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 March 31, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from.............. to..............
Commission file number 0-14421
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.)
Chelsea Piers, Pier 62 - Suite 300
New York, New York 10011 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 March 31,
1996 First Quarter Report of Silver Screen Partners II, L.P. (the "Partnership")
filed herewith as Exhibit 20 and is incorporated herein by reference.
Balance Sheets -- March 31, 1996 and December
31, 1995.
Statements of Operations -- For the Three
Months ended March 31, 1996 and 1995.
Statements of Partners' Equity -- For the
Three Months ended March 31, 1996 and the
Year ended December 31, 1995.
Statements of Cash Flows -- For the Three
Months ended March 31, 1996 and 1995.
Notes to Financial Statements.
The financial statements included herein are unaudited. In the opinion of
the management of the Partnership, all adjustments necessary for a fair
presentation of the results of operations have been included and all adjustments
are of a normal recurring nature. The results of operations for the three months
ended March 31, 1996 are not necessarily indicative of the results of operations
which may be expected for the entire year.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Results of Operations
---------------------
Revenues for the three months ended March 31, 1996 were approximately
$43,629,000, as compared with approximately $837,000 for the comparable three
months in 1995. The Partnership sold its interest in the Joint Venture (see
Investment in Joint Venture below) during the first quarter of 1996 resulting in
a Gain of Sale of approximately $43,186,000. Revenues for the comparable period
in 1995 consisted of income from the Joint Venture of approximately $792,000.
Interest Income for the three months ended March 31, 1996 was approximately
$442,000 as compared with approximately $45,000 for the comparable period in
1995. The increase of $398,000 is the result of an increase in funds available
for investment due to the sale of the interest in the Joint Venture. Interest
rates for the first three months of 1996 ranged from 4.80% to 5.79%, while those
for the comparable period in 1995 ranged from 5.67% to 6.04%.
2
<PAGE>
Expenses for the three months ended March 31, 1996 were approximately
$319,000 as compared with approximately $186,000 for the comparable period in
1995. The increase of approximately $133,000 in expense is attributable
primarily to the cost of the sale of the Partnership's interest in the Joint
Venture.
The Partnership generated net income of approximately $43,309,000 for the
three months ended March 31, 1996, as compared with net income of approximately
$651,000 for the comparable period in 1995. This increase is caused primarily
from the Sale of the Joint Venture's interest.
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 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 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
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 March 31, 1996, the Partnership made cash
distributions to the Partners which amounted to approximately $37,500,000 in the
aggregate.
3
<PAGE>
Investment in Joint Venture
---------------------------
The Investment in the Joint Venture was accounted for using the equity
method of accounting. Under the equity method, the investment was initially
recorded at cost, and was 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 ended September 30, while the Partnership's fiscal
year ends December 31. On January 1, 1996 the investment in the Joint Venture
was $591,842.
The Partnership entered into a Letter Agreement (The "Buyout Agreement")
with Disney dated September 11, 1995, providing for the sale to Disney of all of
the Partnership's interest in the Joint Venture. In accordance with the Buyout
Agreement the closing of the sale occurred on January 2, 1996 and the purchase
price paid to the Partnership was $44,678,304 in cash after an adjustment for
certain film revenues totaling $321,696 received in 1995. Appropriate
distribution will be made to the partners and the Partnership will be dissolved
as quickly as possible.
Liquidity and Capital Resources
-------------------------------
As of March 31, 1996, the General Partners' capital accounts reflect a
deficit of $87,427. 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.
4
<PAGE>
ITEM 3. SELECTED FINANCIAL DATA
SILVER SCREEN PARTNERS II, L.P.
