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, 1995
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 0-14421
SILVER SCREEN PARTNERS II, L.P.
(A Delaware Limited Partnership)
(Exact name of registrant as specified in its
Certificate and Agreement of Limited Partnership)
Delaware 13-3276962
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
936 Broadway
New York, New York 10010
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 995-7600
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 [ ]
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
The financial information set forth below is set forth in the September 30,
1995 Third Quarter Report of Silver Screen Partners II, L.P. (the "Partnership")
filed herewith as Exhibit 20 and is incorporated herein by reference.
Balance Sheets -- September 30, 1995 and December 31, 1994.
Statement of Operations -- For the Three and Nine Months ended
September 30, 1995 and 1994.
Statements of Partners' Equity -- For the Nine Months ended September
30, 1995 and the Year ended December 31, 1994.
Statements of Cash Flows -- For the Nine Months ended September 30,
1995 and 1994.
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 nine months
ended September 30, 1995 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 the quarter ended September 30, 1995 were
approximately $3,563,000 and $699,000, respectively, as compared with
approximately $3,243,000 and $1,406,000 for the comparable periods in 1994.
Revenues for the first nine months and quarter ended September 30, 1995
consisted of income from the Joint Venture of approximately $3,450,000 and
$657,000, respectively, and investment revenues of approximately $113,000 and
$42,000. Revenues for the comparable period in 1994 consisted of income from the
Joint Venture of approximately $3,158,000 and $1,375,000, respectively, and
investment revenues of approximately $85,000 and $31,000. All films in which the
Partnership has an interest have been released in the theatrical, home video and
pay cable markets. The Partnership will
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continue to receive unpredictable revenues from remaining television cycles and
territories. Film revenues for the third quarter 1995 were principally derived
from foreign home video sales of the "The Great Mouse Detective" and lesser
amounts from several films in the portfolio. Interest rates for the first nine
months of 1995 ranged from 5.1% to 6.04%, while those for the comparable period
in 1994 ranged from 2.75% to 4.87%. Interest income increased from 1994 to 1995
by approximately $28,000 due to higher interest rates and a slight increase in
funds available for investment.
Expenses for the nine months and quarter ended September 30, 1995 were
approximately $515,000 and $156,000, respectively, as compared with
approximately $387,000 and $136,000 for the comparable periods in 1994. Expenses
increased by approximately $128,000 for the nine months ended September 30,
1995. The increase is attributable to costs associated with preparations for
negotiation of the sale of the Partnership's interest in the Joint Venture,
which amounted to approximately $162,000, which was offset by a reduction of
approximately $34,000 in payroll related expenses. These costs, which are
considered to benefit each of the Partnership, Silver Screen Partners III, L.P.
and Silver Screen Partners IV, L.P. (collectively and together with the
Partnership, the "Silver Screen Partnerships"), have been allocated among the
Silver Screen Partnerships pro rata to the total original limited partner
capital contributions to each of the Silver Screen Partnerships. See Item 5.
The Partnership generated net income of approximately $3,048,000 for the
nine months ended September 30, 1995, as compared with net income of
approximately $2,856,000 for the comparable period in 1994. This increase is due
to an increase in film revenues which was partially offset by the increase in
expenses.
The Partnership committed approximately $22,000,000 toward the Completed
Films pursuant to the Loan Agreement. In addition, the Partnership became
committed to fund ten films and part of one additional film with total budgets
amounting to approximately $150,690,000, 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 four Completed Films are: "Return to Oz," released June 21, 1985; "The
Black Cauldron," released July 19, 1985; "My Science Project," released August
9, 1985; and "The Journey of Natty Gann," released September 27, 1985. The Joint
Venture Films are: "One Magic Christmas," released November 22, 1985; "Down and
Out in Beverly Hills," released January 31, 1986; "Offbeat," released April 11,
1986; "Ruthless People," released June 27, 1986; "The Great Mouse Detective,"
released July 2, 1986 and re-released February 14, 1992 under the title "The
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Adventures of the Great Mouse Detective;" "Tough Guys," released October 3,
1986; "The Color of Money," released October 17, 1986; "Outrageous Fortune,"
released January 30, 1987; "Tin Men," released March 6, 1987 and "Ernest Goes to
Camp," released May 22, 1987. "Stakeout," which was financed approximately 75%
by the Partnership and 25% by Silver Screen Partners III, L.P. (a separate
limited partnership with the same Managing General Partner formed to finance
subsequent Disney films), was released August 5, 1987.
