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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, 1998
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: 0-19075
JONES PROGRAMMING PARTNERS 1-A, LTD.
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(Exact name of registrant as specified in its charter)
Colorado 84-1088820
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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 (Registrant's telephone no.
Zip Code) including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g)
of the Act: Limited Partnership Interests
Indicate by check mark whether the registrant, (1) has filed all reports
required to be filed by Section 13 or l5(d) of the Securities Exchange Act of
l934 during the preceding l2 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days:
Yes x No
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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. X
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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 1-A, Ltd. (the "Partnership") is a Colorado
limited partnership that was formed in April 1989 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 and own rights to produce and license original programming. The
Partnership generates revenues from the licensing of its programming. 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. As of December 31, 1998, the Partnership had
three programming projects: "The Little Kidnappers," "The Story Lady" and
"Curacao." 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 the Partnership's
programming projects.
The Little Kidnappers
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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 made-for-television film 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. As of December 31, 1998,
the Partnership's net investment in the film, after consideration of
amortization, was $2,210. From inception to December 31, 1998, the Partnership
has recognized approximately $2,998,000 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 help
finance the film's production. As of December 31, 1998, $102 in receivables was
outstanding from the film's distributors and licensees. These amounts were
received by the Partnership in February 1999. The Partnership plans to recover
its remaining investment in this film of $2,210 from net revenues generated in
remaining worldwide television and home video markets from direct distribution
efforts to be made on behalf of the Partnership by the General Partner and by
non-affiliated distributors or the sale of the Partnership's interests in the
film.
The Story Lady
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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 world-wide 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
recovered its remaining net investment in this film. From inception to December
31, 1998, the Partnership has recognized approximately $2,309,000 of revenue
from this film. As of December 31, 1998, the Partnership had outstanding net
receivables from the film's domestic and international distributors and
licensees totaling $106,295, of which $10,000 was received by the Partnership in
January 1999 and $11,122 was received by the Partnership in February 1999. The
Partnership
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anticipates payment of the remaining $85,173 over the next three to twenty-four
months as collected by distributors.
Curacao
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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 presale and supervising production of
this picture. From inception to December 31, 1998, the Partnership has
recognized approximately $4,032,000 of revenue from this film, which included
the initial license fee and home video advance from Showtime of $2,650,000,
which was used to finance the film's production.
During the third quarter of 1995, the General Partner reassessed the
anticipated total gross revenue remaining from the distribution of "Curacao" in
available international and domestic television markets. Based on revised
television sales projections by unexploited territory, 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 (primarily in international television revenues), a
determination was made by the General Partner that the Partnership's net
investment in "Curacao" of $1,076,664 exceeded the film's estimated net
realizable value of $832,500 as of September 30, 1995. As a result, the
Partnership recorded a write-down of film production cost of $244,164 to reduce
the unamortized cost of the film to its estimated net realizable value as of
September 30, 1995.
During the third quarter of 1996, the General Partner again reassessed the
anticipated total gross revenue remaining from the distribution of "Curacao" in
available international and domestic television markets. Based on revised
estimated television sales projections, 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 "Curacao" of $756,744 exceeded the film's
estimated net realizable value of $100,000 as of September 30, 1996. As a
result, the Partnership recorded a write-down of film production cost of
$656,744 to reduce the unamortized cost of the film to its estimated net
realizable value as of September 30, 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 distribution,
net of estimated distribution fees and costs, as of September 30, 1996.
As of December 31, 1998, the Partnership's net investment in the film,
after consideration of amortization and the write-downs discussed above, was
$62,763. The Partnership plans to recover its remaining net investment in this
film from the net revenues generated from remaining international and domestic
television markets or the sale of the Partnership's interests in the film.
General Matters
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The Partnership will seek to recover its investment in programming 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, on behalf of the
Partnership, is currently considering opportunities available for the sale of
the Partnership's interests in its programming projects. 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 these films 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
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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 acceptance in various domestic and international
television markets of the Partnership's programming, 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.
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 its 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, 1999, the number of equity security
holders in the Partnership was 719.
