FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
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 0-11949
SILVER SCREEN PARTNERS, L.P.
(A Delaware Limited Partnership)
(Exact name of registrant as specified in its
Certificate and Agreement of Limited Partnership)
Delaware 13-3163899
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
936 Broadway
New York, New York 10010
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 995-7600
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such requirements for the
past 90 days.
YES X NO
--- ---
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
The financial information set forth below is set forth in the September 30,
1995 Third Quarter Report of Silver Screen Partners, L.P. (the "Partnership")
filed herewith as Exhibit 20 and is incorporated herein by reference.
Balance Sheets -- September 30, 1995 and December 31, 1994.
Statements of Operations -- For the Three and Nine Months ended
September 30, 1995 and 1994.
Statements of Partners' Equity -- For the Nine Months ended
September 30, 1995 and the Year ended December 31, 1994.
Statements of Cash Flows -- For the Nine Months ended September
30, 1995 and 1994.
Notes to Financial Statements.
The financial statements included herein are unaudited. In the opinion of
the management of the Partnership, all adjustments necessary for a fair
presentation of the results of operations have been included and all adjustments
are of a normal recurring nature. The results of operations for the nine months
ended September 30, 1995 are not necessarily indicative of the results of
operations which may be expected for the entire year.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations
Revenues for the nine months and quarter ended September 30, 1995 were
approximately $144,000, and $49,000, respectively, as compared with
approximately $104,000 and $38,000 for the comparable nine months and quarter of
1994. Revenues for the first nine months and third quarter of 1995 consisted of
film revenues of approximately $7,000 and $4,000, respectively, and investment
revenues of approximately $136,000 and $46,000, respectively, while those for
the comparable periods in 1994 consisted of film revenues of approximately
$13,000 and $4,000 and investment revenues of approximately $92,000 and $35,000.
Film revenues continue to be infrequent and unpredictable. Film revenues
decreased by approximately $6,000 from 1994 to 1995. Interest income increased
by approximately $44,000 due to an increase in interest rates. Interest rates
for the first nine
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<PAGE>
months of 1995 ranged from 5.67% to 6.04%, while those for the comparable period
in 1994 ranged from 3.07% to 4.75%.
Expenses for the nine months and quarter ended September 30, 1995 were
approximately $124,000 and $31,000, respectively, as compared with approximately
$154,000 and $41,000 for the comparable period in 1994. The Partnership expenses
decreased by approximately $30,000, consisting of a reduction of $13,000 for
expenses relating to the reporting to the limited partners and $16,000 of
payroll related expenses.
The Partnership generated a net income before taxes of approximately
$20,000 for the nine months ended September 30, 1995, as compared with net loss
of approximately $49,000 for the comparable period in 1994. The increase in net
income is the result of higher interest rates, and a reduction of expense in
general. The Partnership established a reserve for income taxes of $746,000
during the nine months ended September 30, 1995 resulting in a net loss after
income taxes of approximately $726,000.
The Partnership pre-licensed certain television rights (which became
available one year after theatrical release) on all of its films to a subsidiary
of HBO for a price determined by a formula designed to assure the Partnership a
return of 100% of its original investment in each completed film. As part of
this arrangement, HBO agreed to pay a minimum license fee of 50% of the
Partnership's investment in each film without regard to other film revenues
earned. Amounts due to the Partnership from HBO were payable five years after
the United States theatrical release of each film, but not later than August 31,
1991. The Partnership has received substantially all film revenues and the full
amount of license fees from HBO.
The Partnership financed seven films, all have been completed and released
in most media. Total budgets amounted to approximately $73,800,000, of which all
has been expended. Accordingly, all Partnership funds have been committed and
the Partnership will not finance or purchase any additional motion pictures.