During the quarter ended September 30, 1995, 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 30,1995 the General Partners' capital accounts reflect a
deficit of $1,225,798. 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.
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Item 3. Selected Financial Data
<TABLE>
SILVER SCREEN PARTNERS II, L.P.
<CAPTION>
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
Sept. 30, 1995 Sept. 30, 1995 Sept. 30, 1994 Sept. 30, 1994
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Revenues:
Income from
Joint Venture $ 657,145 $3,450,089 $1,374,874 $3,158,479
Interest income 41,967 113,146 30,746 84,626
---------- ---------- ---------- ----------
699,112 3,563,235 1,405,620 3,243,105
Costs and Expenses:
General and
administrative
expenses 155,656 515,242 135,871 387,285
---------- ---------- ---------- ----------
Net income $ 543,456 $3,047,993 $1,269,749 $2,855,820
========== ========== ========== ==========
Net income per
$500 limited
partnership unit
(based on 385,200
Units outstanding) $ 1.20 $ 6.73 $ 2.80 $ 6.71
========== ========== ========== ==========
Cash distribution
per $500 limited
partnership unit $ 0.00 $ 2.50 $ 0.00 $ 7.60
========== ========== ========== ==========
Sept. 30, 1995 Sept. 30, 1994
-------------- --------------
Total assets $3,188,168 $2,943,239
========== ==========
</TABLE>
See notes to financial statements
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Item 3. Selected Financial Data (Continued
The Joint Venture's fiscal year ends September 30, while the Partnership's
fiscal year ends December 31. The Partnership's September 30, 1995 statements
reflect the Joint Venture's results of operations for the period ended June 30,
1995.
<TABLE>
DISNEY-SILVER SCREEN II JOINT VENTURE
<CAPTION>
Nine Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
June 30, 1995 June 30, 1995 June 30, 1994 June 30, 1994
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Revenues $1,035,151 $4,744,513 $2,653,937 $6,400,936
Costs and expenses:
Amortization of film production
costs 7,913 (204,705) (141,869) (592,573)
Participation expense (166,873) 60,308 (678,902) (1,597,056)
---------- ---------- ---------- ----------
Net income $876,191 $4,600,116 $1,833,116 $4,211,307
========== ========== ========== ==========
Net income allocated to:
Silver Screen Partners II, L.P. $3,450,089 $3,158,479
The Walt Disney Company 1,150,027 1,052,828
---------- ----------
$4,600,116 $4,211,307
========== ==========
June 30, 1995 September 30, 1994
------------- ------------------
Assets
Receivables from Buena Vista
Pictures Distribution, Inc. $1,455,995 $629,844
Receivable from
Silver Screen Partners II, L.P. 71,645 -
Prepaid distribution:
Silver Screen Partners II, L.P. - 1,740,029
The Walt Disney Company - 580,007
Film production costs, less
accumulated amortization of
$145,674,685 and $145,469,980 at
June 30, 1995 and September 30,
1994, respectively 86,770 219,830
---------- ----------
$1,614,410 $3,169,710
========== ==========
Liabilities and Venturers' Capital
Accounts and distributions payable
Silver Screen
$561,661 $ -
The Walt Disney Company 739,401 1,366,763
Deferred revenue 226,175 1,582,257
Venturers' capital:
Silver Screen Partners II, L.P. 65,328 165,466
The Walt Disney Company 21,845 55,224
---------- ----------
$1,614,410 $3,169,710
========== ==========
</TABLE>
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Item 5. Other Information.
