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, 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.)
c/o 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 September 30,
1996 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, 1996 and December 31, 1995.
Statements of Operations -- For the Three and Nine Months ended
September 30, 1996 and 1995.
Statements of Partners' Equity -- For the Nine Months ended September
30, 1996 and the Year ended December 31, 1995.
Statements of Cash Flows -- For the Nine Months ended September 30,
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 and
nine months ended September 30, 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 nine months and quarter ended September 30, 1996 were
approximately $132,000 and $44,000, respectively, as compared with approximately
$144,000 and $49,000, for the comparable periods in 1995. Revenues for the nine
months and third quarter of 1996 consisted of film revenues of approximately
$7,000 and $4,000, respectively, and investment revenues of approximately
$125,000 and $42,000, while those for the comparable period in 1995 consisted of
film revenues of approximately $7,000 and $4,000, respectively, and investment
revenues of approximately $136,000 and $46,000. Film revenues continue to be
infrequent and unpredictable. Film revenues remained the same while interest
income decreased by approximately $11,000 from 1995 to 1996. This is due to the
decrease of interest rates from the previous year. Interest rates for the first
nine 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 nine months and quarter ended September 30, 1996 were
approximately $97,000 and $30,000, respectively, as compared with approximately
$124,000 and $31,000 for the comparable periods in 1995. The Partnership
expenses decreased by approximately $27,000, consisting of a reduction of legal
expenses of $14,000, payroll expense of $3,000, auditing expense of $8,000 and
miscellaneous expense of $2,000.
The Partnership generated an income before tax of approximately $36,000 for
the nine months ended September 30, 1996, as compared with income before tax of
approximately $20,000 for the comparable period in 1995. The increase in net
income is the result of a reduction of expense in general.
The Partnership had recorded a contingency reserve for unincorporated
business taxes of $946,000 and after a payment of $106,000 generated an income
after taxes of approximately $875,000. The Partnership's tax returns were
audited by the City of New York and the Partnership had received assessments for
unincorporated business tax of $675,887 covering the period from June 8, 1983
(inception) through December 31, 1990. It was anticipated that additional
assessments, approximating $70,000 would be issued for the years subsequent to
December 31, 1990. All assessments were subject to interest. Accordingly, as of
December 31, 1995 the Partnership had recorded a contingency reserve of
$946,000. The Partnership contested these assessments and on September 30, 1996
a final amount of $106,600 (including interest) was reached with New York City
for all periods through December 31, 1995. The liability was paid that date. The
Partnership recorded an income of $839,400 in 1996, representing the reversal of
the contingency reserve in excess of the settlement. The amount shown as
Unincorporated Business Tax is the difference between the settlement amount and
the contingency liability for unincorporated business tax established in earlier
years.
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. The Partnership expects to dissolve by
the end of 1996.
During the quarter ended September 30, 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 September 30, 1996, the General Partners' capital accounts reflect a
deficit of $719,976. At or prior to dissolution this deficit will be reversed
through a special allocation to the limited partners. 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 other than its
general and administrative expenses and distributions to holders of Units of
limited partnership interests.
The Partnership expects to dissolve by the end of 1996 upon final
disposition of the remaining assets and distribution of cash to the partners.
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
September 30, 1996 September 30, 1996 September 30, 1995 September 30, 1995
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Revenues:
Film revenues .......... $ 1,706 $ 7,220 $ 3,510 $ 7,411
Interest income ........ 41,949 125,227 45,721 136,230
------------- ------------- ------------- -------------
$ 43,655 $ 132,447 $ 49,231 $ 143,641
Costs and Expenses:
General and
administrative
expenses .............. (30,461) (96,786) (30,607) (123,777)
------------- ------------- ------------- -------------
Income before tax......... 13,194 35,661 18,624 19,864
Unincorporated business
tax ................... 839,400 839,400 -- (746,000)
------------- ------------- ------------- -------------
Net income (loss) ......... $ 852,594 $ 875,061 $ 18,624 $ (726,136)
============= ============= ============= =============
Net income per $500
limited partnership
unit (based on 165,639
Units outstanding) ..... $ 5.10 $ 5.23 $ 0.11 $ (4.34)
============= ============= ============= =============
September 30, 1996 September 30, 1995
------------------ ------------------
Total assets ............. $ 3,028,696 $ 3,102,435
============= =============
</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 -- 1996 Third Quarter Report
(b) The Partnership did not file any reports on Form
8-K during the quarter ended September 30, 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: November 13, 1996 By: /s/ Roland W. Betts
--------------------------------
Roland W. Betts, President
7
<PAGE>
Silver Screen Partners Third Quarter Report
September 30, 1996
SILVER
SCREEN
8
<PAGE>
DEAR LIMITED PARTNER:
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.
The Partnership has resolved the outstanding tax issue and is in
negotiations regarding the sale of its remaining rights to the films, including
the U.S. home video rights. At this time, we expect to dissolve the Partnership
by year-end.
The 1996 Annual Report and tax information will be mailed to you by March
15. These are likely to be the final mailings you will receive from the
Partnership.
If you need any assistance in the meantime, please contact our Investor
Relations Department at our new telephone number and address listed on the back
of this report.
It has been a pleasure to work with and for all of you over the years. From
"Flashpoint" through "Volunteers" we are proud of the films which we had the
opportunity to finance.
Thank you for the privilege of serving each of you.