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ITEM 6. SELECTED FINANCIAL DATA
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<TABLE>
<CAPTION>
For the Years Ended December 31,
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<S> <C> <C> <C> <C> <C>
1994 1995 1996 1997 1998
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Gross revenues $ 413,756 $ 699,023 $ 211,669 $222,714 $ 195,717
Costs of filmed entertainment 345,428 250,173 107,418 93,983 11,546
Distribution fees and expenses 65,583 113,877 58,229 98,471 196,695
Loss from write-down of
film production cost - 244,164 656,744 - -
Operating, general and administrative
expenses 37,349 39,454 62,499 94,162 115,247
Operating income (loss) (32,604) 51,355 (673,221) (63,902) (127,771)
Net income (loss) (9,389) 80,758 (654,916) (54,372) (117,496)
Net income (loss) per limited
partnership unit (.73) 6.27 (50.88) (4.22) (9.13)
Weighted average number of limited
partnership units outstanding 12,743 12,743 12,743 12,743 12,743
General partner's deficit (30,671) (36,299) (49,284) (49,828) (52,612)
Limited partners' capital 2,360,143 1,802,941 517,422 463,594 187,985
Total assets 2,498,982 1,933,539 657,221 442,164 265,317
General partner advances 1,100 (10,728) 15,600 8,303 11,045
</TABLE>
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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1998 Compared to 1997
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Revenues of the Partnership decreased $26,997, from $222,714 in 1997 to $195,717
in 1998. This decrease was due primarily to a decrease in domestic and
international sales of "The Little Kidnappers" and "Curacao," which were $79,243
and $20,170, respectively, for 1997 as compared to $12,354 and $39,
respectively, in 1998. International sales of "The Story Lady" increased
$60,023, from $123,301 in 1997 to $183,324 in 1998.
Filmed entertainment costs decreased $82,437, from $93,983 in 1997 to $11,546 in
1998. This decrease resulted primarily from the decrease in Partnership
revenues received from "The Little Kidnappers" and "Curacao"as discussed above.
Filmed entertainment costs are amortized over the life of the film in the ratio
that current gross revenues bear to anticipated gross revenues.
Distribution fees and expenses increased $98,224, from $98,471 in 1997 to
$196,695 in 1998. This increase was due primarily to royalties that became due
to artisan guilds during 1998. This increase was also due to the overall
increase in domestic and international sales of "The Story Lady." These
distribution fees and expenses relate to the compensation due and costs incurred
by distributors 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 increased $21,085, from $94,162
in 1997 to $115,247 in 1998. This increase was due primarily to an allowance of
$80,300 made during 1998 related to the potential uncollectibility of an
outstanding international income receivable. The increase was partially offset
by a decrease in direct costs allocable to the operations of the Partnership
that were charged to the Partnership by the General
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Partner and its affiliates in 1998 as compared to 1997. 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 $892, from $10,427 in 1997 to $9,535 in 1998. This
decrease in interest income was the result of lower average levels of invested
cash balances existing during 1998 as compared to 1997.
1997 Compared to 1996
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Revenues of the Partnership increased $11,045, from $211,669 in 1996 to $222,714
in 1997. This increase was due primarily to an increase in domestic and
international sales of "The Story Lady" and "Little Kidnappers," which were
$123,301 and $79,243, respectively, for 1997 as compared to $77,950 and $15,833,
respectively, in 1996. International sales of "Curacao" decreased $97,716, from
$117,886 in 1996 to $20,170 in 1997.
Filmed entertainment costs decreased $13,435, from $107,418 in 1996 to $93,983
in 1997. This decrease resulted primarily from the decrease in Partnership
revenues from sales of "Curacao" as discussed above and was partially offset by
the increase in sales of the "Little Kidnappers" 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 increased $40,242, from $58,229 in 1996 to
$98,471 in 1997. This increase was due primarily to the overall increase in
domestic and international sales of "The Story Lady." These distribution fees
and expenses relate to the compensation due and costs incurred by distributors
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 from write-down of film production decreased from $656,744 in 1996 to $0
in 1997. This decrease was the result of a write-down of the Partnership's net
investment in "Curacao" to the film's net realizable value of $100,000 as of
September 30, 1996. A write-down of the Partnership's net investment in its
programming was not deemed necessary by the General Partner for the year ended
December 31, 1997.
Operating, general and administrative expenses increased $31,663, from $62,499
in 1996 to $94,162 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 $9,325, from $19,752 in 1996 to $10,427 in 1997. This
decrease in interest income was the result of lower average levels of invested
cash balances existing during 1997 as compared to 1996.
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 the Partnership's
programming. The Partnership had $90,672 in cash as of December 31, 1998. 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 net
receivable from unaffiliated distributors totaling approximately $106,000 as of
December 31, 1998. The international income net receivable of approximately
$25,000 is expected to be paid to the Partnership over the next three to twenty-
four months as collected by distributors. The domestic income receivable of
$81,000 is expected to be paid to the Partnership over the next eight months.
Given the near completion of the second cycle distribution of the Partnership's
programming, as previously announced, regular quarterly distributions from
operations were suspended beginning with the quarter ended March 31, 1997.
However, upon evaluation by the General Partner of the cash reserves and cash
operating needs of the Partnership, an additional cash flow distribution
totaling $160,897 was declared for the quarter ending March 31, 1998 and paid in
May 1998. No other distributions were declared or paid by the Partnership in
1998. The Partnership will retain a
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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 from proceeds received from the sale of the Partnership's assets.
