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, 1998
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, 1998
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, 1998 and December 31, 1997.
Statements of Operations -- For the Three and Six Months ended June
30, 1998 and 1997.
Statements of Partners' Equity -- For the Six Months ended June 30,
1998 and the Year ended December 31, 1997.
Statements of Cash Flows -- For the Six Months ended June 30, 1998 and
1997.
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, 1998 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, 1998 were
approximately $70,000 and $32,000, respectively, as compared with approximately
$87,000 and $45,000 for the comparable periods in 1997. Revenues for the six
months and second quarter of 1998 consisted of film revenues of approximately
$4,000 and $0, respectively, and interest income of approximately $67,000 and
$32,000, respectively, while those for the comparable periods in 1997 consisted
of film revenues of approximately $7,000 and $5,000, respectively, and interest
income of approximately $80,000 and $40,000, respectively. Film revenues
continue to be infrequent and unpredictable. Film revenues decreased by
approximately $3,000 from 1997 to 1998 while interest income decreased by
approximately $13,000 from 1997 to 1998. This is due to the decrease in funds
available for investment from the previous year. Interest rates for the first
six months of 1998 ranged from 5.17% to 5.4%, while those for the comparable
period in 1997 ranged from 5.27% to 5.6%.
2
<PAGE>
Expenses for the six months and quarter ended June 30, 1998 were
approximately $119,000 and $82,000, respectively, as compared with approximately
$66,000 and $31,000, respectively, for the comparable periods in 1997. The
Partnership's expenses increased by approximately $53,000. The issues with the
film industry guilds with respect to historical residual payment obligations
were resolved during the quarter resulting in an expense of $30,187, which
represents the difference between the settlement amounting to $628,460 and the
reserve for other liabilities of $598,273. In addition, legal expenses increased
by approximately $17,000 and expenses relating to reporting to investors by
$6,000.
The Partnership generated net loss of approximately $49,000 for the six
months ended June 30, 1998, as compared with net income of approximately $21,000
for the comparable period in 1997.
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 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,
if any, received from such sale to the investors. However, the Partnership does
not expect these revenues to be significant. Negotiations regarding the sale of
the U.S. home video and ancillary rights to the Films were not concluded in
1997; the Partnership currently expects to finalize the sale during 1998. In
order to conclude this sale, any contingent liabilities that the Partnership may
have 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.
During the quarter ended June 30, 1998, 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, 1998, the General Partners' capital accounts reflect a
deficit of $720,091. 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. Such sources are considered adequate for such
needs.
4
<PAGE>
ITEM 3. SELECTED FINANCIAL DATA.
SILVER SCREEN PARTNERS, L.P.
<TABLE>
<CAPTION>
Three Months Six Months Three Months Six Months
Ended Ended Ended Ended
June 30, 1998 June 30, 1998 June 30, 1997 June 30, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
REVENUES:
Film revenues ........... $ -- $ 3,595 $ 4,559 $ 7,163
Interest income ......... 31,988 66,537 40,243 80,187
------------- ------------- ------------- -------------
$ 31,988 $ 70,132 $ 44,802 $ 87,350
COSTS AND EXPENSES:
Film industry guilds
obligation ............. 30,187 30,187 -- --
General and
administrative
expenses ............... 51,560 89,030 31,122 66,154
------------- ------------- ------------- -------------
Net (loss) income ......... $ (49,759) $ (49,085) $ 13,680 $ 21,196
============= ============= ============= =============
Net (loss) income per $500
limited partnership
unit (based on 165,639
Units outstanding) ...... $ (0.30) $ (0.29) $ 0.08 $ 0.13
============= ============= ============= =============
June 30, 1998 June 30, 1997
------------- -------------
Total assets .............. $ 2,053,835 $ 2,873,211
============= =============
</TABLE>
See notes to financial statements.
5
<PAGE>
PART 11. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
Exhibit 20 -- 1998 Second Quarter Report
(b) The Partnership did not file any reports on Form
8-K during the quarter ended June 30, 1998.
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 13, 1998 By: /s/ Roland W. Betts
--------------------------------
Roland W. Betts, President
7
<PAGE>
SILVER SCREEN PARTNERS
Second Quarter Report
June 30, 1998
F-1
<PAGE>
Dear Limited Partner:
Progress has been made in the Partnership's efforts to settle the sale of
the rights to the seven films in its portfolio and dissolve the Partnership.
Recently, the Partnership successfully resolved all issues with the film
industry guilds. However, the Partnership cannot dissolve until the rights are
sold.
It is important to remember that the complexity of finalizing film rights,
the limited nature of the rights to the films (we hold only the U.S. video and
ancillary rights), the resolution of all outstanding tax issues and the film
portfolio itself (which did not perform well), all contribute to the lengthy
process of completing the sale. We are confident that the film rights will be
sold in the next quarter and that the Partnership will dissolve prior to year
end.