The registrant and The Walt Disney Company ("Disney") have entered into a
letter agreement (the "Letter Agreement") dated September 11, 1995, executed by
the registrant on September 29, 1995, providing for the purchase by Disney, on
the terms and conditions set forth in the Letter Agreement, of all of the
registrant's rights and interests in and with respect to Disney-Silver Screen
II Joint Venture, the Joint Venture which owns the library of films. The
information contained in the Letter Agreement is incorporated herein by
reference. The Letter Agreement is filed herewith as Exhibit 10.
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<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
Exhibit 10 -- Letter Agreement dated September 11, 1995 between The
Walt Disney Company and the registrant (executed by
the registrant on September 29, 1995), with Terms and
Conditions attached thereto.
Exhibit 20 -- 1995 Third Quarter Report
Exhibit 27 -- To be filed supplementally
(b) The Partnership did not file any reports on Form 8-K during
the quarter ended September 30, 1995.
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<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 II, L.P.,
a Delaware limited partnership
By: Silver Screen Management, Inc.,
Managing General Partner
Date: November 14, 1995 By: /s/ Roland W. Betts
--------------------
Roland W. Betts, President
9
Via Facsimile (212) 995-0483
September 11, 1995
Roland Betts
Silver Screen Management, Inc.
936 Broadway
New York, New York 10011
Re: Disney-Silver Screen Partners II Joint Venture
Dear Roland:
Enclosed please find the Terms and Conditions which reflect the business deal
with respect to the buyout by Disney of Silver Screen Partners II, L.P.'s
("Silver Screen II") interest in the Disney-Silver Screen Partners II Joint
Venture.
Please indicate your acceptance of and agreement to the enclosed Terms and
Conditions by countersigning and returning to us a copy of this letter no later
than September 29, 1995. Upon receipt of such countersignature, Disney and
Silver Screen II will promptly prepare and execute a long-form purchase
agreement (the "Purchase Agreement") giving effect to the agreement of the
parties in accordance with the enclosed Terms and Conditions. Until such time as
the Purchase Agreement is executed, the enclosed Terms and Conditions shall
constitute a binding agreement of the parties with respect to the subject matter
therein as of the date of your acceptance of the Terms and Conditions.
Very truly yours,
/s/ Robert S. Moore
Robert S. Moore
cc: Stephen Bollenbach
Sandy Litvack
Ted Philip
<PAGE>
BUYOUT OF SILVER SCREEN PARTNERS II, L.P.
TERMS AND CONDITIONS
PURCHASER: The Walt Disney Company or (subject to the
provisions under "Assignment" below) an affiliate
("Disney").
SELLER: Silver Screen Partners II, L.P. ("Partnership").
PURCHASE PRICE: $45 million, in cash in immediately available
funds (subject to any Purchase Price Adjustment).
BUYOUT: Purchase by Disney of all of Partnership's rights
and interests in, to and under (i) the Joint
Venture Agreement dated as of April 29, 1985 (the
"Joint Venture Agreement") between The Walt Disney
Company and Silver Screen Partners II, L.P., as
amended, (ii) the Distribution Agreement, dated as
of April 29, 1985 (the "Distribution Agreement")
between Disney-Silver Screen II Joint Venture (the
"Joint Venture") and Buena Vista Distribution Co.,
Inc. ("BVD"), as amended, (iii) the Loan Agreement
dated as of April 29, 1985 (the "Loan Agreement")
between The Walt Disney Company and Silver Screen
Partners II, L.P., as amended, (iv) the Completed
Pictures Distribution Agreement dated as of April
29, 1985 (the "Completed Pictures Distribution
Agreement", together with the Distribution
Agreement, the "Distribution Agreements) between
The Walt Disney Company and Buena Vista
Distribution Co., Inc., as amended, (v) the Silver
Screen II films and (vi) Partnership's general
partner interest in the Joint Venture
(collectively, the "Partnership's Interest"). All
of the foregoing agreements are sometimes
collectively referred to as the "Agreements".
Closing of the Buyout shall occur on the Payment
Date (as defined below).