The General Partner, on behalf of the Partnership, is currently considering
opportunities available for 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.
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 projects
will be charged to the Partnership. It is anticipated that the net proceeds
from the sale 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 primarily from the Partnership's programming
projects as follows:
"The Little Kidnappers"
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During 1990, the Partnership invested approximately $2,794,000 in a film
entitled "The Little Kidnappers." The Partnership advanced funds as production
advances to Maple Leaf to complete the film. In return for such production
advances, the Partnership received all distribution rights in perpetuity in all
markets except Canada. The General Partner, on behalf of the Partnership,
licensed the film to The Disney Channel and Maple Leaf licensed the film to the
Canadian Broadcasting Corporation. Aggregate license fees of approximately
$1,365,000 were received from these licensees. The original Disney Channel
license expired in September 1993. The General Partner subsequently relicensed
the film to The Disney Channel for an additional license period of five years
beginning January 1, 1994 for an additional fee of $300,000, which had been
received by the Partnership as of December 31, 1998. The Canadian Broadcasting
Corporation license expired in the second quarter of 1994 and was not renewed.
In April 1991, the General Partner, on behalf of the Partnership, entered into a
distribution agreement with an unaffiliated party granting rights to distribute
"The Little Kidnappers" in the non-theatrical domestic markets for a period not
to exceed seven years. 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, 1998, gross sales made under this arrangement totaled
$94,190, of which $23,548 was retained by the distributor for its fees.
In July 1991, the General Partner, on behalf of the Partnership, entered into an
agreement with an unaffiliated party granting the rights to distribute "The
Little Kidnappers" in the domestic home video market for a period not to exceed
five years. Under this agreement, the Partnership received a minimum guarantee
of $500,000, of which $100,000 was received upon delivery of the film in October
1991. The Partnership discounted the remaining $400,000 at an imputed interest
rate of 8%, which created a discount of $79,157. The Partnership received
$50,000 in October 1992, $75,000 in October 1993, $75,000 in October 1994 and
the remaining $200,000 in October 1995. The Partnership does not expect to
receive any additional proceeds under this agreement.
In the third quarter of 1990, the General Partner, on behalf of the Partnership,
entered into a distribution agreement with an unaffiliated party, granting the
rights to distribute "The Little Kidnappers" in international television and
home video markets for a period of five years. This agreement expired in October
1995. As of December 31, 1998, international gross sales made under this
distribution agreement totaled $1,165,070, of which $363,753 was retained by the
distributor for its fees and marketing costs and $802,097 was remitted to the
Partnership.
The international distribution rights for "The Little Kidnappers" are now being
handled by the General Partner on behalf of the Partnership. The General Partner
will generally earn a distribution fee equal to 25 percent of gross
international sales and will recover its actual distribution and marketing costs
incurred, with remaining net revenues to be paid to the Partnership. In December
1996, the General Partner, acting on behalf of the Partnership, entered into a
distribution
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agreement with an unaffiliated party, granting the rights to distribute "The
Little Kidnappers" in various international television markets, including
France, the United Kingdom, Scandinavia, Africa and the Middle East, for license
periods of five to six years and a license fee of $35,000. The General Partner
did not earn a distribution fee relating to this agreement. As the license
periods under this agreement vary by territory, $31,111 in revenue from this
agreement has been recognized by the Partnership as of December 31, 1998. The
remaining $3,889 will be recognized by the Partnership during the first quarter
of 1999.
In May 1997, the General Partner, acting on behalf of the Partnership, entered
into a five year licensing agreement with an unaffiliated third party, granting
the rights to distribute "The Little Kidnappers" in the North American home
video market. Under this agreement, the Partnership is entitled to a $20,000
license fee which has been received by the Partnership as of December 31, 1998.
In addition to the initial license fee, the Partnership will also be entitled to
a home video royalty of 10 to 20 percent of net retail sale proceeds earned by
the licensee, with the royalty percentage dependent on the per video unit sales
price obtained. As of December 31, 1998, the Partnership has recognized $20,000
in revenue under this agreement.
The Partnership anticipates that it will recover its remaining net investment in
this film of $2,210 from net revenues to be generated in remaining worldwide
television and home video markets by direct distribution efforts to be made on
behalf of the Partnership by the General Partner and other non-affiliated
distributors or from sale of the Partnership's interests in the film.
"The Story Lady"
--------------
In 1991, the General Partner, on behalf of the Partnership, entered into an
agreement with 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, and the Partnership invested its share of approximately $1,183,000
in return for all distribution rights to this film after the contractual airings
on the NBC television network, which have been completed.
