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 0-15763
ML DELPHI PREMIER PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
Delaware 13-
3350265
(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 12,610 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.
Formation.
ML Delphi Premier Partners, L.P. (the "Partnership") is a
Delaware limited partnership formed with the principal business
objective of achieving cash returns through the production,
ownership, acquisition of interests in and exploitation of
feature length motion pictures. The Partnership has acquired
(a) Preferred Film ("PF") Interests in 22 films, with payments
based on the gross receipts of those films, and (b) Single Film
("SF") Interests in 20 films with payments based on the net
proceeds of those films or, if it would result in a greater
amount, payments based on gross receipts. The PF Interests and
most of the SF Interests have been acquired through a joint
venture between the Partnership and TriStar Pictures, Inc.
("TriStar"). The remaining SF Interests are in films
distributed by Columbia Pictures ("Columbia Pictures"), a
division of Columbia Pictures Industries, Inc. ("Columbia").
A public offering (the "Offering") of limited partnership
interests in the Partnership, at $5,000 per unit, was completed
in December l986 with the sale of 12,610 units. Net proceeds to
the Partnership after selling commissions, organizational
expenses and other expenses of the Offering were approximately
$55,500,000. The general partner of the Partnership, ML Delphi
Partners, L.P. (the "General Partner"), contributed
approximately $637,000 as its capital contribution to the
Partnership.
Preferred Film Interests.
Approximately 40% ($22,445,000) of the net proceeds of
the Offering, including the General Partner's capital
contribution, was available for contribution to a joint venture
between the Partnership and TriStar (the "Tri-Star Joint
Venture") for the acquisition, at the rate of $l,000,000 per
film, of PF Interests (the "PF Proceeds"). PF Interests have
been acquired in 22 TriStar and Columbia feature length motion
pictures having direct production costs (excluding overhead) of
at least $5,000,000. In June 1989, it was agreed that Columbia
films, meeting the same criteria as set forth for Tri-Star PF
Interest films (the "Tri-Star PF Interest Films"), would be
treated as if they were Tri-Star PF Interest Films and would be
accounted for, through the Tri-Star Joint Venture, in the same
manner as Tri-Star PF Interest Films (hereinafter referred to as
the "Columbia PF Interest Films"). Of the $22,000,000 that was
contributed by the Partnership toward the acquisition of PF
Interests, $19,000,000 was contributed toward Tri-Star PF
Interest Films and $3,000,000 was contributed toward the
acquisition of Columbia PF Interest Films. Films in which PF
Interests have been acquired are hereinafter collectively
referred to as the "PF Films."
Payments made to the Partnership in respect of the PF
Films consist of two components, one of which is determined on a
film-by-film basis and the other of which is determined on an
aggregate basis (as described below). Both components are based
on the gross receipts of the film or films to which they relate.
The Partnership receives an amount equal to the following
percentages of gross receipts of each PF Film:
5.0% of the first $5,000,000
7.5% of the next $5,000,000
10.0% of the next $5,000,000
Accordingly, the maximum payment based on gross receipts
for any PF Film based on the individual film component will be
$l,l25,000.
The Partnership is also entitled to receive an amount
equal to the following percentages of the aggregate gross
receipts of all the PF Films (computed after deducting U.S. and
Canadian (domestic) theatrical gross receipts of the films):
12.5% of the first $74,800,000
ll.5% of the next $74,800,000
ll.0% of the next $202,400,000
1.0% of the excess over $352,000,000
The distribution agreement between TriStar and the Tri-
Star Joint Venture provides, in general, that gross receipts
consist of all sums received by TriStar, as distributor, from
the exploitation of a film throughout the world, including its
receipts from theatrical showings (i.e., the amounts received by
the distributor from exhibitors, which generally are based on a
percentage of "box office" receipts), pay cable television
exhibition, its receipts from free television showings, and
specified royalties (less certain expenses) from video cassette
and video disc sales, soundtrack revenue, music publishing and
merchandising licenses. Gross receipts generally include all
advances and guaranteed payments received and not refunded by
TriStar, as distributor, for theatrical exhibition, free
television, soundtrack, music publishing and merchandising.
The Partnership received its first payment in respect of PF
Films in December 1987. Payments in respect of PF Films are made
on an annual basis in December of each year through 1996.
TriStar agreed to advance to the Partnership, through the TriStar
Joint Venture, an amount sufficient to enable the Partnership to
receive a payment in December 1987 equal to l4% of the PF
Proceeds (the "14% Return"). Approximately $3,142,000 was paid
to the Partnership, through the Tri-Star Joint Venture, by
TriStar in December 1987, of which approximately $458,000 was
attributable to the performance of one PF Film which was released
in 1987. The balance of $2,684,000 represented an advance (the
"Advance") which TriStar will be entitled to recoup, without
interest, in December 1996 from revenues earned by the
distribution of the Partnership's PF Films. In addition, in
December of each year 1988 through 1995 TriStar, through the Tri-
Star Joint Venture, made a payment to the Partnership of
$3,142,000 representing the 14% Return. To the extent the annual
cash return to the Partnership from the PF Interests causes the
Partnership's cumulative non-compounded return to exceed the l4%
Return in any of the years 1988 through 1995, the excess amount
will be carried forward and, to the extent not applied in later
years to generate the 14% Return, will be payable without
interest in December 1996 less the Acceleration Payment
recoupments and related interest described below. At that time,
TriStar will make a final payment taking into account gross
receipts to the date of payment, as well as the gross receipts
estimated to be received by TriStar during the next seven years
from the distribution of all PF Films (subject to discount under
certain circumstances). Following the final payment, the
Partnership's PF Interests will cease. As of December 31, 1995,
$21,471,000, net of the Acceleration Payments and related
interest described below and the Advance, is carried forward and
is included in the receivable from the Tri-Star Joint Venture in
the accompanying financial statements.
If in any calendar year the Partnership recognizes income
for federal tax purposes with respect to PF Interest Films in
excess of the December payment for that year (the "Excess"),
TriStar is required to make an acceleration payment to the
Partnership with respect to the Excess. The amount of the
acceleration payment is equal to the Excess multiplied by the
maximum individual federal income tax rate in effect for the
year of the Excess (the "Acceleration Payment"). During March
1993 and 1992, the Partnership received $360,000 and $7,548,000
with respect to the Acceleration Payment for 1992 and 1991,
respectively.
These Acceleration Payments were distributed to partners
in April 1993 and 1992, respectively. These Acceleration
Payments are recoupable, with interest, by TriStar, with certain
exceptions, from the payment to be received by the Partnership
with respect to its PF Interests in December 1996 and are
reflected as a reduction to the receivable from the Tri-Star
Joint Venture in the accompanying financial statements.
All of the films in which the Partnership has a PF
Interest have been released both domestically and in foreign
markets. See "PF Interest Films."
Single Film Interests.
The Tri-Star Joint Venture has acquired interests in
certain films produced or co-produced by earlier joint ventures
between TriStar and one or more of the Delphi Partnerships (as
that term is defined under "Distribution of Films" below) and
has produced certain films for which TriStar commenced
production after the expiration of TriStar's similar commitment
to an earlier joint venture between TriStar and Delphi Film
Associates V.
The Partnership has an SF Interest in 20 films, 17
through the Tri-Star Joint Venture (the "Tri-Star SF Interest
films") and three which are participation interests owned
directly in films being distributed by Columbia Pictures (the
"Columbia SF Interest films"). Those films in which the
Partnership has an SF Interest are sometimes collectively
referred to as the "SF Interest films" and individually referred
to as an "SF Interest film." See "Columbia SF Interest Films"
and "Tri-Star SF Interest Films." See also "Tri-Star SF
Interest Extra Film Profit Participations" regarding the
Partnership's interest in the films "Avalon," "Another You," and
"Fisher King."
The Partnership has an interest ranging from 5% to 25% in
each of the SF Interest films. The maximum contribution that
the Partnership was required to make for any Tri-Star SF
Interest film was $3,600,000; however, the Partnership had the
right to elect to contribute up to 25% of the total production
cost of any Tri-Star SF Interest film. The Partnership agreed
to contribute amounts in excess of $3,600,000 toward the
production of four motion pictures ("Nadine," "The Squeeze,"
"Gardens of Stone" and "Suspect").
