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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 for the quarterly period ended March 31, 1996,
or --------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the transition period from __________ to _________
Commission file number 0-14844
-----------
LORIMAR FILM PARTNERS L.P.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 95-3994360
- -------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4000 Warner Blvd., Burbank, California 91522
- ---------------------------------------- --------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (818) 954-6000
--------------
N/A
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)
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 the number of shares outstanding of each of the issuer's class of
common stock, as of the latest practicable date.
Depositary Units of Limited Partnership Interest 33,854
- ------------------------------------------------ --------------------
Description of Class Units Outstanding as
of April 30, 1996
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LORIMAR FILM PARTNERS L.P.
INDEX
PART I. FINANCIAL INFORMATION
PAGE NO.
--------
ITEM 1. FINANCIAL STATEMENTS (Unaudited)
BALANCE SHEETS - March 31, 1996 and December 31, 1995
3
STATEMENTS OF OPERATIONS - Three months ended
March 31, 1996 and 1995 4
STATEMENT OF PARTNERS' CAPITAL - December 31, 1995
through March 31, 1996 4
STATEMENTS OF CASH FLOWS - Three months ended
March 31, 1996 and 1995 5
NOTES TO FINANCIAL STATEMENTS 6-17
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 18-20
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 21-24
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 25
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PART I. FINANCIAL INFORMATION
LORIMAR FILM PARTNERS L.P.
BALANCE SHEETS
(UNAUDITED)
March 31, December 31,
1996 1995
------------ ------------
ASSETS:
Cash and cash equivalents $ 1,045,085 1,188,809
Interest receivable 1,346 0
------------ ------------
Total current assets 1,046,431 1,188,809
Film costs, net 755,788 10,496,816
------------ ------------
Total Assets $ 1,802,219 $ 11,685,625
------------ ------------
------------ ------------
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT):
Current Liabilities:
Amounts due Managing General Partner and
affiliates $ 7,712,180 $ 17,374,018
Amounts due Special Limited Partner 247,324 249,315
Accrued expenses 39,123 69,600
------------ ------------
Total Current Liabilities 7,998,627 17,692,933
------------ ------------
Commitments & Contingencies
Partners' Capital (Deficit):
Limited Partners (5,834,253) (5,739,702)
Managing General Partner (87,166) 7,383
Special Limited Partner (274,989) 274,989
------------ ------------
Total Partners' Capital (Deficit) (6,196,408) (6,077,308)
------------ ------------
Total Liabilities and Partners' Capital
(Deficit) $ 1,802,219 $ 11,685,625
------------ ------------
------------ ------------
See accompanying notes to financial statements.
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LORIMAR FILM PARTNERS L.P.
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
------------------------------
March 31,
1996 1995
---------- -----------
Revenues:
Film revenues $9,841,740 $ 23,958
Interest income 14,660 17,871
---------- -----------
Total revenues 9,856,400 41,829
---------- -----------
Expenses:
Amortization of film costs and
other direct costs 9,745,984 21,827
Interest expense 219,922 344,445
General and administrative 79,560 87,000
Management fees 35 719
Total expenses 10,045,501 453,991
---------- -----------
Net loss $ (189,100) $ (412,162)
---------- -----------
---------- -----------
Allocation of Net Loss:
Limited Partners $ (94,551) $ (206,063)
---------- -----------
---------- -----------
General Partners $ (94,549) $ (206,099)
---------- -----------
---------- -----------
Net loss per unit of limited
partnership interest $ (2.79) $ (6.09)
---------- -----------
---------- -----------
STATEMENT OF PARTNERS' CAPITAL (DEFICIT)
(UNAUDITED)
<TABLE>
<CAPTION>
LIMITED MANAGING SPECIAL
PARTNERS' LIMITED GENERAL LIMITED
UNITS PARTNERS PARTNER PARTNER TOTAL
--------- -------- -------- ------- -----
<S> <C> <C> <C> <C> <C>
Partners' capital (deficit)
December 31, 1995 33,854 $(5,739,702) $ 7,383 $(274,989) $(6,007,308)
Net loss 0 (94,551) (94,549) 0 (189,100)
------ ----------- ----------- --------- -----------
Partners' capital (deficit)
March 31, 1996 33,854 $(5,834,253) $ (87,166) $(274,989) $(6,196,408)
------ ----------- ----------- --------- -----------
------ ----------- ----------- --------- -----------
</TABLE>
See accompanying notes to financial statements.
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LORIMAR FILM PARTNERS L.P.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
------------------
March 31,
1996 1995
----------- -----------
Cash flows from operating activities:
Net loss $ (189,100) $ (412,162)
Adjustments to reconcile net
loss to cash provided by (used in)
operations:
Amortization of film costs 9,741,028 21,371
Changes in balance sheet accounts:
Interest receivable (1,346) 0
Amounts due Managing General
Partner and Affiliates 179,902 300,381
Accrued expenses (30,477) 38,363
Amounts due to Special Limited
Partner (1,991) (17,157)
----------- -----------
Net cash provided by (used in) operations 9,698,016 (69,204)
Cash flows from financing activities:
Repayments of borrowings from Managing
General Partner and affiliates (9,841,740) (23,958)
----------- -----------
Change in cash (143,724) (93,162)
Cash and cash equivalents at beginning of
period 1,188,809 1,366,210
----------- -----------
Cash and cash equivalents at end of period $ 1,045,085 $ 1,273,048
----------- -----------
----------- -----------
See accompanying notes to financial statements.
5
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LORIMAR FILM PARTNERS L.P.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. ORGANIZATION:
Lorimar Film Partners L.P., a Delaware limited partnership ("the
Partnership"), was organized in October 1985. The Partnership is engaged in
the exploitation of four full-length theatrical motion pictures. Since June
16, 1992, Lorimar Motion Picture Management, Inc., the Managing General
Partner, has been a wholly-owned subsidiary of Warner Communications Inc.
