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, 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 September 30,
1998 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, 1998 and
December 31, 1997.
Statements of Operations -- For the Three and
Nine Months ended September 30, 1998 and
1997.
Statements of Partners' Equity -- For the
Nine Months ended September 30, 1998 and the
Year ended December 31, 1997.
Statements of Cash Flows -- For the Nine
Months ended September 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
nine months ended September 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 nine months and quarter ended September 30, 1998 were
approximately $446,000 and $376,000, respectively, as compared with
approximately $124,000 and $37,000 for the comparable periods in 1997. Revenues
for the nine months and third quarter of 1998 consisted of film revenues of
approximately $354,000 and $350,000, respectively, and interest income of
approximately $93,000 and $26,000, respectively, while those for the comparable
period in 1997 consisted of film revenues of approximately $8,000 and $0,
respectively, and interest income of approximately $117,000 and $37,000,
respectively. The Partnership sold its remaining rights to the portfolio for
$350,000 during the quarter. Interest income decreased by approximately $24,000
from 1997 to 1998. This is due to the decrease in funds available for investment
from the previous year. Interest rates for the first nine months of 1998 ranged
from 4.93% to 5.4%, while those for the comparable period in 1997 ranged from
5.15% to 5.6%.
2
<PAGE>
Expenses for the nine months and quarter ended September 30, 1998 were
approximately $155,000 and $36,000, respectively, as compared with approximately
$98,000 and $32,000, respectively, for the comparable periods in 1997. The
Partnership's expenses increased by approximately $57,000. The issues with the
film industry guilds were resolved during the nine months resulting in an
expense of $30,188, 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 increased by $6,000.
The Partnership generated net income of approximately $292,000 for the nine
months ended September 30, 1998, as compared with net income of approximately
$26,000 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 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 sold these rights during the
quarter and expects to dissolve by November 16, 1998 and distribute the
available balance of cash at that time.
3
<PAGE>
During the quarter ended September 30, 1998, 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, 1998, the General Partners' capital accounts reflect a
deficit of $716,683. 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.
The Partnership expects to dissolve by November 16, 1998 and distribute the
remaining 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, 1998 September 30, 1998 September 30, 1997 September 30, 1997
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Revenues:
Film revenues .......... $ 350,000 $ 353,595 $ 398 $ 7,561
Interest income ........ 26,300 92,837 36,600 116,787
------------- ------------- ------------- -------------
$ 376,300 $ 446,432 $ 36,998 $ 124,348
Costs and Expenses:
Film industry
guilds obligations .... - (30,188) - -
General and
administrative
expenses .............. (35,503) (124,533) (32,132) (98,286)
------------- ------------- ------------- -------------
Net income ................ $ 340,797 $ 291,711 $ 4,866 $ 26,062
============= ============= ============= =============
Net income per $500
limited partnership
unit (based on 165,639
Units outstanding) ..... $ 2.04 $ 1.74 $ 0.03 $ 0.16
============= ============= ============= =============
September 30, 1998 September 30, 1997
------------------ ------------------
Total assets ............. $ 2,349,710 $ 2,711,889
============= =============
</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 -- 1998 Third Quarter Report
(b) The Partnership did not file any reports on Form
8-K during the quarter ended September 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: November 13, 1998 By: /s/ Roland W. Betts
--------------------------------
Roland W. Betts, President
7
<PAGE>
Silver Screen Partners Third Quarter Report
September 30, 1998
SILVER
SCREEN
F-1
<PAGE>
DEAR LIMITED PARTNER:
We are pleased to report that Silver Screen Partners, L.P. has sold the
remaining rights to its film portfolio to HBO and can now dissolve. The
Partnership received $350,000 from the sale.
The Partnership expects to dissolve on November 16 and distribute the
available balance of cash at that time.