In 1987, it was agreed that to the extent the Partnership
contributed amounts to the Tri-Star Joint Venture in excess of
$3,600,000 toward the production of these four films, the
Partnership, through the Tri-Star Joint Venture, would have the
right to reduce its interest in a mutually agreed upon film and
to apply that amount toward an interest in three additional SF
Interest films produced by the Tri-Star Joint Venture. In
December 1987, the Partnership, through the Tri-Star Joint
Venture, elected to reduce its interest in the motion picture
"Blind Date" to 5% and contribute the funds thereby made
available toward the production of the motion pictures "Sunset,"
"For Keeps," and "The Seventh Sign." The Partnership has a 5%
interest in each of these films.
The Partnership's ownership interest with respect to each
SF Interest film is generally equal to the percentage the
Partnership's cash contribution for production or acquisition of
a film bears to the total cash contributions for production or
acquisition of that film. The Partnership (directly, or through
the Tri-Star Joint Venture) is entitled to payments based on the
net proceeds of SF Interest films or, if it would result in a
greater amount, payments based on gross receipts. Each
Distributor (as hereinafter defined) is also required to make
special recoupment payments which may enable the Partnership to
recover up to the otherwise unrecouped amount of its
contributions for SF Interest films distributed by that
Distributor. These special recoupment payments are to be made
in December 1996.
All 20 films in which the Partnership has an SF Interest
have been released both domestically and in foreign markets.
The Partnership's contributions (including interest) for the
production and acquisition of SF Interest films aggregated
approximately $42,213,000. Of this amount, approximately
$37,768,000 was contributed to the Tri-Star Joint Venture and
approximately $4,445,000 to Columbia.
Distribution of Films.
The films in which the Partnership owns an interest are
distributed pursuant to distribution agreements (the
"Distribution Agreements") between TriStar and the Tri-Star
Joint Venture and between Columbia Pictures and the Partnership.
TriStar and Columbia Pictures, 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 SF Interest film, the Partnership is generally entitled
to receive an amount equal to the product of its percentage
interest in a film multiplied by the greater of (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. As previously discussed, the
payments to which the Partnership is entitled in respect of PF
Interest films are based solely on gross receipts without regard
to net proceeds. The Distribution Agreements provide, in
general, that gross receipts consist of all sums received by the
Distributor from the worldwide exploitation of a film. 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 Tri-
Star Joint Venture or the Partnership (in the case of Columbia's
SF Interest films) has received from the distribution of that
film an amount equal to the amount contributed (other than
interest) to produce or acquire an interest in the film;
(b) expenses incurred in the distribution, promotion and
marketing of the film, including expenditures for prints and
advertising except that deductions for the cost of domestic
theatrical distribution of Tri-Star SF Interest films may not be
deducted beyond the sum of $6,000,000 plus 20% of the gross
receipts from the domestic theatrical release of a film; and
(c) payments to third party participants who have a
contingent participation 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.
Each Distributor reports to the Partnership or the Tri-
Star Joint Venture, as the case may be, on a quarterly basis
with respect to gross receipts and net proceeds for each film.
The Distributors make payments with respect to the SF Interest
films based on those quarterly reports when the reports are
delivered. Under the terms of each Distribution Agreement,
payments based on gross receipts did not take into account
amounts accrued through December 31, 1986. In addition to
distributing motion pictures produced or acquired by the Joint
Venture and the Partnership (in the case of the Columbia SF
Interest films), 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.
Special Recoupment Payment for SF Interest Films.
Under the terms of the Distribution Agreements, the
Partnership will be entitled to a payment (a "Special Recoupment
Payment") from the Distributors in late 1996 for each SF
Interest film (an "Unrecouped Film") for which the Tri-Star
Joint Venture or the Partnership (in the case of the Columbia SF
Interest films) has not received from the distribution of that
film (or its sale) an amount equal to the total contributions to
produce or acquire an interest in the film, other than amounts
spent for payments in the nature of interest ("Cost Return").
Initially, the Special Recoupment Payment would be
payable only to the extent of the distribution fees received by
the Distributor from the distribution of all of its SF Interest
films. The Special Recoupment Payments to the Tri-Star Joint
Venture based on distribution fees would be allocated by the Tri-
Star Joint Venture first to the Partnership to the extent
necessary for the Partnership to recoup (without interest) the
amount of its contributions to the Tri-Star 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 TriStar. If these
distribution fees are insufficient to enable a Distributor to
make the Special Recoupment Payments with respect to all of its
Unrecouped Films, gross receipts and net proceeds of each
remaining Unrecouped Film distributed by that Distributor would
be recalculated to include as gross receipts in respect of that
Unrecouped Film (i) the excess, if any, of the minimum payments
under its license agreement with Home Box Office, Inc. ("HBO"),
in the case of Columbia, or the minimums determined under the
agreement between TriStar and HBO based on the formula for films
that commence principal photography in 1986, in the case of
TriStar, and (ii) certain minimum amounts in respect of video
cassette and video disc exploitation in excess of the amounts
previously included in the gross receipts of that Unrecouped
Film. Each Distributor would then make a Special Recoupment
Payment to the Partnership 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) in respect of that Unrecouped Film. Each
Special Recoupment Payment made on the basis of such
recalculation would be allocated between the Partnership and
TriStar in proportion to their respective interests in the
applicable Unrecouped Film.
Each Distributor will be entitled to recoup the Special
Recoupment Payments 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. In calculating the amount of
distribution fees available for the Special Recoupment Payments,
no distribution fee will be deemed received by a Distributor
(and therefore no distribution fee will be deemed available for
the Special Recoupment Payment) from a film with respect to
which the most recent payment by that Distributor was based on
gross receipts or from a film that did not reach Cost Return.
Based on the anticipated performance of the three
Columbia SF Interest Films and the 17 Tri-Star SF Interest
Films, as of December 31, 1995, approximately $2,576,000 and
$15,642,000 (amounts present valued at Columbia and the Tri-Star
Joint Venture's respective discount rate from December 1996),
respectively, had been accrued on the financial statements of
the Partnership as Special Recoupment Payments allocable to the
Partnership. To the extent available, the Special Recoupment
Payments from the Distributors are expected to enable the
Partnership to achieve Cost Return for the Unrecouped Films 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.
Tri-Star SF Interest Bonus Film Profit Payments.
The Partnership is entitled to receive certain bonus
profit payments with respect to the three films "Like Father,
Like Son," "Blind Date" and "Peggy Sue Got Married" (the "Bonus
Films") for which it paid no consideration (the "Bonus Film
Profit Payments"). All three SF Interest films have generated
cash payments to the Partnership. The Film Profit Bonus
Payments are equal to 30% of the first $9,000,000 of profits to
the Partnership from its SF Interest in each of these films.
Bonus Film Profit Payments in the amounts of $9,000, $81,000
and $9,000 were received by the Partnership in 1995, 1994 and
1993, respectively.
Additional Bonus Film Profits Payments will be paid in
installments, without interest, and will continue on a quarterly
basis, on the basis of each Bonus Film's performance, subject to
reaching a stipulated maximum amount.
Tri-Star SF Interest Extra Film Profit Participations.
Pursuant to the Distribution Agreement between Tri-Star
and the Tri-Star Joint Venture, the Partnership, through the Tri-
Star Joint Venture, has a net profit participation in three
extra SF Interest films (the "Extra Films"). The Partnership's
Extra Films are "Avalon", "Another You" and "Fisher King" each
of which has been released.
The Partnership was not required to make a capital
contribution with respect to the Extra Films. The Partnership's
profit participation (through the Tri-Star Joint Venture) with
respect to the Extra Films is equal to 10% of the net proceeds
of the Extra Film after 100% of the net proceeds of the Extra
Film exceeds 112 1/2% of its production cost. The interest in
these Extra Films will cease should the Partnership's overall
Cash Return (as defined below) with respect to Tri-Star SF
Interest Amount. For these purposes, "Cash Return" is an amount
equal to (a) the estimated cash payments ultimately to be
received by the Partnership from the Tri-Star SF Interest films
less (b) the Partnership's contributions for those films in
excess of the Allocated Amount and interest on such excess.
Based on the performance of the Extra Films through December 31,
1995, no receivable has been reflected in the accompanying
financial statements.
TriStar and Columbia License Arrangements.
Certain of the Partnership's SF Interest films have been
licensed to HBO for exhibition on its pay television services.