("WCI") as a result of the merger of Lorimar Telepictures Corporation
("Lorimar") into WCI. On June 30, 1992 WCI contributed certain of Lorimar's
former assets (excluding the stock of the Managing General Partner) to Time
Warner Entertainment Company, L.P., a limited partnership ("TWE"), of which
WCI is a general partner. All references in these notes to Lorimar for all
periods prior to June 26, 1992 are intended to refer to Lorimar, for the
period from June 26, 1992 through June 30, 1992 are intended to refer to TWE.
WCI is a wholly-owned subsidiary of Time Warner Inc. Prudential-Bache
Properties, Inc., a wholly-owned subsidiary of Prudential Securities Group
Inc. had been the Co-General Partner until it withdrew as Co-General Partner
as of March 22, 1996, and became a Special Limited Partner. Any references
made to Limited Partners within the financial statements means the same as
Unitholders.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION:
In the opinion of the Partnership's management, the accompanying
unaudited financial statements contain all adjustments necessary to
present fairly the Partnership's financial position as of March 31, 1996, the
results of its operations for the three month periods ended March 31, 1996 and
1995, and its cash flows for the three month periods ended March 31, 1996 and
1995. The adjustments included in the accompanying unaudited financial
statements are of a normal recurring nature.
In recognition that the Partnership's assets were insufficient to satisfy
payment of its liabilities, the report of the independent auditors issued in
connection with the Partnership's financial statements for the year ended
December 31, 1995 contained a qualifying paragraph regarding the substantial
doubt of the ability of the Partnership to continue as a going concern. The
1996 and 1995 financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
The results of operations for the period ended March 31, 1996 are not
necessarily indicative of the results that may be expected for the full year.
The accompanying unaudited financial statements have
6
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been prepared in accordance with generally accepted accounting principles for
interim financial information. For further information, refer to the more
detailed financial statements and related footnotes thereto filed with the
Partnership's Form 10-K report for the year ended December 31, 1995.
REVENUES AND FILM COSTS:
The Partnership acquired four full-length, theatrical motion pictures in
1986 for initial exhibition in domestic theaters followed by distribution in the
domestic home video, pay cable, basic cable, broadcast network and syndicated
television markets, as well as applicable foreign markets. Generally,
distribution to the theatrical, home video and pay cable markets was completed
within eighteen months of initial release. Substantially all of the revenues
recorded during the three month period ended March 31, 1996 resulted from the
Power Guarantee (see Note 3).
Film costs, which included costs to acquire the films and
deferred print and advertising costs, are stated at estimated net
realizable value determined on an individual film forecast basis. The cost
of each individual film is amortized based on the proportion that current
revenues from the film bear to an estimate of total revenues anticipated from
all markets. These estimates are revised periodically and losses, if any, are
provided in full.
Costs of the released feature films were allocated between current and
non-current assets based on the estimated future revenue from their
primary and secondary markets. The primary market for feature films is the
theatrical market; the secondary markets are the video, pay cable television,
network television, basic cable and domestic and foreign syndication markets.
Based upon the Partnership's estimate of remaining ultimate revenue, the
remaining unamortized balance of film costs will be completely amortized
over the remaining terms of the distribution agreements. Assuming the
Partnership continues to own the films for the next three years (the MGP
Option is not exercised - see Note 3), approximately $200,000 of unamortized
film costs will be amortized over the next three years.
CASH EQUIVALENTS:
The Partnership considers all highly liquid instruments purchased with a
maturity of three months or less to be cash equivalents.
INCOME TAXES:
No provision has been made for federal income taxes in the
accompanying financial statements since all income and losses will be
allocated to the partners for inclusion in their respective tax returns.
UNITHOLDERS' CAPITAL:
7
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At March 31, 1996, the Unitholders had a deficit capital account balance of
$5,834,253. Under the Partnership Agreement and the Delaware Revised Uniform
Limited Partnership Act, the fact that the Limited Partners have a deficit
capital account balance does not impose any liability upon the Unitholders.
NET LOSS PER DEPOSITARY UNIT OF LIMITED PARTNERSHIP INTEREST ("UNIT"):
Net loss per Unit was computed by dividing the Limited Partners' share of
net loss by the number of Units outstanding during the period. The number of
Units was 33,854 for the periods ended March 31, 1996 and 1995.
NOTE 3. TRANSACTIONS WITH GENERAL PARTNERS AND AFFILIATES:
The Partnership purchased the rights to four motion picture films by paying
the budgeted production costs of each film. All Partnership films have been
completed. The Partnership has reimbursed the Managing General Partner and its
affiliates for the budgeted production costs of these films. Partnership funds
were insufficient to pay the full budgeted cost of acquiring THE MORNING
AFTER; therefore, the Limited Partners' interest in that film was reduced in
proportion to their contribution with the balance provided by an additional
capital contribution by the Managing General Partner to the Partnership of
approximately $2,675,000. The Limited and Managing General Partners'
investment shares in THE MORNING AFTER are 42.66% and 57.34%, respectively.
The Partnership's capital contributions have been fully invested. Operating
cash flows over the life of the Partnership's four films have been insufficient
to repay liabilities. There is no intention to invest in additional films.
The Partnership Agreement provides for allocations of net income
and distributions of 49.5% to the Limited Partners and 50.5% to the General
Partners, except with respect to THE MORNING AFTER, for which such
allocations are 42.66% to the Limited Partners and 57.34% to the Managing
General Partner. Generally, net loss is allocated 50% to the Limited
Partners and 50% to the Managing General Partner. In addition, the
Partnership is obligated to the General Partners for the following:
a. A management fee equal to 3% of the Partnership's share of gross
receipts (2% to the Managing General Partner and 1% to the Co-General
Partner) through March 22, 1996 (the date the Co-General Partner withdrew
from the Partnership and became a Special Limited Partner, see Note 1) and a
management fee equal to 2% of the Partnership's share of gross receipts is
payable to the Managing General Partner thereafter.
b. Mandatory distributions that are payable to the partners to the extent
minimum guarantees are received in excess of estimated general and
administrative expenses and management fees.
c. Reimbursement of other costs and expenses.
