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 March 31, 1996 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.)
Chelsea Piers, Pier 62 - Suite 300
New York, New York 10011
- ---------------------------------- ----------
(Address of principal executive offices) (zip Code)
Registrant's telephone number, including area code (212) 336-6700
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
-------- ----------
1
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The financial information set forth below is set forth in the March 31,
1996 First Quarter Report of Silver Screen Partners, L.P. (the "Partnership")
filed herewith as Exhibit 20 and is incorporated herein by reference.
Balance Sheets -- March 31, 1996 and December 31,
1995.
Statements of Operations -- For the Three Months
ended March 31, 1996 and 1995.
Statements of Partners' Equity -- For the Three
Months ended March 31, 1996 and the Year ended
December 31, 1995.
Statements of Cash Flows -- For the Three Months
ended March 31, 1996 and 1995.
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 three months
ended March 31, 1996 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 three months ended March 31, 1996 were approximately
$46,000, as compared with approximately $46,000 for the comparable three months
in 1995. Revenues for the first three months of 1996 consisted of film revenues
of approximately $4,000 and investment revenues of approximately $42,000 while
those for the comparable period in 1995 consisted of film revenues of
approximately $2,000 and investment revenues of approximately $44,000. Film
revenues continue to be infrequent and unpredictable. Film revenues increased by
approximately $2,000 from 1995 to 1996. Interest income decreased by
approximately $2,000 from 1995 to 1996. This is due to the decrease of interest
rates from the previous year. Interest rates for the first three months of 1996
ranged from 5.12% to 5.79, while those for the comparable period in 1995 ranged
from 5.67% to 6.04%.
2
<PAGE>
Expenses for the three months ended March 31, 1996 were approximately
$40,000 as compared with approximately $39,000 for the comparable period in
1995. The Partnership expenses were constant.
The Partnership generated a net income before taxes of approximately $5,000
for the three months ended March 31, 1996, as compared with net income before
taxes of approximately $7,000 for the comparable period in 1995. The decrease in
net income is the result of lower interest rates, and a slight increase of
expense in general.
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 of which have been completed and
released in most media. Total budgets amounted to approximately $73,800,000, of
which substantially 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 any net
proceeds received from such sale to the investors. The Partnership does not
expect 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 March 31, 1996, the Partnership made no cash
distributions to the Partners because revenues generated were insufficient to
warrant a distribution.
3
<PAGE>
Liquidity and Capital Resources
-------------------------------
As of March 31 1996, the General Partners' capital accounts reflect a
deficit of $728,673. 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.
Silver Screen 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 9.6. An additional reserve of $200,000 was set aside in previous
years and is included in the contingency on the balance sheet.
As a result of a hearing held with the New York City Department of Finance,
a determination was rendered to Silver Screen which upholds the assessment of
$414,801 covering the period from June 8, 1983 through December 31, 1985.
On March 1, 1995, Silver Screen, through counsel, denied liability to the
unincorporated business tax and appealed the determination to the Commissioners
of the Tax Appeals Tribunal, also a New York City administrative body.
Silver Screen intends to vigorously contest the determination. There can be
no assurance that Silver Screen will prevail in its position.
4
<PAGE>
ITEM 3. SELECTED FINANCIAL DATA.
Three Months Three Months
Ended Ended
March 31, 1996 March 31, 1995
-------------- --------------
Revenues
Film revenues .............................. $ 3,856 $ 2,057
Interest income ............................ 41,918 44,262
----------- -----------
45,774 46,319
Expenses
General and
administrative
expenses .................................. 40,404 39,330
----------- -----------
Net income
before taxes ............................... 5,370 6,989
Income tax ................................... -- 746,000
----------- -----------
Net income(loss) ............................. $ 5,370 $ (739,011)
=========== ===========
Net income (loss) per a $500
limited partnership
unit (based on 165,639
Units outstanding) ......................... $ .03 $ (4.42)
=========== ===========
Cash distribution
per $500 limited
partnership unit ........................... $ 0.00 $ 0.00
=========== ===========
March 31, 1996 March 31, 1995
-------------- --------------
Total assets ................................. $ 3,116,101 $ 3,088,745
=========== ===========
See notes to financial statements.
5
<PAGE>
PART 11. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
Exhibit 20 -- 1996 First Quarter Report
(b) The Partnership did not file any reports on Form
8-K during the quarter ended March 31, 1996.
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: May , 1996 By: /s/ Roland W. Betts
--------------------------------
Roland W. Betts, President
7
<PAGE>
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.
Our Second Quarter Report will be mailed in July. If you need any
assistance in the meantime, please contact our Investor Relations Department
between the hours of 10 A.M. and 2 P.M.