The Distribution Agreements provide that the gross receipts of a
film will initially be credited with respect to pay television
exhibition by HBO in 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 its license agreement 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 its agreement with HBO. See the
"Special Recoupment Payments" provision described above 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 Columbia's 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 Partnership and Columbia Pictures have
agreed that, subject to adjustment in certain circumstances,
gross receipts for films licensed to CBS under this arrangement
would 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. The Columbia
SF Interest films may be licensed for network television
exhibition under this arrangement. Certain of the Tri-Star SF
Interest Films have been licensed for network television
exhibition on CBS or on other television networks on a film-by-
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 provide for a specified royalty for
video cassettes and video discs regardless of the amounts
payable to TriStar or Columbia under their respective
arrangements 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 their respective Distributors 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.
Tri-Star SF Interest Films.
All 17 films in which the Tri-Star Joint Venture has an
SF Interest have been released. Certain information concerning
these films is set forth below:
Partnership's
Approximate
Initial
Percentage
Title Release Date
Interest
Let's Get Harry October 1986
5%
Peggy Sue Got Married October 1986 5%
Every Time We Say Goodbye November 1986
5%
The Boss' Wife November 1986
5%
No Mercy December 1986
18%
Blind Date March 1987
5%
Amazing Grace and Chuck April 1987
25%
Gardens of Stone May 1987
25%
The Squeeze July 1987 25%
Nadine August 1987 25%
The Principal September
1987 25%
Like Father Like Son September 1987 25%
Suspect October 1987 25%
For Keeps January 1988
5%
Sunset April 1988 5%
The Seventh Sign April 1988
5%
Sweet Hearts Dance September 1988 23%
In addition, the Partnership holds a l0% net profit
participation interest in the films "Avalon," "Another You" and
"Fisher King" each of which are Extra Films. See "Tri-Star SF
Interest Extra Film Profit Participations."
Columbia SF Interest Films.
All three of the Columbia SF Interest films have been
released. Certain information concerning these films is set
forth below:
Partnership's
Initial Percentage
Title Release Date
Interest
Armed and Dangerous August 1986 5%
That's Life September 1986
5%
Ishtar May 1987
7.5%
PF Interest Films.
All 22 Films in which the Partnership has an interest have
been released. Certain information concerning these films is
set forth below:
Initial
Title Release Date
The Principal September 1987
Short Circuit 2 July 1988
Tap February 1989
Who's Harry Crumb? February 1989
Chances Are March 1989
Slaves of New York March 1989
Sing March 1989
See No Evil,
Hear No Evil May 1989
Loverboy April 1989
Casualties of War August 1989
Look Who's Talking October 1989
Immediate Family October 1989
Steel Magnolias November 1989
Glory December 1989
Family Business December 1989
Loose Cannons February 1990
Blind Fury June 1989 (Foreign)
March 1990 (Domestic)
Side Out March 1990
I Love You To Death April 1990
The Freshman July 1990
Postcards From The Edge September 1990
Avalon October 1990
With the exception of "Casualties of War," "Immediate
Family" and "Postcards From The Edge," which are each Columbia
PF Interest Films, the films set forth above are Tri-Star PF
Interest Films.
All of the Partnership's SF Interest films and PF Films
have been theatrically released both domestically and in foreign
markets. In addition, substantially all of the Partnership's SF
Interest films have been made available on video cassettes and
have been exhibited on pay television. Certain of the
Partnership's SF Interest films and PF 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 most of 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 5,100
holders of record of limited partnership units of the
Partnership.
Cash Distributions.
Cash distributions attributable to revenue received by
the Partnership from PF Films commenced in December of 1987.
Cash distributions attributable to revenue received by the
Partnership from SF Interests commenced in September 1989.
The following chart sets forth the cash distributions
made by the Partnership through March 15, 1996:
Year Amount Per Unit
1987 $ 245
1988 245
1989 270
1990 270
1991 330
1992 840
1993 275
1994 245
1995 245
1996 (through March 15) 0
Total $2,965
Accordingly, as of March 15, 1996, the partners have
received cash distributions aggregating 59.3% of their original
investment in 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>
Net revenue from
motion pictures
released (1): $ 17 $
8 $ 68 $ 35 $ 46
Share of profit
in motion
picture venture: $ 1,156 $
609 $ 1,420 $ 3,814$ 14,581
Net profit: $
788 $ 208 $ 905 $ 3,312 $ 14,156
Net profit
per unit: $
62 $ 16 $ 71 $ 260 $
1,111
Total assets: $41,311
$43,653 $46,590 $ 49,150 $ 57,590
Total liabilities: $ 53 $
63 $ 88 $ 50 $ 1,103
Cash distributions
per unit: $ 245 $ 245
$ 275 $ 840 $ 330
(1) The Partnership's interest in the Tri-Star Joint Venture is
not included in Operating Revenue as it is 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 has satisfied its commitment to
contribute funds to the Tri-Star Joint Venture and to Columbia
for the production of, and acquisition of SF Interests in films.
In addition, the Partnership has satisfied its commitment to
contribute funds to the Tri-Star Joint Venture for PF Interests
in films. As of December 31, 1995, the Partnership held cash of
approximately $714,000 and short-term investments of
approximately $588,000. Short-term investments consist solely
of U.S. government securities.
In March 1993 and 1992, the Partnership received $360,000
and $7,548,000 with respect to the Acceleration Payment for 1992
and 1991, respectively. These Acceleration Payments are
recoupable, with interest, by TriStar, with certain exceptions,
from the payment to be received by the Partnership with respect
to its PF Interests in December 1996.
Since the Partnership's obligations to make contributions
to the Joint Venture for the production of, and acquisition of
interests in, films have been satisfied, all revenues received
by the Partnership are used to pay operating expenses of the
Partnership and to make cash distributions to partners.
2. Results of Operations.
The Partnership's operating results are primarily
dependent upon the operating results of the Tri-Star Joint
Venture's films and films owned directly and are significantly
impacted by the Tri-Star Joint Venture's and Columbia's
policies.
The performance of each film where net proceeds
determines the amount of revenue recognized is based upon the
amount expended for production and other costs associated with a
film and the gross receipts generated by a film. The amount and
timing of gross receipts 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, the Tri-Star Joint Venture and the
Partnership may record income with respect to Special Recoupment
Payments, to the extent available, which may allow it to recover
its investment in SF Interest films.
For the year ended December 31, 1995, the Tri-Star Joint
Venture had a net profit of which the Partnership's share was
approximately $1,156,000 and the Partnership had an overall net
profit of approximately $788,000. The variance between the
Partnership's share of the Tri-Star Joint Venture's net profit
and the Partnership's net profit for the year ended December 31,
1995 was attributable to the Partnership's operating expenses
(including amortization of the Partnership's direct interest in
motion pictures), partially offset by the accrual of the Special
Recoupment Payments, revenues generated by films in which the
Partnership holds an interest directly and interest income. The
Partnership's share of the net profit reported by the Tri-Star
Joint Venture was due primarily to interest income related to
the accrual of the Special Recoupment Payments and the
profitable results of certain films offset, in part, by interest
expense related to the Acceleration Payments and the recapture
of the Special Recoupment Payments.
For the year ended December 31, 1994, the Tri-Star Joint
Venture had a net profit of which the Partnership's share was
approximately $609,000 and the Partnership had an overall net
profit of approximately $208,000. The variance between the
Partnership's share of the Tri-Star Joint Venture's net profit
and the Partnership's net profit for the year ended December 31,
1994 was attributable to the Partnership's operating expenses
(including amortization of the Partnership's direct interest in
motion pictures), partially offset by the accrual of the Special
Recoupment Payments, interest income and revenues generated by
films in which the Partnership holds an interest directly. The
Partnership's share of the net profit reported by the Tri-Star
Joint Venture was due primarily to interest income related to
the accrual of Special Recoupment Payments and the profitable
results of certain PF Interest films offset, in part, by
expenses related to foreign exchange losses and by interest
expense related to the Acceleration Payments and the recapture
of the Special Recoupment Payments.