The seven Partnership films are: "Flashpoint," released on August 31, 1984;
"Heaven Help Us," released on February 8, 1985; "Volunteers," released on August
16, 1985; "Sweet Dreams," released on October 2, 1985; "Head Office," released
on January 3, 1986; "The Hitcher," released on February 21, 1986; and "Odd
Jobs," released on March 7, 1986.
By the end of 1993, the U.S. home video rights to the Partnership's films
reverted back to the Partnership. The Partnership plans to sell these rights,
along with any other residual rights to the films, and distribute net proceeds
received from such sale to the investors. The Partnership does not expect
3
<PAGE>
these revenues to be significant. Until then, it is unlikely that the films will
generate additional revenue and therefore no cash distributions to investors are
planned.
During the quarter ended September 30, 1995, the Partnership made no cash
distributions to the Partners because revenues generated were insufficient to
warrant a distribution.
Liquidity and Capital Resources
As of September 30, 1995, the General Partners' capital accounts reflect a
deficit of $728,963. In view of the Partnership's limited requirements for
liquidity, short and long term evaluations do not anticipate any effect of
current capital account balances on the Partnership's cash flow.
The Partnership has no material requirements for liquidity in excess of
reserves for the contingency referred to in Note 3 to the financial statements
(see following paragraphs) and the general and administrative expenses and
quarterly distributions to holders of Units of limited partnership interests.
Such sources are considered adequate for such needs.
The Partnership received assessments from the New York City Department of
Finance for unincorporated business tax of $414,801 covering the period from
June 8, 1983 (inception) through December 31, 1985 and $261,086 covering the
period from January 1, 1986 through December 31, 1990. Further, it is
anticipated that additional assessments, approximating $70,000, will be issued
for the years subsequent to December 31, 1990. All assessments are subject to
interest at a rate which has fluctuated over the years from 6% to 12% and is
currently at 9%.
As a result of an administrative hearing held with the New York City
Department of Finance, a determination (the "ALJ Determination") was recently
rendered to the Partnership upholding the assessment for the period from June 8,
1983 through December 31, 1985.
On March 1, 1995, the Partnership, through counsel, denied liability to the
unincorporated business tax and appealed the ALJ Determination to the
Commissioners of the Tax Appeals Tribunal, also a New York City administrative
body.
The Partnership intends to vigorously contest the ALJ Determination. If the
Partnership is successful, barring unforeseen delays, the matter could be
concluded within 1995. If the Partnership is obliged to seek judicial review of
an adverse agency action, the pendency of this matter could be prolonged. There
can be no assurance that the Partnership will prevail in its position.
4
<PAGE>
Item 3. Selected Financial Data
SILVER SCREEN PARTNERS, L.P.
<TABLE>
<CAPTION>
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
Sept. 30, 1995 Sept. 30, 1995 Sept. 30, 1994 Sept. 30, 1994
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Revenues:
Film revenues $ 3,510 $ 7,411 $ 3,391 $ 12,764
Interest income 45,721 136,230 34,900 91,564
--------- --------- --------- ---------
49,231 143,641 38,291 104,328
Costs and Expenses:
General and
administrative
expenses 30,607 123,777 41,422 153,698
Income tax -- 746,000 -- --
--------- --------- --------- ---------
Net income (loss) $ 18,624 $(726,136) $ (3,131) $ (49,370)
========= ========= ========= =========
Net income per
$500 limited
partnership unit
(based on 165,639
Units outstanding) $ 0.11 $ (4.34) $ (0.02) $ (0.30)
========= ========= ========= =========
Cash distribution
per $500 limited
partnership unit $ 0.00 $ 0.00 $ 0.00 $ 0.00
========= ========= ========= =========
Sept. 30, 1995 Sept. 30, 1994
-------------- --------------
Total assets $3,102,435 $3,055,845
=============== ==============
</TABLE>
See notes to financial statements
5
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
Exhibit 20 -- 1995 Third Quarter Report
Exhibit 27 -- to be filed supplementally
(b) The Partnership did not file any reports on Form
8-K during the quarter ended September 30, 1995.