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With respect to POWER, pursuant to a distribution agreement with Lorimar
Distribution International, Inc. ("LDI") for domestic distribution rights (as
amended, the "LDI Domestic Distribution Agreement"), an affiliate of the
Managing General Partner has agreed to pay to the Partnership, on or before
January 30, 1996, an amount generally equal to the amount by which as of
January 30, 1996 (i) the sum of the Partnership's Acquisition Cost (as
defined in said agreement) and the Partnership's share of the Distribution
Expenses (as defined in said agreement) incurred in connection with the film
exceeds (ii) the Partnership's Gross Receipts (as defined in said agreement)
from the film (the "Power Guarantee"). For this purpose, Gross Receipts
consists of all sums actually received with respect to POWER by the
Partnership pursuant to all applicable distribution agreements. The payments
received by the Partnership with respect to the Power Guarantee are
Partnership revenues which were used for Partnership purposes in accordance
with the Partnership Agreement. Accordingly, all amounts received under the
Power Guarantee were used to satisfy obligations of the Partnership due to
affiliates of the Managing General Partner.
Payment in full of the Power Guarantee in the amount of $9,840,486 was paid
on January 30, 1996. In full satisfaction of the Power Guarantee, on that date
the following obligations of the Partnership were offset: the full amount of
the then outstanding balance of the P&A Note of $5,952,350, plus outstanding
principal on the P&A Advances of $176,500 and accrued but unpaid interest on the
P&A Advances of $3,711,636. As a result, as of January 30, 1996 the Power
Guarantee and the P&A Note were each paid in full and the remaining principal
balance of the P&A Advances was $7,151,604.
Foreign distribution in all media and domestic home video
distribution of Partnership Films were originally licensed to LDI pursuant to
a distribution agreement with LDI (the "Foreign Distribution Agreement") and
Karl Lorimar Home Video, Inc. pursuant to a license agreement (the "Home Video
Agreement"), respectively, both affiliates of the Managing General Partner. The
licenses were for minimum guaranteed payments equal to 30% and 20%,
respectively, of the Partnership's contribution to each film's budget or cost of
production, whichever is less. The foreign distribution and domestic home video
distribution arrangements were assigned to other affiliates of the Managing
General Partner in January 1989 and June 1988, respectively. As a result of
various transactions, the foreign distribution and domestic home video
distribution rights are now held by TWE. All minimum guarantees related to
foreign distribution and domestic home video distribution have been recorded and
received by the Partnership. Under the Partnership Agreement, these minimum
guarantees were required to be distributed to the partners as mandatory
distributions after deduction for management fees and general and administrative
expenses. All mandatory distributions relating to minimum guarantees have been
made and there will be no mandatory distributions attributable to minimum
guarantees in the future.
9
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Pursuant to three separate Amendments to Distribution Agreements dated as
of January 26, 1996, between the Partnership and Warner Bros., a division of
TWE, on behalf of Lorimar, (collectively, the "Amendments"), the Partnership
extended the term of its domestic distribution agreement, its foreign
distribution agreement, and its license agreement regarding domestic home video.
In each case, subject to earlier termination as summarized below, the term was
extended from January 30, 1996 to July 31, 1996, subject in the event of the
exercise during the extended Term of the MGP Option (see discussion of MGP
Option below) to further extension automatically to the completion of the
purchases upon such exercise. Either party to any of the distribution
agreements or the license agreement may terminate any of those agreements on 60
days notice given to the other. The Amendments limit the right of the
distributor or licensee, as the case may be, to use certain revenues derived
after January 30, 1996 to recoup various distribution expenses and advances
incurred prior to January 30, 1996.
The Managing General Partner, the Special Limited Partner and their
affiliates have charged to the Partnership the following Partnership expenses
(excluding management fees) incurred by them:
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Three months ended March 31, 1996
---------------------------------
Managing Special
General Limited
Partner Partner Total
------- ------- -----
Interest $ 219,922 $ - $ 219,922
General and administrative 15,000 13,037 28,037
--------- ---------- ---------
$ 234,922 $ 13,037 $ 247,959
--------- ---------- ---------
--------- ---------- ---------
Three months ended March 31, 1995
---------------------------------
Managing Special
General Limited
Partner Partner Total
------- ------- -----
Interest $ 344,445 $ - $ 344,445
General and administrative 15,000 22,000 37,000
--------- ---------- ---------
$ 359,445 $ 22,000 $ 381,445
--------- ---------- ---------
--------- ---------- ---------
Amounts due on demand (or past due) to the Managing General Partner and
affiliates and to the Special Limited Partner are comprised of the following:
March 31, 1996 December 31, 1995
--------------- -----------------
Managing Special Managing Special
General Limited General Limited
Partner Partner Partner Partner
------- ------- ------- -------
Notes and advances for
prints & advertising,
including interest $ 7,250,758 $ 0 $16,872,576 $ 0
Management fee and other 461,422 247,324 501,442 249,315
----------- -------- ----------- --------
$ 7,712,180 $247,324 $17,374,018 $249,315
----------- -------- ----------- --------
----------- -------- ----------- --------
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Interest paid to an affiliate of the Managing General Partner was:
Three Months Three Months
Ended Ended
March 31, March 31,
1996 1995
---------- ----------
Interest paid $4,680,336 $23,502
---------- -------
---------- -------
Under a Credit, Guaranty and Security Agreement dated as of June 6, 1986
(the "Credit Agreement"), the Partnership obtained a revolving credit facility
in the amount of up to $30,000,000 from a group of banks to finance print and
advertising costs for the Partnership Films. The terms of the Credit Agreement
provide for the payment of interest quarterly at a rate equal to 1 1/2% (2 1/2%
in the case of default) over Chemical Bank's prime rate plus commitment fees and
agency fees. Lorimar made a payment to the banks on July 31, 1987 of
approximately $11,753,000, which was the then outstanding balance of the
principal and interest plus fees under the Credit Agreement, and, pursuant to an
agreement dated November 1, 1988, in consideration of such payment and certain
indemnities by Lorimar, the banks assigned to Lorimar all of their interest in
the Credit Agreement, the Partnership's notes made thereunder (collectively, the
"P&A Note"), the related agreements and, with certain exceptions, the Collateral
(as defined in the Credit Agreement). Lorimar has not charged the Partnership
any commitment fees or agency fees and charges interest to the Partnership on
the P&A Note at Chemical Bank's prime rate.
