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 June 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 June 30, 1996
Second Quarter Report of Silver Screen Partners, L.P. (the "Partnership") filed
herewith as Exhibit 20 and is incorporated herein by reference.
Balance Sheets -- June 30, 1996 and December 31, 1995.
Statements of Operations -- For the Three and Six Months ended June
30, 1996 and 1995.
Statements of Partners' Equity -- For the Six Months ended June 30,
1996 and the Year ended December 31, 1995.
Statements of Cash Flows -- For the Six Months ended June 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
six months ended June 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 six months and quarter ended June 30, 1996 were
approximately $89,000 and $43,000, respectively, as compared with approximately
$94,000 and $48,000, for the comparable periods in 1995. Revenues for the six
months and second quarter of 1996 consisted of film revenues of approximately
$6,000 and $2,000, respectively, and investment revenues of approximately
$83,000 and $41,000, while those for the comparable period in 1995 consisted of
film revenues of approximately $4,000 and $2,000, respectively, and investment
revenues of approximately $91,000 and $46,000. Film revenues continue to be
infrequent and unpredictable. Film revenues increased by approximately $2,000
from 1995 to 1996. Interest income decreased by approximately $8,000 from 1995
to 1996. This is due to the decrease of interest rates from the previous year.
Interest rates for the first six 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 six months and quarter ended June 30, 1996 were
approximately $66,000 and $26,000, respectively, as compared with approximately
$93,000 and $54,000 for the comparable period 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 $3,000 and
miscellaneous expense of $7,000.
The Partnership generated a net income before taxes of approximately
$22,000 for the six months ended June 30, 1996, as compared with net income
before taxes of approximately $1,000 for the comparable period in 1995. 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 six months ended June 30, 1995 resulting in a net loss after
income taxes of approximately $745,000.
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 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 June 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 June 30, 1996, the General Partners' capital accounts reflect a
deficit of $728,502. 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 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. All assessments are
subject to interest at a rate which has fluctuated over the years from 6% to 12%
and is currently at 9%. 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 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 has recently reached an agreement in principle with regard
to this matter for all periods through December 31, 1995 and a final agreement
is expected before the close of the current quarter. It is anticipated that the
final agreement will require the Partnership to pay an amount which is less than
the contingency amount reflected on the June 30, 1996 financial statements.
The Partnership expects to dissolve upon final resolution of the New York
City tax issue and disposition of the Partnership's U.S. home video rights and
any other residual rights in the Partnership films. The Partnership will
continue to operate until these issues are settled.
4
<PAGE>
ITEM 3. SELECTED FINANCIAL DATA.
<TABLE>
<CAPTION>
SILVER SCREEN PARTNERS, L.P.
----------------------------
Three Months Six Months Three Months Six Months
Ended Ended Ended Ended
June 30, 1996 June 30, 1996 June 30, 1995 June 30, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Film revenues .......... $ 1,658 $ 5,514 $ 1,844 $ 3,901
Interest income ........ 41,360 83,278 46,247 90,509
------------- ------------- ------------- -------------
$ 43,018 $ 88,792 $ 48,091 $ 94,410
Costs and Expenses:
General and
administrative
expenses .............. 25,921 66,325 53,840 93,170
Income tax ............ -- -- -- 746,000
------------- ------------- ------------- -------------
Net income (loss) ......... $ 17,097 $ 22,467 $ (5,749) $ (744,760)
============= ============= ============= =============
Net income per $500
limited partnership
unit (based on 165,639
Units outstanding) ..... $ 0.10 $ 0.13 $ (0.03) $ (4.45)
============= ============= ============= =============
Cash distribution
per $500 limited
partnership unit ....... $ 0.00 $ 0.00 $ 0.00 $ 0.00
============= ============= ============= =============
June 30, 1996 June 30, 1995
------------- -------------
Total assets ............. $ 3,123,939 $ 3,079,045
============= =============
</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 Second Quarter Report
(b) The Partnership did not file any reports on Form
8-K during the quarter ended June 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: August , 1996 By: /s/ Roland W. Betts
--------------------------------
Roland W. Betts, President
7
<PAGE>
Silver Screen Partners Second Quarter Report
June 30, 1996
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.