For the year ended December 31, 1993, the Tri-Star Joint
Venture had a net profit of which the Partnership's share was
approximately $1,420,000 and the Partnership had an overall net
profit of approximately $905,000. The variance between the
Partnership's share of the Tri-Star Joint Venture's net profit
and the Partnership's net profit for the year ended December 31,
1994 was attributable to the Partnership's operating expenses
(including amortization of the Partnership's direct interest in
motion pictures), partially offset by the accrual of the Special
Recoupment Payments, interest income and revenues generated by
films in which the Partnership holds an interest directly. The
Partnership's share of the net profit reported by the Tri-Star
Joint Venture was due primarily to interest income related to
the accrual of Special Recoupment Payments and the profitable
results of certain PF Interest films offset, in part, by
expenses related to foreign exchange losses and by interest
expense related to the Acceleration Payments and the recapture
of the Special Recoupment Payments.
The increase in the Special Recoupment Payments accrued
for the years ended December 31, 1995 and 1994 as compared with
the prior years is primarily due to the shortening of the
discount period in 1994 and 1993.
The Partnership reports net revenues from motion picture
exploitation for the three films in which it owns interests
directly. The increase in net revenues for the year ended
December 31, 1995 as compared with the prior year is due
primarily to an increase in the accrual of syndicated television
revenues in 1995. The decrease in net revenues for the year
ended December 31, 1994 as compared with the prior year is due
primarily to lower syndicated television revenues accrued in
1994. The amortization of the Partnership's direct interest in
motion pictures for the year ended December 31, 1995 as compared
with the prior year is unchanged. The decrease in amortization
of the Partnership's direct interest in motion pictures for the
year ended December 31, 1994 as compared with the prior year is
due primarily to a decrease in net revenues from motion picture
exploitation.
The increase in interest income for the years ended
December 31, 1995 and 1994 as compared with the corresponding
periods in 1994 and 1993 was due primarily to more funds being
available for short-term investments as well as higher interest
rates earned on short-term investments during 1995 and 1994.
The increase in total expenses for the year ended
December 31, 1995 as compared with the prior year (exclusive of
amortization of the Partnership's direct interest in motion
pictures) is due primarily to an increase in Other Expenses.
The increase in Other Expenses is primarily attributable to an
increase in professional fees related to the performance of a
greater number of distribution audits in 1995. The decrease in
total expenses for the year ended December 31, 1994 as compared
with the prior year (exclusive of amortization of th
Partnership's direct interest in motion pictures) is due
primarily to a decrease in Other Expenses. The decrease in
Other Expenses is primarily attributable to a decrease in
professional fees related to the performance of fewer film
audits in 1994.
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 ML Delphi
Partners, L.P., a Delaware limited partnership formed in January
1987 between 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"), its general partner, and Delphi Film
Services, its sole limited partner. ML Delphi Partners, L.P. is
the successor to ML Delphi Partners, a New York general
partnership between ML Film and Delphi Film Services, which was
the general partner of the Partnership from June 1986 through
December 1986. Since the Partnership's inception, ML Film has
been the managing partner of the Partnership's General Partner.
Set forth below is certain information regarding the current
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 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
Lynch & 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 Mezzanine 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.
("SPE") (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
transaction 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, the sole shareholder of
Goshen Services, Inc. (which is a partner of Delphi Film
Services, the sole limited 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
approximately $569,000 for 1995 and is entitled to an annual
management fee in the same amount through 1996. The General
Partner is responsible for payments to all personnel
employed by it, office and travel expenses 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. In addition,
the General Partner is being reimbursed for out-of-pocket
expenses with respect to administering the Partnership and
reporting to partners. For years subsequent to 1996 there
will be no fixed management fee. In that regard, the
General Partner, on behalf of the Partnership, has retained
Magera to provide those services to the Partnership for
years after 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.
Following Capital Return, until limited partners have
received total cash distributions equal to 150% of Capital
Return, the General Partner, in addition to receiving
distributions in respect of 1% interest for which it has
paid, will be entitled to receive distributions in amounts
equal to 10% of all further cash distributions made. After
the limited partners have received total cash distributions
equal to 150% of Capital Return, 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 15% of all further cash
distributions made.
Prior to reaching Capital Return, income will be
allocated 99% to the limited partners and 1% 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.
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.
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:
ML Delphi Premier Partners, L.P.
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, 1995, 1994 and 1993
Statements of Changes in Partners' Capital
for the Years Ended December 31, 1995,
1994 and 1993
Notes to Financial Statements
Tri-Star-ML Delphi Premier 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, 1995, 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 and Restated Agreement
of Limited Partnership (1)
4.l
Production Credit Agreement dated
as of January 18, 1988 (2)
4.2(a)
Amendment No. 1 to the Production
Credit Agreement dated as of March 1, 1988 (3)
4.2(b)
Tri-Star Joint Venture Agreement (1)
l0.1
Product Origination
Agreements (1)
l0.2
Distribution Agreements (1)
l0.4
Agreement dated June 13, 1989 between
ML Delphi Premier Partners, L.P.
and Columbia Pictures Entertainment, Inc. (4)
10.5
Financial Data Schedule 27
</TABLE>
(1) Incorporated by reference to the Partnership's
registration statement No. 33-6489, 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, 1987 on file with the Securities
and Exchange Commission.
(3) Incorporated by reference to the Partnership's Form
10-K for the year ended December 31, 1988 on file with the
Securities and Exchange Commission.
(4) Incorporated by reference to the Partnership's Form
10-K for the year ended December 31, 1989 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 Schedule.
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 28, 1996 ML DELPHI PREMIER PARTNERS,
L.P.
By: ML DELPHI
PARTNERS, L.P.
General Partner
By: ML Film
Entertainment Inc.,
General 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 28, 1996
(Kevin K. Albert) the general partner
of the General Partner
(principal executive
officer of the Registrant)
/s/ Robert F. Aufenanger Director and Executive Vice
March 28, 1996
(Robert F. Aufenanger) President of the general
partner of the General Partner
/s/ Steven N. Baumgarten Director and Vice President
March 28, 1996
(Steven N. Baumgarten) of the Managing Partner
of the General Partner
Director and Vice
President March 28, 1996
(Michael E. Lurie) of the Managing Partner
of the General Partner
/s/ Diane T. Herte Treasurer of the general March 28, 1996
(Diane T. Herte) partner of the General Partner
(principal financial
officer and principal
accounting officer of the
Registrant)
EXHIBIT INDEX
Page Reference
in Sequentially
Numbered Copy
4.1 Amended and Restated Agreement
of Limited Partnership*
4.2(a) Production Credit Agreement
dated as of January 18, 1988*
4.2(b) Amendment No. 1 to the Production
Credit Agreement dated as of
March 1, 1988*
l0.l Tri-Star Joint Venture Agreement*
l0.2 Product Origination Agreements*
l0.4 Distribution Agreements*
10.5 Agreement dated June 13, 1989 between
ML Delphi Premier Partners, L.P.
and Columbia Pictures Entertainment, Inc.*
27 Financial Data Schedule
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
ML Delphi Premier Partners, L.P.:
We have audited the accompanying balance sheets of ML Delphi
Premier Partners, L.P. (a Delaware 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 ML Delphi Premier Partners, L.P. (a Delaware
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>
ML DELPHI PREMIER PARTNERS, L.P.
(A Delaware Limited Partnership)
BALANCE SHEETS
(000's Omitted)
<TABLE>
<CAPTION>
December
31,
1995 1994
<S> <C> <C>
ASSETS
Cash $ $
714 623
Short-Term Investments (Note 2) 588 902
Receivable from Tri-Star-ML
Delphi Premier
Productions, net (Note 4) 37,301 39,600
Receivable from Columbia
Pictures
(Distributor) (Note 2) 110 113
Interests in Motion Pictures
Released, net of
accumulated amortization of
$11,527 and
$11,526, respectively (Note 2 3
2)
Interest in Motion Picture
Venture-Tri-Star-
ML Delphi Premier 20 39
Productions
(Notes 2 & 4)
Motion Picture Costs
Recoverable from
Special Recoupment
Payments
(Notes 2 & 5)
2,576 2,373
Total $ $
Assets 41,311 43,653
LIABILITIES AND PARTNERS'
CAPITAL
Liabilities:
Accrued Expenses and Accounts $ $
Payable 53 63
Total
Liabilities 53 63
Partners' Capital (Notes 1 &
9):
General Partner 486 509
Limited Partners
40,772 43,081
Total
Partners' Capital 41,258 43,590
Total
Liabilities and Partners'
$ $
Capital 41,311 43,653
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
ML DELPHI PREMIER PARTNERS, L.P.