PAYMENT DATE: January 2, 1996 (or such later date as mutually
agreed to by the parties), on which date after
payment of the Purchase Price, all right, title
and interest in the Partnership's Interest shall
be automatically transferred to Disney, and
Partnership shall not be entitled to receive any
revenues from, shall have no further right, title
or interest in, and shall have no further
obligations or liabilities with respect to, the
Partnership's Interest. Prior to the Payment Date,
Disney will not assert any ownership interest in
the Partnership's Interest for any purpose,
including for any tax purpose. Disney agrees that
it shall have no right to set-off, counterclaim or
other similar remedy with respect to its payment
obligations hereunder.
PURCHASE PRICE ADJUSTMENT: The Purchase Price will be reduced,
dollar-for-dollar, by each dollar which
Partnership receives under the Joint Venture
Agreement or the Loan Agreement during the period
from October 1, 1995 to the Payment Date from any
exploitation of the films "The Black Cauldron" and
"The Great Mouse Detective".
DOCUMENTATION: The parties will prepare, execute and deliver a
long-form purchase agreement (the "Purchase
Agreement") as soon as practicable which will
document the terms and conditions set forth
herein. In addition to the terms and conditions
set forth herein, the Purchase Agreement will
contain (a) representations and warranties of
Disney and Partnership as to: (i) due execution of
the Purchase Agreement, (ii) due authorization to
enter into and perform under the Purchase
Agreement, (iii) enforceability of the Purchase
Agreement, and (iv) in the case of Partnership,
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(x) right, title and interest in and to the
Partnership's Interest free and clear of all liens
and encumbrances other than any lien or
encumbrance arising out of actions of Disney and
other than as provided hereunder and (y)
Partnership not having taken any action or entered
into any agreement to bind the Joint Venture or
Disney or which would constitute a violation or
infringement of the rights granted to the Joint
Venture or Disney under the Joint Venture
Agreement; and (b) the following conditions to the
parties' respective obligations to consummate the
Buyout: (i) no provision of any applicable law
prohibits the closing of the Buyout, (ii) no
order, judgment or injunction prohibits the
closing of the Buyout, (iii) any applicable
waiting period under the HSR Act (as defined
below) shall have expired or been terminated, (iv)
absence of any pending litigation or proceeding
before any court, or governmental or
administrative body which seeks to prohibit
closing of the Buyout and which has a substantial
likelihood of success on the merits, (v) accuracy
of representations and warranties in all material
respects, and (vi) as a condition to Disney's
obligation to close, a certificate from
Partnership as to (x) right, title and interest in
and to the Partnership's Interest free and clear
of all liens and encumbrances other than any lien
or encumbrance arising out of the actions of
Disney and other than as provided hereunder and
(y) Partnership not having taken any action or
entered into any agreement to bind the Joint
Venture or Disney or which would constitute a
violation or infringement of the rights granted to
the Joint Venture or Disney under the Joint
Venture Agreement.
In the event that no Purchase Agreement is
executed by the parties, these Terms and
Conditions will govern the closing of the Buyout.
AGREEMENTS: Upon acceptance of these Terms and Conditions by
the parties:
(1) Disney shall have the right in perpetuity to
enter into distribution, licensing or other
arrangements with respect to the exploitation
of Silver Screen II films in any media now
known and unknown and by any means and/or
devices now known and unknown for any period
of time, without the prior approval of
Partnership. Subject to the preceding
sentence, Disney agrees that until the
closing of the Buyout, the Silver Screen II
films will continue to be exploited in
accordance with the Distribution Agreements.
