SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 [FEE
REQUIRED] OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(D)
OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE
REQUIRED]
For Fiscal Year Ended
Commission File
December 31, 1995 Number 0-
14408
DELPHI FILM ASSOCIATES IV
(Exact name of registrant as specified in its
charter)
New York
13-3261814
(State or other jurisdiction of
(IRS Employer
incorporation or organization)
Identification No.)
666 Third Avenue, New York, New York 10017
(Address of principal executive offices) (Zip
Code)
Registrant's telephone number, including area code: (212) 983
9040
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 Interests
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
(or for such shorter period that the registrant was required to
file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes x No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein
and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
[x]
As of March 15, 1996, there were 8,000 units of limited
partnership interests outstanding, all held by non-affiliates.
The aggregate market value of those interests is not
determinable because there is no active public trading market
for the units. See Item 5. Market for the Registrant's Common
Equity and Related Security Holder Matters.
<PAGE>
PART I.
Item 1. Business.
Introduction.
Delphi Film Associates IV (the "Partnership") is a
limited partnership which was organized under the law of the
State of New York in December 1984 to participate in the
production, acquisition, ownership and exploitation of
feature length motion pictures through a joint venture with
Columbia Pictures Industries, Inc. ("Columbia"), known as
Columbia-Delphi IV Productions (the "Columbia Joint
Venture"), and through a joint venture with TriStar
Pictures, Inc. ("TriStar"), known as Tri-Star-Delphi IV
Productions (the "Tri-Star Joint Venture"). The terms of
the Tri-Star Joint Venture and the Columbia Joint Venture
are substantially the same. Those two joint ventures are
referred to collectively as the "Joint Ventures" and
sometimes individually as a "Joint Venture," and the
Partnership's co-venturer in a joint venture is sometimes
referred to as the "Studio Venturer."
A public offering (the "Offering") of limited
partnership interests in the Partnership, at $5,000 per
unit, was completed in June 1985 with the sale of 8,000
units. Net proceeds to the Partnership after deducting
selling commissions, organizational expenses and other
expenses of the offering were approximately $35,300,000.
The general partner of the Partnership, The Delphi Company
(the "General Partner"), contributed approximately $404,000
as its capital contribution to the Partnership.
Production and Acquisition of Films.
The Partnership has an interest in 27 films through
the Joint Ventures (12 through the Columbia Joint Venture
and 15 through the Tri-Star Joint Venture), all of which
have been released. See "Films in Release."
The Partnership's contributions for the production of, and
acquisition of interests in, films have aggregated
approximately $45,818,000 (including interest).
Approximately one-half of the Partnership's contributions
were made to each Joint Venture.
The Tri-Star Joint Venture acquired the right to
produce and exploit each film that met certain criteria
for
which TriStar commenced production after the expiration of
a similar existing commitment to an earlier joint venture
between TriStar and Delphi Film Associates III ("Delphi
III") and prior to the time the funds that the Partnership
agreed to contribute to the Tri-Star Joint Venture were
fully committed. Until such time as the funds the
Partnership agreed to contribute to the Columbia Joint
Venture were fully committed, the Columbia Joint Venture
acquired the right to participate in completing the
production of, and exploiting, certain films being produced
by Columbia which were either designated or met certain
criteria.
Each Joint Venture has acquired interests in or co
produced films in which Delphi Film Associates V ("Delphi
V") has an interest through its own joint ventures with
TriStar and Columbia. Delphi III and Delphi V are limited
partnerships that were organized in 1983 and 1985,
respectively, to participate in the production,
acquisition, ownership and exploitation of films through
joint ventures with Columbia and TriStar. Another public
limited partnership, ML Delphi Premier Partners, L.P. ("ML
Delphi"), which was organized in 1986, participates in a
joint venture with TriStar ("Tri-Star-ML Delphi"). The Tri-
Star Joint Venture entered into agreements with Tri-Star-ML
Delphi pursuant to which Tri-Star-ML Delphi acquired
interests in four films in which the Tri-Star Joint Venture
has an interest ("Let's Get Harry," "Peggy Sue Got
Married," "No Mercy" and "Nadine"). In addition, the Tri-
Star Joint Venture acquired interests in certain films
produced by independent producers that were distributed by
TriStar.
The Partnership has an interest ranging from 5% to
25% in each of the Joint Ventures' films. See "Films in
Release." The Partnership's ownership interest with
respect to each film generally is equal to the percentage
the
Partnership's cash contribution for the production or
acquisition of a film bears to the total cash contributions
for production or acquisition of that film.
The Partnership, through the Tri-Star Joint Venture,
was granted a participation interest by TriStar in 1988 in
the motion pictures "Short Circuit 2" and "Rambo III." See
"Films In Release." The Partnership made no capital
contributions for its interest in these films but is
entitled to a share of any net proceeds from each of these
films beyond certain performance levels. Any payments due
with respect to these interests will be made to the
Partnership in June 1996, subject to being paid earlier
under certain circumstances. The Partnership does not
anticipate receiving any revenues with respect to "Short
Circuit 2." However, as of December 31, 1995, the
Partnership had accrued revenues of approximately $166,000
in connection with "Rambo III." "Short Circuit 2" and Rambo
III" are sometimes referred to as the "Additional Films."
The Partnership has begun evaluating the value of
its interest in the film assets for the purpose of possibly
selling that interest and liquidating the Partnership. The
General Partner presently anticipates that the Partnership
may be liquidated by late 1996, or early 1997. However,
cash distributions as a result of the liquidation may be
made to the partners to the extent, and only to the extent,
the proceeds from the sale of the Partnership's interest in
the film assets in connection with the liquidation are in
excess of the Distributors' entitlement to the recoupment
described below net of a reserve for the Partnership's
operating expenses. See "Additional Payments".
Distribution of Films.
The films of the Columbia Joint Venture and the Tri
Star Joint Venture are distributed pursuant to distribution
agreements between Columbia Pictures, a division of
Columbia ("Columbia Pictures"), and the Columbia Joint
Venture, and between TriStar and the Tri-Star Joint
Venture, respectively. Columbia Pictures and TriStar, as
distributors, are sometimes referred to collectively as the
"Distributors" and individually as a "Distributor."
The Distributor has the ultimate authority for all
decisions with respect to the distribution of the films.
For each film, the Partnership, through a Joint Venture, is
generally entitled to receive an amount equal to the
greater of the product of the Partnership's percentage
interest in a film multiplied by (a) an amount equal to
100% of the net proceeds from the distribution of the film
and (b) an amount equal to 32% of the gross receipts from
the distribution of the film. Distribution arrangements
with respect to films in which a Joint Venture has an
interest that were produced by independent producers may
vary from those with respect to films produced by a Joint
Venture. The Partnership and the Studio Venturer share in
the amount to which the Joint Ventures are entitled from
the distribution of any film in proportion to their
respective interests in the film. The distribution
agreements provide, with certain exceptions, that gross
receipts consist of all sums received by the Distributor
from the exploitation of a film throughout the world. Net
proceeds with respect to each film generally are determined
by deducting from gross receipts:
(a) a distribution fee equal to 17-1/2% of
substantially all of the gross receipts of the film. The
Distributor's entitlement to this distribution fee is
deferred until the Joint Venture has received from the
distribution of that film an amount equal to the amounts
contributed by the Joint Venture to produce or acquire an
interest in the film, other than amounts paid in the nature
of interest;
(b) all expenses incurred in the distribution,
promotion and marketing of the film, including expenditures
for prints and advertising; and
(c) payments to third party participants who have
contingent shares in the film. The extent to which
payments to third party participants may be deducted from
the gross receipts of a film in determining net proceeds is
limited by the distribution agreements.
Many of the Columbia Joint Venture's and the Tri-
Star Joint Venture's films have been licensed to Home Box
Office, Inc. ("HBO") for exhibition on its pay television
services. The distribution agreements with each Joint
Venture provide that gross receipts of a film with respect
to pay television exhibition by HBO shall be an amount
equal to specified percentages of the first year's domestic
theatrical gross receipts of that film, regardless of the
actual license fee payable to Columbia or TriStar under
their respective license agreements with HBO. The amount
initially included in gross receipts may be less (and in
some instances substantially less) than the amount actually
received by Columbia or TriStar under their agreements with
HBO. See the "Additional Payments" provision described
below for information concerning additional amounts that
gross receipts may be credited with in connection with pay
television exhibition by HBO.
Columbia Pictures entered into an arrangement with
CBS Inc. ("CBS") for CBS to license for exhibition on the
CBS television network, a specified number of motion
pictures from among a specified number of groups of motion
pictures. The arrangement provides for CBS to pay a
specified average license fee for the motion pictures in
each group licensed by CBS. The Columbia Joint Venture and
its Distributor have
agreed that, subject to adjustment in certain
circumstances, gross receipts for films licensed to CBS
under this arrangement include an amount equal to the
higher of the license fees paid by CBS and the comparable
fair market value for the license rights involved for the
relevant license period. Certain films in which the
Partnership owns an interest have been licensed for network
television exhibition under this arrangement. Certain of
the Tri-Star Joint Venture Films have been licensed for
network television exhibition on CBS or on other television
networks on a filmby-film basis.
The films in which the Partnership owns an interest
are subject to agreements between each Distributor and
Columbia TriStar Home Video (formerly known as RCA/Columbia
Pictures Home Video) and Columbia TriStar Home Video
(International) Inc. (formerly known as RCA/Columbia
Pictures International Video). The distribution agreements
between each Joint Venture and its Distributor provide for
the inclusion in gross receipts of a specified royalty for
video cassettes and video discs regardless of the amounts
payable to TriStar or Columbia under their respective
agreements with such joint ventures (which may exceed the
amounts includable in gross receipts).
Many films in which the Partnership has an interest
have been licensed by the Distributor for exhibition on
other cable television services, independent television
stations in the United States and on foreign television
stations. Generally, these films have been made available
for foreign television exhibition and domestic independent
television exhibition approximately three and five years,
respectively, after a film's domestic theatrical release.
Each Distributor reports gross receipts and net
proceeds for each film to the Joint Venture on behalf of
which it acts, on a quarterly basis, and makes payment to
that Joint Venture based on those reports when the reports
are delivered. In addition to distributing motion pictures
produced or acquired by the Joint Ventures, each
Distributor distributes films in which joint ventures
between each of Columbia and TriStar and certain other
limited partnerships (the "Delphi Partnerships") own an
interest, as well as films in which neither the Partnership
nor any of the Delphi Partnerships own an interest.
Additional Payments.
The terms of the distribution agreements between
each Joint Venture and its respective Distributor provided
that the Partnership would be entitled to receive, through
each Joint Venture, a payment (an "Additional Payment")
from that Joint Venture's Distributor for each film (an
"Unrecouped Film"), if by March 1993, in the case of the
Columbia Joint Venture, and if by February l994, in the
case of the Tri-Star Joint Venture, for which the
particular Joint Venture had not received from the
distribution of that film (or its sale) an amount equal to
the amount spent by the Joint Venture to produce or acquire
an interest in that film, other than amounts spent for
payments in the nature of interest ("Cost Return"). Each
Additional Payment was in the amount necessary for the
Partnership to be repaid (without interest) its unrecouped
contributions to the Joint Venture with respect to the
production or acquisition of an Unrecouped Film (other than
contributions for payments in the nature of interest), but
not more than the amount specified below. The Additional
Payment was first payable only to the extent of (and
attributable to) the distribution fees received by the
Distributor from the distribution of all of its Joint
Venture's films. The Additional Payments based on
distribution fees were allocated by the Joint Ventures
first
to the Partnership to the extent necessary for the
Partnership to recoup its investment in such film; any
excess for such film was allocated to the respective Studio
Venturer until Cost Return. If these distribution fees
were insufficient to enable a Distributor to make the
Additional Payments with respect to all of its Joint
Venture's Unrecouped Films, then gross receipts and net
proceeds of each remaining Unrecouped Film distributed by
that Distributor were recalculated by including as gross
receipts the minimum license fees under its license
agreement with HBO and certain minimum amounts in respect
of video cassette and video disc exploitation with respect
to that Unrecouped Film. Each Distributor then made an
Additional Payment to the Partnership, through its Joint
Venture, with respect to each Unrecouped Film to the extent
of the Partnership's share of additional gross receipts or
net proceeds payable as a result of the recalculation but
only up to the amount of the unrecouped contributions
(other than contributions for payments in the nature of
interest) by the Partnership for the production or
acquisition of that Unrecouped Film. Each such Additional
Payment made on the basis of such recalculation was
allocated between the Partnership and the respective Studio
Venturer in proportion to their respective interest in the
applicable Unrecouped Film.
