10-Q 1 a2056019z10-q.txt FORM 10-Q 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 JUNE 30, 2001. [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to ______________ Commission File Number: 0-20944 JONES PROGRAMMING PARTNERS 2-A, LTD. -------------------------------------------------- (Exact name of registrant as specified in charter) Colorado 84-1088819 -------- ---------- (State of organization) (I.R.S. Employer Identification No.) 9697 E. Mineral Avenue, Englewood, Colorado 80112 (303) 792-3111 -------------------------------------------------- -------------- (Address of principal executive office) (Registrant's telephone no, including area code) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Limited Partnership Interests Indicate by check mark whether the registrant (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 / / JONES PROGRAMMING PARTNERS 2-A, LTD. (A Limited Partnership) INDEX

2 JONES PROGRAMMING PARTNERS 2-A, LTD. (A Limited Partnership) UNAUDITED STATEMENTS OF FINANCIAL POSITION

The accompanying notes are an integral part of these unaudited financial statements. 3 JONES PROGRAMMING PARTNERS 2-A, LTD. (A Limited Partnership) UNAUDITED STATEMENTS OF OPERATIONS

The accompanying notes are an integral part of these unaudited financial statements. 4 JONES PROGRAMMING PARTNERS 2-A, LTD. (A Limited Partnership) UNAUDITED STATEMENTS OF CASH FLOWS