(A Delaware Limited Partnership)
STATEMENTS OF OPERATIONS
(000's Omitted, except net profit per unit)
<TABLE>
<CAPTION>
For the Year Ended December
31,
1995 1994 1993
<S> <C> <C> <C>
Net Revenue from Motion
Pictures
Released (Note 2) $ $ $
17 8 68
Special Recoupment Payment
Accrual (Note 5) 203 186 182
Interest Income
69 47 35
289 241 285
Expenses:
Management Fee 569 569 569
Amortization of
Interests in Motion
Pictures Released 1 1 13
(Note 2)
Other Expenses
87 72 218
657 642 800
Loss before Share of Profit
in Motion
Picture Venture (368) (401) (515)
Share of Profit in Motion
Picture Venture--Tri-Star-
ML Delphi
Premier Productions (Notes
2 & 4) 1,156 609 1,420
Net Profit $ $ $
788 208 905
Net Profit Per Unit of
Limited
Partnership Interest $ $ $
(12,610) units 62 16 71
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
ML DELPHI PREMIER PARTNERS, L.P.
(A Delaware 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 Profit $ $ $
788 208 905
Adjustments to reconcile Net
Profit to net cash
provided by operating
activities:
Amortization of Interests in
Motion Pictures
Released 1 1 13
Share of Profit in Motion (1,156) (609) (1,420)
Picture Venture
Distributions from Joint 1,175 754 2,053
Venture
Changes in Assets and
Liabilities:
Increase in Motion
Picture Costs
Recoverable from
Special Recoupment
Payments (203) (186) (182)
Decrease (Increase) in
Receivable from
Columbia Pictures 3 23 (33)
(Distributor)
Decrease in Receivable
from Tri-Star-ML
Delphi Premier 2,299 3,168 2,211
Productions, net
(Decrease) Increase in
Accrued Expenses
and Accounts Payable
(10) (25) 38
Net Cash Provided by
Operating Activities 2,897 3,334 3,585
Cash Flow From Investing
Activities:
Purchases of Short-Term (1,671) (2,181) (5,113)
Investments
Redemptions of Short-Term
Investments 1,985 1,958 5,017
Net Cash Provided (Used)
by Investing
Activities
314 (223) (96)
Cash Flow from Financing
Activities:
Distributions to Partners
(3,120) (3,120) (3,503)
Net Cash Used by Financing
Activities (3,120) (3,120) (3,503)
Increase (Decrease) In Cash and
Cash
Equivalents 91 (9) (14)
Cash at beginning of year
623 632 646
Cash at end of year $ $ $
714 623 632
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
ML DELPHI PREMIER PARTNERS, L.P.
(A Delaware 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 $ $ $
564 48,536 49,100
Net Profit for the Year
Ended
December 31, 1993 9 896 905
Distributions to Partners
($275 per unit) (35) (3,468) (3,503)
Balance December 31, 1993 538 45,964 46,502
Net Profit for the Year
Ended
December 31, 1994 2 206 208
Distributions to Partners
($245 per unit) (31) (3,089) (3,120)
Balance December 31, 1994 509 43,081 43,590
Net Profit for the Year
Ended
December 31, 1995 8 780 788
Distributions to Partners
($245 per unit) (31) (3,089) (3,120)
Balance December 31, 1995 $ $ $
486 40,772 41,258
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
ML DELPHI PREMIER PARTNERS, L.P.
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. General
ML Delphi Premier Partners, L.P. (the "Partnership") is a
limited partnership which was formed to participate in the
production, ownership, acquisition of interests in and
exploitation of feature length motion pictures. The Partnership
was organized under the laws of the State of Delaware on
June 12, 1986. ML Delphi Partners, L.P., a Delaware limited
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 $569,000 in l995,
l994 and 1993. A public offering (the "Offering") of limited
partnership interests in the Partnership was completed on
December 23, 1986. A total of 12,610 units at $5,000 per unit
were sold.
A substantial portion of the business of the Partnership is
the production, ownership, acquisition of interests in and
exploitation of motion pictures through its participation in the
Joint Venture (as hereinafter defined.) Accordingly, the
Partnership's operating results are in large part dependent upon
the operating results of the Joint Venture, and are
significantly impacted by the Joint Venture's policies (see Note
4).
The General Partner contributed $637,000, an amount equal to
l% of the total capital contributions, to the Partnership.
Profits and losses are currently being allocated l% to the
General Partner and 99% to the limited partners (See Note 9).
The Partnership (a) has acquired Preferred Film ("PF")
Interests in films through Tri-Star-ML Delphi Premier
Productions (the "Joint Venture"), a joint venture with TriStar
Pictures, Inc. (formerly Tri-Star Pictures, Inc.) ("TriStar"),
with returns based on gross receipts of those films and (b) has
acquired Single Film ("SF") Interests in films through the Joint
Venture with returns generally based on the net proceeds of
those films or upon certain gross receipts if it would result in
a greater amount. In addition, SF Interests have been acquired
in three films released by Columbia Pictures, a division of
Columbia Pictures Industries, Inc. (the "Columbia Distributor").
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
approximate market value.
(b) Accounting for Participation in Tri-Star-ML Delphi
Premier Productions
The Partnership records its investment in the Joint Venture
under the equity method of accounting.
(c) Interests in Motion Pictures Released and Amortization
Interests in Motion Pictures Released include the
Partnership's share of the direct costs of production of certain
films plus an overhead charge equivalent to 12.5% of the direct
production costs. In addition, advertising expenditures which
benefit future periods were capitalized as incurred by the
Partnership and are included in Interests in Motion Pictures
Released.
The Partnership's interests in motion pictures are amortized
based on net revenues recognized in proportion to the
Partnership's estimate of ultimate net revenues to be received.
Unamortized amounts 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 with respect to
each film.
However, should losses be indicated for films, the Special
Recoupment Payments described in Note 5, to the extent
available, are accrued as Motion Picture Costs Recoverable from
Special Recoupment Payments.
Columbia agreed to compensate the Partnership for the
unavailability to it of an investment tax credit with respect to
one of the films in which the Partnership has a direct ownership
interest by making a payment to the Partnership in l987 of
$85,000. This amount is equal to approximately one and one-half
times the investment tax credit applicable to the Partnership's
interest in that film. This payment results in a reduction in
the account, Interests in Motion Pictures Released, in the
accompanying financial statements.
(d) Recognition of Revenue for Motion Pictures Released
Net revenues from the Columbia Distributor with respect to SF
Interest motion pictures released in which the Partnership has
an interest are recognized 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, a percentage of gross receipts
accrued payable to the Partnership under the distribution
agreement, plus, (b) the portion of gross receipts accrued (not
in excess of the advertising expenditures for the films, subject
to certain limitations, plus an amount intended to approximate
the cost of funds incurred by the Partnership in connection with
its advertising obligation). However, certain advances received
by the Columbia 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.
(e) Receivable from Columbia Pictures (Distributor)
This asset represents the amounts receivable by the
Partnership from Columbia. The total receivable from Columbia
consists of amounts accrued with respect to film exploitation of
$110,000 in 1995 and $113,000 in l994.
(f) Distribution Fee
The Columbia Distributor is entitled to receive a 17.5%
distribution fee on substantially all gross receipts in
calculating the net proceeds to which the Partnership is
entitled from the distribution of a film; however, the Columbia
Distributor's entitlement to this distribution fee is deferred
until the Partnership has received from the distribution of a
film an amount equal to the amount spent by the Partnership to
produce or acquire an interest in that film, other than amounts
spent for payments in the nature of interest ("Cost Return").
After Cost Return for a film, the deferred distribution fee will
be recouped by the Distributor from a portion (based on the
Partnership's interest in the film) of the amount otherwise
payable to the Partnership. After Cost Return, the Distributor
would be entitled to receive a distribution fee equal to 17.5%
of substantially all gross receipts, including gross receipts
prior to Cost Return.
(g) Accounting for Income Taxes
No provision for income taxes has been made as ML Delphi
Premier Partners, L.P. 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 exceeded
the tax bases by approximately $13,492,000 and $11,138,000,
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 1995, l994 and l993.
