period ended September 1999 as compared to the same period in
1998, was due to the decrease in distribution fees. The decrease for the nine
month period ended September 1999 as compared to the same period in 1998, was
due primarily to the reduction of distribution fees and expenses for the
Bible Programs. Distribution fees and expenses relate to the compensation due
and costs incurred by unaffiliated parties in selling the Partnership's
programming in the domestic and international markets. The timing and amount
of distribution fees and expenses vary depending upon the individual market
in which programming is distributed.
Operating, general and administrative expenses decreased $982, from $6,030 to
$5,048 for the three months ended September 30, 1998 and 1999, respectively.
Operating and general and administrative expenses decreased $2,021, from
$23,602 to $21,581 for the nine months ended September 30, 1998 and 1999,
respectively. These decreases were due primarily to decreased direct costs
allocable to the operations of the Partnership that were charged to the
Partnership by the General Partner and its affiliates in 1999 as compared to
1998. The decrease in direct costs allocable to the Partnership's operations
resulted mainly from the decrease in General Partner personnel expenses and
the decrease in direct time spent by the affiliates of the General Partner on
the accounting and legal functions of the Partnership.
Interest income decreased $3,437, from $3,894 to $457 for the three months
ended September 30, 1998 and 1999, respectively. Interest income decreased
$12,703, from $15,033 to $2,330 for the nine months ended September 30, 1998
and 1999, respectively. These decreases for the three month and nine month
periods ended September 30, 1999 were the result of lower invested cash
balances as compared to the same periods in 1998.
Limited Partners' net income per partnership unit changed $1.00, from $.15 to
$1.15 for the three months ended September 30, 1998 and 1999, respectively.
Limited Partners' net income for the partnership unit changed $3.89 , from
$3.92 to $7.81 for the nine months ended September 30, 1998 and 1999,
respectively. This change was due to the results of operations as discussed
above.
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/ Thomas B. Anema
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Thomas B. Anema
Vice President/Finance and Treasurer
(Principal Financial Officer)
Dated: November 15, 1999
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 113,615
<SECURITIES> 0
<RECEIVABLES> 17,711
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 131,326
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 279,578
<CURRENT-LIABILITIES> 7,184
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 272,416
<TOTAL-LIABILITY-AND-EQUITY> 279,578
<SALES> 0
<TOTAL-REVENUES> 149,415
<CGS> 0
<TOTAL-COSTS> (63,033)
<OTHER-EXPENSES> (63)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,330
<INCOME-PRETAX> 88,649
<INCOME-TAX> 0
<INCOME-CONTINUING> 88,649
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 88,649
<EPS-BASIC> 7.81
<EPS-DILUTED> 7.81
</TABLE>