The accompanying notes are an integral part of these unaudited financial statements. 5 JONES PROGRAMMING PARTNERS 2-A, LTD. (A Limited Partnership) NOTES TO UNAUDITED FINANCIAL STATEMENTS (1) BASIS OF PRESENTATION This Form 10-Q is being filed in conformity with the SEC requirements for unaudited financial statements and does not contain all of the necessary footnote disclosures required for a fair presentation of the Statements of Financial Position and Statements of Operations and Cash Flows in conformity with accounting principles generally accepted in the United States. However, in the opinion of management, this data includes all adjustments, consisting of normal recurring accruals, necessary to present fairly the financial position of Jones Programming Partners 2-A, Ltd. (the "Partnership") as of December 31, 2000 and June 30, 2001, its results of operations for the three and six month periods ended June 30, 2000 and 2001, and its cash flows for the six month periods ended June 30, 2000 and 2001. 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. (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 $1,266 and $3,702 to the Partnership for direct expenses to the Partnership for the three months ended June 30, 2000 and 2001, respectively. For the six months ended June 30, 2000 and 2001, $4,976 and $10,535, respectively, of direct expenses were charged to the Partnership. The Partnership and Jones Documentary Film Corporation granted the General Partner the exclusive rights to distribute four one-hour programs for television, entitled "Charlton Heston Presents: The Bible" (the "Bible Programs"). To accomplish this, the General Partner, on its own behalf, and GoodTimes Home Video Corporation ("GoodTimes"), an unaffiliated entity directly involved in the specialty home video and international television distribution business, entered into an agreement to form J/G Distribution Company to distribute the Bible Programs. J/G Distribution Company was formed in June 1992 and is owned 50 percent by GoodTimes and 50 percent by the General Partner. The Partnership granted J/G Distribution Company the sole and exclusive right to exhibit and distribute, and to license others to exhibit and distribute, the Bible Programs in all markets, all languages, and all media in perpetuity; except for the CD-ROM version. J/G Distribution Company holds the copyright for the benefit of the Partnership (50 percent interest) and GoodTimes (50 percent interest). Once the Partnership is fully recouped, Agamemnon Films ("Agamemnon") begins to receive a portion of the revenue generated from the distribution of the Bible Programs, pursuant to the Jones/Agamemnon agreement. During 2000, Agamemnon began to participate in profit sharing from the distribution of the Bible Programs. J/G Distribution Company is currently distributing the Bible Programs in the retail home video market. As of June 30, 2001, gross sales made by J/G Distribution Company totaled $3,647,836, of which $1,823,918 has been retained by J/G Distribution Company for its fees and marketing costs, with the remaining $1,823,918 allocated to the Partnership, GoodTimes, and Agamemnon in accordance with the income sharing agreement. Additionally, $250,000 was received directly by the Partnership as its share of the initial license fee from A & E Television Networks ("A&E"). As of June 30, 2001, the Partnership had received $886,134 from J/G Distribution Company and $250,000 from A&E. The $10,893 balance was received by the Partnership in July 2001. 6 (3) INVESTMENT IN AND ADVANCES FOR FILM PRODUCTION "CHARLTON HESTON PRESENTS: THE BIBLE" The production costs of the Bible Programs were approximately $2,370,000, which included a $240,000 production and overhead fee paid to the General Partner. In return for agreeing to fund these production costs, the Partnership acquired all rights to the Bible Programs in all markets and in all media in perpetuity. The Partnership subsequently assigned half of its ownership of the Bible Programs to an unaffiliated party for an investment of $1,000,000 toward the production costs for the Bible Programs. After consideration of the reimbursement, the Partnership's total investment in the Bible Programs was $1,369,764. In June 1998, the Partnership fully amortized its net investment in this film. From inception to June 30, 2001, the Partnership has recognized $2,052,787 of revenue from this film, of which $905,760 was retained by the distributors of the film for their fees and marketing costs. Of the remaining $1,147,027, the Partnership received $1,136,134 as of June 30, 2001. The Partnership received the remaining $10,893 in July 2001. "THE WHIPPING BOY" "The Whipping Boy" is a two hour telefilm which premiered in the North American television market on The Disney Channel. The film's final cost was approximately $4,100,000. As of June 30, 2001, the Partnership had invested $2,661,487 in the film, which included a $468,000 production and overhead fee paid to the General Partner. The completed picture was delivered to The Disney Channel in the second quarter of 1994. From inception to June 30, 2001, the Partnership has recognized $2,277,930 of gross revenue from this film, of which $2,100,000 represents the initial license fee from The Disney Channel. Of the remaining $177,930, $8,497 has been retained by the distributors of the film for their fees and marketing costs and $169,433 has been received by the Partnership as of June 30, 2001. In December 2000, the Partnership, after consideration of approximately $1,744,000 in amortization and approximately $917,000 in write-downs, fully amortized its net investment in the film. 7 JONES PROGRAMMING PARTNERS 2-A, LTD. (A Limited Partnership) MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION LIQUIDITY AND CAPITAL RESOURCES The Partnership's principal sources of liquidity are cash on hand and amounts received from the domestic and international distribution of its programming. As of June 30, 2001, the Partnership had approximately $19,000 in cash. Cash used in operations for the six months ended June 30, 2001 was approximately $2,000. As of June 30, 2001, accounts payable to affiliates totaled approximately $25,000. The Partnership made a $10,000 payment towards this accounts payable liability in July 2001. The Partnership will not invest in any additional programming projects, but instead will focus on the distribution and/or sale of its two films. Regular quarterly distributions were suspended beginning with the quarter ended September 30, 1998. However, a distribution of $141,781 was declared for the three months ended March 31, 1999, and was paid in May 1999. A distribution of $141,781 