The distribution agreements provided that each
Distributor would be entitled to recoup the Additional
Payment made to the Partnership in respect of each
Unrecouped Film, with interest calculated at 110% of the
prime rate from time to time, from the Partnership's share
of subsequent gross receipts or net proceeds of that
Unrecouped Film and from the proceeds of any sale of the
Partnership's interest in that Unrecouped Film or amounts
allocable to that Unrecouped Film upon a sale of the
Partnership's interest in
the Joint Venture. Except for Unrecouped Films, the
Distributor does not have the right to recoup amounts from
the proceeds of any sale of a film. In calculating the
amount of distribution fees available for the Additional
Payments, no distribution fee has been deemed received by a
Distributor (and therefore no distribution fee will be
deemed available for the Additional Payment) from (i) a
film with respect to which the most recent payment was
based on gross receipts (ii) a film that did not reach Cost
Return or (iii) an Additional Film.
Based on the anticipated performance of one film in
release through the Tri-Star Joint Venture as of December
31, 1995, approximately $392,000 has been accrued by the
Tri-Star Joint Venture as an Additional Payment allocable
to the Partnership. In February, 1994 the Partnership
received approximately $7,886,000 representing its share of
the TriStar Joint Venture's Additional Payment relating to
all but one film net of the repayment of the $200,000
advance (see below) previously received by the Partnership.
The Partnership received approximately $10,911,000 in May
1993 representing its share of the Columbia Joint Venture's
Additional Payment net of the repayment of the $200,000
advance (see below) previously received by the Partnership.
The Additional Payments from the Distributors are
expected to enable the Partnership, through each Joint
Venture, to achieve Cost Return for each Unrecouped Film
and are not intended to enable the Partnership to recoup
any amounts paid by the Partnership for management fees or
other expenses of the Partnership. The Columbia and
TriStar Distributors are not expected to fully recoup the
Additional Payments made.
During 1990, an interest-free advance from the
Columbia and TriStar Distributors, respectively, was made
to
the Joint Venture and allocated to the Partnership each in
the amount of $200,000 (hereinafter referred to as the
"Advances"). In October 1992, the Distributors for the
respective Joint Ventures modified the terms of the
recoupment of the Advances to provide that the Distributors
would be entitled to retain an amount equal to the Advances
from any Additional Payments otherwise payable to the Joint
Ventures on behalf of the Partnership. Prior to this
modification, the Partnership was restricted in the amount
of cash it could distribute to its partners and would have
been required to repay these Advances in 1992. This
modification permitted the Partnership to defer this
repayment and to make distributions in excess of $100 per
limited partnership unit during 1994, 1993 and 1992 without
first repaying these Advances. The $200,000 Advances
previously received by the Partnership from the Columbia
and TriStar Distributors, respectively, were repaid as of
December 31, 1994.
Films in Release.
All 12 films in which the Columbia Joint Venture has
an interest have been released. Certain information
concerning these films is set forth below:
Initial Partnership's
Release Approximate
Title Date
Percentage Interest
St. Elmo's Fire June 1985
25%
Silverado July 1985
15.6%
Fright Night August
1985
20.2%
Agnes of God September 1985
11%
Jagged Edge October 1985 15%
Quicksilver February 1986
15%
Crossroads March 1986
15%
Violets Are Blue April 1986
15%
Desert Bloom April 1986
15%
One More Saturday Night June 1986
15%
Armed and Dangerous August 1986 5%
Happy New Year July 1987
6.3%
All 15 films in which the Tri-Star Joint Venture
has
acquired an interest have been released. Certain
information
concerning these films is set forth below:
Initial Partnership's
Release Approximate
Title Date
Percentage Interest
Rambo: First Blood
Part II May 1985
7.5%
Lifeforce June 1985
7.5%
Santa Claus: The Movie November 1985
5%
Band of the Hand April 1986
20%
Short Circuit May 1986
5%
Labyrinth June 1986
5%
About Last Night... July 1986 22.5%
Nothing In Common July 1986 17.8%
Night of the Creeps August 1986 20%
Peggy Sue Got Married October 1986
17.8%
Let's Get Harry October 1986
17%
No Mercy December 1986
9%
Nadine August 1987 5%
Rambo III May 1988 (See
Below)
Short Circuit 2 July 1988 (See
Below)
The Partnership, through the Tri-Star Joint Venture,
has participation interests in the films "Short Circuit 2"
and "Rambo III." The Partnership is entitled to a
percentage of net proceeds (3.2% in the case of "Short
Circuit 2" and 6% in the case of "Rambo III") after
"Breakeven" has been reached. "Breakeven" in this instance
is defined as the point at which 5.6% of net proceeds
(after recoupment of deferred distribution fees) in the
case of "Short Circuit 2" and 10% in the case of "Rambo
III" equals 5% of the production cost of the film
(including an overhead charge of 12-1/2%). The Partnership
does not anticipate receiving any revenues with respect to
"Short Circuit 2." However, as of December 31, 1995, the
Partnership had accrued revenues of
approximately $166,000 in connection with "Rambo III."
All of the Partnership's films have been
theatrically released both domestically and in foreign
markets. In addition, all of these films have been made
available on video cassettes and have been exhibited on pay
television. Many of these films have been exhibited on
network television and certain of these films are currently
under license for domestic syndicated television exhibition
and foreign television exhibition. See "Distribution of
Films." Competition.
Competition in the motion picture industry is
intense, both in theatrical distribution as well as in the
ancillary markets where the Partnership's films are now
being distributed. All of the "major" studios and
independent distribution companies are distributing films
that compete for the attention of purchasers of product for
these ancillary markets which include pay cable television,
home video, network television exhibition, and syndicated
television exhibition both foreign and domestic. The
Partnership's films compete in many of these markets not
only with films that were released contemporaneously, but
also with many films that were released in prior and
subsequent years. The level of theatrical success that a
film enjoyed is often an important factor with respect to
results achieved in these ancillary markets.
Employees.
The Partnership has no employees. The General
Partner, however, retains the services of Magera Management
Corporation ("Magera") to provide operational and financial
services to it. See Item l0 "Directors and Executive
Officers of the Partnership-Operational and Financial
Services." Magera has eight employees who perform services
for the General Partner and for the general partners of
other
private and public limited partnerships, including the
other Delphi Partnerships.
Item 2. Properties.
The executive offices of the Partnership and the
General Partner are located at 666 Third Avenue, New York,
New York 10017. The Partnership pays no rent.
Item 3. Legal Proceedings.
None.
Item 4. Submission of Matters to a Vote of Security
Holders.
None.
<PAGE>
PART II.
Item 5. Market for the Registrant's Common Equity and
Related Security Holder Matters.
The Partnership is a limited partnership; there is
no established public market for limited partnership units
of the Partnership.
Effective November 9, 1992, the Partnership was
advised that Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch") introduced a new limited
partnership secondary service available to its clients
through Merrill Lynch's Limited Partnership Secondary
Transaction Department.
Beginning with the December 1994 client account
statements, Merrill Lynch implemented new guidelines for
providing estimated values of limited partnerships and
other direct investments reported on client account
statements. As a result, Merrill Lynch no longer reports
general partner estimates of limited partnership net asset
value on its client account statements. Pursuant to the
guidelines, estimated values for limited partnership
interests originally sold by Merrill Lynch (such as the
Partnership's Units) will be provided two times per year to
Merrill Lynch by independent valuation services. The
estimated values will be
based on financial and other information available to the
independent services on the prior August l5th for reporting
on December year-end client account statements, and on
information available to the services on March 31st for
reporting on June month-end Merrill Lynch client account
statements. Merrill Lynch clients may contact their
Merrill Lynch Financial Consultants or telephone the number
provided to them on their account statements to obtain a
general description of the methodology used by the
independent valuation services to determine their estimates
of value.
The estimated values provided by the independent services
are not market values and Unit holders may not be able to
sell Units or realize the amount upon a sale. In addition,
Unit holders may not realize the independent estimated
value upon the liquidation of the Partnership over its
remaining life.
As of March 15, 1996, there were approximately 4,200
holders of record of limited partnership units of the
Partnership.
Cash Distributions.
The Partnership commenced making cash distributions
in April 1987. The following chart sets forth the cash
distributions made by the Partnership through March 15,
1996:
Year Amount Per Unit
1987 $ 600
1988 300
1989 120
1990
100 1991
100 1992
240 1993 1,400
1994 875
1995 50
1996 (through March 15) 0
Total $3,785
Accordingly, as of March 15, 1996, the partners
have received distributions aggregating 75.7% of their
original investment in the Partnership. The Partnership
does not currently anticipate that the partners will
receive cash
distributions in an aggregate amount sufficient to recover
their capital contribution to the Partnership.
<PAGE>
<TABLE>
<CAPTION>
Item 6. Selected Financial Data.
(000's omitted except for per unit
information)
Year
Ended December 31,
1995 1994
1993
1992 1991
<S> <C> <C>
<C>
<C> <C>
Operating
revenues(1): $ 0 $ 0 $
0 $ 0 $ 0
Share of profit
in motion
picture ventures,
net: $ 338 $ 312 $
2,275
$ 3,039 $ 1,112
Net (loss)
profit: $ (32) $ (17) $
1,789 $ 2,583 $ 785
Net (loss)
profit per unit: $ (4) $ (2)
$ 221 $ 320 $ 97
Total assets: $ 2,825 $ 3,303 $10,364
$l9,895 $19,217
Total liabilities: $ 68 $
110
$ 83 $ 90 $ 56
Cash distributions
per unit: $ 50 $ 875
$ 1,400 $ 240 $ 100
(1)The Partnership's interests in the Joint Ventures are
not included in Operating Revenues as they are accounted
for by the equity method.
</TABLE>
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
1. Liquidity and Capital Resources.
The Partnership fully satisfied its commitment to
contribute funds to the Joint Ventures for the production
of, and acquisition of interests in, films. As of December
31, 1995, the Partnership held cash of approximately
$185,000 and short-term investments of approximately
$1,227,000. Short-
term investments consist solely of U.S. government
securities.
The Partnership received approximately $7,886,000 in
February 1994 representing its share of the Tri-Star Joint
Venture's Additional Payment relating to all but one film
net of the repayment of the $200,000 Advance previously
received by the Partnership. These funds, less a reserve
for Partnership operating expenses, were distributed to
partners in May 1994. The Partnership received
approximately $10,911,000 in May 1993 representing its
share of the Columbia Joint Venture's Additional Payment
net of the repayment of the $200,000 Advance previously
received by the Partnership. These funds, less a reserve
for Partnership operating expenses, were distributed to
partners in May 1993. The Columbia and TriStar Distributors
are not expected to fully recoup these Additional Payments
and it is therefore currently expected that the Partnership
will not receive any additional revenue with respect to the
Columbia and Tri-Star Joint Venture's Unrecouped Films.
