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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 0-19075
Jones Programming Partners 1-A, Ltd.
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Exact name of registrant as specified in charter
Colorado #84-1088820
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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 1-A, LTD.
INDEX
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Page
Number
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Statements of Financial Position
December 31, 1998 and September 30, 1999 3
Unaudited Statements of Operations
Three and Nine Months Ended September 30, 1998 and 1999 4
Unaudited Statements of Cash Flows
Nine Months Ended September 30, 1998 and 1999 5
Notes to Unaudited Financial Statements
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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2
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JONES PROGRAMMING PARTNERS 1-A, LTD.
(A Limited Partnership)
UNAUDITED STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
December 31, September 30,
1998 1999
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<S> <C> <C>
ASSETS
CASH AND CASH EQUIVALENTS $ 90,672 $ 92,824
RECEIVABLES:
Domestic income receivable 25,275 -
Foreign income receivable 81,122 25,950
INVESTMENT IN AND ADVANCES FOR FILM PRODUCTION,
net of accumulated amortization of $8,822,233 and $8,824,781
as of December 31, 1998 and September 30, 1999, respectively 64,973 62,425
OTHER ASSETS 3,275 3,275
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Total assets $ 265,317 $ 184,474
============== ============
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable to affiliates 11,045 4,084
Unearned revenue 3,889 -
Accrued liabilities 115,010 60,340
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Total current liabilities 129,944 64,424
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PARTNERS' CAPITAL (DEFICIT):
General partner -
Contributed capital 1,000 1,000
Distributions (42,440) (42,440)
Accumulated deficit (11,172) (11,325)
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Total general partner's deficit (52,612) (52,765)
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Limited partners -
Contributed capital, net of offering costs
(12,743 units outstanding as of December 31, 1998
and September 30, 1999) 5,459,327 5,459,327
Distributions (4,201,502) (4,201,502)
Accumulated deficit (1,069,840) (1,085,010)
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Total limited partners' capital 187,985 172,815
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Total partners' capital 135,373 120,050
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Total liabilities and partners' capital $ 265,317 $ 184,474
============== ============
</TABLE>
The accompanying notes to these unaudited financial statements
are an integral part of these unaudited financial statements.
3
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JONES PROGRAMMING PARTNERS 1-A, LTD.
(A Limited Partnership)
UNAUDITED STATEMENTS OF OPERATIONS
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<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
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1998 1999 1998 1999
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GROSS REVENUES $ 10,200 $ 114 $ 28,902 $ 4,905
COSTS AND EXPENSES:
Costs of filmed entertainment - 111 7,556 2,548
Distribution fees and expenses 3,957 - 81,736 23
Operating, general and administrative expenses 7,343 5,714 25,153 20,992
----------- ----------- ----------- -----------
Total costs and expenses 11,300 5,825 114,445 23,563
----------- ----------- ----------- -----------
OPERATING LOSS (1,100) (5,711) (85,543) (18,658)
----------- ----------- ----------- -----------
OTHER INCOME:
Interest income 1,016 1,327 8,820 2,302
Other income, net 245 1,110 11 1,033
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Other income, net 1,261 2,437 8,831 3,335
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NET INCOME (LOSS) $ 161 $ (3,274) (76,712) $ (15,323)
=========== =========== =========== ===========
ALLOCATION OF NET INCOME (LOSS):
General partner $ 2 $ (33) $ (767) $ (153)
=========== =========== =========== ===========
Limited partners $ 159 $ (3,241) $ (17,945) $ (15,170)
=========== =========== =========== ===========
NET INCOME (LOSS) PER LIMITED
PARTNERSHIP UNIT $ .02 $ (.25) $ (5.96) $ (1.19)
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
LIMITED PARTNERSHIP UNITS
OUTSTANDING 12,743 12,743 12,743 12,743
=========== =========== =========== ===========
</TABLE>
The accompanying notes to the unaudited financial statements
are an integral part of these unaudited financial statements.
4
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JONES PROGRAMMING PARTNERS 1-A, LTD.