was declared for the three months ended June 30, 2000 and was paid in August 2000. The Partnership will retain a certain level of working capital, including any necessary reserves, to fund its operating activities. It is anticipated that future distributions, if any, will only be made once proceeds are received from the sale, or sales, of the Partnership's assets. There is no assurance regarding any future distributions. The General Partner, on behalf of the Partnership, is pursuing the sale of the Partnership's assets. This activity is the principal focus of the Partnership. The General Partner will not purchase any assets of the Partnership. The General Partner cannot predict when or at what price the Partnership's interests in its programming ultimately will be sold, but has initiated sales efforts. The sale of the Partnership's assets will be subject to a vote of the limited partners. The films may be sold as a group or on an individual basis, in the judgement of the General Partner. The films could also be packaged with the films of an affiliated public limited partnership. 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 assets will be charged to the Partnership. It is probable that the distributions of the proceeds from the sale or sales of the Partnership's programming projects, together with all prior distributions paid to the limited partners, will return to the limited partners less than 70% of their initial capital contributions to the Partnership. The Partnership has retained the services of a broker to assist in the sale of the Partnership's films. The broker was paid $5,500 for film evaluation services. Pursuant to the services agreement, the broker will also receive a 10% commission for arranging the sale, or sales, of the Partnership's films. In May 1992, the General Partner, on behalf of the Partnership, entered into an agreement with Agamemnon with respect to the production of the Bible Programs. Pursuant to this agreement, Agamemnon does not participate in profit sharing until certain revenues to the General Partner and the Partnership from the distribution of the Bible Programs are first applied towards the Partnership's recoupment of its production investment, its share of production overages, and a production fee plus interest on the unrecouped investment. In 2000, the Partnership fully recouped the requisite amount and Agamemnon began to participate in profits from the distribution of the Bible Programs. The Partnership will therefore receive a decreased percentage of the net proceeds from the distribution of the Bible Programs. The General Partner believes that the Partnership has sufficient liquidity to fund its operations and to meet its obligations through the remainder of the year, so long as distributions are suspended. Any cash flow from operating activities will be primarily generated from the Bible Programs. The General Partner does not anticipate cash flow from the films to increase significantly in the future. The lack of significant cash flow presently being generated by the Partnership's films may negatively affect the ultimate sales price of the films. 8 RESULTS OF OPERATIONS Revenues of the Partnership increased $3,008, from $12,968 to $15,976 for the three months ended June 30, 2000 and 2001, respectively. Revenues of the Partnership increased $3,107, from $13,255 to $16,362 for the six months ended June 30, 2000 and 2001, respectively. These increases were primarily the result of an increase in royalty revenue received from the distribution of the Bible Programs for the three and six month periods ended June 30, 2001 as compared to the same periods in 2000. The Partnership did not incur any filmed entertainment costs for the three month periods ending June 30, 2000 and 2001. Filmed entertainment costs decreased $287, from $287 to $0 for the six months ended June 30, 2000 and 2001, respectively. This decrease was the result of the Partnership's net investment in the "The Whipping Boy" becoming fully amortized in December 2000. 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 $1,401, from $6,484 to $5,083 for the three and six month periods ended June 30, 2000 and 2001, respectively. The decrease was primarily the result of the elimination of recoverable distribution costs for the Bible Programs that occurred when the Partnership reached a recouped position in the film during 2000. Distribution fees and expenses generally relate to the compensation due and costs incurred by unaffiliated parties in selling the Partnership's programming in the domestic and international markets. The timing and amount of the distribution fees and expenses vary depending upon the individual market in which programming is distributed. Operating, general and administrative expenses increased $6,256, from $8,803 to $15,059 for the three months ended June 30, 2000 and 2001, respectively. This increase was due primarily to an increase in accounting and tax preparation expenses combined with an increase in professional service expenses related to efforts to sell the Partnership's programming assets. Operating, general and administrative expenses increased $13,252, from $16,823 to $30,075 for the six months ended June 30, 2000 and 2001, respectively. This increase resulted primarily from an increase in accounting, tax preparation and investor relation expenses combined with an increase in legal and professional services expenses related to efforts to sell the Partnership's programming assets. Interest income decreased $2,136, from $2,400 to $264 for the three months ended June 30, 2000 and 2001, respectively. Interest income decreased $3,504, from $3,935 to $431 for the six months ended June 30, 2000 and 2001, respectively. These decreases were primarily the result of lower levels of invested cash balances during the three and six month periods ended June 30, 2001 as compared to the same periods in 2000. Limited Partners' net income (loss) per partnership unit changed $(.35), from $.01 to $(.34) for the three months ended June 30, 2000 and 2001, respectively. Limited Partners' net loss per partnership unit changed $(1.06), from $(.56) to $(1.62) for the six months ended June 30, 2000 and 2001, respectively. These changes were due to the results of operations as discussed above. 9 Part II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. a) Exhibits None b) Reports on Form 8-K None 10 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. JONES PROGRAMMING PARTNERS 2-A, LTD. BY: JONES ENTERTAINMENT GROUP, LTD. General Partner By: /s/ Timothy J. Burke --------------------------------- Timothy J. Burke Vice President Dated: August 6, 2001 11

JONES PROGRAMMING PARTNERS 2-A LTD 10-Q