In 1992, the General Partner, on behalf of the Partnership, entered into a
distribution agreement with an unaffiliated party, granting rights to distribute
"The Story Lady" in the non-theatrical domestic markets. As of December 31,
1998, gross sales made under this arrangement totaled $300,969, of which $75,241
was retained by the distributor for its fees. The remaining $225,728 has been
received by the Partnership. The General Partner, on behalf of the Partnership,
entered into an agreement with The Disney Channel, granting The Disney Channel
exclusive domestic television rights to the film for one year, from September
1994 until September 1995, for a license fee of $40,000. Of this license fee,
$26,667 was received in July 1994, with the remaining balance of $13,333
received in April 1995. In addition, the film was distributed in the domestic
home video market by the General Partner and a third party consultant beginning
in the second quarter of 1994. As of December 31, 1998, net sale proceeds under
this arrangement totaled $99,312, which were applied towards the General
Partner's recoupment of its distribution costs. As the General Partner has
fully recovered its remaining distribution costs, any additional sales, net of
fees, will flow to the Partnership. However, the Partnership does not expect to
receive any additional proceeds under this agreement.
On behalf of the Partnership, the General Partner has sub-licensed under the NBC
agreement international television and home video distribution rights to a
distribution affiliate of NBC for approximately eight years. As of December 31,
1998, international gross sales totaled $1,474,299, of which $434,387 was
retained by the distributor for its fees and marketing costs, with the remaining
$1,039,912 due to the Partnership. As of December 31, 1998, the Partnership had
received $934,459 of such amounts. In December 1998, an allowance of $80,300
related to potential uncollectibility was made for an outstanding contract under
this agreement. The remaining $25,153 is expected to be paid to the Partnership
over the next three to twenty-four months as collected by the distributor.
In October 1995, the General Partner, on behalf of the Partnership, entered into
a license agreement with an unaffiliated party, granting right to distribute
"The Story Lady" in the domestic home video market through direct, non-retail
sales for a license fee of $200,000. Under the original terms of the three year
agreement, the Partnership was entitled to $50,000 upon execution of the
agreement, and $10,000 per month for fifteen consecutive months. Of this
license fee, $50,000 was received by the General Partner in November 1995, of
which $21,341 was retained by the General Partner to be applied towards
recoupment of its remaining distribution costs incurred on behalf of the
Partnership for "The Story Lady." The remaining $28,659 was remitted to the
Partnership. As of December 31, 1998, the Partnership had received monthly
license fee payments totaling the remaining $150,000. In June 1998, the General
Partner agreed to extend this distribution agreement to the unaffiliated third
party for an additional three years. The distribution agreement extension
requires a fee of $150,000 for the renewal period to be paid in fifteen equal
monthly installments. As of December 31, 1998, the Partnership has received
$70,000 toward the distribution agreement extension. The remaining $80,000 will
be paid to the Partnership over the next eight months.
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In December 1996, the General Partner, on behalf of the Partnership, entered
into an agreement with Lifetime Television ("Lifetime"), granting rights to
distribute "The Story Lady" in the domestic cable and satellite television
markets for a period of one and a half years commencing in July 1997. In
accordance with the terms of the agreement, the Partnership is entitled to a
$75,000 license fee, of which $25,000 was received in three equal payments in
January 1997, August 1997 and July 1998.
In May 1997, the General Partner, acting on behalf of the Partnership, entered
into a five year licensing agreement with an unaffiliated third party, granting
the rights to distribute "The Story Lady" in the North American home video
market. Under this agreement, the Partnership is entitled to a $20,000 license
fee which has been received by the Partnership as of December 31, 1998. In
addition to the initial license fee, the Partnership will also be entitled to a
home video royalty of 10 to 20 percent of net retail sale proceeds earned by the
licensee, with the royalty percentage dependent on the per video unit sales
price obtained. As of December 31, 1998, the Partnership has recognized $31,627
in license fee revenue under this agreement.
The Partnership has fully recovered its net investment in this film.
"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 cost of the
film 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.
The Partnership has received license fees and a home video advance totaling
$2,650,000 from Showtime in return for granting Showtime a pay television
license through 1997 and the right to market domestic home video rights for
seven years. Home video revenues in excess of $875,000 will be shared 50/50
between the Partnership and Showtime until Showtime has received $1,875,000,
after which the Partnership will receive all of the home video revenues. It is
unlikely that the Partnership will receive any additional revenues beyond the
original Showtime advance from the domestic home video distribution of
"Curacao."
In May 1993, the General Partner, on behalf of the Partnership, entered into a
distribution agreement with an unaffiliated party, granting rights to distribute
"Curacao" in the non-theatrical domestic markets. As of December 31, 1998,
gross sales made under this arrangement totaled $117,358, of which $29,340 was
retained by the distributor for its fees and $88,018 was received by the
Partnership.