(2) BVD will account for and will make payments
to the Joint Venture as required by the
Distribution Agreements, with respect to
receipts received by BVD from the Silver
Screen II films through November 30, 1995
(including revenues from the arrangements
referred to in clause (1) above). A final
payment will be made by the Payment Date, or
earlier, to Partnership of its share of Joint
Venture revenues payable as of November 30,
1995. BVD agrees to use methods and
procedures in its calculation of revenues
payable to the Joint Venture consistent with
methods and procedures utilized by BVD in the
past with respect to accountings and payments
previously made by BVD to the Joint Venture
in connection with the Silver Screen II
films. Partnership waives all rights to
audits and all audit claims arising from or
under the terms of the Agreements whether
currently outstanding, now existing or
hereafter arising, and all statements with
respect to payments due to the Joint Venture
will be binding upon Partnership absent
manifest error, except that Partnership will
have the right to audit future statements
solely for the purpose of ensuring that BVD
is in compliance with this clause (2) and
that no manifest error exists in the
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statements. Such limited audit right must be
exercised by Partnership within 30 days after
receipt by Partnership of such statement or
such right shall be deemed waived.
(3) (a) Subject to subclause (d) below of this
clause (3), Disney irrevocably releases
Partnership and its affiliates from, any
claims, known and unknown, which Disney may
have now or in the future against
Partnership, arising from any acts, omissions
or conduct of Partnership during the course
of the Agreements; provided, however, that
this release does not include (i) any breach
of these Terms and Conditions or the Purchase
Agreement, if applicable, and (ii) any breach
of Paragraph 31 of the Joint Venture
Agreement by Partnership, it being understood
that the provisions of such Paragraph 31
shall survive the closing of the Buyout.
(b) Subject to subclause (d) below of this
clause (3), Partnership irrevocably waives,
and releases Disney and its affiliates from,
any rights and claims, known and unknown,
which Partnership may have now or in the
future, with respect to its interest in the
Joint Venture and the Silver Screen II films,
other than its continued right to receive
accountings and payments in accordance with
(2) above through and until the Payment Date
(for receipts from Silver Screen II films
through and including November 30, 1995) and
except as expressly provided in these Terms
and Conditions (including clause (4) below).
Partnership's waived rights and claims
include, without limitation (except as
otherwise provided in these Terms and
Conditions):
-- all rights to audits and all audit
claims except to the extent provided
in (2) above
-- rights and claims to any revenues or
royalties, whether or not explicitly
expressed in the Agreements, with
respect to stage plays, ice shows, new
technologies, or any other
exploitation or payments derived
therefrom or with respect to any
revenues or royalties derived from
rights not previously exploited or
from rights previously exploited but
not previously accounted for to
Partnership
-- any rights or claims with respect to
home video royalty re-negotiations
(c) Although the foregoing respective
releases by Disney and by Partnership as the
releasing party (the "Releasing Party") is
not a general release, as to matters being
released, each Releasing Party expressly
waives and relinquishes all rights and
benefits afforded by Section 1542 of the
Civil Code of the State of California, which
provides:
"A general release does not extend
to claims which the creditor does
not know or suspect to exist in his
favor at the time of executing the
release, which if known by him must
have materially affected his
settlement with the debtor."
(d) If the Buyout fails to close on the
Payment Date as a result of any breach by a
party of these Terms and Conditions or of the
Purchase Agreement, or as a result of a
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failure to satisfy a condition precedent to
closing because of any act or omission of a
party, nothing contained herein or in the
Purchase Agreement will limit any rights or
obligations of the parties existing at law or
in equity. Furthermore, it is understood and
agreed that if the Buyout shall fail to close
on the Payment Date for any reason other than
the breach of these Terms and Conditions or
of any provision contained in the Purchase
Agreement by Partnership, or the failure of a
condition precedent to be satisfied because
of any action or omission of Partnership,
then the parties shall negotiate for a period
of 60 days (or such longer period as the
parties shall agree, the "Workout Period")
after the Payment Date to consummate the
Buyout. If at the end of the Workout Period
the Buyout still has not occurred then (i)
the waivers and releases contained in this
section captioned "Agreements" shall be void
and of no force and effect and Partnership
and Disney shall once again have all the
rights and claims previously waived or
released, (ii) the Agreements shall continue
to govern the relationship, rights and
obligations of the parties with respect to
the Partnership's Interest, except that the
relevant dates under Paragraph 16 of the
Joint Venture Agreement, Paragraph 7 of the
Loan Agreement and Paragraph 20 of the
Distribution Agreement shall be tolled until
the last day of the Workout Period and the
earliest date contained in such Paragraphs
shall be revised to be the date which is the
first day after the Workout Period and each
other date in such Paragraphs shall be
revised and extended accordingly, (iii) the
term of the Distribution Agreement under
Paragraph 1.2 thereof shall be extended until
the latest date in Paragraph 20 of the
Distribution Agreement as revised and
extended in accordance with subclause (ii)
above and (iv) any and all distribution,
licensing or other arrangements entered into
by Disney in accordance with clause (1) above
shall remain in full force and effect.