4. Transactions with Joint Venture
(a) PF Interests in Motion Pictures
The Partnership, through the Joint Venture, acquired PF
interests in twenty-two films for a cost of $l,000,000 per film.
Of these twenty-two films, nineteen were produced by TriStar and
three were produced by Columbia. The Partnership is receiving
an amount for each film based on certain percentages of gross
receipts of that film from all sources, with a maximum payment
of $l,l25,000 per film. In addition, the Partnership will also
be entitled to receive an amount based on certain percentages of
the aggregate gross receipts of all PF Interest films excluding
U.S. and Canadian domestic theatrical gross receipts. In any of
the years l988 through l995 in which the annual cash return to
the Partnership from the PF Interest films would cause the
Partnership's cumulative non-compounded return on the amount of
the Partnership's total funds to be contributed for PF Interest
films to exceed l4% per year, the balance of the amount due is
carried forward and, to the extent not applied in later years to
generate a l4% return to the Partnership, will be payable,
without interest, to the Partnership on December 23, l996 less
the Acceleration Payment recoupments described below. As of
December 31, 1995, $21,471,000, net of Acceleration Payments and
related interest and the Advance described below, is carried
forward and is included in the receivable from the Tri-Star
Joint Venture in the accompanying financial statements.
As of December 31, 1995, the Partnership had an interest in
twenty-two Joint Venture PF Interest films all of which had been
released. In each December of 1988 through 1995, TriStar,
through the Joint Venture, made a payment to the Partnership of
$3,l42,000 representing revenue for the PF Interest Films. In
December l987, $3,l42,000 was also paid to the Partnership,
through the Joint Venture, by TriStar. Approximately $2,684,000
of the l987 amount represented an advance (the "Advance") which
TriStar will be entitled to recoup, without interest, in
December l996 from revenues earned by the distribution of the
Partnership's PF Interest Films. Such amount has been netted
against the receivable from the Tri-Star Joint Venture (see Note
4(e)).
If in any calendar year the Partnership recognizes income for
federal tax purposes with respect to PF Interest films in excess
of the December payment for that year (the "Excess"), TriStar is
required to make an acceleration payment to the Partnership with
respect to the Excess. The amount of the acceleration payment
is equal to the Excess multiplied by the maximum individual
federal income tax rate in effect for the year of the Excess
(the "Acceleration Payment"). The Acceleration Payment is
recoupable, with interest, by TriStar, with certain exceptions,
from the payment to be received by the Partnership in December
1996. The Partnership received approximately $360,000 and
$7,548,000 in March l993 and l992 with respect to the
Acceleration Payment for l992 and 1991, respectively. As of
December 31, 1995 and 1994, Acceleration Payments of
approximately $8,702,000 have been netted against the receivable
from Tri-Star Joint Venture. Cumulative interest accrued on the
Acceleration Payments as of December 31, 1995 and l994 of
approximately $2,870,000 and $l,836,000, respectively, has been
netted against the receivable from Tri-Star Joint Venture (see
Note 4(e)).
(b) SF Interests in Motion Pictures
The Partnership, through the Joint Venture, has interests
ranging from 5% to 25% in (and has borne a corresponding
percentage of the cost of) seventeen motion pictures produced by
the Joint Venture ("Joint Venture Films"). The Partnership has
satisfied its commitment to contribute (including interest) a
maximum of approximately $37,768,000 to the Joint Venture for
the production or acquisition of SF Interest films. The Joint
Venture Films are distributed pursuant to a distribution
agreement between TriStar Pictures, Inc. (a "Distributor") and
the Joint Venture (see Note 5). The Distributor is entitled to
receive a fee of l7.5% of substantially all gross receipts from
each film, except that 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
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 Joint
Venture Films, net revenues have been computed as of December
31, l995, l994 and l993 without the Distributor deducting a
distribution fee, with the exception of five films in 1995 and
four films in 1994 and 1993 for which a portion of the fees were
deducted.
(c) Joint Venture Revenue Recognition
The Joint Venture recognizes net revenues for SF Interest
films 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) gross
receipts accrued (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). The
Joint Venture recognizes revenues for a PF Interest film based
on certain percentages of gross receipts for that film up to a
maximum amount of $l,l25,000 per film. In addition, the Joint
Venture also recognizes revenue based on certain percentages of
the aggregate gross receipts of all PF Interest films, excluding
U.S. and Canadian theatrical gross receipts. 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.
(d) Joint Venture Amortization Policies
Advertising expenditures which benefit future periods were
capitalized as incurred by the Joint Venture. Advertising
expenditures and unamortized production costs are amortized by
the Joint Venture 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 Special Recoupment Payments (see Note 5).
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 the total
estimated gross receipts from all films in the aggregate and
losses are recognized to the extent of any excess of
expenditures over gross receipts.
(e) Receivable from Tri-Star-ML Delphi Premier Productions,
net
This asset represents the excess of the amounts receivable by
the Partnership from the Joint Venture over amounts payable by
the Partnership to the Joint Venture. The total receivable of
$37,301,000 in 1995 consists of $15,642,000 accrued as special
recoupment payments, $27,025,000 accrued with respect to gross
receipts payments from PF Interest films (net of Acceleration
Payments of $8,702,000) and $188,000 accrued with respect to net
proceeds and gross receipts payments from SF Interest films
partially offset by a $2,684,000 advance to the Partnership
related to its PF Interest films and $2,870,000 of interest
expense related to the Acceleration Payments. The total
receivable of $39,600,000 in l994 consisted of $l3,925,000
accrued as special recoupment payments and $29,873,000 accrued
with respect to gross receipts payments from PF Interest films
(net of Acceleration Payments of $8,702,000) and $322,000
accrued with respect to net proceeds and gross receipts payments
from SF Interest films partially offset by a $2,684,000 advance
to the Partnership related to its PF Interest films and
$l,836,000 of interest expense related to the Acceleration
Payments.
(f) Transactions with Tri-Star
The films in which the Joint Venture has an interest are
distributed pursuant to a distribution agreement between TriStar
and the Joint Venture with terms similar to those with the
Columbia Distributor (see Note 2(f)).
5. Special Recoupment Payments
Under the terms of the distribution agreement between the
Joint Venture and its Distributor and the distribution agreement
between the Partnership and the Columbia Distributor, the
Partnership will be entitled to a payment (a "Special Recoupment
Payment") from the Distributors in l996 for each SF Interest
film (an "Unrecouped Film") for which the Partnership has not
received from the distribution of that film or a sale of the
Partnership's interest in that film an amount ("Cost Return")
equal to the amount spent by the Partnership to produce or
acquire an interest in the film, other than amounts spent for
payments in the nature of interest. Each Special Recoupment
Payment would be in the amount necessary for the Partnership to
be repaid (without interest) the amounts contributed by it (from
all sources) 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. Initially, the Special Recoupment Payment would be
payable only to the extent of the distribution fees received by
each Distributor from the distribution of all SF Interest films
distributed by it, reduced to the extent of the Special
Recoupment Payments made with respect to other Unrecouped Films
distributed by it. The Special Recoupment Payments to the Tri-
Star Joint Venture based on distribution fees would be allocated
by the Tri-Star Joint Venture first to the Partnership to the
extent necessary for the Partnership to recoup (without
interest) the amount of its contributions to the Tri-Star 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 TriStar. If
those distribution fees are insufficient to enable each
Distributor to make the Special Recoupment Payments with respect
to all Unrecouped Films distributed by it, gross receipts and
net proceeds of each remaining Unrecouped Film distributed by
that Distributor would be recalculated by including as gross
receipts in respect of each such Unrecouped Film the excess, if
any, of the minimum payments under its license agreement with
Home Box Office, Inc. ("HBO"), in the case of Columbia, or the
minimums determined under the agreement between TriStar and HBO
based on the formula for films that commenced principal
photography in l986, in the case of TriStar, and certain minimum
amounts in respect of video cassette and video disc exploitation
in excess of the amounts previously included in the gross
receipts of that Unrecouped Film in respect of those
arrangements. The Distributor would then make a Special
Recoupment Payment for the account of the Partnership to the
extent of the additional gross receipts or net proceeds payable
for the account of the Partnership as a result of the
recalculation (and, in the case of a Columbia SF Interest film,
to the extent of the amount equal to any additional payments
that the Partnership would have received in respect of that film
had the limit on the deduction of distribution expenses
applicable to Tri-Star SF Interest films been applicable to that
Columbia SF Interest film), but only up to the amount of the
unrecouped contribution (other than contributions for payments
in the nature of interest) in respect of that Unrecouped Film.