The Partnership has benefited from an arrangement
between each Joint Venture and its related Distributor
under which up to an aggregate of $400,000 had been made
available, without interest, to the Joint Ventures on
behalf of the Partnership as an advance against payments
that would otherwise be made by the Distributors to the
Joint Ventures at a later date. The Partnership has
received the entire $400,000 available under these
arrangements. In October 1992, each of the Distributors
for the respective Joint Ventures modified the terms of the
recoupment of the Advances to provide that the Distributor
would be entitled to retain an amount equal to the Advances
from any Additional Payments otherwise payable to the Joint
Ventures on behalf of the Partnership. Prior to this
modification, the Partnership was restricted in the
amount of cash it could distribute to its partners and
would have been required to repay these Advances in 1992.
This modification permitted the Partnership to defer this
repayment and to make distributions in excess of $100 per
limited partnership unit during 1995, 1994 and 1993
without first repaying these Advances. As of December 31,
1994, the $400,000 Advance previously received by the
Partnership from the Columbia and TriStar Distributors had
been repaid.
The Partnership has begun evaluating the value of
its interest in the film assets for the purpose of
possibly selling that interest and liquidating the
Partnership. The General Partner presently anticipates
that the Partnership may be liquidated by late 1996, or
early 1997. However, cash distributions as a result of
the liquidation may be made to the partners to the extent,
and only to the extent, the proceeds from the sale of the
Partnership's interest in the film assets in connection
with the liquidation are in excess of the Distributors'
entitlement to the recoupment described below net of a
reserve for the Partnership's operating expenses. See
"Additional Payments."
Since the Partnership's obligations to make
contributions to the Joint Ventures for the production of,
and acquisition of interests in, films have been
satisfied, all revenue received by the Partnership (for
other than Unrecouped Films) is used to pay operating
expenses of the Partnership and to make cash distributions
to partners. The Partnership does not anticipate
significant future revenues and accordingly, the
Partnership does not currently anticipate making cash
distributions to partners on a quarterly basis. However,
the Partnership may make future distributions if it
realizes proceeds from its interest in films other than
Unrecouped Films. The most recent cash distribution by
the Partnership was made in November 1995.
2. Results of Operations.
The Partnership's operating results are primarily
dependent upon the operating results of the Joint Ventures
and are significantly impacted by the Joint Ventures'
policies.
The performance of each film is based upon the
amount expended for production and other costs associated
with a film and the revenue generated by a film. The
amount and timing of revenue generated by each film is
dependent upon the degree of acceptance by the consumer
public and the particular ancillary market in which the
film is then being exhibited.
Amounts contributed toward each film are compared
periodically to the expected total revenue to be generated
for that film, and write-downs may occur to the extent the
amounts invested exceed the expected total revenue for
that film.
Additionally, each Joint Venture may record income
with respect to Additional Payments, to the extent
available, which may allow it to recover its investment in
films.
For the year ended December 31, 1995, the Columbia
Joint Venture had a net profit of which the Partnership's
share was approximately $316,000, due primarily to the
profitable results of certain films. The Tri-Star Joint
Venture had a net profit of which the Partnership's share
was approximately $22,000, due primarily to the profitable
results of certain films. In addition, the Partnership
earned approximately $87,000 of interest income from short
term investments and incurred approximately $457,000 in
expenses from operations, resulting in an overall net loss
reported by the Partnership of approximately $32,000.
For the year ended December 31, 1994, the Columbia Joint
Venture had a net profit of which the Partnership's share
was
approximately $250,000, due primarily to the profitable
results of certain films offset, in part, by expenses
related to foreign exchange losses. The Tri-Star Joint
Venture had a net loss; however, the Partnership reported
a net profit from that Joint Venture of approximately
$62,000, due primarily to the profitable results of one
film and interest income related to the accrual of
Additional Payments offset, in part, by expenses related
to foreign exchange losses. In addition, the Partnership
earned approximately $119,000 of interest income from
short-term investments and incurred approximately $448,000
in expenses from operations, resulting in an overall net
loss reported by the Partnership of approximately $17,000.
For the year ended December 31, 1993, the Columbia
Joint Venture had a net profit of which the Partnership's
share was approximately $504,000, due primarily to the
profitable results of certain films, interest income
related to the accrual of Additional Payments and payments
received with respect to the resolution of several
outstanding issues with the Distributor. The Tri-Star
Joint Venture had a net profit of which the Partnership's
share was approximately $1,771,000, due primarily to the
accrual of Additional Payments and related interest income
and the profitable results of certain films. In addition,
the Partnership earned approximately $40,000 of interest
income from shortterm investments and incurred
approximately $526,000 in expenses from operations,
resulting in an overall net profit reported by the
Partnership of approximately $1,789,000.
The decrease in interest income for the year ended
December 31, 1995 as compared with the prior year is due
primarily to less funds available for short-term
investments during 1995.
The increase in interest income for the year ended
December 31, 1994 as compared with the prior year is due
primarily to the availability of more funds for short-term
investments during 1994.
The increase in the Partnership's total expenses for the
year ended December 31, 1995 as compared with the prior is
due primarily to an increase in Other Expenses. The
increase in Other Expenses is attributable to an increase
in professional fees related to film audits.
The decrease in the Partnership's total expenses for the
year ended December 31, 1994 as compared with the prior
year is due primarily to a decrease in Other Expenses. The
decrease in Other Expenses is attributable to a decrease in
professional fees related to film audits.
The Partnership does not believe that the impact of
inflation on the results of its operations has been
material. Item 8. Financial Statements and Supplementary
Data.
See the financial statements set forth in Item 14 of
this annual report.
Item 9.Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None.
<PAGE>
PART III.
Item 10. Directors and Executive Officers of the
Partnership.
The General Partner of the partnership is The Delphi
Company, a New York general partnership originally formed
in December 1984 by Lewis J. Korman, Richard M. Mason, and
two other individuals. In January 1987, ML Film
Entertainment Inc. ("ML Film"), a Delaware corporation, and
a wholly-owned subsidiary of ML Leasing Equipment Corp.
(which is an indirect wholly-owned subsidiary of Merrill
Lynch & Co. Inc., and the successor in interest to Merrill
Lynch Leasing Inc. and Merlease Leasing Corp.) and an
affiliate of Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("Merrill
Lynch"), was admitted as a partner in the General Partner
and replaced Mr. Korman as managing partner of the General
Partner (the "Managing Partner"). Set forth below is
certain information regarding the management of the General
Partner.
ML Film.
The executive officers and directors of ML Film are:
Kevin K. Albert . . . . . . . .President, Director
Robert F. Aufenanger . . . Executive Vice President,
Director Steven N. Baumgarten . . .Vice President, Director
Michael E. Lurie . . . . . . . Vice President, Director
Diane T. Herte. . . . . . . . . Treasurer
Kevin K. Albert, 43, a Managing Director of
Merrill Lynch Investment Banking Group ("ML Investment
Banking"), joined Merrill Lynch in 1981. Mr. Albert
works in the Equity Private Placement Group and is
involved in structuring and placing a diversified array
of private equity financings including common stock,
preferred stock, limited partnership interests and
other equity related securities. Mr. Albert is also a
director of ML Media Management Inc. ("ML Media"), an
affiliate of ML Film and a joint venturer of Media
Management Partners, the general partner of ML Media
Partners, L.P.; a director of ML Opportunity Management
Inc. ("ML Opportunity"), an affiliate of ML Film and a
joint venturer in Media Opportunity Management
Partners, the general partner of ML Media Opportunity
Partners, L.P.; a director of ML Mezzanine II Inc. ("ML
Mezzanine II"), an affiliate of ML Film and the general
partner of the managing general partner of ML Lee
Acquisition Fund II, L.P. and ML Lee Acquisition Fund
(Retirement Accounts) II, L.P.; a director of ML
Mezzanine Inc. ("ML Mezzanine"), an affiliate of ML
Film and the general partner of the managing general
partner of ML Lee
Acquisition Fund, L.P.; a director of Merrill Lynch
Venture Capital Inc. ("ML Venture"), an affiliate of ML
Film and the general partner of the Managing General
Partner of ML Venture Partners I, L.P. ("Venture I"),
ML Venture Partners II, L.P. ("Venture II"), and ML
Oklahoma Venture Partners Limited Partnership
("Oklahoma"); and a director of Merrill Lynch R&D
Management Inc. ("ML R&D"), an affiliate of ML Film and
the general partner of the Managing General Partner of
ML Technology Ventures, L.P. Mr. Albert also serves as
an independent general partner of Venture I and Venture
II.
Robert F. Aufenanger, 42, a Vice President of
Merrill & Co. Corporate Credit and a Director of the
Partnership Management Department, joined Merrill Lynch
in 1980. Mr. Aufenanger is responsible for the ongoing
management of the operations of the equipment and
project related limited partnerships for which
affiliates of ML Film serve as general partners. Mr.
Aufenanger is also a director of ML Media, ML
Opportunity, ML Venture, ML R&D, ML Mezzanine, and ML
Mezanine II.
Steven N. Baumgarten, 40, a Vice President of Merrill
Lynch & Co. Corporate Credit joined Merrill Lynch in
1986. Mr. Baumgarten shares responsibility for the
ongoing management of the operations of the equipment
and project related limited partnerships for which
subsidiaries of ML Leasing Equipment Corp., an
affiliate of Merrill Lynch, are general partners.
Michael E. Lurie, 52, a First Vice President of
Merrill Lynch & Co. Corporate Credit and the Director
of the Asset Recovery Management Department, joined
Merrill Lynch in 1970. Prior to his present position,
Mr. Lurie was the Director of Debt and Equity Markets
Credit responsible for the global allocation of credit
limits
and the approval and structuring of specific
transactions relating to debt and equity products. He
also served as Chairman of the Merrill Lynch
International Bank Credit Committee. Mr. Lurie is also
a director of ML Media, ML Opportunity, ML Venture and
ML R&D.
Diane T. Herte, 35, an Assistant Vice President
of Merrill Lynch & Co., Corporate Credit since 1992,
joined Merrill Lynch in 1984. Ms. Herte's
responsibilities include controllership and financial
management functions for certain partnerships for which
subsidiaries of ML Leasing Equipment Corp., an
affiliate of Merrill Lynch, are general partners.
Mr. Aufenanger is an executive officer of Mid
Miami Diagnostics Inc. ("Mid-Miami Inc."). On October
28, 1994 both Mid-Miami Inc. and Mid-Miami Diagnostics,
L.P. filed voluntary petitions for protection from
creditors under Chapter 7 of the United States
Bankruptcy Code in the United States Bankruptcy Court
for the Southern District of New York.
Merrill Lynch was a co-managing underwriter of
the initial public offering of Sony Pictures
Entertainment Inc. (then known as "Tri-Star Pictures,
Inc.") securities and of several subsequent public
offerings of additional SPE securities. In addition,
an affiliate of the Managing Partner serves as a
manager for certain film financing transactions
conducted on behalf of SPE in Japan. Therefore, ML
Film and its affiliates could have interests that may
conflict with those of the Partnership.
Merrill Lynch, or an affiliate, has served as a
selling agent for the public offerings of units in each
of the Delphi Partnerships.
Operational and Financial Services.
To assist it in the performance of its duties,
the General Partner has engaged Magera, subject to the
direction and supervision of the General Partner, to
provide operational and financial services which are
provided at no additional cost to the Partnership for
each year for which there is a management fee. Magera
is owned by Richard M. Mason and Aaron German. Mr.