The P & A Note and related accrued but unpaid interest became due and
payable on December 31, 1990. As of March 31, 1996, the principal balance owed
with respect to the P&A Note and the related accrued interest was paid in full.
In addition to the P&A Note, the Partnership is obligated to reimburse
Lorimar for print and advertising costs and other distribution expenses
advanced pursuant to the Partnership Agreement on behalf of the Partnership
by LDI (the "P&A Advances"). As of March 31, 1996, the outstanding balance
of the P&A Advances owed to Lorimar was approximately $7,151,604 and related
accrued but unpaid interest, computed at Chemical Bank's prime rate, was
approximately $99,154. Lorimar has the right to declare the P&A Advances,
and related interest, to be immediately due and payable. To date, Lorimar
has not made demand for payment in full of such amounts; however, Lorimar has
the right to make such a demand at any time in the future. The Partnership
does not have sufficient liquid assets to pay the principal of the P&A
Advances and interest thereon in full.
All amounts due to the Managing General Partner and its affiliates have
been classified as current liabilities.
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Neither currently nor at any time over the remaining term of the
Partnership is it anticipated that the Partnership will have sufficient assets
to pay the principal plus interest on the P&A Advances.
The Partnership maintains a checking account and an interest-earning
mutual fund account. The interest-earning account is managed by an affiliate of
the Managing General Partner. The interest rate earned on funds fluctuates
daily and approximated 5.3% during the three months ended March 31, 1996.
Interest earned on this account was $14,660 and $17,871 for the three months
ended March 31, 1996 and 1995, respectively.
As of March 31, 1996, Prudential Securities Incorporated, an affiliate of
the Special Limited Partner, owned 113 Units.
At any time after June 26, 1996, the tenth anniversary of the final
closing of the sale of Units, the Managing General Partner will have the right
(the "MGP Option") to purchase, or cause one of its affiliates to purchase, for
cash the Partnership's interest in the Partnership Films and related rights at
their appraised value, whereupon the Partnership is to be liquidated. Pursuant
to the Partnership Agreement and applicable law, the proceeds of any such
purchase would be applied to pay the debts, liabilities and loans of the
Partnership before any amounts are distributed to the Partners or Unitholders.
In light of the Partnership's financial condition, the Managing General Partner
does not believe that the amount payable to the Partnership in the event of the
exercise of the MGP Option plus the other assets of the Partnership will be
sufficient to satisfy the outstanding loans and other liabilities of the
Partnership, and thus there will be no amounts available for distribution to the
Partners or Unitholders.
Upon exercise of the MGP Option, in lieu of purchasing the Partnership
Films and rights, the Managing General Partner has the right to elect, or to
cause its affiliate to elect, to purchase the Limited Partnership Interests, the
Units and the interest of the Special Limited Partner in the Partnership. The
purchase price would be the amount that would have been distributed to the
Unitholders, the Limited Partners and the Special Limited Partner if the
Partnership Films and related rights had been purchased by the Managing General
Partner and the Partnership liquidated. However, as stated in the immediately
preceding paragraph, the Managing General Partner believes that in such event no
amounts would be distributable to the Unitholders, the Limited Partners or the
Special Limited Partner, and thus under this alternative application of the MGP
Option, the Managing General Partner believes that the purchase price for the
Units, Limited Partnership Interests and the interest of the Special Limited
Partner will be zero.
The Managing General Partner has advised the Special Limited Partner that
it is considering, but is not yet committed to, exercising the MGP Option at
such time as permitted by the Partnership Agreement. If the settlement by the
Lorimar defendants of the Southern District of New York class action litigating
referred to below is effected upon certain terms, and the Managing General
Partner reaches an agreement
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with the Special Limited Partner to resolve certain of the outstanding matters
on a mutually agreeable basis (see Note 4), then the Managing General Partner
will be committed to exercise, or cause its affiliate to exercise, the MGP
Option.
NOTE 4. LITIGATION:
A purported class action lawsuit on behalf of a class of all persons who
are or have been holders of limited partnership interests was filed on May 22,
1991 in the Superior Court of California for Los Angeles County. Named as
defendants are Lorimar Motion Picture Management, Inc.; Lorimar Telepictures
Corporation; Prudential Securities Incorporated; and Prudential-Bache
Properties, Inc. (TILLMAN, ET AL. V. LORIMAR MOTION PICTURE MANAGEMENT, INC., ET
AL., Case No. BC 028964, L.A. Co. Sup. Ct.). The original complaint charged
defendants with fraud, negligence, and breach of fiduciary duty in connection
with the offering of the Units and breach of fiduciary duty in connection with
the operation of the Partnership. The plaintiffs sought compensatory and
punitive damages in an unspecified amount and an accounting. The General
Partners had advised the Partnership that they intended to defend the case
vigorously. Certain of the charges made in the complaint were similar to
charges made in litigation entitled GALLOWAY V. LORIMAR MOTION PICTURE
MANAGEMENT, INC., ET AL., filed in the courts of the State of Ohio. Certain of
those charges were dismissed on the merits and the dismissal was affirmed on
appeal.
A demurrer seeking dismissal of the complaint was filed by the defendants
in 1991 and, on May 3, 1994, the TILLMAN court sustained this demurrer. The
court ruled that the complaint was insufficient as a matter of law with respect
to all claims arising from the public offering of the Units in 1985 and 1986.