The Partnership has contracted with an unaffiliated international sales agent to
market theatrical, home video, and television rights outside the United States
and Canada for a period of five years. The General Partner approved an
agreement negotiated by the international sales agent with an unaffiliated party
to market international theatrical and home video rights for a period of ten
years. The terms of such agreement provide for an advance payment of $950,000
against international theatrical and home video revenues. The payment has been
received by the Partnership net of distribution fees and expenses retained by
the distributor. No international theatrical or home video overages are
expected to be received for the remaining term of the agreement. International
television sales continue and are remitted to the Partnership, net of
distribution fees and expenses, as collected by the distributor. As of December
31, 1998, the Partnership had recorded international gross revenues of
$1,245,075, of which $355,733 was retained by the distributor for is fees and
marketing costs. The remaining $889,342 has been received by the Partnership.
During the third quarter of 1995, the General Partner reassessed the anticipated
total gross revenue remaining from the distribution of "Curacao" in available
international and domestic television markets. Based on revised television
sales projections by unexploited territory, 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 (primarily in international television revenues), a determination
was made by the General Partner that the Partnership's net investment in
"Curacao" of $1,076,664 exceeded the film's estimated net realizable value of
$832,500 as of September 30, 1995. As a result, the Partnership recorded a
write-down of film production cost of $244,164 to reduce the unamortized cost of
the film to its estimated net realizable value as of September 30, 1995.
Likewise, in the third quarter of 1996, the General Partner again reassessed the
anticipated gross revenue remaining from the distribution of "Curacao" based on
revised estimated television sales projections and actual results of the film's
distribution in comparison to the film's prior projections. A determination was
made by the General Partner that the
9
<PAGE>
Partnership's net investment in "Curacao" of $756,744 exceeded the film's
estimated net realizable value of $100,000 as of September 30, 1996, resulting
in a write-down of $656,744. 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 distribution, net of
estimated distribution fees and costs, as of September 30, 1996.
These revenue projections were estimated by the General Partner and the film's
distributor based on the film's prior distribution history, the remaining
international and domestic territories available to the film for future
television distribution, and the General Partner's and the distributor's
previous distribution experience with other films. As of December 31, 1998, the
Partnership's net investment in the film, after consideration of amortization
and the write-downs discussed above, was $62,763. The Partnership plans to
recover its remaining net investment in this film from the net revenues
generated from remaining international and domestic television markets or from
sale of the Partnership's interests in the film.
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 connection 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 the majority
of 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.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
-------------------------------------------------
ABOUT MARKET RISK.
------------------
The Partnership does not hold any financial instruments which present
significant interest or market risk.
10
<PAGE>
ITEM 8. FINANCIAL STATEMENTS
----------------------------
JONES PROGRAMMING PARTNERS 1-A, LTD.
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1997 AND 1998
INDEX
Page
----------------
<TABLE>
<CAPTION>
<S> <C>
Report of Independent Public Accountants 12
Statements of Financial Position 13
Statements of Operations 14
Statements of Partners' Capital (Deficit) 15
Statements of Cash Flows 16
Notes to Financial Statements 17
</TABLE>
11
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Jones Programming Partners 1-A, Ltd.:
We have audited the accompanying statements of financial position of Jones
Programming Partners 1-A, Ltd. (a Colorado limited partnership) as of December
31, 1997 and 1998, and the related statements of operations, partners' capital
(deficit) and cash flows for each of the three years in the period ended
December 31, 1998. 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 1-A,
Ltd. as of December 31, 1997 and 1998, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1998 in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Denver, Colorado,
March 12, 1999
12
<PAGE>
JONES PROGRAMMING PARTNERS 1-A, LTD.
(A Limited Partnership)
STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
December 31,
--------------------------
1997 1998
----------- -----------
<S> <C> <C>
ASSETS
------
CASH AND CASH EQUIVALENTS (Note 2) $ 234,842 $ 90,672
RECEIVABLES:
International income receivable, net of allowance for
doubtful accounts of $2,742 and $80,300 as of
December 31, 1997 and 1998, respectively (Note 5) 122,528 25,275
Domestic income receivable 5,000 81,122
INVESTMENT IN AND ADVANCES FOR FILM PRODUCTION,
net of accumulated amortization of $8,810,687 and $8,822,233
as of December 31, 1997 and 1998, respectively (Notes 2 and 5) 76,519 64,973
OTHER ASSETS 3,275 3,275
----------- -----------
Total assets $ 442,164 $ 265,317
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
-------------------------------------------
LIABILITIES:
Accounts payable to affiliates $ 8,303 $ 11,045
Accrued liabilities 20,095 118,899
----------- -----------
Total liabilities 28,398 129,944
----------- -----------
PARTNERS' CAPITAL (DEFICIT) (Note 3):
General partner -
Contributed capital 1,000 1,000
Distributions (40,831) (42,440)
Accumulated deficit (9,997) (11,172)
----------- -----------
Total general partner's deficit (49,828) (52,612)
----------- -----------
Limited partners -
Contributed capital
(12,743 units outstanding as of December 31, 1997 and 1998) 5,459,327 5,459,327
Distributions (4,042,214) (4,201,502)
Accumulated deficit (953,519) (1,069,840)
----------- -----------
Total limited partners' capital 463,594 187,985
----------- -----------
Total partners' capital (deficit) 413,766 135,373
----------- -----------
Total liabilities and partners' capital (deficit) $ 442,164 $ 265,317
=========== ===========
</TABLE>
The accompanying notes to these financial statements
are an integral part of these financial statements.