Mason, a partner of the non-managing partner of the
General Partner and the President of Magera, and Mr.
German, the Executive Vice President of Magera, also
previously acted as consultants to SPE. Magera also
provides operational and financial services to the
general partners of other private and public limited
partnerships, including the other Delphi Partnerships,
and serves as a consultant to others engaged in the
entertainment industry.
Item 11. Executive Compensation.
The General Partner was paid a management fee of
$400,000 for 1995. The General Partner is responsible
for payments to all personnel employed by it, office
and travel expenses, and the preparation and mailing of
reports to partners and other matters relating to the
administration of the Partnership. The General Partner
does not, however, bear the expense of professional
fees rendered on behalf of the Partnership, such as
legal fees and fees to certified public accountants,
which are paid directly by the Partnership. For years
subsequent to 1995, there is no fixed management fee,
but the General Partner will be reimbursed for out-of-
pocket expenses with respect to administering the
Partnership and reporting to partners. In that regard,
the General Partner, on behalf of the Partnership, has
retained Magera to provide those services to the
Partnership for 1996.
Until limited partners have received total cash
distributions equal to their capital contributions (the
"Capital Return"), they will receive 99% of, and the
General Partner will receive 1% of, all cash distributions.
The General Partner, in addition to receiving distributions
in respect of the 1% interest for which it has paid, will
be entitled to receive distributions in amounts equal to
20% of all cash distributions made after Capital Return.
The payment to the General Partner of one-third of these
additional amounts with respect to the 20% interest will be
deferred until the limited partners have received total
cash distributions equal to l50% of Capital Return and the
amounts deferred will be payable from the next cash
distributed after l50% of Capital Return is reached. If
l50% of Capital Return is not reached, the General Partner
will not receive any deferred amount.
The foregoing describes the provisions of the
partnership agreement concerning the General Partner's
right to share in cash distributions, and is not intended
to suggest that any particular level of cash distributions
will be reached.
Prior to reaching Capital Return, income will be
allocated 99% to the limited partners and l% to the General
Partner. After Capital Return is reached, allocations of
income will be based on the aggregate prior allocations of
income and losses, the aggregate prior cash distributions
and cash available for distribution.
Item 12. Security Ownership of Certain Beneficial Owners
and Management
To the best of the knowledge of the Partnership, no
person beneficially owns in excess of 5% of the limited
partnership units of the Partnership.
To the best of the knowledge of the Managing
Partner, as of March 1, 1996, no
person is the beneficial owner of 5% or more of the
outstanding common stock of Merrill
Lynch.
Item 13. Certain Relationships and Related Transactions.
The Partnership's operations relating to the
ownership and exploitation of films involve Columbia or
TriStar. See Item 1 "Business."
The General Partner is entitled to management fees
and to a portion of cash distributions to partners. The
General Partner of the Partnership is affiliated with the
general partners of other Delphi Partnerships all of which
are limited partnerships similar to the Partnership.
<PAGE>
PART IV.
Item 14. Exhibits, Financial Statement Schedules,
and
Reports on Form 8-K.
(a)(1) Financial Statements:
Delphi Film Associates IV
Independent Auditors' Report
Balance Sheets at December 31, 1995 and 1994
Statements of Operations for the Years
Ended December 31, 1995, 1994 and 1993
Statements of Cash Flows for the Years
Ended December 31, l995, 1994 and 1993
Statements of Changes in Partners'
Capital for the Years Ended December
31, 1995, 1994 and 1993
Notes to Financial Statements Columbia-
Delphi IV Productions
Independent Auditors' Report
Balance Sheets at December 31, 1995 and
1994
Statements of Operations for the Years
ended December 31, 1995, 1994 and 1993
Statements of Cash Flows for the Years
Ended December 31, l995, 1994 and 1993
Statements of Venturers' Capital for the
Years ended December 31, 1995,
1994 and 1993
Notes to Financial Statements Tri-Star-
Delphi IV Productions
Independent Auditors' Report
Balance Sheets at December 31, l995 and
1994
Statements of Operations for the Years
Ended December 31, 1995, 1994 and 1993
Statements of Cash Flows for the Years
Ended December 31, l995 1994 and 1993
Statements of Venturers' Capital for the Years
Ended December 31, 1995, 1994 and 1993
Notes to Financial Statements
(a)(2) Financial Statement Schedules:
No financial statement schedules have been
filed as part of this report as none are
required.
<TABLE>
<CAPTION>
(a)(3) Exhibits
Exhibit No.
<S> <C>
Amended Agreement
of Limited Partnership (1)
4.l(a)
Amendment to the Amended Agreement
of Limited Partnership dated
as of December 26, 1986 (2)
4.1(b)
Joint Venture Agreements (1)
10.1
Product Origination
Agreements (1)
l0.2
Distribution Agreements (1)
l0.4(a)
Amendment to the Columbia
Distribution Agreement dated May
14, 1987 (3)
10.4(b)
Amendment to the Tri-Star
Distribution Agreement dated June
9, 1987 (3)
10.4(c)
Amendment to the Columbia Distribution
Agreement dated as of October 14, 1987 (4)
10.4(d)
Amendment to the Tri-Star Distribution Agreement
dated as of October 14, 1987 (4)
10.4(e)
Financial Data Schedule 27
</TABLE>
(1) Incorporated by reference to the Partnership's
registration statement No. 2-96426, as amended, on file
with the Securities and Exchange Commission.
(2) Incorporated by reference to the Partnership's Form 10-K
for the year ended December 31, 1986 on file with the
Securities and Exchange Commission.
(3) Incorporated by reference to the Partnership's Form 10-Q
for the quarter ended June 30, 1987 on file with the
Securities and Exchange Commission.
(4) Incorporated by reference to the Partnership's Form 10-Q
for the quarter ended September 30, 1987 on file with
the Securities and Exchange Commission.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the last
quarter of the Partnership's fiscal year ended December 31,
1995.
(c) Exhibits.
The Exhibits required by Item 601 of Regulation S-K
are submitted as a separate section following the
Partnership's financial statements.
(d) Financial Statement Schedules.
No financial statement schedules have been filed
as part of this report as none are required.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d)
of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: March 26 , 1996 DELPHI FILM ASSOCIATES
IV
By: THE DELPHI COMPANY
General Partner
By: ML Film
Entertainment Inc.,
Managing Partner
/s/ Kevin K.
Albert (Kevin K. Albert)
President
Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by
the following persons on behalf of the Registrant in the
capacities and on the dates indicated.
Signature Title Date
/s/ Kevin K. Albert Director and President
of March 26, 1996
(Kevin K. Albert) the Managing Partner
of the General Partner
(principal executive
officer of the Registrant)
/s/ Robert F. Aufenanger Director and
Executive Vice March 26, 1996
(Robert F. Aufenanger) President of the
Managing
Partner of the General Partner
/s/ Steven N. Baumgarten Director and Vice
President March 26, 1996
(Steven N. Baumgarten) of the Managing Partner
of the General Partner
Director and
Vice President March 26, 1996
(Michael E. Lurie) of the Managing Partner
of the General Partner
/s/ Diane T. Herte Treasurer of the March 26,
1996
(Diane T. Herte) Managing Partner
of the General Partner
(principal financial
officer and principal
accounting officer of the
Registrant)
<PAGE>
EXHIBIT INDEX
Page Reference
in Sequentially
Numbered Copy
4.1(a) Amended Agreement
of Limited Partnership*
4.1(b) Amendment to the Amended
Agreement or Limited Partnership
dated as of December 26, 1986*
l0.l Joint Venture Agreements*
l0.2 Product Origination Agreements* l0.4(a)
Distribution Agreements*
10.4(b) Amendment to the Columbia Distribution
Agreement dated May 14, 1987*
10.4(c) Amendment to the Tri-Star Distribution
Agreement dated June 9, 1987*
10.4(d) Amendment to the Columbia Distribution
Agreement dated as of October 14, 1987*
10.4(e) Amendment to the Tri-Star Distribution
Agreement dated as of October 14, 1987*
27 Financial Data Schedule
*Incorporated by reference
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
Delphi Film Associates IV:
We have audited the accompanying balance sheets of Delphi
Film Associates IV (a New York Limited Partnership) as of
December 31, 1995 and 1994, and the related statements of
operations, cash flows and changes in partners' capital
for each of the years in the three-year period ended
December 31, 1995. These financial statements are the
responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also
includes assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial
position of Delphi Film Associates IV (a New York Limited
Partnership) at December 31, 1995 and 1994, and the
results of its operations and its cash flows for each of
the years in the three-year period ended December 31, 1995
in conformity with generally accepted accounting
principles.
KPMG PEAT MARWICK LLP
New York, New York
March 25, 1996
<PAGE>
DELPHI FILM ASSOCIATES IV
(A New York Limited Partnership)
BALANCE SHEETS
(000's Omitted)
<TABLE>
<CAPTION>
December 31,
1995 1994
<S> <C> <C>
ASSETS
Cash $
$
185
473
Short-Term Investments (Note 2) 1,227
1,369
Receivable from Columbia-Delphi
IV
Productions, net (Notes 4 &5) 623
584
Receivable from Tri-Star-Delphi
IV
Productions, net (Notes 4 & 777
817
5)
Interest in Motion Picture
Venture-Columbia-
Delphi IV Productions (Notes 13
25
2 & 4)
Interest in Motion Picture
Venture-Tri-Star-
Delphi IV Productions (Notes
2 & 4) --
35
Total $
$
Assets 2,825
3,303
LIABILITIES AND PARTNERS'
CAPITAL
Liabilities:
Accrued Expenses and Accounts $
$
Payable 68
110
Total
Liabilities 68
110
Partners' Capital (Note 1):
General Partner 73
77
Limited Partners
2,684
3,116
Total
Partners' Capital 2,757
3,193
Total
Liabilities and Partners'
$
$ Capital 2,825
3,303
See accompanying notes to the financial
statements.
</TABLE>
<PAGE>
DELPHI FILM ASSOCIATES IV
(A New York Limited Partnership)
STATEMENTS OF OPERATIONS
(000's Omitted, except net (loss) profit per unit)
<TABLE>
<CAPTION>
For the Year Ended December
31,
1995 1994 1993
<S> <C> <C> <C>
Interest Income $ $
$
87 119
40
Expenses:
Management Fee 400 400
400
Other Expenses
57 48
126
457 448
526
Loss before Share of
Profit
in Motion Picture (370) (329)
(486)
Ventures
Share of Profit in
Motion Picture
Venture--Columbia-
Delphi IV
Productions (Notes 2 316 250
504
& 4)
Share of Profit in
Motion Picture
Venture--Tri-Star-
Delphi IV
Productions (Notes
2 & 4) 22 62
1,771
Net (Loss) Profit $ $
$
(32) (17)
1,789
Net (Loss) Profit Per
Unit of
Limited Partnership
Interest
( 8,000 Units) $ $
$
(4) (2)
221
See accompanying notes to the financial
statements.