The court did not permit amendment of those claims. The court also sustained
the demurrer challenging the sufficiency of plaintiffs' claims that the General
Partners breached certain fiduciary duties under the Partnership Agreement in
connection with their operation of the Partnership, but granted plaintiffs'
counsel an opportunity to amend those claims to attempt to state a cause of
action. An amended complaint for breach of fiduciary duty was filed on June 2,
1994, naming only the General Partners as defendants. The General Partners
filed a demurrer to the amended complaint, together with a motion for summary
adjudication that the specific conduct challenged in the amended complaint was
undertaken by the General Partners in conformance with the terms and
requirements of the Partnership Agreement. A hearing on these matters was held
on August 3, 1994, and on November 1, 1994, the court sustained the General
Partners' demurrer on the basis that the amended complaint failed to state a
claim upon which relief may be granted. The court gave plaintiffs leave to file
an amended complaint for breach of fiduciary duty and, for this reason,
defendants' motion for summary judgment was denied without prejudice. On
January 18, 1995, plaintiffs served their second amended complaint on the
defendants. The second amended complaint asserts claims for alleged breaches of
the Partnership Agreement and breaches of fiduciary duty by defendants.
Plaintiffs seek damages in an unspecified amount but in excess of $500,000. On
March
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24, 1995, defendants filed an answer to the second amended complaint, denying
the allegations therein and asserting several affirmative defenses. Defendants
filed a summary judgment motion on April 18, 1995, and a hearing took place on
May 24, 1995. On June 12, 1995, the court granted defendants' motion for
summary judgment insofar as it sought dismissal of all claims made as a class
action on behalf of Unitholders individually. However, the court permitted the
action to proceed as a derivative action by plaintiffs on behalf of the
Partnership. Pursuant to the court's order, plaintiffs again amended their
complaint to seek on behalf of the Partnership recovery from the General
Partners of allegedly improperly high fees and interest paid to certain banks
which provided P&A Financing to the Partnership. Plaintiffs allege that
defendants breached their fiduciary duties by permitting payment of such excess
fees and interest and, in the complaint, estimate the allegedly excess fees and
interest to exceed $500,000. Defendants continue to assert that their actions
were entirely proper under the law and the terms of the Limited Partnership
Agreement and that the Partnership did not pay any excess or improper fees or
interest to the banks. The Partnership has been advised that the General
Partners intend to defend the action vigorously. In December 1995, Prudential-
Bache Properties, Inc. was dismissed voluntarily by plaintiffs. Nevertheless,
preliminary discussions have been conducted between plaintiff and the Managing
General Partner regarding the possibility of presenting to the court for its
approval a settlement which would reflect the size of the claim, the relative
positions of the parties, and the costs of continued litigation. The terms
which have been agreed upon in principle would involve a reduction of certain of
the debt owed by the Partnership to the Managing General Partner and affiliates
and payment, in part, of certain attorneys' fees to plaintiffs' counsel by the
Managing General Partner. That agreement is subject to documentation and court
approval.
Prudential Securities Incorporated ("PSI"), certain of its present and
former employees, the Managing General Partner and the former Co-General
Partner, among others, have been named defendants in a putative class action
filed in U.S. District Court for the Southern District of New York, entitled IN
RE PRUDENTIAL SECURITIES INCORPORATED LIMITED PARTNERSHIPS LITIGATION (MDL
1005). Two former officers and the parent company of the Managing General
Partner were also named as defendants, and the Managing General Partner has
undertaken their defense. (Hereinafter, these additional defendants and the
Managing General Partner are sometimes referred to collectively as "the Lorimar
Organization Defendants.") The consolidated complaint, which was filed on June
8, 1994, consolidates complaints previously filed in actions in several federal
district courts around the country that were transferred to the Southern
District of New York by order of the Judicial Panel on Multidistrict Litigation
in April 1994. None of the Lorimar Organization Defendants were named as
defendants in any of the transferred actions. The consolidated complaint alleges
violations of the federal Racketeer Influenced and Corrupt Organizations Act
("RICO Act"), fraud, negligent misrepresentation, breach of fiduciary duties,
breach of third-party beneficiary contracts, breach of implied covenants and
violations of New Jersey statutes in connection with the marketing
15
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and sales of limited partnership interests. Plaintiffs request relief in the
nature of: rescission of the purchase of securities, and recovery of all
consideration and expenses in connection therewith, as well as compensation for
lost use of money invested, less cash distributions; compensatory damages;
consequential damages; treble damages for defendants' alleged RICO violations
(both federal and New Jersey); general damages for all alleged injuries
resulting from negligence, fraud, breaches of contract, and breaches of duty in
an amount to be determined at trial; disgorgement and restitution of all
earnings, profits, benefits and compensation received by defendants as a result
of their allegedly unlawful acts; costs and disbursements of the action;
reasonable attorneys' fees; and such other and further relief as the court deems
just and proper. The Partnership is listed in the consolidated complaint as
being among the limited partnerships at issue in the case. On September 29,
1994, plaintiffs filed a motion to deem each of the constituent complaints (in
which the Lorimar Organization Defendants were not named) amended to conform to
the consolidated complaint. The Managing General Partner opposed the motion. A
hearing was held on November 21, 1994 and on November 28, 1994, the court
granted plaintiffs' motion. As a result, the Lorimar Organization Defendants
are deemed to be defendants in each of the constituent actions, as well as in
the consolidated action. On October 31, 1994, the Managing General Partner
filed a motion to dismiss the consolidated complaint (and each of the
constituent actions) with respect to the Lorimar Organization Defendants. The
hearing on the motion, originally expected in January 1995, was postponed
indefinitely by the court, and the parties are awaiting a new hearing date. On
December 20, 1994, PSI, along with various other defendants, moved to dismiss
the entire consolidated complaint.
By order dated August 29, 1995, the court granted plaintiffs' motion for
temporary class certification, preliminarily approved a settlement entered into
between plaintiffs, the former Co-General Partner and PSI, scheduled a fairness
hearing for November 17, 1995, approved the form and content of the notice to
class members and directed that it be provided to class members. The settlement
was approved by the court at the fairness hearing. The full amount due under
the settlement agreement has been paid by PSI.