-------------------------------
Three Months Three Months
Ended Ended
March 31, March 31,
1996 1995
----------- -----------
Revenues
Gain on Sale of Joint
Venture's interest ........................... $43,186,462 $ --
Income from Joint Venture (Note 3) ............ -- 791,861
Interest income ............................... 442,377 44,793
----------- -----------
43,628,839 863,654
Expenses
General and administrative
expenses ..................................... 319,402 185,508
----------- -----------
Net income ...................................... $43,309,437 $ 651,146
=========== ===========
Net income per
$500 limited
partnership unit
(based on 385,200
Units outstanding) ........................... $ 95.57 $ 1.44
=========== ===========
Cash distribution
per $500 limited
partnership unit ............................. $ 82.75 $ -0-
=========== ===========
March 31, 1996 March 31, 1995
-------------- --------------
Total assets .................................... $11,570,869 $ 2,978,613
=========== ===========
See notes to financial statements.
5
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 20 -- 1996 First Quarter Report
(b) The Partnership did not file any reports on Form 8-K during the
quarter ended March 31, 1996.
6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
SILVER SCREEN PARTNERS II, L.P.,
a Delaware limited partnership
By: Silver Screen Management, Inc.,
Managing General Partner
Date: May, 1996 By: /s/ Roland W. Betts
--------------------------------
Roland W. Betts, President
7
<PAGE>
Silver Screen Management, Inc.
Chelsea Piers-Pier 62
Suite 300
New York, NY 10011
(212) 336-6700
Recorded News Update:
(800) 999-SILV
Silver Screen Partners II
First Quarter Report
1996
8
<PAGE>
As discussed in previous correspondence, Silver Screen Partners II, L.P.
and the Walt Disney Company agreed on the sale of the Partnership's interest in
the Joint Venture. Accordingly, on February 16th, the Partnership made a
distribution based on this sale. To date, we have distributed a total of $276
million or $717 per $500 unit for investors who were part of the first closing
in June 1985.
Although we have received and distributed proceeds from the sale, we will
continue operations since we are required to produce quarterly information and
maintain investor records until dissolution. Funds have been reserved for these
purposes. Remaining funds in reserve at the time of dissolution will be
distributed to investors.
Our Second Quarter Report will be mailed in July. If you need any
assistance in the meantime, please contact our Investor Relations Department
between the hours of 10 A.M. and 2 P.M.
Sincerely,
Roland W. Betts
President
9
<PAGE>
Balance Sheets (Unaudited)
- --------------------------
March 31, December 31,
1996 1995
------------ ------------
Assets
Current assets:
Cash ........................................... $ -- $ 818,642
Temporary investments (at cost,
plus accrued interest,
which approximates market) (Note 2) .......... 11,570,869 3,493,817
------------ ------------
Total current assets ........................... 11,570,869 4,312,459
Investment in Joint Venture (Note 3) ........... -- 591,842
------------ ------------
$ 11,570,869 $ 4,904,301
------------ ------------
Liabilities and partners' equity
Current liabilities:
Cash Overdraft ................................. $ 732,779 --
Due to managing general partner ................ 155,548 30,896
------------ ------------
Total current liabilities ...................... 888,327 30,896
Other liabilities .............................. 100,000 100,000
------------ ------------
Total liabilities .............................. 988,327 130,896
------------ ------------
Partners' equity:
General partners ............................... (87,427) (958,843)
Limited partners ............................... 10,669,969 5,732,248
------------ ------------
Total partners' equity ......................... 10,582,542 4,773,405
------------ ------------
$ 11,570,869 $ 4,904,301
------------ ------------
See notes to financial statements.
10
<PAGE>
Statements of Operations (Unaudited)
- ------------------------------------
Three Months Three Months
Ended Ended
March 31, March 31,
1996 1995
----------- -----------
Revenues:
Gain on Sale of Joint Venture's interest ......... $43,186,462 $ --
Income from Joint Venture (Note 3) ............... -- 791,861
Interest income .................................. 442,377 44,793
----------- -----------
43,628,839 836,654
Costs and expenses:
General and administrative expenses .............. 319,402 185,508
----------- -----------
Net income ....................................... $43,309,437 $ 651,146
----------- -----------
Net income allocated to:
General partners ................................. $ 6,496,416 $ 97,672
Limited partners ................................. 36,813,021 553,474
----------- -----------
$43,309,437 $ 651,146
----------- -----------
Net income per a $500 limited partnership
unit
(based on 385,200 units outstanding) ........... $ 95.57 $ 1.44
----------- -----------
See notes to financial statements.
