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, 1997 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,
1997 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, 1997 and
December 31, 1996.
Statements of Operations -- For the Three and
Nine Months ended September 30, 1997 and
1996.
Statements of Partners' Equity -- For the
Nine Months ended September 30, 1997 and the
Year ended December 31, 1996.
Statements of Cash Flows -- For the Nine
Months ended September 30, 1997 and 1996.
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, 1997 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, 1997 were
approximately $124,000 and $37,000, respectively, as compared with approximately
$132,000 and $44,000, for the comparable periods in 1996. Revenues for the first
nine months and third quarter of 1997 consisted of film revenues of
approximately $8,000 and $500 respectively, and interest income of approximately
$117,000 and $37,000, while those for the comparable period in 1996 consisted of
film revenues of approximately $7,000 and $2,000, respectively, and interest
income of approximately $125,000 and $42,000. Film revenues continue to be
infrequent and unpredictable. Film revenues were about the same for the first
nine months in 1997 as in the comparable period in 1996 while interest income
decreased by approximately $8,000 from 1996 to 1997. This is due to the decrease
in funds available for investment and to the decrease of interest rates from the
previous year. Interest rates applicable to the Partnership's investments for
the first nine months of 1997 ranged from 5.15% to 5.6%, while those for the
comparable period in 1996 ranged from 5.12% to 5.79%.
2
<PAGE>
Expenses for the nine months and quarter ended September 30, 1997 were
approximately $98,000 and $32,000, respectively, as compared with approximately
$97,000 and $30,000 for the comparable periods in 1996. The Partnership expenses
remained constant.
The Partnership generated net income before taxes of approximately $26,000
for the nine months ended September 30, 1997, as compared with net income before
taxes of approximately $36,000 for the comparable period in 1996. The reduction
of approximately $10,000 was primarily attributable to lower interest income.
The Partnership had recorded a contingency reserve for unincorporated business
taxes of $946,000 and after a payment of $106,600 generated an income after
taxes of approximately $875,000 in 1996. Unincorporated business taxes for 1997
will be insignificant and have not been reserved for.
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 to the Partnership. The Partnership plans to sell these rights, along
with any other residual rights to the films, and distribute net proceeds, if
any, to the investors. Negotiations regarding the sale of the U.S. home video
and ancillary rights to the Films were not concluded in 1996; the Partnership
currently expects to finalize the sale within 1997. However, there can be no
assurance that the Partnership will be able to consummate the sale on
satisfactory terms within such time frame. In order to conclude this sale, any
contingent liabilities that the Partnership may have in respect of residual
obligations relating to the Films must be settled or assumed by the buyer of the
Partnership's rights. It is impossible to predict the extent to which the
Partnership's remaining assets will be required to be dedicated to these
contingent liabilities. To the extent that the Partnership has assets remaining
after such a settlement or assumption, such assets will be distributed to the
partners in accordance with the partnership agreement.
3
<PAGE>
During the quarter ended September 30, 1997, 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, 1997, the General Partners' capital accounts reflect a
deficit of $719,669. 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's current sources of liquidity
are considered adequate for such needs.
The Partnership's tax returns were audited by the City of New York and the
Partnership 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.
The Partnership contested these assessments and on September 30, 1996, a
final settlement of $106,600 (including interest) was reached with the City of
New York and paid for all periods through December 31, 1995.
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, 1997 September 30, 1997 September 30, 1996 September 30, 1996
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Revenues:
Film revenues .......... $ 398 $ 7,561 $ 1,706 $ 7,220
Interest income ........ 36,600 116,787 41,949 125,227
------------- ------------- ------------- -------------
$ 36,998 $ 124,348 $ 43,655 $ 132,447
Costs and Expenses:
General and
administrative
expenses .............. (32,132) (98,286) (30,461) (96,786)
------------- ------------- ------------- -------------
Net income ................ $ 4,866 $ 26,062 $ 13,194 $ 35,661
============= ============= ============= =============
Net income per $500
limited partnership
unit (based on 165,639
Units outstanding) ..... $ 0.03 $ 0.16 $ 5.10 $ 5.23
============= ============= ============= =============
September 30, 1997 September 30, 1996
------------------ ------------------
Total assets ............. $ 2,711,889 $ 3,028,696
============= =============
</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 -- 1997 Third Quarter Report
(b) The Partnership did not file any reports on Form
8-K during the quarter ended September 30, 1997.
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 1_, 1997 By: /s/ Roland W. Betts
--------------------------------
Roland W. Betts, President
7
<PAGE>
Silver Screen Partners Third Quarter Report
September 30, 1997
SILVER
SCREEN
F-1
<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.
As you know, the negotiations regarding the sale of the U.S. home video and
ancillary rights to the films have taken longer to conclude than initially
expected. We still anticipate, however, that the Partnership will be dissolved
by the end of 1997. The final distribution, if any, will be paid at the time of
dissolution.
The 1997 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 between the hours of 10 A.M. and 2 P.M., Eastern Standard
Time.