Subsequent to the announcement of the Prudential settlement, the Lorimar
defendants held settlement negotiations with counsel for the class. Counsel for
the class and the Lorimar defendants have agreed in principle to the settlement
of all class claims against the Lorimar defendants in exchange for payment by
the Lorimar defendants of $400,000, the allocation of which will be provided in
the settlement documents. That agreement in principle is subject to agreement
on appropriate documentation and to court approval. Upon submission of the
agreed upon documentation to the Court, it is expected that the Court would
schedule a hearing for approval and direct notice to be given to the class
regarding the terms of the settlement and their procedural rights. In connection
with, and as a condition to, the proposed settlement between the plaintiffs and
the Lorimar defendants, the Managing General Partner will require an agreement
between it and the
16
<PAGE>
former Co-General Partner regarding certain outstanding matters, including
mutual releases, involving them and their affiliates.
The Partnership is not aware of any legal proceedings that name the
Partnership as a defendant. Neither the TILLMAN nor the MDL litigation
described above name the Partnership as a defendant. The Partnership Agreement
provides for indemnification of the General Partners and their affiliates under
certain circumstances. The indemnification excludes damages assessed against a
General Partner for violation of securities laws, the RICO Act or fraud.
NOTE 5. SUBSEQUENT EVENTS TO FINANCIAL STATEMENTS:
On May 2, 1996, Prudential Securities Group Inc. notified the Managing General
Partner of its intent to resign as the Depository for the Partnership to be
effective no later than 180 days from the date of notification (October 29,
1996).
17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION AT MARCH 31, 1996
The Partnership's ability to continue to operate at the present time is
due exclusively to Lorimar's forbearance with respect to the Partnership's
obligations which are currently due and owing to Lorimar and its affiliates,
principally under the P&A Advances. The Partnership has no assurance that
Lorimar will not make demand at any time with respect to the P&A Advances. The
Partnership has neither sufficient liquid assets nor total assets to pay its
current liabilities. As of March 31, 1996 the Partnership's liquid assets are
$1,046,431 and its total assets are $1,802,219, while the Partnership's
liabilities (all of which are current) are $7,998,627, of which $7,712,180
constitutes the amounts owed with respect to the P&A Advances and other sums to
Lorimar and its affiliates. In the event Lorimar demands payment of the P&A
Advances and the Partnership does not satisfy payment thereof in full, Lorimar
will have all of its rights under applicable agreements and law, including the
right ultimately to proceed against the Partnership's assets. In recognition of
the Partnership's financial condition, the auditors' report issued in connection
with the Partnership's financial statements for the year ended December 31, 1995
contains an explanatory paragraph regarding the substantial doubt of the ability
of the Partnership to continue as a going concern.
Even if Lorimar continues to forbear on the principal of the P&A
Advances and merely requires current satisfaction of interest, the Managing
General Partner believes that the Partnership will continue to incur net
operating losses on an annual basis through 1996. These losses are
anticipated to result from the fact that the only significant source of
Partnership revenue which is anticipated during this period is domestic
syndication revenue under existing distribution agreements (which is
estimated to aggregate approximately $60,000 through June 26, 1996,(See
description of MGP Option below) before deducting fees and expenses), and it
is anticipated that this revenue will be less than the Partnership's
aggregate annual interest expense (net of interest income) with respect to
the P&A Advances during this period. Further, the general and administrative
expenses of the Partnership will continue to increase such net losses.
Pursuant to the Partnership Agreement, at any time after June 26, 1996,
the Managing General Partner has the right (the "MGP Option") to purchase the
Partnership Films and the Rights (as defined in the Partnership Agreement) at
their Appraised Fair Market Value (as defined in and determined pursuant to the
Partnership Agreement). Based on the Managing General Partner's judgments as to
the inability of the Partnership to derive further exploitation revenue from the
Partnership Films, the Managing General Partner believes that the purchase price
under the MGP Option would be insufficient to satisfy all of the Partnership's
liabilities.
18
<PAGE>
In lieu of purchasing the Partnership Films and the Rights, as part of the
MGP Option, the Managing General Partner also has the option from and after June
26, 1996 to purchase the Depositary Units and Limited Partnership Interests for
an amount equal to the amount that the Unitholders and Limited Partners would be
entitled to receive if the Managing General Partner has exercised the MGP Option
and thereupon the Partnership was liquidated and dissolved.
Based on the above analysis of estimated future Partnership revenue, in
the event of the exercise of the MGP Option and upon the subsequent liquidation
and dissolution of the Partnership, there would be no amounts payable to the
Unitholders or the Limited Partners and no amounts payable to them as the
purchase price for their units or Limited Partnership Interests if the Managing
General Partner elects to purchase the same pursuant to the MGP Option. The
Managing General Partner has indicated to the Special Limited Partner that it is
its current intention to exercise the MGP Option, but has no obligation to do
so.
Other than with respect to the domestic theatrical exhibition of the
Partnership Films, the Partnership Films have been distributed on behalf of the
Partnership pursuant to the Home Video Agreement, the LDI Domestic Distribution
Agreement and the Foreign Distribution Agreement.
In January 1996, the above distribution agreements were extended (see
Note 3, Transactions with General Partners and Affiliates). Accordingly,
receipt of any future distribution or licensing revenue will depend upon the
ability of the Managing General Partner, on behalf of the Partnership, to
enter into new distribution or licensing agreements with respect to the
Partnership Films. Moreover, any revenue received under the existing foreign
and home video distribution agreements would be subject to recoupment of the
minimum guarantees under the Foreign Distribution Agreement and the Home
Video Agreement. The Managing General Partner believes that the Partnership
will be unable to enter into distribution or license agreements with respect
to the Partnership Films in any media other than worldwide television
syndication, to the extent not already licensed. Based on the above analysis
by the Managing General Partner, the Managing General Partner does not
believe that any such distribution arrangements, after recoupment of fees and
expenses, would provide income to the Partnership sufficient to satisfy all
of the Partnership's obligations.