</TABLE>
<PAGE>
DELPHI FILM ASSOCIATES IV
(A New York Limited
Partnership) STATEMENTS OF
CASH FLOWS
(000's Omitted)
<TABLE>
<CAPTION>
For the Year Ended December 31,
1995 1994 1993
<S>
<C> <C> <C>
Cash Flow From Operating
Activities:
Net (Loss) Profit $ $
$
(32) (17)
1,789 Adjustments to reconcile Net
(Loss) Profit to net
cash (used) provided by
operating activities:
Share of Profit in Motion (338) (312)
(2,275) Picture Ventures
Distributions from Joint 385 341
2,429
Ventures
Changes in Assets and
Liabilities:
Decrease in Receivables
from Joint
Ventures, net 1 7,864
9,267
(Decrease) Increase in
Accrued Expenses
and Accounts Payable
(42) 27
(7)
Net Cash (Used) Provided
by Operating
Activities
(26) 7,903
11,203
Cash Flow From Investing
Activities:
Purchases of Short-Term (4,472) (35,792)
(12,475)
Investments
Redemptions of Short-Term
Investments 4,614 34,967
12,568
Net Cash Provided (Used) by
Investing
Activities
142 (825)
93
Cash Flow From Financing
Activities:
Distributions to Partners
(404) (7,071)
(11,313) Net Cash Used by Financing
Activities (404) (7,071)
(11,313)
(Decrease) Increase In Cash (288) 7
(17)
Cash at beginning of year
473 466
483 Cash at end of year $ $
$
185 473
466 See accompanying notes to the financial statements.
</TABLE>
<PAGE>
DELPHI FILM ASSOCIATES IV
(A New York Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 3l, 1995, 1994 AND
1993 (000's Omitted, except distributions per
unit)
<TABLE>
<CAPTION>
General Limited
Total
<S> <C> <C>
<C>
Balance January 1, 1993 $ $
$
243 19,562
19,805
Net Profit for the Year
Ended
December 31, 1993 18 1,771
1,789
Distributions to Partners
($1,400 per unit) (113) (11,200)
(11,313)
Balance December 31, 1993 148 10,133
10,281
Net Profit for the Year
Ended
December 31, 1994 -- (17) (17)
Distributions to Partners
($875 per unit) (71) (7,000) (7,071)
Balance December 31, 1994 77 3,116 3,193
Net Loss for the Year Ended
December 31, 1995 -- (32) (32)
Distributions to Partners
($50 per unit) (4) (400) (404)
Balance December 31, 1995 $ $ $
73 2,684 2,757
See accompanying notes to the financial statements.
</TABLE>
<PAGE> DELPHI FILM
ASSOCIATES IV
(A New York Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. General
Delphi Film Associates IV (the "Partnership") is a
limited partnership which was formed to participate in the
production, acquisition, ownership, and exploitation of
feature length motion pictures through Columbia-Delphi IV
Productions, a joint venture with Columbia Pictures
Industries, Inc. (the "Columbia Joint Venture"), and
through Tri-Star-Delphi IV Productions, a joint venture
with TriStar Pictures, Inc. (formerly Tri-Star Pictures,
Inc.) ("TriStar") (the "Tri-Star Joint Venture") (the
"Joint Ventures").
The Partnership was organized under the law of the State
of New York in December 1984. The Delphi Company, a New
York general partnership (the "General Partner"), is the
general partner of the Partnership. The General Partner,
which has the full responsibility for the management of the
Partnership's business, received a fee for its management
services of $400,000 in each of the years l995, 1994 and
1993. A public offering (the "Offering") of limited
partnership interests was completed on June 27, l985. The
Partnership had no substantial operations until June l985
when the Offering was completed. A total of 8,000 units at
$5,000 per unit were sold. The General Partner contributed
$404,000, an amount equal to l% of the total capital
contributed to the Partnership. Profits and losses have
been allocated l% to the General Partner and 99% to the
Limited Partners.
The principal business of the Partnership is the
production, acquisition, ownership, and exploitation of
motion pictures through its participation in the Joint
Ventures. Accordingly, the Partnership's operating results
are in large part dependent upon the operating results of
the Joint Ventures, and are significantly impacted by the
Joint Ventures' policies (see Note 4).
2. Summary of Significant Accounting Policies
(a) Short-Term Investments
Short-Term Investments consist solely of U.S. Government
Securities which are stated at cost plus accrued interest,
which approximates market value.
(b) Accounting for Participation in Joint Ventures
The Partnership records its investment in the Joint
Ventures under the equity method of accounting. Columbia
agreed to compensate the Partnership for the
unavailability to the Columbia Joint Venture of investment
tax credits with respect to one of the Columbia films by
paying $288,000 to the Partnership in l986, an amount
which is equal to approximately twice the Partnership's
proportionate share of the investment tax credit relating
to that film. This payment had been applied as a
reduction of the Partnership's interest in the Columbia
Joint Venture as of December 31, 1991. During the year
ended December 31, 1992, the Partnership accrued
distributions from the Columbia Joint
Venture in excess of its interest in Motion Picture
Venture. As a result, the Partnership included an
additional $288,000 in its share of profit from the
Columbia Joint Venture for the year ended December 31,
1992.
(c) Accounting for Income Taxes
No provision for income taxes has been made as Delphi
Film Associates IV is treated as a partnership for income
tax purposes, with all income tax consequences flowing
directly to its partners.
Effective January l, l993, the Partnership adopted
Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes." As of December 31, 1995 and
1994, the reported amounts of the Partnership's assets less
liabilities were less than the tax bases by approximately
$56,000 and $101,000, respectively. The adoption of the
Statement had no impact on the Partnership's financial
statements.
3. Supplemental Disclosure of Cash Flow Information
No amounts for interest were paid in l995, l994 and l993.
4. Transactions with Joint Ventures
(a) Interests in Motion Pictures
The Partnership, through each Joint Venture, generally
has interests ranging from 5% to 25% in (and has borne a
corresponding percentage of the cost of) motion pictures in
which a Joint Venture has an interest ("Joint Venture
Films"). In addition, the Partnership, through the Tri-
Star Joint Venture, has a participation interest in two
films (the "Additional Films"). The Partnership made no
capital contributions for its interest in these two films,
and payments due, if any, with respect to these interests
will be made to the Partnership in June l996, subject to
being paid
earlier under certain circumstances.
As of December 31, 1995, the Columbia Joint Venture had
twelve films in release for which the Partnership's cash
contributions (including interest) aggregated $23,117,000,
and the Tri-Star Joint Venture had fifteen films (including
the Additional Films) in release for which the
Partnership's cash contributions (including interest)
aggregated $22,701,000.
(b) Current Operations
As of December 31, l995, all twenty-seven films in which
the Partnership has an interest had been released. Based
on the performance of the films during the year ended
December 31, 1995, and after deducting the net operating
expenses of the Partnership, the Partnership is reporting a
net loss of $32,000 for the year ended December 31, 1995.
(c) Transactions with Columbia and TriStar
The films in which the Columbia Joint Venture has an
interest are distributed pursuant to a distribution
agreement between Columbia Pictures, a division of Columbia
Pictures Industries, Inc. ("Columbia") (a "Distributor"),
and the Columbia Joint Venture. The films in which the Tri-
Star Joint Venture has an interest are distributed pursuant
to a distribution agreement between TriStar Pictures, Inc.
(a "Distributor") and the Tri-Star Joint Venture (see Note
6). The Distributors are entitled to receive a fee of l7.5%
of substantially all gross receipts from each film, except
that a Distributor's entitlement to this distribution fee
is deferred until its Joint Venture has received from the
distribution of a film an amount equal to that spent by the
Joint Venture to produce or acquire an interest in the
film, other than amounts spent for payments in the nature
of interest. In light of the results of the Joint Venture
films, net revenue as of December 31, 1995, 1994 and 1993
has
been computed without deducting a distribution fee to the
Distributor with the exception of five films in l995, l994
and l993 for which a portion of the fee was deducted and
two films in l995, l994 and l993 for which the entire
distribution fee has been deducted.
(d) Joint Venture Revenue Recognition
Each Joint Venture recognizes net revenues from the
Distributor on an accrual basis. Net revenues consist of:
(a) the portion of net proceeds (gross receipts less a
distribution fee, unless deferred, and other distribution
and releasing costs) or, if greater, the portion of gross
receipts payable to the Joint Ventures under the
distribution agreements, plus, (b) accrued gross receipts
(not in excess of the Columbia and Tri-Star Joint Venture's
advertising expenditures plus an amount intended to
approximate the cost of funds incurred by the Partnership
in connection with the Columbia and the Tri-Star Joint
Ventures' advertising obligations). However, certain
advances received by the Distributor which are includable
in gross receipts under the distribution agreements are not
reflected in the calculation of net revenues until those
advances are earned.
(e) Joint Venture Amortization Policies
Advertising expenditures which benefit future periods
were capitalized as incurred by the Joint Ventures.
Advertising expenditures and unamortized production costs
are amortized under the individual film forecast method
based upon net revenues recognized in proportion to the
Joint Venture's estimate of ultimate net revenues to be
received without regard to any Additional Payments (see
Note 6). Unamortized production costs are compared with
net realizable value on a film by film basis, and losses
are recognized to the extent of any excess of costs over
net realizable value. Unamortized advertising expenditures
are compared with net
realizable value for all films in the aggregate for each
Joint Venture and losses are recognized to the extent of any
excess of expenditures over net realizable value.
(f) Receivable from Columbia Joint Venture
This asset represents the amounts receivable by the
Partnership from the Columbia Joint Venture. The total
receivable in l995 and l994 of $623,000 and $584,000,
respectively, consists of amounts accrued with respect to
net proceeds and gross receipts payments.
(g) Receivable from Tri-Star Joint Venture, net
This asset represents the net amounts receivable by the
Partnership from the Tri-Star Joint Venture. The total
receivable in l995 of $777,000 consists of $385,000 accrued
with respect to net proceeds and gross receipts payments and
$392,000 accrued as additional payments. The total
receivable in l994 of $817,000 consisted of $423,000 accrued
with respect to net proceeds and gross receipts payments and
$394,000 accrued as additional payments.
5. Advances
The Partnership benefited from an arrangement between
each Joint Venture and its related Distributor under which
an aggregate of $400,000 (the "Advances") had been made
available, without interest, to the Joint Ventures, for the
benefit of the Partnership, as an advance against payments
that would otherwise be made to the Joint Ventures at a
later date. During 1990, the Partnership had received the
entire $400,000 available under these arrangements. In
October l992, the Distributors for the respective Joint
Ventures modified the terms of the recoupment of the
Advances to provide that the Distributors will be entitled
to retain an amount equal to the Advances from any
Additional Payments (See Note 6) otherwise payable to the
Joint Ventures on
behalf of the Partnership. Prior to this modification, the
Partnership was restricted in the amount of cash it could
distribute to its partners and would have been required to
repay these Advances in l992. This modification permitted
the Partnership to defer this repayment and to make
distributions in excess of $l00 per limited partnership unit
during l994, 1993 and 1992 without first repaying these
Advances. As of December 31, 1994, each $200,000 Advance
previously received by the Partnership from each of
Columbia and TriStar Distributors had been repaid.
6. Additional Payments
The terms of the distribution agreements between each
Joint Venture and its respective Distributor provided that
the Partnership would be entitled to receive, through the
Joint Venture, a payment (an "Additional Payment") from that
Joint Venture's Distributor for each film (an "Unrecouped
Film"), if by March l993, in the case of the Columbia Joint
Venture, and if by February l994, in the case of the Tri-
Star Joint Venture, for which the Joint Venture had not
received from the distribution of that film (or its sale) an
amount equal to the amount spent by the Joint Venture to
produce or acquire an interest in that film, other than
amounts spent for payments in the nature of interest ("Cost
Return"). Each Additional Payment was in the amount
necessary for the Partnership to be repaid (without
interest) its unrecouped contributions to the Joint Venture
with respect to the production or acquisition of an
Unrecouped Film (other than contributions for payments in
the nature of interest), but not more than the amount
specified below. The Additional Payment was first payable
only to the extent of the distribution fees received by the
Distributor from the distribution of all of its Joint
Venture's films. The
Additional Payments based on distribution fees were
allocated by the Joint Venture first to the Partnership to
the extent necessary for the Partnership to recoup its
investment in such film; any excess for such film was
allocated to the respective co-venturer of the Partnership
in a Joint Venture ("Studio Venturer") until Cost Return.