6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
SILVER SCREEN PARTNERS, L.P.,
a Delaware limited partnership
By: Silver Screen Management, Inc.,
Managing General Partner
Date: November 14, 1995 By: /s/ Roland W. Betts
--------------------------
Roland W. Betts, President
7
Silver Screen Partners Third Quarter Report
September 30, 1995
[LOGO]
<PAGE>
Dear Limited Partner:
As discussed in previous reports, the Partnership has received all payments
from HBO and has recovered at least its full investment in each of its seven
films. Cumulative distributions to date total $88 million.
Two issues must be resolved before the Partnership can dissolve. First, we
plan to sell the U.S. home video rights and any other residual rights to our
films. We do not expect these revenues to be significant. Until the rights are
sold, it is unlikely that the films will generate additional revenue; therefore,
no cash distributions are planned. Second, the New York City tax issue,
discussed in Note 3 to the financial statements, must be resolved. We will
continue to operate Silver Screen Partners until these issues are settled. We
will keep you informed of any updates regarding these matters.
The 1995 Annual Report and tax information will be mailed to you by March
15. If you need any assistance in the meantime, please contact our Investor
Relations Department.
Sincerely,
/S/ ROLAND W. BETTS
Roland W. Betts
President
<PAGE>
Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
September 30, 1995 December 31, 1994
=============================================================================================
<S> <C> <C>
Assets
Current assets:
Cash $ 58,312 $ 42,974
Temporary investments (at cost plus accrued interest,
which approximates market) (Note 1) 3,044,123 3,034,173
- - - - - - - ---------------------------------------------------------------------------------------------
$ 3,102,435 $ 3,077,147
=============================================================================================
Liabilities and partners' equity
Current liabilities:
Due to managing general partner $ 10,550 $ 12,435
- - - - - - - ---------------------------------------------------------------------------------------------
Total current liabilities 10,550 12,435
Contingency liability (Note 3) 746,000 --
Other liabilities 1,232,709 1,225,400
- - - - - - - ---------------------------------------------------------------------------------------------
Total liabilities 1,989,259 1,237,835
- - - - - - - ---------------------------------------------------------------------------------------------
Partners' equity:
General partners (728,963) (721,702)
Limited partners 1,842,139 2,561,014
- - - - - - - ---------------------------------------------------------------------------------------------
Total partners' equity 1,113,176 1,839,312
- - - - - - - ---------------------------------------------------------------------------------------------
$ 3,102,435 $ 3,077,147
=============================================================================================
</TABLE>
See notes to financial statements.
<PAGE>
Statements of Operations (Unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
Sept. 30, 1995 Sept. 30, 1995 Sept. 30, 1994 Sept. 30, 1994
======================================================================================================================
<S> <C> <C> <C> <C>
Revenues:
Film revenues (Note 2) $ 3,510 $ 7,411 $ 3,391 $ 12,764
Interest income 45,721 136,230 34,900 91,564
- - - - - - - ----------------------------------------------------------------------------------------------------------------------
49,231 143,641 38,291 104,328
Costs and expenses:
General and administrative expenses 30,607 123,777 41,422 153,698
- - - - - - - ----------------------------------------------------------------------------------------------------------------------
Net income (loss) before taxes 18,624 19,864 (3,131) (49,370)
Income tax (Note 3) -- 746,000 -- --
- - - - - - - ----------------------------------------------------------------------------------------------------------------------
Net income (loss) 18,624 (726,136) (3,131) (49,370)
======================================================================================================================
Net income (loss) allocated to:
General partners $ 186 $ (7,261) $ (31) $ (494)
Limited partners 18,438 (718,875) (3,100) (48,876)
- - - - - - - ----------------------------------------------------------------------------------------------------------------------
$ 18,624 $(726,136) $ (3,131) $ (49,370)
======================================================================================================================
Net income (loss) per a $500
limited partnership unit (based
on 165,639 units outstanding) $ 0.11 $ (4.34) $ (0.02) $ (0.30)
======================================================================================================================
</TABLE>
See notes to financial statements.