Our Third Quarter Report will be mailed in October. 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,
/s/ Roland W. Betts
- -------------------
Roland W. Betts
President
8
<PAGE>
BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
June 30, 1996 December 31, 1995
------------- -----------------
<S> <C> <C>
ASSETS
Current assets:
Cash ................................................ $ 25,313 $ 28,031
Temporary investments (at cost plus accrued interest,
which approximates market) (Note 1) ............... 3,098,626 3,094,515
----------- -----------
$ 3,123,939 $ 3,122,546
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Due to managing general partner ..................... $ 7,608 $ 6,969
----------- -----------
Total current liabilities ........................... 7,608 6,969
Contingency liability (Note 3) ...................... 946,000 946,000
Other liabilities ................................... 1,011,010 1,032,723
----------- -----------
Total liabilities ................................... $ 1,964,618 $ 1,985,692
----------- -----------
Partners' equity:
General partners .................................... $ (728,502) $ (728,727)
Limited partners .................................... 1,887,823 1,865,581
----------- -----------
Total partners' equity .............................. 1,159,321 1,136,854
----------- -----------
$ 3,123,939 $ 3,122,546
=========== ===========
</TABLE>
See notes to financial statements.
9
<PAGE>
STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Six Months Three Months Six Months
Ended Ended Ended Ended
June 30, 1996 June 30, 1996 June 30, 1995 June 30, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
REVENUES:
Film revenues (Note 2) ........................ $ 1,658 $ 5,514 $ 1,844 $ 3,901
Interest income ............................... 41,360 83,278 46,247 90,509
--------- --------- --------- ---------
43,018 88,792 48,091 94,410
COSTS AND EXPENSES:
General and administrative expenses ........... 25,921 66,325 53,840 93,170
--------- --------- --------- ---------
Net income (loss) before taxes ................ 17,097 22,467 (5,749) 1,240
Income tax (Note 3) ........................... -- -- -- 746,000
--------- --------- --------- ---------
Net Income (loss) ............................. $ 17,097 $ 22,467 $ (5,749) $(744,760)
========= ========= ========= =========
NET INCOME (LOSS) ALLOCATED TO:
General partners .............................. $ 171 $ 225 $ (57) $ (7,448)
Limited partners .............................. 16,926 22,242 (5,692) (737,312)
--------- --------- --------- ---------
$ 17,097 $ 22,467 $ (5,749) $(744,760)
========= ========= ========= =========
Net income (loss) per a $500 limited
partnership unit (based on
165,639 units outstanding) .................. $ 0.10 $ 0.13 $ (0.03) $ (4.45)
========= ========= ========= =========
</TABLE>
See notes to financial statements.
STATEMENTS OF PARTNERS' EQUITY (UNAUDITED)
<TABLE>
<CAPTION>
Year Ended December 31, 1995
and Six Months Ended June 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, SIX MONTHS 1996 ................................ 225 22,242 22,467
DISTRIBUTIONS DURING SIX MONTHS 1996 ....................... -- -- --
----------- ----------- -----------
$ (728,502) $ 1,887,823 $ 1,159,321
=========== =========== ===========
</TABLE>
See notes to financial statements.
10
<PAGE>
STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
June 30, 1996 June 30, 1995
---------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ...................................... $ 22,467 $(744,760)
Adjustments to reconcile net income to net cash provided
by operating activities:
Decrease in accrued interest receivable ................ 971 13,741
Net change in operating assets and liabilities:
Increase (decrease) in due to managing general partner 639 (5,545)
Increase in contingent liability ..................... -- 746,000
(Decrease) increase in other liabilities ............. (21,713) 6,203
--------- ---------
Net cash provided by operating activities .............. 2,364 15,639
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of temporary investments, net ................. (5,082) (40,846)
--------- ---------
Net cash used in investing activities .................. (5,082) (40,846)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distribution to partners ............................... -- --
--------- ---------
Net cash used in financing activities .................. -- --
--------- ---------
Net decrease in cash ................................... (2,718) (25,207)
Cash, beginning of year ................................ 28,031 42,974
--------- ---------
Cash at end of six months .............................. $ 25,313 $ 17,767
========= =========
</TABLE>
See notes to financial statements.
11
<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 six months of 1996, the Partnership received
approximately $5,514.
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 the 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>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED BALANCE SHEET AS OF JUNE 30, 1996, AND THE STATEMENT OF OPERATIONS FOR
THE PERIOD ENDED JUNE 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 25
<SECURITIES> 3,098
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,124
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,124
<CURRENT-LIABILITIES> 8
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 1,159
<TOTAL-LIABILITY-AND-EQUITY> 3,124
<SALES> 6
<TOTAL-REVENUES> 89
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 66
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 22
<INCOME-TAX> 0
<INCOME-CONTINUING> 22
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22
<EPS-PRIMARY> 0.13
<EPS-DILUTED> 0
</TABLE>