(A Limited Partnership)
UNAUDITED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30,
-------------------------------
1998 1999
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(76,712) $(15,323)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Amortization of filmed entertainment costs 7,556 2,548
Net change in assets and liabilities:
Decrease (increase) in domestic income receivable (105,000) 25,275
Decrease in foreign income receivable 22,432 55,172
Net change in amounts due to/from affiliates (3,769) (6,961)
Decrease in accrued liabilities (1,164) (54,670)
Increase (decrease) in unearned revenue 142,222 (3,889)
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Net cash provided by (used in) operating activities (14,435) 2,152
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CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners (160,897) -
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Net cash used in financing activities (160,897) -
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INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (175,332) 2,152
CASH AND CASH EQUIVALENTS, beginning of period 234,842 90,672
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CASH AND CASH EQUIVALENTS, end of period $59,510 $ 92,824
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</TABLE>
The accompanying notes to these unaudited financial statements are
an integral part of these unaudited financial statements.
5
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JONES PROGRAMMING PARTNERS 1-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
1-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 $5,482 and $2,550 to the Partnership for direct expenses for
the three months ended September 30, 1998 and 1999, respectively. For
the nine month periods ended September 30, 1998 and 1999, $11,871 and
$7,498, respectively, were charged to the Partnership for direct
expenses.
(3) INVESTMENT IN AND ADVANCES FOR FILM PRODUCTION
"THE LITTLE KIDNAPPERS"
In January 1990, the General Partner, on behalf of the Partnership,
entered into an agreement with Jones Maple Leaf Productions ("Maple
Leaf") to produce a full-length feature film for television entitled
"The Little Kidnappers." The total film cost was approximately
$3,200,000. Of this amount, the Partnership invested approximately
$2,794,000, which included a production and overhead fee of $300,000
paid to the General Partner. In March 1999, the Partnership fully
amortized its net investment in this film. From inception to September
30, 1999, the Partnership has recognized approximately $3,002,000 of
revenue from this film, which includes the initial license fees of
approximately $1,365,000 from The Disney Channel and the Canadian
Broadcasting Corporation, which were used to finance the film's
production. As of September 30, 1999, there were no outstanding
receivables.
"THE STORY LADY"
In April 1991, the General Partner, on behalf of the Partnership,
entered into an agreement with NBC Productions, Inc. ("NBC") for the
production of a full-length, made-for-television film entitled "The
Story Lady." The total cost of the film was approximately $4,300,000.
Of this amount, the Partnership invested approximately $1,183,000 in
return for worldwide distribution rights to this film, excluding United
States and Canadian broadcast television rights. Included in the total
amount invested is a production and overhead fee of $120,000 paid to
the General Partner. In December 1995, the Partnership fully amortized
its net investment in the film. From inception to September 30, 1999,
the Partnership has recognized approximately $2,299,000 of revenue from
this film. As of September 30, 1999, the Partnership had outstanding
receivables from the film's international distributors and licensees
totaling $25,950. The Partnership anticipates payment over the next
three to twenty-four months as collected by distributors.
"CURACAO"
In October 1992, the General Partner, on behalf of the Partnership,
entered into an agreement with Showtime Networks, Inc. ("Showtime") for
the production of a full-length, made-for-television film entitled
"Curacao." The total production cost of the film incurred by the
Partnership was approximately $4,410,000. In addition to the costs of
production, the Partnership paid the General Partner $500,000 as a
production and overhead fee for services rendered in connection with
arranging the Showtime pre-sale and supervising production of this
picture. From inception to September 30, 1999, the Partnership has
recognized approximately $4,032,000 of revenue from this film, which
included $2,650,000 from Showtime, which was used to finance the film's
production. As of September 30, 1999, the Partnership's net investment
in the film, after consideration of amortization and write downs, was
$62,425. The Partnership plans to amortize its
6
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remaining net investment in this film from the net revenues generated
from remaining international and domestic television markets or recover
its remaining net investment from the sale of the Partnership's
interest in the film. As of September 30, 1999, there were no
outstanding receivables.
7
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JONES PROGRAMMING PARTNERS 1-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 the
Partnership's programming. The Partnership had approximately $93,000 in cash
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. The
Partnership had outstanding amounts receivable from unaffiliated distributors
totaling approximately $26,000 as of September 30, 1999. The foreign income
receivable of approximately $26,000 will be paid to the Partnership over the
next three to twenty-four months as collected by distributors. The accrued
liabilities of approximately $60,000 as of Sept ember 30, 1999, are owed
primarily to artisan guilds for royalties.
The Partnership will retain a certain level of working capital, including any
necessary reserves, to fund its operating activities and/or satisfy its
outstanding liabilities. 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 75% 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
so long as quarterly distributions are suspended. Cash flow from operating
activities will be generated from "The Little Kidnappers", "The Story Lady",
and "Curacao".