Statements of Partners' Equity (Unaudited)
<TABLE>
<CAPTION>
Year Ended December 31, 1994
and Nine Months Ended September 30, 1995
======================================================================================================================
General Partners Limited Partners Total
- - - - - - - ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, January 1, 1994 $ (721,371) $ 2,593,758 $ 1,872,387
Net loss, 1994 (331) (32,744) (33,075)
Distributions, 1994 -- -- --
- - - - - - - ----------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1994 (721,702) 2,561,014 1,839,312
Net loss, nine months 1995 (7,261) (718,875) (726,136)
Distributions during nine months 1995 -- -- --
- - - - - - - ----------------------------------------------------------------------------------------------------------------------
$ (728,963) $ 1,842,139 $ 1,113,176
======================================================================================================================
</TABLE>
See notes to financial statements.
<PAGE>
Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended
September 30, 1995 September 30, 1994
======================================================================================================================
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $(726,136) $ (49,370)
Adjustments to reconcile net income to net cash provided
by operating activities:
Decrease in accrued interest receivable (216) (5,088)
Net change in operating assets and liabilities:
Decrease in due to managing general partner (1,885) (3,016)
Increase in contingent liability 746,000
(Decrease) increase in other liabilities 7,309 (41,629)
- - - - - - - ----------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by operating activities 25,072 (99,103)
- - - - - - - ----------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Sales (purchases) of temporary investments, net (9,734) 158,491
- - - - - - - ----------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities (9,734) 158,491
- - - - - - - ----------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Distributions to partners -- --
- - - - - - - ----------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities -- --
- - - - - - - ----------------------------------------------------------------------------------------------------------------------
Net increase in cash 15,338 59,388
Cash, beginning of year 42,974 1,603
- - - - - - - ----------------------------------------------------------------------------------------------------------------------
Cash at end of nine months $ 58,312 $ 60,991
======================================================================================================================
</TABLE>
See notes to financial statements.
<PAGE>
Notes to Financial Statements
1. Temporary Investments
Temporary investments represent investments in commercial paper.
2. Film Revenues
The film investments aggregated approximately $73,000,000 and
have been fully amortized. Film revenues are recognized when earned as reported
by each distributor. During the first nine months of 1995, the Partnership
received approximately $7,400 from HBO Video and music royalties.
3. Contingency
The Partnership's tax returns were audited by the City of New
York and received assessments from the New York City Department of Finance for
unincorporated business tax of $414,801 covering the period from June 8, 1983
(inception) through December 31, 1985 and $261,086 covering the period from
January 1, 1986 through December 31, 1990. Further, it is anticipated that
additional assessments, approximating $70,000, will be issued for the years
subsequent to December 31, 1990. All assessments are subject to interest at a
rate which has fluctuated over the years from 6% to 12% and is currently at 9%.
As a result of an administrative hearing held with the New York City Department
of Finance, a determination (the "ALJ Determination") was recently rendered to
the Partnership upholding the assessment for the period from June 8, 1983
through December 31, 1985.
On March 1, 1995 the Partnership, through counsel, denied liability to the
unincorporated business tax and appealed the ALJ Determination to the
Commissioners of the Tax Appeals Tribunal, also a New York City administrative
body.
The Partnership intends to vigorously contest the ALJ Determination. If the
Partnership is successful, barring unforeseen delays, the matter could be
concluded within 1995. If the Partnership is obliged to seek judicial review of
an adverse agency action, the pendency of this matter could be prolonged. There
can be no assurance that the Partnership will prevail in its position.
<PAGE>
Silver Screen Management, Inc.
936 Broadway
New York, NY 10010
(212) 995-7600
(c) 1995 Silver Screen Management, Inc.