If you need any assistance, 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)
- --------------------------
June 30, 1998 Dec. 31, 1997
------------- -------------
ASSETS
Current assets:
Cash ....................................... $ 15,583
Temporary investments (at cost, plus accrued --
interest which approximates market) ...... $ 2,053,835 2,650,398
----------- -----------
$ 2,053,835 $ 2,665,981
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Cash overdraft ............................. $ 5,582 --
Due to managing general partner ............ 47,795 $ 18,165
----------- -----------
Total current liabilities .................. 53,377 18,165
Other liabilities .......................... -- 598,273
----------- -----------
Total liabilities .......................... 53,377 616,438
----------- -----------
Partners' equity:
General partners ........................... (720,091) (719,600)
Limited partners ........................... 2,720,549 2,769,143
----------- -----------
Total partners' equity ..................... 2,000,458 2,049,543
----------- -----------
$ 2,053,835 $ 2,665,981
=========== ===========
See notes to financial statements.
F-3
<PAGE>
STATEMENTS OF OPERATIONS (UNAUDITED)
- ------------------------------------
<TABLE>
<CAPTION>
Three Months Six Months Three Months Six Months
Ended Ended Ended Ended
June 30, 1998 June 30, 1998 June 30, 1997 June 30, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
REVENUES:
Film revenues .................................. $ -- $ 3,595 $ 4,559 $ 7,163
Interest income ................................ 31,988 66,537 40,243 80,187
-------- -------- -------- --------
31,988 70,132 44,802 87,350
COSTS AND EXPENSES:
Film industry guilds obligation ................ 30,187 30,187 -- --
General and administrative expenses ............ 51,560 89,030 31,122 66,154
-------- -------- -------- --------
Net (loss) income .............................. $(49,759) $(49,085) $ 13,680 $ 21,196
======== ======== ======== ========
NET INCOME ALLOCATED TO:
General partners ............................... $ (498) $ (491) $ 137 $ 212
Limited partners ............................... (49,261) (48,594) 13,543 20,984
======== ======== ======== ========
$(49,759) $(49,085) $ 13,680 $ 21,196
======== ======== ======== ========
Net (loss) income per a $500 limited partnership
unit (based on 165,639 units outstanding) .... $ (0.30) $ (0.29) $ 0.08 $ 0.13
======== ======== ======== ========
</TABLE>
See notes to financial statements
STATEMENTS OF PARTNERS' EQUITY (UNAUDITED)
- ------------------------------------------
Year Ended December 31, 1997
and Six Months Ended June 30, 1998
==========================================
General Limited
Partners Partners Total
----------- ----------- -----------
Balance, January 1, 1997 ......... $ (719,930) $ 2,736,466 $ 2,016,536
Net income, 1997 ................. 300 32,677 33,007
Distributions, 1997 .............. -- -- --
----------- ----------- -----------
Balance, December 31, 1997 ....... (719,600) 2,769,143 2,049,543
NET LOSS, SIX MONTHS 1998 ........ (491) (48,594) (49,085)
DISTRIBUTIONS DURING
SIX MONTHS 1998 ................. -- -- --
----------- ----------- -----------
$ (720,091) $ 2,720,549 $ 2,000,458
=========== =========== ===========
See notes to financial statements.
F-4
<PAGE>
STATEMENTS OF CASH FLOWS (UNAUDITED)
- ------------------------------------
Six Months Six Months
Ended Ended
June 30, 1998 June 30, 1997
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income ............................... $ (49,085) $ 21,196
Adjustments to reconcile net income to net
cash provided by operating activities:
Increase in accrued interest receivable ..... (3,437) (23,713)
Net change in operating assets and liabilities:
Increase in due to managing general partner . 29,630 4,965
Decrease in other liabilities ............... (598,273) (173,000)
--------- ---------
Net cash used in operating activities ........... (621,165) (170,552)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale of temporary investments, net .............. 600,000 172,989
--------- ---------
Net cash provided by investing activities ....... 600,000 172,989
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners ....................... -- --
--------- ---------
Net cash used in financing activities ........... -- --
--------- ---------
Net (decrease) increase in cash ................. (21,165) 2,437
Cash, beginning of year ......................... 15,583 27,424
--------- ---------
(Cash overdraft) cash at end of six months ...... $ (5,582) $ 29,861
========= =========
See notes to financial statements.
F-5
<PAGE>
NOTES TO THE 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 six months of 1998, the Partnership received
approximately $3,595 in film revenues.
The Partnership resolved all issues with the film industry guilds and
recognized an expense of $30,187, which represents the difference between the
settlement amounting to $628,460 and the reserve for other liabilities of
$598,273.
The Partnership expects to dissolve by the end of 1998 upon final
disposition of the remaining assets.
F-6
<PAGE>
Silver Screen Management, Inc.
Chelsea Piers-Pier 62
Suite 300
New York, NY 10011
(212) 336-6700
(c) 1998 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 JUNE 30, 1998, AND THE STATEMENT OF OPERATIONS FOR
THE PERIOD ENDED JUNE 30, 1998, 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-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 0
<SECURITIES> 2,054
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,054
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,054
<CURRENT-LIABILITIES> 54
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 2,000
<TOTAL-LIABILITY-AND-EQUITY> 2,054
<SALES> 4
<TOTAL-REVENUES> 70
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 119
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (49)
<INCOME-TAX> 0
<INCOME-CONTINUING> (49)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (49)
<EPS-PRIMARY> (0.29)
<EPS-DILUTED> 0
</TABLE>