If these distribution fees were insufficient to enable a
Distributor to make the Additional Payments with respect to
all of its Joint Venture's Unrecouped Films, then gross
receipts and net proceeds of each remaining Unrecouped Film
distributed by that Distributor were recalculated by
including as gross receipts the minimum license fees under
its license agreement with Home Box Office, Inc. and certain
minimum amounts in respect of video cassette and video disc
exploitation with respect to that Unrecouped Film. Each
Distributor then made an Additional Payment to the
Partnership, through its Joint Venture, with respect to each
Unrecouped Film to the extent of the Partnership's share of
additional gross receipts or net proceeds payable as a
result of the recalculation but only up to the amount of the
unrecouped contributions (other than contributions for
payments in the nature of interest) by the Partnership for
the production or acquisition of that Unrecouped Film. Each
such Additional Payment made on the basis of such
recalculation was allocated between the Partnership and the
respective Studio Venturer in proportion to their respective
interest in the applicable Unrecouped Film.
The Distribution Agreements provided that each
Distributor would be entitled to recoup the Additional
Payments made to the Partnership in respect of each
Unrecouped Film, with an amount in the nature of interest
calculated at ll0% of the prime rate from time to time, from
the Partnership's share of subsequent gross receipts or net
proceeds of that Unrecouped
Film and from the proceeds of any sale of the Partnership's
interest in that Unrecouped Film or amounts allocable to
that Unrecouped Film upon a sale of the Partnership's
interest in the Joint Venture. In no event will the
Distributor be able to recoup amounts from the proceeds of
any sale from a film that is not an Unrecouped Film. In
calculating the amount of distribution fees available for
the Additional Payments, no distribution fee will be deemed
received by a Distributor (and therefore no distribution fee
is deemed available for the Additional Payment) from (i) a
film with respect to which the most recent payment was based
on gross receipts, (ii) a film that did not reach Cost
Return or (iii) an Additional Film.
Based on the anticipated performance of one film in
release at December 31, l995 and 1994, $392,000 and
$394,000, respectively, were accrued by the Tri-Star Joint
Venture as an Additional Payment allocable to the
Partnership. The Additional Payments were due and payable
to the Partnership, net of the Advances through the
respective Joint Ventures, promptly after the dates set
forth above following certain certifications. The
Partnership received approximately
$7,886,000 in February l994 representing its share of the
TriStar Joint Venture's Additional Payment, relating to all
but one film net of the $200,000 advances previously
received by the Partnership and approximately $l0,911,000 in
May l993 representing its share of the Columbia Joint
Venture's Additional Payment net of the $200,000 advance
previously received by the Partnership. The Additional
Payments from the Distributors are expected to enable the
Partnership, through each Joint Venture, to achieve Cost
Return for each Unrecouped Film and are not intended to
enable the Partnership to recoup any amounts paid by the
Partnership for management fees or other expenses of the
Partnership.
Until the recoupment as referred to is complete, the
Partnership will not receive any additional revenue from
the distribution of any Unrecouped Film. The Columbia and
TriStar Distributors are not expected to fully recoup these
Additional Payments and it is therefore currently expected
that the Partnership will not receive any additional
revenue with respect to the Columbia and Tri-Star Joint
Venture's Unrecouped Films.
The Partnership has begun evaluating the value of
its interest in the film assets for the purpose of possibly
selling that interest and liquidating the Partnership. The
General Partner presently anticipates that the Partnership
may be liquidated by late 1996, or early 1997. However,
cash distributions as a result of the liquidation may be
made to the partners to the extent, and only to the extent,
the proceeds from the sale of the Partnership's interest in
the film assets in connection with the liquidation are in
excess of the Distributors' entitlement to the recoupment
described below net of a reserve for the Partnership's
operating expenses.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Venturers
Columbia - Delphi IV Productions
In our opinion, the accompanying balance sheets and the
related statements of operations, of cash flows and of
venturers' capital present fairly, in all material
respects, the financial position of Columbia - Delphi IV
Productions at December 31, 1995 and 1994, and the results
of its operations and its cash flows for each of the three
years in the period ended December 31, 1995, in conformity
with generally accepted accounting principles. These
financial statements are the responsibility of the
Venture's management; our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits of these statements in accordance
with generally accepted auditing standards which require
that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and
disclosures in the
financial statements, assessing the accounting principles
used and significant estimates made by management, and
evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for
the opinion expressed above.
Century City, California
March 22, l996
<PAGE>
COLUMBIA - DELPHI IV PRODUCTIONS
(A Joint Venture)
BALANCE SHEETS
(000's Omitted)
<TABLE>
<CAPTION>
December 31,
1995 1994
<S>
<C> <C>
ASSETS
Motion Picture Production and
Advertising
Costs, net of accumulated
amortization
of $164,104 and $163,408, $
$
respectively 82
778
(Notes 1, 2 & 5)
Motion Picture Costs Recoverable
from
Additional Payments (Notes --
1,482
3, 5 & 6)
Receivable from Columbia
Pictures
(Distributor) (Note 6)
6,278
5,049
Total $ 6,360
$
Assets
7,309
LIABILITIES AND VENTURERS'
CAPITAL
Liabilities:
Payable to Columbia Pictures
Industries, Inc.
(Note 6) $ 5,655
$
5,947 Payable to Delphi Film
Associates IV
(Note 6)
623 584
Total
Liabilities 6,278 6,531
Venturers' Capital (Notes 1 &
3):
Columbia Pictures Industries, 69 753
Inc.
Delphi Film Associates IV
13 25
Total
Venturers' Capital 82 778
Total
Liabilities and Venturers'
$ $
Capital 6,360 7,309
See accompanying notes to the financial
statements. </TABLE>
<PAGE>
COLUMBIA - DELPHI IV PRODUCTIONS
(A Joint Venture)
STATEMENTS OF
OPERATIONS (000's
Omitted)
<TABLE>
<CAPTION>
For
the Year Ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Net Revenues From Motion
Picture
Exploitation (Note $ $
$
2) 3,021 3,055
3,133
Less: Amortization of
Motion
Picture
Production and
Advertising
Costs
(Notes 2 & 5)
696 652
559
Income from Operations 2,325 2,403
2,574
Additional Payment
Accrual
(Recapture) (Notes 3 -- 158
(443)
& 5)
Interest Income -- --
1,428
Other (Expense) Income
(Note 7)
-- (146)
28
Net Income $ $
$
2,325 2,415
3,587
See accompanying notes to the financial
statements.
</TABLE>
<PAGE>
COLUMBIA - DELPHI IV PRODUCTIONS
(A Joint Venture)
STATEMENTS OF CASH
FLOWS (000's
Omitted)
<TABLE>
For the Year
Ended December 31,
1995
1994 1993
<S>
<C> <C> <C>
Cash Flow From Operating
Activities:
Net Income $ $
$
2,325 2,415
3,587 Adjustments to reconcile Net
Income to net cash
provided by operating
activities:
Amortization of Motion Picture
Production and
Advertising Costs 696 652
559
Accrued Distributions to 253 (237)
70,023
Venturers
Changes in Assets and
Liabilities:
(Decrease) Increase in
Payable to Columbia
Pictures Industries, (292) 269
(59,120)
Inc.
Increase in Receivable from
Columbia
Pictures (Distributor) (1,229) (79)
(458) Decrease in Investment in
Motion Picture
Production and -- --
97
Advertising Costs
Decrease (Increase) in
Motion Picture Costs
Recoverable from 1,482 (158)
70,481
Additional Payments
Increase (Decrease) in
Payable to Delphi
Film Associates IV, net 39 (32)
(10,703)
Decrease in Advance from
Columbia
Pictures Industries,
Inc. (Distributor) -- --
(200)
Net Cash Provided by
Operating Activities 3,274 2,830
74,266
Cash Flow from Financing
Activities:
Distributions to Venturers
(3,274) (2,830)
(74,266)
Net Cash Used by
Financing Activities (3,274) (2,830)
(74,266)
Net Change in Cash -- --
- --
Cash at beginning of year
-- --
- -Cash at end of year $ $
$
-- --
- --
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
COLUMBIA - DELPHI IV PRODUCTIONS
(A Joint Venture)
STATEMENTS OF VENTURERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 3l,
1995, 1994 AND 1993 (000's Omitted)
<TABLE>
<CAPTION>
Columbia Delphi
Pictures Film
Total
Industries, Associates
Venturers'
Inc.
IV Capital
<S> <C> <C>
<C>
Venturers' Capital as of $ $ $
January 1, 1993 1,973 113 2,086
Net Income for the Year
Ended
December 31, 1993 3,083 504 3,587
Accrued Distributions to
Venturers (3,680) (563) (4,243)
Venturers' Capital as of
December 31,
1993 1,376 54 1,430
Net Income for the Year
Ended
December 31, 1994 2,165 250 2,415
Accrued Distributions to
Venturers (2,788) (279) (3,067)
Venturers' Capital as of
December 31,
1994 753 25 778
Net Income for the Year
Ended
December 31, 1995 2,009 316 2,325
Accrued Distributions to
Venturers (2,693) (328) (3,021)
Venturers' Capital as of
December 31,
1995 $ $
$
69 13
82
See accompanying notes to the financial statements.
</TABLE>
<PAGE> COLUMBIA - DELPHI IV
PRODUCTIONS
(A Joint Venture)
NOTES TO FINANCIAL STATEMENTS
1. General
Columbia-Delphi IV Productions (the "Joint Venture") is
a joint venture between Columbia Pictures Industries, Inc.
("Columbia") and Delphi Film Associates IV, a New York
limited partnership (the "Partnership") formed on April l8,
l985 to engage in the business of producing, acquiring,
owning and exploiting feature length motion pictures.
Through the Joint Venture, Columbia has interests in ten
films ranging from approximately 75-94% and the Partnership
has interests ranging from approximately 6-25% in these
same
films and Columbia has a 65% interest and the Partnership
has a 15% interest in one film in which Columbia-Delphi V
Productions, a joint venture between Columbia and Delphi
Film Associates V, a New York limited partnership ("Delphi
V"), holds the remaining 20% interest (collectively the
"Joint Venture Films"). Columbia and the Partnership were
each responsible for these respective percentages of the
production cost of the Joint Venture Films. In addition,
the Joint Venture acquired a 10% interest in one film
during 1986 which was previously l00% owned by Columbia-
Delphi V Productions. This l0% interest was acquired from
Columbia, which derived its ownership interest through
Columbia-Delphi V Productions. The general partner of
Delphi V is affiliated with the general partner of the
Partnership.
As of December 31, 1995, all twelve Joint Venture Films
had been released (see Note 5).
All of the Joint Venture's films are being distributed
pursuant to a distribution agreement between Columbia
Pictures (the "Distributor"), a division of Columbia, and
the Joint Venture (see Note 2). The Joint Venture does not
anticipate the production of, or acquisition of interests
in, any additional films.
The Partnership participates in a Joint Venture (the
"Other Venture") with TriStar Pictures, Inc. (formerly Tri
Star Pictures, Inc.) ("TriStar") similar to the Joint
Venture.
Sony Pictures Entertainment Inc., the parent company of
Columbia and TriStar, is an indirect wholly-owned
subsidiary of Sony Corporation.