Statements of Partners' Equity (Unaudited)
- ------------------------------------------
Year Ended December 31, 1995
and Three Months Ended March 31, 1996
-------------------------------------
General Limited
Partners Partners Total
------------ ------------ ------------
Balance, January 1, 1995 ....... $ (1,513,056) $ 2,591,712 $ 1,078,656
Net income, 1995 ............... 724,154 4,103,536 4,827,690
Distributions, 1995 ............ (169,941) (963,000) (1,132,941)
------------ ------------ ------------
Balance, December 31, 1995 ..... (958,843) 5,732,248 4,773,405
Net income, three months 1996... 6,496,416 36,813,021 43,309,437
Distributions during three
months 1996 ................... (5,625,000) (31,875,300) (37,500,300)
------------ ------------ ------------
$ (87,427) $ 10,669,969 $ 10,582,542
------------ ------------ ------------
See notes to financial statements.
11
<PAGE>
Statements of Cash Flows (Unaudited)
- ------------------------------------
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, 1996 March 31, 1995
------------ ---------------
<S> <C> <C>
Cash flows from operating activities:
Net income ........................................... $ 43,309,437 $ 651,146
------------ ------------
Adjustments to reconcile net income to net
cash provided by operating activities:
Net change in operating assets and liabilities:
(Increase) decrease in accrued interest receivable ... (24,197) 12,878
Increase (decrease) in due to managing general
partner ............................................ 124,652 (18,978)
------------ ------------
Net cash provided by operating activities ............ 43,409,892 645,046
------------ ------------
Cash flows from investing activities:
Distributions received from Joint Venture
in excess of equity in income ...................... -- (163,178)
Decrease in investment in Joint Venture .............. 591,842 --
Purchase of temporary investments, net ............... (8,052,855) (461,786)
------------ ------------
Net cash used in investing activities ................ (7,461,013) (624,964)
------------ ------------
Cash flows from financing activities:
Distributions to partners ............................ (37,500,300) --
------------ ------------
Net cash used in financing activities ................ (37,500,300) --
------------ ------------
Net (decrease) increase in cash ...................... (1,551,421) 20,082
Cash, beginning of year .............................. 818,642 63,669
------------ ------------
Cash at end of three months .......................... $ (732,779) $ 83,751
------------ ------------
</TABLE>
See notes to financial statements.
12
<PAGE>
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 have been 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 was accounted for using the equity
method of accounting. Under the equity method, the investment was initially
recorded at cost, and was 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. On January 1, 1996 the investment in the
Joint Venture was $591,842.
The Partnership entered into a Letter Agreement (The "Buyout Agreement")
with Disney dated September 11, 1995, providing for the sale to Disney of all of
the Partnership's interest in the Joint Venture. In accordance with the Buyout
Agreement the closing of the sale occurred on January 2, 1996 and the purchase
price paid to the Partnership was $44,678,304 in cash after an adjustment for
certain film revenues totaling $321,696 received in 1995.
(c) 1996 Silver Screen Management, Inc. Cover Illustration: Michael Kline
13
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED BALANCE SHEET AS OF MARCH 31, 1996, AND THE STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED MARCH 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> Mar-31-1996
<CASH> 0
<SECURITIES> 11,571
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11,571
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 11,571
<CURRENT-LIABILITIES> 888
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 10,583
<TOTAL-LIABILITY-AND-EQUITY> 11,571
<SALES> 43,186
<TOTAL-REVENUES> 43,629
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 319
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 43,309
<INCOME-TAX> 0
<INCOME-CONTINUING> 43,309
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 43,309
<EPS-PRIMARY> 95.57
<EPS-DILUTED> 0
</TABLE>