Each Special Recoupment Payment made on the basis of such
recalculation would be allocated between the Partnership and
TriStar in proportion to their respective interests in the
applicable Unrecouped Film. The Distributor will be entitled to
recoup the Special Recoupment Payments 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 all 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. In
calculating the amount of distribution fees available for the
Special Recoupment Payments, no distribution fee will be deemed
received by a Distributor (and therefore no distribution fee
will be deemed available for the Special Recoupment Payment)
from a film with respect to which the most recent payment by
that Distributor was based on gross receipts or from a film that
did not reach Cost Return.
Based on the anticipated performance of the three films
released by Columbia as of December 31, 1995 and 1994 $2,576,000
and $2,373,000, respectively (amounts present valued at
Columbia's discount rate from December 1996), have been accrued
by the Columbia Distributor as Special Recoupment Payments
payable to the Partnership. Based on the anticipated
performance of the seventeen SF films released by the Joint
Venture as of December 31, 1995 and 1994, $15,642,000 and
$l3,925,000, respectively (amounts present valued at the Joint
Venture's discount rate from December 1996), have been accrued
by the Joint Venture as Special Recoupment Payments allocable to
the Partnership. To the extent available, the Special
Recoupment Payments from the Distributors are expected to enable
the Partnership to achieve Cost Return for the Unrecouped Films.
6. Bonus Film Profit Payments
The Partnership is entitled to certain additional payments
("Bonus Profit Payments") with respect to the three Tri-Star SF
Interest films that generate the greatest payments to the
Partnership ("Bonus Films"). All three SF Interest Films have
generated cash payments to the Partnership. The Bonus Profit
Payments will be equal to 30% of the first $9,000,000 received
by the Joint Venture in excess of the Partnership's
contributions with respect to that Bonus Film. Bonus Profit
Payments were made in 1995, 1994 and 1993 in the amounts of
$9,000, $81,000 and $9,000, respectively. Additional Bonus
Profit Payments will be made to the extent earned, in
installments, without interest, and continue on a quarterly
basis to the extent subsequently earned until reaching the
maximum profit payments.
7. Extra Film Profit Participations
The Partnership will be entitled to receive, without any
additional cost or payment to it, a profit participation in
three additional Tri-Star SF Interest films ("Extra Films")
since, in December l990, the aggregate Cash Return (as defined
below) to the Partnership from the Tri-Star SF Interest films
was estimated to be less than l25% of the portion of the net
proceeds of the Offering (and of the General Partner's capital
contribution) allocated to such Tri-Star SF Interest films (the
"Allocated Amount"). The profit participation will equal l0% of
the net proceeds of each Extra Film after l00% of the net
proceeds of that Extra Film exceeds 112 1/2% of its production
cost. The profit participation in these Extra Films will cease
should the Partnership's overall Cash Return with respect to Tri-
Star SF Interest films plus any profit participation payments
with respect to the Extra Films equal 200% of the Allocated
Amount. The Cash Return is an amount equal to (a) the cash
payments then estimated ultimately to be received by the
Partnership from the Tri-Star SF Interest films less (b) the
Partnership's contributions for those films in excess of the
Allocated Amount and an amount in the nature of interest on such
excess. Insofar as the selection of these Extra Films is
concerned, the Partnership chose one Extra Film, TriStar chose
one Extra Film, and the third Extra Film was jointly chosen. As
of December 31, 1995, all three Extra Films have been selected
and released. Based on the performance of the Extra Films
through December 31, 1995, no receivable has been reflected in
the accompanying financial statements.
8. Current Operations
As of December 31, 1995, the Partnership had an interest in
twenty SF Interest films (seventeen of which are owned through
the Joint Venture), all of which had been released.
Additionally, the Partnership had an interest in twenty-two PF
Interest films which had been released. Based on the
performance of the released films during the year ended
December 31, 1995 and after deducting the net operating expenses
of the Partnership, the Partnership is reporting a net profit of
$788,000 for the year ended December 31, 1995.
9. Distribution to Partners
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.
Following Capital Return, until limited partners have
received total cash distributions equal to 150% of Capital
Return, the General Partner, in addition to receiving
distributions in respect of 1% interest for which it has
paid, will be entitled to receive distributions in amounts
equal to 10% of all further cash distributions made. After
the limited partners have received total cash distributions
equal to 150% of Capital Return, 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 15% of all further cash
distributions made.
Prior to reaching Capital Return, income will be
allocated 99% to the limited partners and 1% 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. As of December 31,
1995, the limited partners have not reached Capital Return
and, as such, income and losses have been allocated 99% to
the limited partners and 1% to the General Partner.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Venturers
TriStar - ML Delphi Premier 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 - ML Delphi Premier
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-ML DELPHI PREMIER 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
$279,715 and $279,570,
respectively
(Notes 1, 2 & 7) $ 1,202 $
1,347
Motion Picture Costs Recoverable
from
Special Recoupment Payments
(Notes 3, 7 & 8) 62,590 53,072
Receivable from TriStar
Pictures, Inc.
(Distributor), net (Notes 8
& 10) 24,082 28,210
Total $87,874 $
Assets 82,629
LIABILITIES AND VENTURERS'
CAPITAL
Liabilities:
Payable to TriStar Pictures, $49,371 $ 41,682
Inc. (Note 8)
Payable to ML Delphi Premier
Partners, L.P., net (Note 37,301 39,600
8)
Total 86,672 81,282
Liabilities
Venturers' Capital (Notes 1,3,4
& 5)
TriStar Pictures, Inc. 1,182 1,308
ML Delphi Premier Partners,
L.P. 20 39
Total
Venturers' Capital 1,202 1,347
Total
Liabilities and Venturers'
$
Capital $87,874 82,629
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
TRI-STAR-ML DELPHI PREMIER 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) 1,138 761 1,985
Less: Amortization of
Motion
Picture
Production and
Advertising
Costs
(Notes 2 &
7) 145 188 648
Income from Operations 993 573 1,337
Special Recoupment
Payment
Accrual (Recapture)
(Notes 3 & 7) 2,152 (304) (2,56
7)
Interest Income, net 6,332 5,784 5,440
(Notes 7 & 11)
Other Expense (Note 12)
-- (2,36 --
3)
Net Income $ $ $
9,477 3,690 4,210
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
TRI-STAR - ML DELPHI PREMIER 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 $ $ $
9,477 3,690 4,210
Adjustments to reconcile Net
Income to net cash
provided by operating
activities:
Amortization of Motion Picture
Production
and Advertising Costs 145 188 648
Accrued Distributions to (5,390) 2,539 2,471
Venturers
Changes in Assets and
Liabilities:
Decrease in Payable to ML
Delphi Premier
Partners, L.P., net (2,299) (3,168) (2,211)
Increase (Decrease) in
Payable to TriStar
Pictures, Inc. 7,689 629 (260)
Decrease in Receivable
from TriStar
Pictures, Inc. 4,128 8,740 5,930
(Distributor), net
Increase in Motion Picture
Costs
Recoverable from
Special Recoupment
Payments
(9,518) (6,201) (3,459)
Net Cash Provided by
Operating Activities 4,232 6,417 7,329
Cash Flow From Financing
Activities:
Distributions to Venturers
(4,232) (6,417) (7,329)
Net Cash Used by
Financing Activities (4,232) (6,417) (7,329)
Net Change in Cash 0 0 0
Cash at beginning of year
0 0 0
Cash at end of year $ $ $
0 0 0
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
TRI-STAR-ML DELPHI PREMIER PRODUCTIONS
(A Joint Venture)
STATEMENTS OF VENTURERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 3l, 1995, 1994 AND 1993
(000's Omitted)
<TABLE>
<CAPTION> ML Delphi
Total
TriStar, Premier
Venturers'
Pictures Inc. Partners
Capital
<S> <C> <C>
<C>
Venturers' Capital as of $ $ $
January 1, 1993 1,366 817 2,183
Net Income for the Year
Ended
December 31, 1993 2,790 1,420 4,210
Accrued Distributions to
Venturers (2,805) (2,053) (4,858)
Venturers' Capital as of 1,351 184 1,535
December 31,
1993
Net Income for the Year
Ended
December 31, 1994 3,081 609 3,690
Accrued Distributions to
Venturers (3,124) (754) (3,878)
Venturers' Capital as of
December 31,
1994 1,308 39 1,347
Net Income for the Year
Ended
December 31, 1995 8,321 1,156 9,477
Accrued Distributions to
Venturers (8,447) (1,175) (9,622)
Venturers' Capital as of
December 31,
1995 $ $ $
1,182 20 1,202
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
TRI-STAR-ML DELPHI PREMIER PRODUCTIONS
(A Joint Venture)
NOTES TO FINANCIAL STATEMENTS
1. General
Tri-Star-ML Delphi Premier Productions (the "Joint Venture")
is a joint venture between TriStar Pictures, Inc. (formerly Tri-
Star Pictures, Inc.) ("TriStar") ("TSPI") and ML Delphi Premier
Partners, L.P., a Delaware limited partnership (the
"Partnership") formed in June 1986 to engage in the business of
producing, owning, acquiring interests in and exploiting feature
length motion pictures. Substantial operation of the Joint
Venture began in December l986. The Joint Venture has acquired
Preferred Film ("PF") Interests in twenty-two films with returns
based on gross receipts of those films. Of these twenty-two
films, nineteen were produced by TSPI and three were produced by
Columbia Pictures Industries, Inc. ("Columbia"). The
Partnership has and will continue to receive all amounts paid to
the Joint Venture based on the gross receipts of those films.