2. Summary of Significant Accounting Policies
Recognition of Revenue
The Joint Venture recognizes net revenues from the
Distributor on the accrual basis. Net revenues consist of:
a) the portion of net proceeds (gross receipts less a
distribution fee, unless deferred, and other distribution
and releasing costs) or, if greater, the portion of gross
receipts payable to the Joint Venture under the
distribution agreement, plus b) accrued gross receipts (not
in excess of the amount of the advertising and promotion
charge paid by the Joint Venture plus an amount intended to
approximate the cost of funds incurred by the Partnership
in connection with the payment of that charge). However,
certain advances received by the Distributor which are
includable in gross receipts under the distribution
agreement are not reflected in the calculation of net
revenues until those advances are earned. The Joint
Venture's advertising and promotion charge expenditures are
recovered (subject to certain limitations) from gross
receipts from all films in which the Joint Venture has an
interest.
Distribution Fee
The Distributor is entitled to receive a 17.5%
distribution fee on substantially all gross receipts in
calculating the net proceeds to which the Joint Venture is
entitled from the distribution of a film; however, the
Distributor's entitlement to this distribution fee will be
deferred until the Joint Venture has received from the
distribution of that film an amount equal to the amount
spent by the Joint Venture to produce or acquire an
interest in the film, other than amounts spent for payments
in the nature of interest ("Cost Return"). After Cost
Return for a film, for purposes of determining any
additional payments based on net proceeds to which the
Joint Venture is entitled in respect of that film, the
Distributor will be entitled to receive a distribution fee
equal to 17.5% of substantially all gross receipts of the
film including gross receipts prior to Cost Return.
Net revenues accrued at December 31, 1995, 1994 and 1993
have been computed without deducting a distribution fee to
the Distributor in light of the results of the Joint
Venture Films released through those respective dates, with
the exception of four films for which a portion of the
distribution fees were deducted.
Motion Picture Production and Advertising Costs
Motion picture production costs include the direct costs
of production plus an overhead charge equivalent to 12.5%
of the direct production costs; these costs were
capitalized as incurred by the Joint Venture. Payments by
the Joint Venture in respect of the advertising and
promotion charge payable to the Distributor were
capitalized as incurred by the Joint Venture to the extent
that those charges benefit future periods. These costs are
amortized under the individual film forecast method based
upon net revenues recognized in
proportion to the Joint Venture's estimate of ultimate net
revenues to be received. Unamortized production costs are
compared with net realizable value on a film by film basis
and unamortized advertising costs are compared with net
realizable value in the aggregate; losses are recognized to
the extent of any excess of costs over net realizable
value. If losses are indicated for films, the Additional
Payments described in Note 3, to the extent available, are
accrued as Motion Picture Costs Recoverable from Additional
Payments.
3. Additional Payments (See Note 5)
The Joint Venture was entitled to a payment from the
Distributor if the Joint Venture had not received net
proceeds and gross receipts (excluding amounts paid to the
Joint Venture for the recovery of advertising and promotion
charge payments) at least equal to the amount spent by the
Joint Venture for the production of films and the
acquisition of interests in films (excluding amounts spent
for payments in the nature of interest) (the
"Expenditures") by March l993. Consequently, a payment of
approximately $7l,000,000 was made in May l993 representing
the amount available to be repaid to the Joint Venture,
without interest, for its unrecouped Expenditures. The
payment to the Joint Venture was allocated first to the
Partnership, to the extent necessary for the Partnership to
recoup (without interest) the amount of its contribution to
the Joint Venture for the production or acquisition of the
Unrecouped Films (other than contributions for payments in
the nature of interest); any excess was then allocated to
Columbia. As a result, the Partnership has recouped all
Expenditures, Columbia is still unrecouped. After Columbia
recoups the outstanding Expenditures, the Distributor will
be entitled to recoup these payments, with an amount in the
nature of interest,
from the Joint Venture's share of subsequent net proceeds
and gross receipts and from the proceeds of any subsequent
sale of the Joint Venture's interest in films which
generated Additional Payments.
If the gross receipts from a film do not exceed the costs
of distributing the film, or if the most recent payment to
the Joint Venture with respect to the film is based on
gross receipts, no amounts from the distribution of that
film will be available for payment to the Joint Venture for
this purpose.
4. Income Taxes
No provision for income taxes is made in the Joint
Venture's financial statements since the venturers treat
the Joint Venture as a partnership for income tax purposes,
with all income tax consequences flowing directly to the
venturers.
Effective January l, l993, the Partnership adopted
Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes." As of October 31, 1995 and
1994 (the Joint Venture's tax year end is October 31), the
tax bases of the Joint Venture's assets less liabilities
exceeded amounts reported in the financial statements at
December 31, 1995 and l994 by approximately $5,660,000 and
$4,998,000, respectively. Management estimates that the
tax bases of the Joint Venture's assets and liabilities did
not differ significantly between October 31 and December 31
in l995 and l994. The adoption of the Statement had no
impact on the Joint Venture's financial statements.
5. Current Operations
As of December 31, 1995, the Distributor had released all
twelve films in which the Joint Venture has an interest.
The Joint Venture was not expected to recoup its investment
in eight of these films out of the proceeds from their
distribution. However, as a result of the Additional
Payments referred to below, the Partnership recouped its
investment in these films. For the years ended December
31, 1995, 1994 and 1993, motion picture production and
advertising costs were reduced by amortization of $696,000,
$652,000 and $531,000, respectively. In addition, for the
year ended December 31, 1993 these costs have been written
down by an additional $28,000 to current net realizable
value.
6. Receivables and Payables
An analysis of the Joint Venture's receivables and
payables is as follows:
AT DECEMBER 31, l995
Receivable Payable Payable
to
from to the
Distributor Columbia
Partnership
(000's omitted)
Net Proceeds and Gross
Receipts $ 6,278 $ 5,655 $ 623
AT DECEMBER
31, 1994
Receivable Payable
Payable to
from to the
Distributor Columbia
Partnership
(000's omitted)
Net Proceeds and Gross
Receipts $ 5,049 $ 4,465 $ 584
Accrued Additional
Payments 1,482 1,482 0
Total $ 6,531 $ 5,947 $ 584
7. Foreign Exchange Gains and Losses
The distribution agreement between the Joint Venture and
the Distributor provides that revenues earned in foreign
currencies be valued as of the date that monies are
remitted or are "freely remittable" to the United States.
Other Expense for the year ended December 31, l994 of
$146,000 represents the cumulative difference between the
monies remitted in U.S. dollars and the value previously
recorded based on the exchange rate at the time of revenue
recognition in the applicable international territory. No
such revenue valuation adjustment was necessary in 1995.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Venturers
TriStar - Delphi IV Productions
In our opinion, the accompanying balance sheets and the
related statements of operations, of cash flows and of
venturers' capital present fairly, in all material
respects, the financial position of TriStar - Delphi IV
Productions at December 31, 1995 and 1994, and the results
of its operations and its cash flows for each of the three
years in the period ended December 31, 1995, in conformity
with generally accepted accounting principles. These
financial statements are the responsibility of the
Venture's management; our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits of these statements in accordance
with generally accepted auditing standards which require
that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the
accounting principles used and significant estimates made
by management, and evaluating the overall financial
statement presentation. We believe that our audits provide
a reasonable basis for the opinion expressed above.
Century City, California
March 22, l996
<PAGE>
TRI-STAR-DELPHI IV PRODUCTIONS
(A Joint Venture)
BALANCE SHEETS
(000's Omitted)
<TABLE>
<CAPTION>
December 31,
1995
1994
<S>
<C> <C>
ASSETS
Motion Picture Production and
Advertising
Costs, net of accumulated
amortization
of $108,473 and $108,268,
respectively
(Notes 1, 2 & 5) $
$
102
307
Motion Picture Costs Recoverable
from
Additional Payments,(Notes 3, 5 1,835 1,006
& 6)
Receivable from TriStar
Pictures, Inc.
(Distributor) (Note 6)
1,083
1,958
Total $
$
Assets 3,020
3,271
LIABILITIES AND VENTURERS'
CAPITAL
Liabilities:
Payable to TriStar Pictures, $
$
Inc. (Note 6) 2,141
2,147
Payable to Delphi Film
Associates IV
(Note 6)
777
817
Total
Liabilities 2,918
2,964
Venturers' Capital (Notes 1 &
3):
TriStar Pictures, Inc. 102
272
Delphi Film Associates IV
--
35
Total
Venturers' Capital 102
307
Total
Liabilities and Venturers'
$
$
Capital 3,020
3,271
See accompanying notes to the financial
statements. </TABLE>
<PAGE>
TRI-STAR-DELPHI IV PRODUCTIONS
(A Joint Venture)
STATEMENTS OF
OPERATIONS (000's
Omitted)
<TABLE>
<CAPTION>
For
the Year Ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Net Revenues From Motion
Picture
Exploitation (Note $ $
$
2) 547 1,318
516
Less: Amortization of
Motion
Picture
Production and
Advertising
Costs
(Notes 2 & 5)
205 277
41
Income from Operations 342 1,041
475
Additional Payments
Accrual
(Recapture) (Notes 3 5 (3,010
4,717
& 5) )
Interest Income -- 571
2,694
Other Expense (Note 7)
-- (508)
- --
Net Income (Loss) $ $(1,90
$
347 6)
7,886
See accompanying notes to the financial
statements.
</TABLE>
<PAGE>
TRI-STAR-DELPHI IV PRODUCTIONS
(A Joint Venture)
STATEMENTS OF CASH
FLOWS (000's
Omitted)
<TABLE>
<CAPTION>
For the Year Ended
December 31,
1995
1994 1993
<S>
<C> <C> <C>
Cash Flow From Operating
Activities:
Net Income (Loss) $ $
$
347 (1,906)
7,886 Adjustments to reconcile Net
Income (Loss)
to net cash provided by
operating activities:
Amortization of Motion Picture
Production and
Advertising Costs 205 277
41
Accrued Distributions to 46 25,236
(6,546)
Venturers
Changes in Assets and
Liabilities:
(Decrease) Increase in
Payable to TriStar
Pictures, Inc. (6) (17,204)
5,110
Decrease (Increase) in
Receivable from
TriStar Pictures, Inc. 875 (405)
865
(Distributor)
(Increase) Decrease in
Motion Picture Costs
Recoverable from (829) 25,641
(7,411)
Additional Payments
(Decrease) Increase in
Payable to Delphi
Film Associates IV, net (40) (7,832)
1,436
Decrease in Advance from
TriStar
Pictures, Inc.
(Distributor) -- (200)
- --
Net Cash Provided by
Operating Activities 598 23,607
1,381
Cash Flow from Financing
Activities:
Distributions to Venturers
(598) (23,607)
(1,381)
Net Cash Used by
Financing Activities (598) (23,607)
(1,381)
Net Change in Cash -- --
- --
Cash at beginning of year
-- --
- -Cash at end of year $ $
$
-- --
- --
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
TRI-STAR-DELPHI IV PRODUCTIONS
(A Joint Venture)
STATEMENTS OF VENTURERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 3l, 1995, 1994 AND 1993
(000's Omitted)
<TABLE>
<CAPTION>
Delphi TriStar
Film
Total
Pictures,
Associates Venturers'
Inc.
IV
Capital
<S> <C> <C>
<C>
Venturers' Capital as of $ $
$
January 1, 1993 495 130
625
Net Income for the Year
Ended
December 31, 1993 6,115 1,771
7,886
Accrued Distributions to
Venturers (6,061) (1,866)
(7,927)
Venturers' Capital as of
December 31,
1993 549 35
584
Net (Loss) Income for the
Year Ended
December 31, 1994 (1,968) 62
(1,906)
Accrued Distributions to
Venturers 1,691 (62)
1,629
Venturers' Capital as of
December 31,
1994 272 35
307
Net Income for the Year
Ended
December 31, 1995 325 22
347
Accrued Distributions to
Venturers (495) (57)
(552)
Venturers' Capital as of
December 31,
1995 $ $
$
102 --
102
See accompanying notes to the financial statements.