Sincerely,
/s/Roland W. Betts
Roland W. Betts
President
9
<PAGE>
Balance Sheets (Unaudited)
- --------------------------
<TABLE>
<CAPTION>
September 30, 1996 December 31, 1995
------------------ -----------------
ASSETS
Current assets:
<S> <C> <C>
Cash ................................................ $ 39,316 $ 28,031
Temporary investments (at cost plus accrued interest,
which approximates market) (Note 1) ................ 2,989,380 3,094,515
----------- -----------
$ 3,028,696 $ 3,122,546
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Due to managing general partner ..................... $ 4,952 $ 6,969
----------- -----------
Total current liabilities ........................... 4,952 6,969
Contingency liability (Note 3) ...................... -- 946,000
Other liabilities ................................... 1,011,829 1,032,723
----------- -----------
Total liabilities ................................... $ 1,016,781 $ 1,985,692
----------- -----------
Partners' equity:
General partners .................................... (719,976) (728,727)
Limited partners .................................... 2,731,891 1,865,581
----------- -----------
Total partners' equity .............................. 2,011,915 1,136,854
----------- -----------
$ 3,028,696 $ 3,122,546
=========== ===========
</TABLE>
See notes to financial statements.
10
<PAGE>
STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
Sept.30, 1996 Sept.30, 1996 Sept.30, 1995 Sept.30, 1995
------------- ------------- ------------- -------------
REVENUES:
<S> <C> <C> <C> <C>
Film revenues (Note 2) ............. $ 1,706 $ 7,220 $ 3,510 $ 7,411
Interest income .................... 41,949 125,227 45,721 136,230
--------- --------- --------- ---------
43,655 132,447 49,231 143,641
COSTS AND EXPENSES:
General and administrative expenses (30,461) (96,786) (30,607) (123,777)
--------- --------- --------- ---------
Income before tax .................. 13,194 35,661 18,624 19,864
Unincorporated Business tax (Note 3) 839,400 839,400 -- (746,000)
--------- --------- --------- ---------
Net Income (loss) .................. $ 852,594 $ 875,061 $ 18,624 $(726,136)
========= ========= ========= =========
NET INCOME (LOSS) ALLOCATED TO:
General partners ................... $ 8,526 $ 8,751 $ 186 $ (7,261)
Limited partners ................... 844,068 866,310 18,438 (718,875)
--------- --------- --------- ---------
$ 852,594 $ 875,061 $ 18,624 $(726,136)
========= ========= ========= =========
Net income (loss) per a $500 limited
partnership unit (based on 165,639
units outstanding) ................ $ 5.10 $ 5.23 $ 0.11 $ (4.34)
========= ========= ========= =========
</TABLE>
See notes to financial statements.
STATEMENTS OF PARTNERS' EQUITY (UNAUDITED)
<TABLE>
<CAPTION>
Year Ended December 31, 1995
and Nine Months Ended September 30, 1996
======================================================
General Partners Limited Partners Total
---------------- ---------------- -----
<S> <C> <C> <C>
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, nine months 1996 ........ 8,751 866,310 875,061
Distributions during nine months 1996 -- -- --
----------- ----------- -----------
$ (719,976) $ 2,731,891 $2,011,915
=========== =========== ==========
</TABLE>
See notes to financial statements.
11
<PAGE>
STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended
Sept. 30, 1996 Sept. 30, 1995
------------------ -----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) .................................. $ 875,061 $(726,136)
Adjustments to reconcile net income to
net cash provided by operating activities:
Decrease (increase) in accrued interest receivable 7,099 (216)
Net change in operating assets and liabilities:
Decrease in due to managing general partner ...... (2,017) (1,885)
(Decrease) increase in contingent liability ...... (946,000) 746,000
(Decrease) increase in other liabilities ......... (20,894) 7,309
--------- ---------
Net cash (used in) provided by operating activities (86,751) 25,072
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale (purchase) of temporary investments, net ...... 98,036 (9,734)
--------- ---------
Net cash provided by (used in) investing activities 98,036 (9,734)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distribution to partners ........................... -- --
--------- ---------
Net cash used in financing activities .............. -- --
--------- ---------
Net increase in cash ............................... 11,285 15,338
Cash, beginning of year ............................ 28,031 42,974
--------- ---------
Cash at end of nine months ......................... $ 39,316 $ 58,312
========= =========
</TABLE>
See notes to financial statements.
12
<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 1996, the Partnership received
approximately $7,220.
3. UNINCORPORATED BUSINESS TAX
The Partnership's tax returns were audited by the City of New York and the
Partnership had received assessments for unincorporated business tax of $675,887
covering the period from June 8, 1983 (inception) through December 31, 1990. It
was anticipated that additional assessments, approximating $70,000, would be
issued for the years subsequent to December 31, 1990. All assessments were
subject to interest. Accordingly, as of December 31, 1995 the Partnership had
recorded a contingency reserve of $946,000.
The Partnership contested these assessments and on September 30, 1996 a final
amount of $106,600 (including interest) was reached with New York City for all
periods through December 31, 1995. The liability was paid that date. The
Partnership recorded an income of $839,400 in 1996, representing the reversal of
the contingency reserve in excess of the settlement.
The amount shown as Unincorporated Business Tax is the difference between the
settlement amount and the contingency liability for unincorporated business tax
established in earlier years.
The Partnership expects to dissolve by the end of 1996 upon final disposition of
the remaining assets and distribution of cash to the partners.
13
<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>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED BALANCE SHEET AS OF SEPTEMBER 30, 1996, AND THE STATEMENT OF
OPERATIONS FOR THE PERIOD ENDED SEPTEMBER 30, 1996, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 39
<SECURITIES> 2,989
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,029
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,029
<CURRENT-LIABILITIES> 5
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 1,012
<TOTAL-LIABILITY-AND-EQUITY> 3,029
<SALES> 7
<TOTAL-REVENUES> 132
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 97
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 36
<INCOME-TAX> (839)
<INCOME-CONTINUING> 875
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 875
<EPS-PRIMARY> 5.23
<EPS-DILUTED> 0
</TABLE>