Sincerely,
/s/Roland W. Betts
Roland W. Betts
President
F-2
<PAGE>
Balance Sheets (Unaudited)
- --------------------------
Sept. 30, 1997 Dec. 31, 1996
-------------- -------------
ASSETS
Current assets:
Cash ........................................... $ 59,588 $ 27,424
Temporary investments (at cost, plus accrued
interest which approximates market) ......... 2,652,301 2,992,626
----------- -----------
$ 2,711,889 $ 3,020,050
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Due to managing general partner ................ $ 8,562 $ 351
----------- -----------
Total current liabilities ...................... 8,562 351
Other liabilities .............................. 660,729 1,003,163
----------- -----------
Total liabilities .............................. 669,291 1,003,514
----------- -----------
Partners' equity:
General partners ............................... (719,669) (719,930)
Limited partners ............................... 2,762,267 2,736,466
----------- -----------
Total partners' equity ......................... 2,042,598 2,016,536
----------- -----------
$ 2,711,889 $ 3,020,050
=========== ===========
See notes to financial statements.
F-3
<PAGE>
STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
Sept.30, 1997 Sept.30, 1997 Sept.30, 1996 Sept.30, 1996
------------- ------------- ------------- -------------
REVENUES:
<S> <C> <C> <C> <C>
Film revenues ........................... $ 398 $ 7,561 $ 1,706 $ 7,220
Interest income ......................... 36,600 116,787 41,949 125,227
--------- --------- --------- ---------
36,998 124,348 43,655 132,447
COSTS AND EXPENSES:
General and administrative expenses ..... (32,132) (98,286) (30,461) (96,786)
--------- --------- --------- ---------
Income before tax ....................... 4,866 26,062 13,194 35,661
Unincorporated Business tax ............. - - 839,400 839,400
--------- --------- --------- ---------
Net Income .............................. $ 4,866 $ 26,062 $ 852,594 $ 875,061
========= ========= ========= =========
NET INCOME ALLOCATED TO:
General partners ........................ $ 49 $ 261 $ 8,526 $ 8,751
Limited partners ........................ 4,817 25,801 844,068 866,310
--------- --------- --------- ---------
$ 4,866 $ 26,062 $ 852,594 $ 875,061
========= ========= ========= =========
Net income per a $500 limited
partnership unit (based on 165,639
units outstanding) ..................... $ 0.03 $ 0.16 $ 5.10 $ 5.23
========= ========= ========= =========
</TABLE>
See notes to financial statements.
STATEMENTS OF PARTNERS' EQUITY (UNAUDITED)
<TABLE>
<CAPTION>
Year Ended December 31, 1996
and Nine Months Ended September 30, 1997
======================================================
General Partners Limited Partners Total
---------------- ---------------- -----
<S> <C> <C> <C>
Balance, January 1, 1996 ............ $ (728,727) $ 1,865,581 $ 1,136,854
Net income, 1996 .................... (8,797) (870,885) (879,682)
Distributions, 1996 ................. -- -- --
----------- ----------- -----------
Balance, December 31, 1996 .......... (719,930) 2,736,466 2,016,536
Net income, nine months 1997 ........ 261 25,801 26,062
Distributions during nine months 1997 -- -- --
----------- ----------- -----------
$ (719,669) $ 2,762,267 $ 2,042,598
=========== =========== ===========
</TABLE>
See notes to financial statements.
F-4
<PAGE>
STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended
Sept. 30, 1997 Sept. 30, 1996
------------------ -----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ............................................... $ 26,062 $ 875,061
Adjustments to reconcile net income to net
cash provided by operating activities:
Decrease in accrued interest receivable .............. 3,689 7,099
Net change in operating assets and liabilities:
Increase (decrease) in due to managing general partner 8,211 (2,017)
Decrease in contingent liability ..................... -- (946,000)
Decrease in other liabilities ........................ (342,434) (20,894)
--------- ---------
Net cash used in operating activities .................... (304,472) (86,751)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale of temporary investments, net ....................... 336,636 98,036
--------- ---------
Net cash provided by investing activities ................ 336,636 98,036
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners ................................ -- --
--------- ---------
Net cash used in financing activities .................... -- --
--------- ---------
Net increase in cash ..................................... 32,164 11,285
Cash, beginning of year .................................. 27,424 28,031
--------- ---------
Cash at end of nine months ............................... $ 59,588 $ 39,316
========= =========
</TABLE>
See notes to financial statements.
F-5
<PAGE>
NOTES TO FINANCIAL STATEMENTS
TEMPORARY INVESTMENTS
Temporary investments represent investments in commercial paper.
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 1997, the Partnership received
$7,561 in film revenues.
CONTINGENT LIABILITY
The Partnership's tax returns were audited by the City of New York and the
partnership 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.
The Partnership contested these assessments and on September 30, 1996, a final
settlement of $106,000 (including interest) was reached with the City of New
York and paid for all periods through December 31, 1995.
The Partnership expects to dissolve by the end of 1997 upon final disposition of
the remaining assets and payment of liabilities.
F-6
<PAGE>
Silver Screen Management, Inc.
Chelsea Piers-Pier 62
Suite 300
New York, NY 10011
(212) 336-6700
C 1997 Silver Screen Management, Inc.
F-7
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED BALANCE SHEET AS OF SEPTEMBER 30, 1997, AND THE STATEMENT OF
OPERATIONS FOR THE PERIOD ENDED SEPTEMBER 30, 1997, 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-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 60
<SECURITIES> 2,652
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,712
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,712
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 2,043
<TOTAL-LIABILITY-AND-EQUITY> 2,712
<SALES> 8
<TOTAL-REVENUES> 124
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 98
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 26
<INCOME-TAX> 0
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<NET-INCOME> 26
<EPS-PRIMARY> 0.16
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</TABLE>