13
<PAGE>
JONES PROGRAMMING PARTNERS 1-A, LTD.
(A Limited Partnership)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Years Ended December 31,
---------------------------------
1996 1997 1998
--------- -------- ---------
<S> <C> <C> <C>
GROSS REVENUES (Notes 2 and 5) $ 211,669 $222,714 $ 195,717
COSTS AND EXPENSES:
Costs of filmed entertainment (Notes 2 and 5) 107,418 93,983 11,546
Distribution fees and expenses (Note 2) 58,229 98,471 196,695
Loss from write-down of film production cost
(Notes 2 and 5)
656,744 - -
Operating, general and administrative
expenses (Note 4) 62,499 94,162 115,247
--------- -------- ---------
Total costs and expenses 884,890 286,616 323,488
--------- -------- ---------
OPERATING LOSS (673,221) (63,902) (127,771)
--------- -------- ---------
OTHER INCOME (EXPENSE):
Interest income 19,752 10,427 9,535
Other income (expense), net (1,447) (897) 740
--------- -------- ---------
Total other income, net 18,305 9,530 10,275
--------- -------- ---------
NET LOSS $(654,916) $(54,372) $(117,496)
========= ======== =========
ALLOCATION OF NET LOSS:
General partner $ (6,549) $ (544) $ (1,175)
========= ======== =========
Limited partners $(648,367) $(53,828) $(116,321)
========= ======== =========
NET LOSS PER LIMITED
PARTNERSHIP UNIT $(50.88) $(4.22) $(9.13)
========= ======== =========
WEIGHTED AVERAGE NUMBER OF
LIMITED PARTNERSHIP UNITS
OUTSTANDING 12,743 12,743 12,743
========= ======== =========
</TABLE>
The accompanying notes to these financial statements
are an integral part of these financial statements.
14
<PAGE>
JONES PROGRAMMING PARTNERS 1-A, LTD.
(A Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
<TABLE>
<CAPTION>
For the Years Ended December 31,
----------------------------------
1996 1997 1998
---------- -------- ---------
<S> <C> <C> <C>
GENERAL PARTNER:
Balance, beginning of year $ (36,299) $(49,284) $ (49,828)
Distributions (6,436) - (1,609)
Net loss (6,549) (544) (1,175)
---------- -------- ---------
Balance, end of year $ (49,284) $(49,828) $ (52,612)
========== ======== =========
LIMITED PARTNERS:
Balance, beginning of year $1,802,941 $517,422 $ 463,594
Distributions (637,152) - (159,288)
Net loss (648,367) (53,828) (116,321)
---------- -------- ---------
Balance, end of year $ 517,422 $463,594 $ 187,985
========== ======== =========
TOTAL PARTNERS' CAPITAL (DEFICIT) $ 468,138 $413,766 $ 135,373
========== ======== =========
</TABLE>
The accompanying notes to these financial statements
are an integral part of these financial statements.
15
<PAGE>
JONES PROGRAMMING PARTNERS 1-A, LTD.
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Years Ended December 31,
----------------------------------
1996 1997 1998
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(654,916) $ (54,372) $(117,496)
Adjustments to reconcile net loss
to net cash provided by (used in) operating activities:
Amortization of filmed entertainment costs 107,418 93,983 11,546
Loss from write-down of film production cost 656,744 - -
Decrease in international income net receivable 175,717 19,074 97,253
Decrease (increase) in domestic income receivable 62,427 72,573 (76,122)
Decrease (increase) in other assets 1,181 (2,183) -
Net change in amounts due to/from affiliates 52,448 (7,297) 2,742
Increase in accrued liabilities 6,586 7,509 98,804
--------- --------- ---------
Net cash provided by operating activities 407,605 129,287 16,727
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners (643,588) (160,897) (160,897)
--------- --------- ---------
Net cash used in financing activities (643,588) (160,897) (160,897)
--------- --------- ---------
DECREASE IN CASH AND CASH EQUIVALENTS (235,983) (31,610) (144,170)
CASH AND CASH EQUIVALENTS, beginning of year 502,435 266,452 234,842
--------- --------- ---------
CASH AND CASH EQUIVALENTS, end of year $ 266,452 $ 234,842 $ 90,672
========= ========= =========
</TABLE>
The accompanying notes to these financial statements
are an integral part of these financial statements.