</TABLE>
<PAGE> TRI-STAR-DELPHI IV
PRODUCTIONS
(A Joint Venture)
NOTES TO FINANCIAL STATEMENTS
1. General
Tri-Star-Delphi IV Productions (the "Joint Venture") is
a joint venture between TriStar Pictures, Inc. (formerly
TriStar Pictures, Inc.) ("TSPI") ("TriStar") and Delphi
Film Associates IV, a New York limited partnership (the
"Partnership") formed in April 1985 to engage in the
business of producing, owning and exploiting feature length
motion pictures. Through the Joint Venture, TSPI has
interests ranging from approximately 5-62% and the
Partnership has interests ranging from approximately 5-23%
in twelve films (the "Joint Venture Films"). In addition,
the Joint Venture
acquired a l0% participation interest in one film during
l987 which is l00% owned by Delphi VI (as defined below).
This interest was derived from TSPI's interest in the film
through Delphi VI. The Partnership's interest in this film
was obtained in exchange for a portion of the Partnership's
interest in two other films which were conveyed to TSPI.
In addition, the Partnership, through the Joint Venture,
has a participation interest without cost to the Joint
Venture in two additional films. Generally, the remaining
interests in the Joint Venture Films are held by Tri-Star
Delphi III Productions, a joint venture between Delphi Film
Associates III ("DFA III"), a New York limited partnership,
and TSPI, Tri-Star-Delphi V Productions, a joint venture
between Delphi Film Associates V ("DFA V"), a New York
limited partnership, and TSPI, or Tri-Star-ML Delphi
Premier Productions ("Delphi VI"), a joint venture between
ML Delphi Premier Partners, L.P. ("MLDP"), a Delaware
limited partnership, and TSPI.
As of December 31, 1995, the Joint Venture had released
all fifteen films in which the Joint Venture has an
interest. All of the Joint Venture's films are being
distributed pursuant to a distribution agreement with TSPI
(the "Distributor"). The general partner of the
Partnership is affiliated with the general partner of DFA
III, DFA V and MLDP.
The Partnership participates in a similar joint venture
(the "Other Venture") with Columbia Pictures Industries,
Inc. ("Columbia").
Sony Pictures Entertainment Inc., the parent company of
Columbia and TriStar, is an indirect wholly-owned
subsidiary of Sony Corporation.
2. Summary of Significant Accounting Policies
Recognition of Revenue
The Joint Venture recognizes net revenues from the
Distributor on an accrual basis. Net revenues consist of:
a) the portion of net proceeds (gross receipts, less a
distribution fee, unless deferred, and other distribution
and releasing costs) or, if greater, gross receipts payable
to the Joint Venture under the distribution agreement, plus
b) accrued gross receipts (not in excess of the amount of
the advertising and promotion charge paid by the Joint
Venture plus an amount intended to approximate the cost of
funds incurred by the Partnership in connection with
payment of that charge). However, certain advances
received by the Distributor which are includable in gross
receipts under the distribution agreement are not reflected
in the calculation of net revenues until those advances are
earned.
Distribution Fee
The Distributor is entitled to receive a distribution
fee equal to 17.5% on substantially all gross receipts of a
film; however, the Distributor's entitlement to this
distribution fee will be deferred until the Joint Venture
has received from the distribution of that film an amount
equal to the amount spent by the Joint Venture to produce
or acquire an interest in the film, other than amounts
spent for payments in the nature of interest ("Cost
Return"). After Cost Return for a film, in calculating
subsequent payments to the Joint Venture based on net
proceeds, the Distributor will be entitled to receive a
distribution fee equal to l7.5% on substantially all gross
receipts of the film including gross receipts prior to Cost
Return.
Net revenues accrued at December 31, 1995, 1994, and 1993
have been computed without deducting a distribution fee to
the Distributor in light of the results of the films
released through those dates with the exception of two
films in l995,
l994 and l993 for which the entire distribution fee has
been deducted and one film in 1995, 1994 and 1993 for
which a portion of the distribution fee has been deducted.
Motion Picture Production and Advertising Costs
Motion picture production costs include the direct cost
of production plus an overhead charge equivalent to 12.5%
of the direct production costs; these costs were
capitalized as incurred by the Joint Venture. Payments by
the Joint Venture in respect of the advertising and
promotion charge payable to the Distributor were
capitalized as incurred by the Joint Venture to the extent
that those charges benefit future periods. These costs are
amortized under the individual film forecast method based
upon net revenue recognized in proportion to the Joint
Venture's estimate of ultimate net revenues to be received.
Unamortized production costs are compared with net
realizable value on a film by film basis and unamortized
advertising costs are compared with net realizable value in
the aggregate; losses are recognized to the extent of any
excess of costs over net realizable value. If losses are
indicated for films, the Additional Payments described in
Note 3, to the extent available, are accrued as Motion
Picture Costs Recoverable from Additional Payments.
3. Additional Payments (See Note 5)
The Joint Venture was entitled to a payment (an
"Additional Payment") from the Distributor with respect to
each film for which the Joint Venture had not received from
the film's distribution (or its sale) by February 1994 an
amount equal to the amount spent by the Joint Venture to
produce or acquire an interest in the film (other than
amounts spent for payments in the nature of interest) (an
"Unrecouped Film"). Each Additional Payment would be made
in the amount necessary for the Joint Venture to be repaid
(without interest) the amounts spent by it with respect to
the production or acquisition of an Unrecouped Film, other
than contributions for payments in the nature of interest,
but not more than the amount specified below. The
Additional Payment would be payable only to the extent of
the distribution fees received by the Distributor from the
distribution of all of the Joint Venture's films (reduced
to the extent of the Additional Payments made with respect
to other Unrecouped Films). The Additional Payments to the
Joint Venture based on distribution fees would be allocated
by the Joint Venture first to the Partnership, to the
extent necessary for the Partnership to recoup (without
interest) the amount of its contributions to the Joint
Venture for the production or acquisition of the Unrecouped
Films (other than contributions for payments in the nature
of interest); any excess would then be allocated to TSPI.
If those distribution fees were insufficient to enable the
Distributor to make the Additional Payments with respect to
all Unrecouped Films, gross receipts and net proceeds of
each remaining Unrecouped Film would be recalculated by
including as gross receipts in respect of that Unrecouped
Film the excess, if any, of the minimum license fees under
the Distributor's license agreement with Home Box Office,
Inc. and certain minimum amounts in respect of video
cassette and video disc exploitation over the amounts
previously included in the gross receipts of that
Unrecouped Film in respect of those arrangements. The
Distributor would then make Additional Payments to the
Joint Venture to the extent of the additional gross
receipts or net proceeds payable to the Joint Venture as a
result of the recalculation, but only up to the amount of
the unrecouped contributions (other than contributions for
payments in the nature of interest) for the production or
acquisition of that Unrecouped Film; each
Additional Payment made on the basis of such recalculation
would be allocated between the Partnership and TSPI in
proportion to their respective interests in the applicable
Unrecouped Film. The Distributor is entitled to recoup the
Additional Payments made on either basis in respect of each
Unrecouped Film, with an amount in the nature of interest,
from the Joint Venture's share of subsequent gross receipts
or net proceeds of that Unrecouped Film and from the
proceeds of any sale of the Partnership's interest in that
Unrecouped Film or amounts allocable to that Unrecouped
Film upon a sale of the Partnership's interest in the Joint
Venture. In calculating the amount of distribution fees
available for the Additional Payments, no distribution fee
would be deemed received by the Distributor (and therefore
no distribution fee would be deemed available for the
Additional Payment) from a film with respect to which the
most recent payment to the Joint Venture was based on gross
receipts or from a film that did not reach Cost Return.
4. Income Taxes
No provision for income taxes is made in the Joint
Venture's financial statements since the venturers treat
the Joint Venture as a partnership for income tax purposes,
with all income tax consequences flowing directly to the
venturers.
Effective January l, l993, the Partnership adopted
Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes." As of October 31, 1995 and
1994 (the Joint Venture's tax year end is October 31), the
tax bases of the Joint Venture's assets less liabilities
exceeded amounts reported in the financial statements at
December 31, 1995 and 1994 by approximately $2,602,000 and
$2,356,000, respectively. Management estimates that the
tax
bases of the Joint Venture's assets and liabilities did not
differ significantly between October 31 and December 31 in
l995 and l994. The adoption of the Statement had no impact
on the Joint Venture's financial statements.
5. Current Operations
As of December 31, 1995 the Distributor had released all
fifteen films in which the Joint Venture has an interest
(see Note 1). The Joint Venture did not recoup its
investment in ten of these films out of the proceeds from
their distribution. However, as a result of the Additional
Payments referred to below, and those required to be made
in future periods, the Partnership is expected to recoup
its investment in these films. For the years ended
December 31, l995, 1994 and 1993 motion picture production
and advertising costs have been reduced by amortization of
$205,000, $277,000 and $41,000, respectively.
For the year ended December 31, 1995 the Joint Venture
has recorded an increase in the Additional Payment accrual
of $5,000 due to an increase in the amount of minimuns
available for recoupment.
During 1990, an agreement was reached between the Joint
Venture and the Distributor whereby the Distributor agreed
to make non-interest bearing advances to the Joint Venture
up to an aggregate amount of $200,000 against amounts to be
due to the Joint Venture. This advance had been allocated
to the Partnership in order for it to make cash
distributions to its partners. As of December 31, 1993,
the entire $200,000 had been advanced to the Partnership.
The Joint Venture received approximately $23,202,000 in
February l994, net of the $200,000 advance described above,
representing the Joint Venture's Additional Payment.
6. Receivables and Payables
An analysis of the Joint Venture's receivables and
payables is as follows:
AT DECEMBER 31, 1995
Receivable Payable
Payable
to
from to the
Distributor TriStar
Partnership
(000's omitted)
Net Proceeds and Gross
Receipts $ 1,083
$ 698 $ 385
Accrued Additional
Payments 1,835 1,443 392
Total $ 2,918 $ 2,141 $ 777
AT DECEMBER 31, 1994
Receivable Payable
Payable
to
from to the
Distributor TriStar
Partnership
(000's omitted)
Net Proceeds and Gross
Receipts $ 1,958
$ 1,535 $ 423
Accrued Additional
Payments 1,006
612 394
Total $ 2,964
$ 2,147 $ 817
7. Foreign Exchange Gains and Losses
The distribution agreement between the Joint Venture and
the Distributor provides that revenues earned in foreign
currencies be valued as of the date that monies are remitted or
are "freely remittable" to the United States. Other Expense
for the year ended December 31, l994 of $508,000 represents the
cumulative difference between the monies remitted in U.S.
dollars and the value previously recorded based on the exchange
rate at the time of revenue recognition in the applicable
international territory. No such revenue valuation adjustment
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial
information extracted from Balance Sheets and Statement
of Operations for the year ended December 31, 1995 Form
10K of Delphi Film Associates IV and is qualified in its
entirety by reference to such financial statements.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 185,000
<SECURITIES> 1,227,000
<RECEIVABLES> 1,400,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,825,000
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 2,757,000
<TOTAL-LIABILITY-AND-EQUITY> 2,825,000
<SALES> 0
<TOTAL-REVENUES> 87,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 457,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (32,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (32,000)
<EPS-PRIMARY> (4.00)
<EPS-DILUTED> 0
</TABLE>