(4) Notwithstanding clause (3) above, the
following rights and interests of Partnership
shall only be irrevocably and automatically
waived as of (and shall not be waived prior
to) the closing of the Buyout: (i) the right
that no amendment or waiver (other than as
contemplated hereunder) of the Agreements
shall be made without Partnership's consent;
(ii) revenues actually received by the Joint
Venture with respect to a Silver Screen II
film will continue to be allocated in
accordance with Paragraph 13 of the Joint
Venture Agreement in the case of receipts by
the Joint Venture and in accordance with the
Distribution Agreement in the case of
receipts by BVD (subject to clause (2)
above); and (iii) Paragraphs 15, 19.1, 22.4,
24 and 33 of the Joint Venture Agreement.
HSR ACT FILINGS: Filings under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 ("HSR Act") will be made
by Disney and Partnership and the applicable
waiting period will have expired or been
terminated prior to the Payment Date.
CONFIDENTIALITY: Each of Disney and Partnership agrees to keep
confidential and will not disclose the existence
of this transaction or the terms hereof to any
person, other than its managing partner, officers,
employees, directors and advisors, as applicable,
who need to know and who are bound by the same
confidentiality undertakings and other than as
required by applicable law (including securities
laws), without the prior written consent of the
other party (not to be unreasonably withheld). In
connection with any disclosure required by
applicable law (including securities laws), the
party proposing to make such disclosure shall
obtain the prior written approval of the other
party (not to be unreasonably withheld) with
respect to the proposed disclosure. In addition,
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each of Disney and Partnership agrees that no
public announcement of this transaction or the
terms hereof shall be made without the prior
written approval of the other party (not be to be
unreasonably withheld) and any response to
inquiries or other communications with respect to
this transaction or the terms hereof shall be
limited to the previously approved disclosure
hereunder. It is agreed that either party may file
these Terms and Conditions and/or the Purchase
Agreement as an exhibit to any report filed by
such party under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), if so
required under the Exchange Act.
EXPENSES: Each party shall bear its own costs and expenses
(including fees and expenses of counsel and other
advisors) incurred in connection with the Buyout.
NO RELIANCE: Each party acknowledges and represents that it has
independently, and without reliance upon the other
party or any of its affiliates, and based on such
documents, information and advice of advisors as
it has deemed appropriate, made its own analysis
and decision to enter into the transaction.
CO-OPERATION; Disney and Partnership will co-operate and each
FURTHER ASSURANCES: use its reasonable best efforts to take, or cause
to be taken, all actions and to do, or cause to be
done, all things necessary or desirable under
applicable laws and regulations to consummate the
transactions contemplated hereby. Disney and
Partnership each agree to execute and deliver such
other documents, certificates, agreements and
other writings and to take such other actions as
may be necessary or desirable in order to
consummate or implement expeditiously the
transactions contemplated hereby.
GOVERNING LAW: State of California
ASSIGNMENT: Neither Partnership nor Disney may assign its
rights or obligations under these Terms and
Conditions or the Purchase Agreement without the
prior written consent of the other party;
provided, however, that Disney may assign its
rights and obligations hereunder or under the
Purchase Agreement to an affiliate so long as The
Walt Disney Company remains liable for the payment
obligations hereunder.
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THE TERMS AND CONDITIONS REFERRED TO
ABOVE ARE HEREBY ACCEPTED AND AGREED TO
ON SEPTEMBER 29, 1995.
SILVER SCREEN PARTNERS II, L.P.