Sincerely,
Roland W. Betts
President
8
<PAGE>
Balance Sheets (Unaudited)
- --------------------------
March 31, December 31,
1996 1995
----------- -----------
Assets
Current assets:
Cash ............................................. $ 17,865 $ 28,031
Temporary investments (at cost plus accrued
interest, which approximates market)
(Note 1) ....................................... 3,098,236 3,094,515
----------- -----------
$ 3,116,101 $ 3,122,546
----------- -----------
Liabilities and partners' equity
Current liabilities:
Due to managing general partner .................. $ 18,342 $ 6,969
----------- -----------
Total current liabilities ........................ 18,342 6,969
Contingency liability (Note 3) ................... 946,000 946,000
Other liabilities ................................ 1,009,535 1,032,723
----------- -----------
Total liabilities ................................ 1,973,877 1,985,692
----------- -----------
Partners' equity:
General partners ................................. (728,673) (728,727)
Limited partners ................................. 1,870,897 1,865,581
----------- -----------
Total partners' equity ........................... 1,142,224 1,136,854
----------- -----------
$ 3,116,101 $ 3,122,546
----------- -----------
See notes to financial statements.
9
<PAGE>
Statements of Operations (Unaudited)
- ------------------------------------
Three Months Three Months
Ended Ended
March 31, 1996 March 31, 1995
-------------- -------------
Revenues:
Film revenues (Note 2) ...................... $ 3,856 $ 2,057
Interest income ............................. 41,918 44,262
------------ ------------
45,774 46,319
Costs and expenses:
General and administrative expenses ......... 40,404 39,330
------------ ------------
Net income before taxes ..................... 5,370 6,989
Income tax (Note 3) ......................... -- 746,000
------------ ------------
Net income (loss) ........................... $ 5,370 $(739,011 )
------------ ------------
Net income (loss) allocated to:
General partners ............................ $ 54 $ (7,390 )
Limited partners ............................ 5,316 (731,621 )
------------ ------------
$ 5,370 $(739,011 )
------------ ------------
Net income (loss) per a $500
limited partnership (unit based
on 165,639 units outstanding) ............. $ 0.03 $ (4.42)
------------ ------------
See notes to financial statements
Statements of Partners' Equity (Unaudited)
- ------------------------------------------
Year Ended December 31, 1995
and Three Months Ended March 31, 1996
-------------------------------------
General Limited
Partners Partners Total
----------- ----------- -----------
Balance, January 1, 1995 .......... $ (721,702) $ 2,561,014 $ 1,839,312
Net loss, 1995 .................... (7,025) (695,433) (702,458)
Distributions, 1995 ............... -- -- --
----------- ----------- -----------
Balance, December 31, 1995 ........ (728,727) 1,865,581 1,136,854
Net income, three months 1996 ..... 54 5,316 5,370
Distributions during
three months 1996 ................ -- -- --
----------- ----------- -----------
$ (728,673) $ 1,870,897 $ 1,142,224
----------- ----------- -----------
See notes to financial statements.
10
<PAGE>
Statements of Cash Flows (Unaudited)
- ------------------------------------
Three Months Three Months
Ended Ended
March 31, March 31,
1996 1995
--------- ---------
Cash flows from operating activities:
Net income (loss) .................................... $ 5,370 $(739,011)
--------- ---------
Adjustments to reconcile net
income to net cash provided
by operating activities:
Decrease in accrued interest receivable .............. 503 20,853
Net change in operating assets and liabilities:
Increase in due to managing general partner ......... 11,373 3,891
Increase in contingent liability .................... -- 746,000
(Decrease) increase in other liabilities ............ (23,188) 718
--------- ---------
Net cash (used in) provided by operating activities .. (5,942) 32,451
--------- ---------
Cash flows from investing activities:
Purchase of temporary investments, net ............... (4,224) (15,699)
--------- ---------
Net cash used in investing activities ................ (4,224) (15,699)
--------- ---------
Cash flows from financing activities:
Distributions to partners ............................ -- --
--------- ---------
Net cash used in financing activities ................ -- --
--------- ---------
Net (decrease) increase in cash ...................... (10,166) 16,752
Cash, beginning of year .............................. 28,031 42,974
--------- ---------
Cash at end of three months .......................... $ 17,865 $ 59,726
--------- ---------
See notes to financial statements.
11
<PAGE>
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 three months of 1996,
the Partnership received approximately $3,856.
3. Contingent Liability
The Partnership's tax returns were audited by the City of New York and
received assessments for unincorporated business tax of $675,887
covering the period from June 8, 1983 (inception) through December 31,
1990. 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%.
As a result of a hearing held with the New York City Department of Finance, a
determination was rendered to the Partnership which upholds the assessment of
$414,801 covering the period June 8, 1983 through December 31, 1985.
On March 1, 1995 the Partnership, through counsel, denied liability to the
unincorporated business tax and appealed determination to the Commissioners of
the Tax Appeals Tribunal, also a New York City administrative body.
While the Partnership is vigorously contesting the determination, there can
be no assurance that it will prevail in its position.
12
<PAGE>
Silver Screen Management, Inc.
Chelsea Piers-Pier 62
Suite 300
New York, NY 10011
(212) 336-6700
(c) 1996 Silver Screen Management, Inc.
13
<PAGE>
Silver Screen Partners First Quarter Report
March 31, 1996
14
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED BALANCE SHEET AS OF MARCH 31, 1996, AND THE STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED MARCH 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<PERIOD-END> MAR-31-1996
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