The final accounting will be provided in the 1998 Annual Report and tax
information which will be mailed 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, 1998 Dec. 31, 1997
-------------- -------------
ASSETS
Current assets:
Cash ........................................... $ 22,498 $ 15,583
Temporary investments (at cost, plus accrued
interest which approximates market) .......... 2,327,212 2,650,398
----------- -----------
$ 2,349,710 $ 2,665,981
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Due to managing general partner ................ $ 8,456 $ 18,165
----------- -----------
Total current liabilities ...................... 8,456 18,165
Other liabilities .............................. -- 598,273
----------- -----------
Total liabilities .............................. 8,456 616,438
----------- -----------
Partners' equity:
General partners ............................... (716,683) (719,600)
Limited partners ............................... 3,057,937 2,769,143
----------- -----------
Total partners' equity ......................... 2,341,254 2,049,543
----------- -----------
$ 2,349,710 $ 2,665,981
=========== ===========
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, 1998 Sept.30, 1998 Sept.30, 1997 Sept.30, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
REVENUES:
Film revenues ................................ $ 350,000 $ 353,595 $ 398 $ 7,561
Interest income .............................. 26,300 92,837 36,600 116,787
--------- --------- --------- ---------
376,300 446,432 36,998 124,348
COSTS AND EXPENSES:
Film industry guilds obligation .............. -- (30,188) -- --
General and administrative expenses .......... (35,503) (124,533) (32,132) (98,286)
--------- --------- --------- ---------
Net income ................................... $ 340,797 $ 291,711 $ 4,866 $ 26,062
========= ========= ========= =========
NET INCOME ALLOCATED TO:
General partners ............................. $ 3,408 $ 2,917 $ 49 $ 261
Limited partners ............................. 337,389 288,794 4,817 25,801
--------- --------- --------- ---------
$ 340,797 $ 291,711 $ 4,866 $ 26,062
========= ========= ========= =========
Net income per a $500 limited partnership unit
(based on 165,639 units outstanding) ....... $ 2.04 $ 1.74 $ 0.03 $ 0.16
========= ========= ========= =========
</TABLE>
See notes to financial statements.
STATEMENTS OF PARTNERS' EQUITY (UNAUDITED)
<TABLE>
<CAPTION>
Year Ended December 31, 1997
and Nine Months Ended September 30, 1998
======================================================
General Partners Limited Partners Total
---------------- ---------------- -----
<S> <C> <C> <C>
Balance, January 1, 1997 ............ $ (719,930) $ 2,736,466 $ 2,016,536
Net income, 1997 .................... 330 32,677 33,007
Distributions, 1997 ................. -- -- --
----------- ----------- -----------
Balance, December 31, 1997 .......... (719,600) 2,769,143 2,049,543
Net income, nine months 1998 ........ 2,917 288,794 291,711
Distributions during nine months 1998 -- -- --
----------- ----------- -----------
$ (716,683) $ 3,057,937 $ 2,341,254
=========== =========== ===========
</TABLE>
See notes to financial statements.
F-4
<PAGE>
STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended
Sept. 30, 1998 Sept. 30, 1997
------------------ -----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ............................................... $ 291,711 $ 26,062
Adjustments to reconcile net income to net
cash provided by operating activities:
(Increase) decrease in accrued interest receivable ... (1,814) 3,689
Net change in operating assets and liabilities:
(Decrease) increase in due to managing general partner (9,709) 8,211
Decrease in other liabilities ........................ (598,273) (342,434)
--------- ---------
Net cash used in operating activities .................... (318,085) (304,472)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale of temporary investments, net ....................... 325,000 336,636
--------- ---------
Net cash provided by investing activities ................ 325,000 336,636
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners ................................ -- --
--------- ---------
Net cash used in financing activities .................... -- --
--------- ---------
Net increase in cash ..................................... 6,915 32,164
Cash, beginning of year .................................. 15,583 27,424
--------- ---------
Cash at end of nine months ............................... $ 22,498 $ 59,588
========= =========
</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 1998, the Partnership received
approximately $3,595 in film revenues and $350,000 for the sale of the rights of
the seven films.
The Partnership resolved all issues with the film industry guilds in the second
quarter 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 on November 16, 1998 and distribute the
remaining balance of cash less expenses on or before that date.
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 SEPTEMBER 30, 1998, AND THE STATEMENT OF
OPERATIONS FOR THE PERIOD ENDED SEPTEMBER 30, 1998, 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-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 22
<SECURITIES> 2,327
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,350
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,350
<CURRENT-LIABILITIES> 8
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 2,341
<TOTAL-LIABILITY-AND-EQUITY> 2,350
<SALES> 354
<TOTAL-REVENUES> 446
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 155
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 292
<INCOME-TAX> 0
<INCOME-CONTINUING> 292
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 292
<EPS-PRIMARY> 1.74
<EPS-DILUTED> 0
</TABLE>