The Managing General Partner believes that the fair market value of the
Partnership's assets will be less than the amount of the Partnership's
current liabilities throughout the remaining term of the Partnership.
Accordingly, the Managing General Partner believes that the Partnership will
be unable to fully satisfy the P&A Advances and that the Partnership will be
unable to make any further distributions to the Unitholders.
19
<PAGE>
As a result of the minimum guarantees, approximately 39% of Unitholders'
original capital contributions have been returned through Partnership
distributions. All mandatory distributions relating to minimum guarantees have
been made and there will be no further distributions to the Unitholders.
DISCUSSION OF THE RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH
31, 1996 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 1995.
The results of operations are not necessarily comparable from quarter to
quarter since the Partnership's income is determined by exploitation of its four
films in the various media of the exploitation cycle (i.e. theatrical, home
video, pay television, non-theatrical, network television and domestic
syndication).
The Partnership's film revenues for the three months ended March 31, 1996
were higher than the comparable period in 1995 due principally to the Power
Guarantee (see Note 3 to the financial statements).
The Partnership had a net loss of $189,100 for the three months ended March
31, 1996. Film related revenues of $9,841,740 net of related costs of
$9,745,984 resulted in a gross profit of $95,756 due largely to the Power
Guarantee. However, this was offset by other operating expenses including
interest expense of $219,922, general and administrative expenses of $79,560 and
management fees of $35 less interest income of $14,660. Interest expense was
lower for the three months ended March 31, 1996 than for the three months ended
March 31, 1995 principally due to lower average interest rates and lower average
borrowings.
The Partnership had a net loss of $412,162 for the three months ended March
31, 1995. Film related revenues of $23,958 net of related costs of $21,272
resulted in a gross profit of $2,131, due largely to the syndication licensing
of AMERICAN ANTHEM, THE BOY WHO COULD FLY, THE MORNING AFTER and POWER.
However, this was offset by other operating expenses including interest expense
of $344,445, general and administrative expenses of $87,000 and management fees
of $719 less interest income of $17,871.
20
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
A purported class action lawsuit on behalf of a class of all persons who
are or have been holders of limited partnership interests was filed on May 22,
1991 in the Superior Court of California for Los Angeles County. Named as
defendants were Lorimar Motion Picture Management, Inc.; Lorimar Telepictures
Corporation; Prudential Securities Incorporated; and Prudential-Bache
Properties, Inc. (TILLMAN, ET AL. V. LORIMAR MOTION PICTURE MANAGEMENT, INC., ET
AL., Case No. BC 028964, L.A. Co. Sup. Ct.). The original complaint charged
defendants with fraud, negligence, and breach of fiduciary duty in connection
with the offering of the Units and breach of fiduciary duty in connection with
the operation of the Partnership. The plaintiffs sought compensatory and
punitive damages in an unspecified amount and an accounting. The General
Partners had advised the Partnership that they intended to defend the case
vigorously. Certain of the charges made in the complaint were similar to
charges made in litigation entitled GALLOWAY V. LORIMAR MOTION PICTURE
MANAGEMENT, INC., ET AL., filed in the courts of the State of Ohio. Certain of
those charges were dismissed on the merits and the dismissal was affirmed on
appeal.
A demurrer seeking dismissal of the complaint was filed by the defendants
in 1991 and, on May 3, 1994, the TILLMAN court sustained this demurrer. The
court ruled that the complaint was insufficient as a matter of law with respect
to all claims arising from the public offering of the Units in 1985 and 1986.
The court did not permit amendment of those claims. The court also sustained
the demurrer challenging the sufficiency of plaintiffs' claims that the General
Partners breached certain fiduciary duties under the Partnership Agreement in
connection with their operation of the Partnership, but granted plaintiffs'
counsel an opportunity to amend those claims to attempt to state a cause of
action. An amended complaint for breach of fiduciary duty was filed on June 2,
1994, naming only the General Partners as defendants. The General Partners
filed a demurrer to the amended complaint, together with a motion for summary
adjudication that the specific conduct challenged in the amended complaint was
undertaken by the General Partners in conformance with the terms and
requirements of the Partnership Agreement. A hearing on these matters was held
on August 3, 1994, and on November 1, 1994, the court sustained the General
Partners' demurrer on the basis that the amended complaint failed to state a
claim upon which relief may be granted. The court gave plaintiffs leave to file
an amended complaint for breach of fiduciary duty and, for this reason,
defendants' motion for summary judgment was denied without prejudice. On
January 18, 1995, plaintiffs served their second amended complaint on the
defendants. The second amended complaint asserts claims for alleged breaches of
the Partnership Agreement and breaches of fiduciary duty by defendants.
Plaintiffs seek damages in an unspecified amount but in excess of $500,000. On
March 24, 1995, defendants filed an answer to the second amended complaint,
denying the allegations therein and asserting several affirmative
21
<PAGE>
defenses. Defendants filed a summary judgment motion on April 18, 1995, and a
hearing took place on May 24, 1995. On June 12, 1995, the court granted
defendants' motion for summary judgment insofar as it sought dismissal of all
claims made as a class action on behalf of Unitholders individually. However,
the court permitted the action to proceed as a derivative action by plaintiffs
on behalf of the Partnership. Pursuant to the court's order, plaintiffs again
amended their complaint to seek on behalf of the Partnership recovery from the
General Partners of allegedly improperly high fees and interest paid to certain
banks which provided P&A Financing to the Partnership. Plaintiffs allege that
defendants breached their fiduciary duties by permitting payment of such excess
fees and interest and, in the complaint, estimate the allegedly excess fees and
interest to exceed $500,000. Defendants continue to assert that their actions
were entirely proper under the law and the terms of the Limited Partnership
Agreement and that the Partnership did not pay any excess or improper fees or
interest to the banks. The Partnership has been advised that the General
Partners intend to defend the action vigorously. In December 1995, Prudential-
Bache Properties, Inc. was dismissed voluntarily by plaintiffs. Nevertheless,
preliminary discussions have been conducted between plaintiff and the Managing
General Partner regarding the possibility of presenting to the court for its
approval a settlement which would reflect the size of the claim, the relative
positions of the parties, and the costs of continued litigation. The terms
which have been agreed upon in principle would involve a reduction of certain of
the debt owed by the Partnership to the Managing General Partner and affiliates
and payment, in part, of certain attorneys' fees to plaintiffs' counsel by the
Managing General Partner. That agreement is subject to documentation and court
approval.