16
<PAGE>
JONES PROGRAMMING PARTNERS 1-A, LTD.
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION AND BUSINESS
Organized in April 1989, Jones Programming Partners 1-A, Ltd. (the
"Partnership") is a limited partnership formed pursuant to the laws of the
State of Colorado to engage in the development, production, acquisition,
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 revenues in
------------------------
accordance with the provisions of Statement of Financial Accounting
Standards No. 53 ("SFAS No. 53"). Revenues from domestic and international
licensing of programming, which may include the receipt of non-refundable
guaranteed amounts, are recognized when such amounts are known, 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 criteria are met.
Investment in and Advances for Film Production - Investment in and advances
----------------------------------------------
for film production consists of advances to production entities for story
rights, production costs, 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 in investment in film production. Film production
costs are amortized based upon the individual-film-forecast method. As the
Partnership nears completion of the second cycle of distribution for its
programming, it will seek to recover its remaining investment in its
programming by continuing to relicense its programming to distributors in
remaining unexploited markets and media, if any, or by selling its
remaining interests in its film projects. Estimated losses, if any, will
be provided for in full when determined by the General Partner. Repayment
of production advances will be applied to reduce advances outstanding.
Distribution Costs - Distribution fees and expenses incurred in connection
------------------
with domestic and international film distribution are recorded at the time
that the related licensing fees are recognized as revenue by the
Partnership. Similarly, the Partnership expenses film advertising costs
related to distribution when the advertising takes place.
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 connection with its affiliates, the General Partner has performed an
assessment of its computer applications to determine the extent of the
problem. Based on this assessment, the General Partner has determined that
the majority of 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.
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.
17
<PAGE>
(3) PARTNERS' CAPITAL (DEFICIT)
The capitalization of the Partnership is set forth in the accompanying
Statements of Partners' Capital (Deficit). No 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.
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. Interest income earned
prior to the start of the Partnership's first production was allocated 100
percent to the limited partners.
(4) TRANSACTIONS WITH AFFILIATES
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 $25,042, $35,028, and $0 to the Partnership for
the years ended December 31, 1996, 1997, and 1998, 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 expense totaled $16,755,
$20,443, and $15,442 for the years ended December 31, 1996, 1997, and 1998,
respectively.
(5) 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 has invested approximately $2,794,000, which
includes a production and overhead fee of $300,000 paid to the General
Partner. As of December 31, 1998, the Partnership's net investment in the
film, after consideration of amortization, is $2,210. From inception to
December 31, 1998, the Partnership has recognized approximately $2,998,000
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 December 31, 1998, $102 in net receivables was outstanding from the
film's distributors and licensees. These amounts were received by the
Partnership in February 1999.
"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 recovered its remaining net investment
in the film. From inception to December 31, 1998, the Partnership has
recognized approximately $2,309,000 of revenue from this film. As of
December 31, 1998, the Partnership had outstanding receivables from the
film's domestic and international distributors
18
<PAGE>
and licensees totaling $106,295, of which $10,000 was received by the
Partnership in January 1999 and $11,122 was received by the Partnership in
February 1999. During 1998, the Partnership recorded an allowance of
$80,300 related to the potential uncollectibility of certain amounts due
from international distributors. The Partnership anticipates payment of the
remaining $85,173 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 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 December 31, 1998, the Partnership has
recognized approximately $4,032,000 of revenue from this film, which
includes the initial license fee and home video advance from Showtime of
$2,650,000 which was used to finance the film's production.
During the third quarter of 1995, the General Partner reassessed the
anticipated total gross revenue remaining from the distribution of
"Curacao" in available international and domestic television markets.
Based on revised television sales projections by unexploited territory, 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 (primarily in international
television revenues), a determination was made by the General Partner that
the Partnership's net investment in "Curacao" of $1,076,664 exceeded the
film's estimated net realizable value of $832,500 as of September 30, 1995.
As a result, the Partnership recorded a write-down of film production cost
of $244,164 to reduce the unamortized cost of the film to its estimated net
realizable value as of September 30, 1995.
Likewise, in the third quarter of 1996, the General Partner again
reassessed the anticipated gross revenue remaining from the distribution of
"Curacao" based on revised estimated television sales projections and
actual results of the film's distribution in comparison to the film's prior
projections. A determination was made by the General Partner that the
Partnership's net investment in "Curacao" of $756,744 exceeded the film's
estimated net realizable value of $100,000 as of September 30, 1996,
resulting in a write-down of $656,744. 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
distribution, net of estimated distribution fees and costs, as of September
30, 1996.