By: SILVER SCREEN MANAGEMENT, INC.,
Its Managing Partner
By: /s/ Roland W. Betts
--------------------------
Roland W. Betts, President
THE WALT DISNEY COMPANY
By: /s/ David K. Thompson
-------------------------------
David K. Thompson
Senior Vice President-Assistant General Counsel
<PAGE>
[LOGO]
Silver Screen
Partners II
Third Quarter Report
1995
<PAGE>
Dear Limited Partner:
In previous reports we have explained that revenues in a particular quarter
might not be sufficient to justify making a cash distribution. This applies to
the 1995 third quarter. Our 34 previous distributions total over $243 million
since the Partnership's inception in 1985.
Negotiations regarding the sale of library rights to the films in our
portfolio began on July 1, 1995. Specific information regarding these
negotiations with Disney will be sent to you under separate cover in the coming
weeks.
The 1995 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.
Sincerely,
/c/ ROLAND W. BETTS
Roland W. Betts
President
<PAGE>
Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
September 30, 1995 December 31, 1994
=====================================================================================================================
<S> <C> <C>
Assets
Current assets:
Cash $ 43,704 $ 63,669
Temporary investments (at cost plus accrued interest,
which approximates market) (Note 2) 3,144,464 2,445,954
- - - - - - - ---------------------------------------------------------------------------------------------------------------------
$ 3,188,168 $ 2,509,623
=====================================================================================================================
Liabilities and partners' equity
Current liabilities:
Due to managing general partner $ 30,624 $ 76,930
- - - - - - - ---------------------------------------------------------------------------------------------------------------------
Total current liabilities 30,624 76,930
Other liabilities 100,000 100,000
Distributions in excess of investment in Joint Venture (Note 3) 63,836 1,254,037
- - - - - - - ---------------------------------------------------------------------------------------------------------------------
Total liabilities 194,460 1,430,967
- - - - - - - ---------------------------------------------------------------------------------------------------------------------
Partners' equity:
General partners (1,225,798) (1,513,056)
Limited partners 4,219,506 2,591,712
- - - - - - - ---------------------------------------------------------------------------------------------------------------------
Total partners' equity 2,993,708 1,078,656
- - - - - - - ---------------------------------------------------------------------------------------------------------------------
$ 3,188,168 $ 2,509,623
=====================================================================================================================
</TABLE>
See notes to financial statements.
<PAGE>
Statements of Operations (Unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
Sept. 30, 1995 Sept. 30, 1995 Sept. 30, 1994 Sept. 30, 1994
=====================================================================================================================
<S> <C> <C> <C> <C>
Revenues:
Income from Joint Venture (Note 3) $ 657,145 $3,450,089 $1,374,874 $3,158,479
Interest income 41,967 113,146 30,746 84,626
- - - - - - - ---------------------------------------------------------------------------------------------------------------------
699,112 3,563,235 1,405,620 3,243,105
Costs and expenses:
General and administrative expenses 155,656 515,242 135,871 387,285
- - - - - - - ---------------------------------------------------------------------------------------------------------------------
Net income $ 543,456 $3,047,993 $1,269,749 $2,855,820
=====================================================================================================================
Net income allocated to:
General partners $ 81,518 $ 457,199 $ 190,462 $ 270,873
Limited partners 461,938 2,590,794 1,079,287 2,584,947
- - - - - - - ---------------------------------------------------------------------------------------------------------------------
$ 543,456 $3,047,993 $1,269,749 $2,855,820
=====================================================================================================================
Net income per a $500 limited partnership unit
(based on 385,200 units outstanding) $ 1.20 $ 6.73 $ 2.80 $ 6.71
=====================================================================================================================
</TABLE>
See notes to financial statements.