Prudential Securities Incorporated ("PSI"), certain of its present and
former employees, the Managing General Partner and the former Co-General
Partner, among others, have been named defendants in a putative class action
filed in U.S. District Court for the Southern District of New York, entitled IN
RE PRUDENTIAL SECURITIES INCORPORATED LIMITED PARTNERSHIPS LITIGATION (MDL
1005). Two former officers and the parent company of the Managing General
Partner were also named as defendants, and the Managing General Partner has
undertaken their defense. (Hereinafter, these additional defendants and the
Managing General Partner are sometimes referred to collectively as "the Lorimar
Organization Defendants.") The consolidated complaint, which was filed on June
8, 1994, consolidates complaints previously filed in actions in several federal
district courts around the country that were transferred to the Southern
District of New York by order of the Judicial Panel on Multidistrict Litigation
in April 1994. None of the Lorimar Organization Defendants were named as
defendants in any of the transferred actions. The consolidated complaint alleges
violations of the federal Racketeer Influenced and Corrupt Organizations Act
("RICO Act"), fraud, negligent misrepresentation, breach of fiduciary duties,
breach of third-party beneficiary contracts, breach of implied covenants and
violations of New Jersey statutes in connection with the marketing and sales of
limited partnership interests. Plaintiffs request relief in the nature of:
rescission of the purchase of securities, and
22
<PAGE>
recovery of all consideration and expenses in connection therewith, as well as
compensation for lost use of money invested, less cash distributions;
compensatory damages; consequential damages; treble damages for defendants'
alleged RICO violations (both federal and New Jersey); general damages for all
alleged injuries resulting from negligence, fraud, breaches of contract, and
breaches of duty in an amount to be determined at trial; disgorgement and
restitution of all earnings, profits, benefits and compensation received by
defendants as a result of their allegedly unlawful acts; costs and disbursements
of the action; reasonable attorneys' fees; and such other and further relief as
the court deems just and proper. The Partnership is listed in the consolidated
complaint as being among the limited partnerships at issue in the case. On
September 29, 1994, plaintiffs filed a motion to deem each of the constituent
complaints (in which the Lorimar Organization Defendants were not named) amended
to conform to the consolidated complaint. The Managing General Partner opposed
the motion. A hearing was held on November 21, 1994 and on November 28, 1994,
the court granted plaintiffs' motion. As a result, the Lorimar Organization
Defendants are deemed to be defendants in each of the constituent actions, as
well as in the consolidated action. On October 31, 1994, the Managing General
Partner filed a motion to dismiss the consolidated complaint (and each of the
constituent actions) with respect to the Lorimar Organization Defendants. The
hearing on the motion, originally expected in January 1995, was postponed
indefinitely by the court, and the parties are awaiting a new hearing date. On
December 20, 1994, PSI, along with various other defendants, moved to dismiss
the entire consolidated complaint.
By order dated August 29, 1995, the court granted plaintiffs' motion for
temporary class certification, preliminarily approved a settlement entered into
between plaintiffs, the former Co-General Partner and PSI, scheduled a fairness
hearing for November 17, 1995, approved the form and content of the notice to
class members and directed that it be provided to class members. The settlement
was approved by the court at the fairness hearing. The full amount due under
the settlement agreement has been paid by PSI.
Subsequent to the announcement of the Prudential settlement, the Lorimar
defendants held settlement negotiations with counsel for the class. Counsel for
the class and the Lorimar defendants have agreed in principle to the settlement
of all class claims against the Lorimar defendants in exchange for payment by
the Lorimar defendants of $400,000, the allocation of which will be provided in
the settlement documents. That agreement in principle is subject to agreement
on appropriate documentation and to court approval. Upon submission of the
agreed upon documentation to the Court, it is expected that the Court would
schedule a hearing for approval and direct notice to be given to the class
regarding the terms of the settlement and their procedural rights. In connection
with, and as a condition to, the proposed settlement between the plaintiffs and
the Lorimar defendants, the Managing General Partner will require an agreement
between it and the former Co-General Partner regarding certain outstanding
matters, including mutual releases, involving them and their affiliates.
23
<PAGE>
The Partnership is not aware of any legal proceedings that name the
Partnership as a defendant. Neither the TILLMAN nor the MDL litigation
described above name the Partnership as a defendant. The Partnership Agreement
provides for indemnification of the General Partners and their affiliates under
certain circumstances. The indemnification excludes damages assessed against a
General Partner for violation of securities laws, the RICO Act or fraud.
24
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
None
(b) Reports on Form 8-K.
No reports on Form 8-K were filed by the Registrant
during the period covered by this report.
25
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
Lorimar Film Partners L.P.
By: Lorimar Motion Picture Management, Inc.
A California Corporation, Managing General Partner
By: /s/ Edward A. Romano Date: May 15, 1996
------------------------------------
Edward A. Romano
Vice President, Treasurer
(Principal Accounting Officer)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,045,085
<SECURITIES> 0
<RECEIVABLES> 1,346
<ALLOWANCES> 0
<INVENTORY> 755,788
<CURRENT-ASSETS> 1,046,431
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,802,219
<CURRENT-LIABILITIES> 7,998,627
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (6,196,408)
<TOTAL-LIABILITY-AND-EQUITY> 1,802,219
<SALES> 9,841,740
<TOTAL-REVENUES> 9,856,400
<CGS> 9,745,984
<TOTAL-COSTS> 9,745,984
<OTHER-EXPENSES> 79,595
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 219,922
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (189,100)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (189,100)
<EPS-PRIMARY> (2.79)
<EPS-DILUTED> (2.79)
</TABLE>