These revenue projections were estimated by the General Partner and the
film's distributor based on the film's prior distribution history, the
remaining international and domestic territories available to the film for
future television distribution and the General Partner's and the
distributor's previous distribution experience with other films. As of
December 31, 1998, the Partnership's net investment in the film, after
consideration of amortization and the write-downs discussed above, was
$62,763.
(6) INCOME TAXES
Income tax provision (benefit) resulting from the Partnership's operations
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 are 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 to 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 differences between the
financial reporting and tax bases of the Partnership's assets and
liabilities are associated with: 1) the difference between the amount of
film production cost amortization and loss from write-down of film
production cost recognized under generally
19
<PAGE>
accepted accounting principles and the amount of expense allowed for tax
purposes; and 2) the allowance for doubtful accounts which is not yet
deductible for tax purposes. Film production cost recognized under
generally accepted accounting principles exceeded the amount of expense
recognized for tax purposes by approximately $533,000, $178,000 and $91,300
for the years ended December 31, 1996, 1997 and 1998, respectively.
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.
<TABLE>
<CAPTION>
Name Age Positions with the General Partner
- --------------------------------- ----------------- ----------------------------------------------------------
<S> <C> <C>
Glenn R. Jones 69 Chairman of the Board, Chief Executive Officer and
President
Steven W. Gampp 47 Vice President/Finance and Treasurer
Keith D. Thompson 32 Chief Accounting Officer
Elizabeth M. Steele 47 Secretary
Wilfred N. Cooper, Sr. 68 Director
J. Rodney Dyer 63 Director
Robert Kearney 62 Director
David K. Zonker 45 Director
</TABLE>
Mr. Glenn R. Jones has served as Chairman of the Board of Directors and
Chief Executive Officer of the General Partner since its inception and he has
served as President of the General Partner since April 1994. Mr. Jones is also
the Chairman of the Board of Directors and Chief Executive Officer of the
General Partner's principal shareholder, Jones 21st Century, Inc., a subsidiary
of Jones International, Ltd. Mr. Jones has served as Chairman of the Board of
Directors and Chief Executive Officer of Jones Intercable, Inc., one of the
nation's largest cable television companies, since its formation in 1970, and he
was President of that company from June 1984 until April 1988. Mr. Jones is the
sole shareholder, President and Chairman of the Board of Directors of Jones
International, Ltd. He is also Chairman of the Board of Directors of other
affiliates of the General Partner. He is a member of the Board of Directors and
the Executive Committee of the National Cable Television Association.
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
21
<PAGE>
Certified Public Accountant and is a member of both the American and the
Colorado societies of Certified Public Accountants.
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, 1999, no person or entity owns more than 5 percent of
the limited partnership interests in the Partnership, except for Herbert Borbe.
Mr. Borbe owns 800 of the 12,743 partnership interests outstanding as of
December 31, 1998. Mr. Borbe's address is 218 Main Street, Suite 216, Kirkland,
Washington 98033. Mr. Borbe is not a director, officer or employee of the
General Partner or any of its affiliates, and, except for his approximately 6
percent interest in the Partnership, he is not otherwise affiliated with the
General Partner and its affiliates.
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
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. During 1998, in aggregate, transactions of this nature
totaled less than $60,000.
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 - Financial Data Schedule.
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 1-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 Officer
Dated: March 24, 1999 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 24, 1999 (Principal Executive Officer)
By: /s/ Steven W. Gampp
-------------------
Steven W. Gampp
Vice President/Finance and Treasurer
Dated: March 24, 1999 (Principal Financial Officer)
By: /s/ Keith D. Thompson
---------------------
Keith D. Thompson
Dated: March 24, 1999 Chief Accounting Officer
(Principal Accounting Officer)
By: /s/ Wilfred N. Cooper, Sr.
--------------------------
Wilfred N. Cooper, Sr.
Dated: March 24, 1999 Director
By: /s/ J. Rodney Dyer
------------------
J. Rodney Dyer
Dated: March 24, 1999 Director
By: /s/ Robert Kearney
------------------
Robert Kearney
Dated: March 24, 1999 Director
By: /s/ David K. Zonker
-------------------
David K. Zonker
Dated: March 24, 1999 Director
25
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 90,672
<SECURITIES> 0
<RECEIVABLES> 106,397
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,275
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 265,317
<CURRENT-LIABILITIES> 129,944
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 135,373
<TOTAL-LIABILITY-AND-EQUITY> 265,317
<SALES> 0
<TOTAL-REVENUES> 195,717
<CGS> 0
<TOTAL-COSTS> 323,488
<OTHER-EXPENSES> 740
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,535
<INCOME-PRETAX> (117,496)
<INCOME-TAX> 0
<INCOME-CONTINUING> (117,496)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (117,496)
<EPS-PRIMARY> (9.13)
<EPS-DILUTED> (9.13)
</TABLE>