Statements of Partners' Equity (Unaudited)
<TABLE>
<CAPTION>
Year Ended December 31, 1994
and Nine Months Ended September 30, 1995
=====================================================================================================================
General Partners Limited Partners Total
- - - - - - - ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, January 1, 1994 $(1,721,281) $ 2,667,785 $ 946,504
Net income, 1994 317,903 2,851,447 3,169,350
Distributions, 1994 (109,678) (2,927,520) (3,037,198)
- - - - - - - ---------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1994 (1,513,056) 2,591,712 1,078,656
Net income, nine months 1995 457,199 2,590,794 3,047,993
Distributions during nine months 1995 (169,941) (963,000) (1,132,941)
- - - - - - - ---------------------------------------------------------------------------------------------------------------------
$(1,225,798) $ 4,219,506 $ 2,993,708
=====================================================================================================================
</TABLE>
See notes to financial statements.
<PAGE>
Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended
September 30, 1995 September 30, 1994
=====================================================================================================================
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,047,993 $ 2,855,820
Adjustments to reconcile net income to net cash
provided by operating activities:
Decrease in accrued interest receivable (8,173) (3,534)
Net change in operating assets and liabilities:
Increase (decrease) in due to managing general partner (46,306) 17,240
- - - - - - - ---------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 2,993,514 2,869,526
- - - - - - - ---------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Income received from Joint Venture in excess of distribution (1,190,201) (441,743)
Sales (purchases) of temporary investments, net (690,337) 606,195
- - - - - - - ---------------------------------------------------------------------------------------------------------------------
Net cash provided by investing activities (1,880,538) 164,452
- - - - - - - ---------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Distributions to partners (1,132,941) (3,037,198)
- - - - - - - ---------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (1,132,941) (3,037,198)
- - - - - - - ---------------------------------------------------------------------------------------------------------------------
Net decrease in cash (19,965) (3,220)
Cash, beginning of year 63,669 51,830
- - - - - - - ---------------------------------------------------------------------------------------------------------------------
Cash at end of nine months $ 43,704 $ 48,610
=====================================================================================================================
</TABLE>
See notes to financial statements.
<PAGE>
Notes to Financial Statements
1. Partnership Proceeds
The Partnership Agreement provides that all Partnership income, losses and
distributable cash ("Proceeds") are distributed 99% to the limited partners and
1% to the general partners until the Partnership has satisfied certain tests.
Thereafter, all Proceeds will be allocated 85% to the limited partners and 15%
to the general partners. These tests were satisfied in the first quarter of
1994. Therefore, all proceeds beginning with the second quarter will be
allocated 85% to the limited partners and 15% to the general partners.
2. Temporary Investments
Temporary investments represent investments in commercial paper.
3. Investment in Joint Venture
The investment in the Joint Venture is accounted for using the equity method of
accounting. Under the equity method, the investment is initially recorded at
cost, and is thereafter increased by additional investments, adjusted by the
Partnership's share of the Joint Venture's results of operations, and reduced by
distributions received from the Joint Venture. The Joint Venture's fiscal year
ends September 30, while the Partnership's fiscal year ends December 31. The
distributions received to date from the Joint Venture exceed the Partnership's
investment in the Joint Venture and income recognized, resulting in a negative
balance classified as a liability on the balance sheet. The Statements of
Operations reflects the Joint Venture's results of operations for the nine
months ended June 30, 1995.
The investment in Joint Venture is as follows:
================================================================================
Balance, January 1, 1995 $(1,254,037)
Investments, January 1, 1995
to September 30, 1995 --
Income from Joint Venture for the nine
months ended June 30, 1995 3,450,089
Distributions, nine months 1995 (2,259,888)
- - - - - - - --------------------------------------------------------------------------------
Balance, September 30, 1995 $ (63,836)
================================================================================
For each Joint Venture film, all revenues received by the Joint Venture are
allocated and distributed first to the Partnership and Disney in proportion to
their respective investments in the film until each has recovered its
investment; second, to Disney until it recovers any amounts paid for cost
overruns; and thereafter, net of participations, 75% to the Partnership and 25%
to Disney (adjusted for any Disney investment in the film other than cost
overruns).
<PAGE>
Silver Screen Management, Inc.
936 Broadway
New York, NY 10010
(212) 995-7600
Recorded News Update:
(800) 999-SILV
(c) 1995 Silver Screen Management, Inc. Cover Illustration: Michael Kline