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 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.
8
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RESULTS OF OPERATIONS
The results for the three and nine month periods ended September 30, 1999
show a continuing decrease in revenues from the Partnership's programming
projects, two of which "The Little Kidnappers " and "Curacao" are producing
very little revenue for the Partnership. "The Story Lady" is producing some
revenue, but these revenues have also been steadily decreasing.
Revenues of the Partnership decreased $10,086, from $10,200 to $114 for the
three months ended September 30, 1998 and 1999, respectively. Revenues of the
Partnership decreased $23,997, from $28,902 to $4,905 for the nine months
ended September 30, 1998 and 1999, respectively. These decreases were due
primarily to a decrease in the international and domestic sales of "The Story
Lady" and "The Little Kidnappers". Revenue for "The Little Kidnappers"
increased $22 and decreased $3,814 for the three and nine months ended
September 30, 1999, respectively, as compared to the same periods of 1998.
Revenue for "The Story Lady" decreased $10,200 and $20,408 for the three and
nine months ended September 30, 1999, respectively, as compared to the same
periods of 1998
Filmed entertainment costs increased $111, from $0 to $111 for the three
months ended September 30, 1998 and 1999, respectively. Filmed entertainment
costs decreased $5,008, from $7,556 to $2,548 for the nine months ended
September 30, 1998 and 1999, respectively. This decrease was the result of
decreased film revenues as discussed above. Filmed entertainment costs are
amortized over the life of the film in the ratio that current gross revenues
bear to anticipated total gross revenues.
Distribution fees and expenses decreased $3,957, from $3,957 to $0 for the
three months ended September 30, 1998 and 1999, respectively. Distribution
fees and expenses decreased $81,713, from $81,736 to $23 for the nine months
ended September 30, 1998 and 1999, respectively. The decrease for the three
month period ended September 1999 and 1998 is due primarily to the decrease
in distribution and royalty fees. The decrease for the nine month period
ended September 1999 and 1998 resulted primarily from the payment of
royalties in 1998 of approximately $47,000 and $30,000 to artisan guilds for
revenue received from inception to date for the films "Curacao" and "The
Little Kidnappers," respectively. These distribution fees and expenses relate
to the compensation due and costs incurred by distributors in connection with
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 $1,629, from $7,343
to $5,714 for the three months ended September 30, 1998 and 1999,
respectively. Operating, general and administrative expenses decreased
$4,161, from $25,153 to $20,992 for the nine months ended September 30, 1998
and 1999, respectively. This decrease was due primarily to a decrease in the
direct costs allocable to the operations of the Partnership that were charged
to the Partnership by the General Partner and its affiliates during the three
and nine months ended September 30, 1999 as compared to the same periods in
1998. This 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 increased $311, from $1,016 to $1,327 for the three months
ended September 30, 1998 and 1999, respectively. Interest income decreased
$6,518, from $8,820 to $2,302 for the nine months ended September 30, 1998
and 1999, respectively. The increase in interest income was the result of
higher average levels of invested cash balances existing during the three
month period ended September 30, 1999 as compared to the same period in 1998.
This decrease in interest income was the result of lower average levels of
invested cash balances existing during the nine month period ended September
30, 1999 as compared to the same period in 1998.
Limited partners' net income (loss) per partnership unit changed $(.27), from
$.02 to $(.25) for the three months ended September 30, 1998 and 1999,
respectively. Limited partners' net loss per partnership unit changed $4.77,
from $(5.96) to $(1.19) 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 1-A, LTD.
BY: JONES ENTERTAINMENT GROUP, LTD.
General Partner
By: /s/ Thomas B. Anema
-----------------------------------------
Thomas B. Anema
Vice President/Finance and Treasurer
(Principal Financial Officer)
Dated: November 15, 1999
11
<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> 92,824
<SECURITIES> 0
<RECEIVABLES> 25,950
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 118,774
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 184,474
<CURRENT-LIABILITIES> 64,424
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 120,050
<TOTAL-LIABILITY-AND-EQUITY> 244,426
<SALES> 0
<TOTAL-REVENUES> 4,905
<CGS> 0
<TOTAL-COSTS> (23,563)
<OTHER-EXPENSES> 1,033
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,302
<INCOME-PRETAX> (15,323)
<INCOME-TAX> 0
<INCOME-CONTINUING> (15,323)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (15,323)
<EPS-BASIC> (1.19)
<EPS-DILUTED> (1.19)
</TABLE>