The Joint Venture has also acquired seventeen Single Film ("SF")
Interests in films with returns generally based on the net
proceeds of those films. Generally, through the Joint Venture,
TSPI has either a 75% or a 95% interest and the Partnership has
either a 25% or a 5% interest in, and each was responsible for
those respective percentages of the production cost of, SF
Interest films in which the Joint Venture has a 100% interest
and which were produced by the Joint Venture ("Joint Venture
Films").
Three of the Joint Venture Films were co-produced with Tri-
Star Delphi IV Productions, a joint venture between TSPI and
Delphi Film Associates IV ("DFA IV"), a New York limited
partnership, and with Tri-Star-Delphi V Productions, a joint
venture between TSPI and Delphi Film Associates V ("DFA V"), a
New York limited partnership. The Joint Venture has an interest
ranging from l0-36% in these three films. In addition, three of
the Joint Venture Films were co-produced only with Tri-Star-
Delphi V Productions. The Joint Venture has an interest of l0%
in two and 50% in one of these three films. With respect to one
Joint Venture Film in which the Joint Venture has a l00%
interest, Tri-Star-Delphi IV Productions has acquired a l0%
participation interest which was derived from TSPI's interest in
that film through the Joint Venture. All seventeen Joint
Venture Films and all twenty-two PF Interest Films had been
released as of December 31, 1995.
All of the Joint Venture's films are to be distributed
pursuant to a distribution agreement with TSPI (the
"Distributor"). The general partner of the Partnership is
affiliated with the general partner of DFA IV and DFA V.
The Partnership has acquired an SF Interest in three films
released by Columbia, which are similar to the Joint Venture's
SF Interests.
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 for SF Interest
films 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) gross
receipts accrued (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). The
Joint Venture recognizes revenues for a PF Interest film based
on certain percentages of gross receipts for that film up to a
maximum amount of $l,l25,000 per film. In addition, the Joint
Venture also recognizes revenue based on certain percentages of
the aggregate gross receipts of all PF Interest films, excluding
U.S. and Canadian theatrical gross receipts. 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% of the gross receipts of an SF Interest film;
however, TSPI's entitlement to this distribution fee is deferred
until the Joint Venture has received from the distribution of a
particular SF Interest film 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"). 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 17.5% of substantially all gross
receipts of the film prior to Cost Return and l7.5% of
substantially all gross receipts after Cost Return.
Net revenues accrued at December 31, 1995, 1994 and 1993 were
computed without deducting a distribution fee to the Distributor
in light of the results of the films released through those
respective dates, with the exception of five films in 1995 and
four films in 1994 and 1993 for which a portion of the
distribution fees were 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 to the extent those
payments 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 Special Recoupment Payments
described in Note 3, to the extent available, are accrued as
Motion Picture Costs Recoverable from Special Recoupment
Payments in the accompanying financial statements.
3. Special Recoupment Payments (See Note 7)
The Joint Venture will be entitled to a payment (a "Special
Recoupment Payment") from the Distributor in l996 with respect
to each film (an "Unrecouped Film") for which the Joint Venture
has not received from the film's distribution (or its sale) 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). Each Special Recoupment
Payment would be 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.
Initially, the Special Recoupment 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 Special Recoupment Payments
made with respect to other Unrecouped Films). The Special
Recoupment 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 are insufficient to enable the
Distributor to make the Special Recoupment 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 payments under the Distributor's 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 Special Recoupment 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 Special Recoupment 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 will be
entitled to recoup the Special Recoupment 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 Special Recoupment Payments, no distribution
fee will be deemed received by the Distributor (and therefore no
distribution fee will be deemed available for the Special
Recoupment 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. Bonus Film Profit Payments
The Joint Venture will be entitled to certain additional
payments ("Bonus Profit Payments") with respect to the three
TSPI SF Interest films that generate the greatest profits to the
Partnership ("Bonus Films"). All three SF Interest Films have
generated cash profits to the Partnership. The Bonus Profit
Payments will be equal to 30% of the first $9,000,000 of cash
profits received by the Partnership. Bonus Profit Payments were
made in 1995, l994 and l993 in the amounts of $9,000, $81,000
and $9,000, respectively. Additional Bonus Profit Payments will
be made to the extent earned, in installments without interest,
and continue on a quarterly basis to the extent subsequently
earned.
5. Extra Film Profit Participations
The Joint Venture is entitled to receive, without any
additional cost or payment by the Joint Venture, a profit
participation in three additional TSPI SF Interest films ("Extra
Films") not otherwise included in the SF Interest program since,
in December l989, the aggregate Cash Return (as defined below)
to the Partnership from the TSPI SF Interest films was estimated
to be less than l25% of the portion of the net proceeds of the
Partnership's offering (and of the General Partner's capital
contribution) allocated to such TSPI SF Interest films (the
"Allocated Amount"). The profit participation will equal l0% of
the net proceeds of each Extra Film after l00% of the net
proceeds of that Extra Film exceeds 112 1/2% of its production
cost. The profit participation in these Extra Films will cease
should the Partnership's overall Cash Return with respect to
TSPI SF Interest films plus any profit participation payments
with respect to the Extra Films equal 200% of the Allocated
Amount. The Cash Return is an amount equal to (a) the cash
payments then estimated ultimately to be received by the
Partnership from the TSPI SF Interest films less (b) the
Partnership's contributions for those films in excess of the
Allocated Amount and an amount in the nature of interest on such
excess. As of December 31, 1995, all three Extra Films had been
selected and released by TriStar. Due to the results of their
release to date, the Joint Venture is not expected to receive
any profit participation from those films.
6. 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 $35,499,000 and $40,992,000, 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.
7. Current Operations
As of December 31, 1995, the Distributor had released
seventeen SF Interest films in which the Joint Venture has an
interest. The Joint Venture is not expected to recoup its
investment in twelve of these SF Interest films out of the
proceeds from their distribution. However, due to the Special
Recoupment Payment referred to below, the Partnership is
expected to recoup its investment in these films. In addition,
one of these SF Interest films has also been designated as a PF
Interest film and the Distributor had released another twenty-
one PF films (see Note l). For the years ended December 31,
1995, 1994 and 1993, motion picture production and advertising
costs have been reduced by amortization of $145,000, $188,000
and $648,000, respectively.
Based upon the anticipated performance of the films in
release, it is expected that the Distributor will be required to
make Special Recoupment Payments to the Joint Venture with
respect to its SF Interest films (see Note 3). Accordingly,
approximately $62,590,000 and $53,072,000 (discounted at 13%
from December l996) have been accrued as Motion Picture Costs
Recoverable from Special Recoupment Payments at December 31,
1995 and 1994, respectively, in the accompanying financial
statements. The current year increase in Motion Picture Costs
Recoverable from Special Recoupment Payments of approximately
$9,518,000 consists of an increase in the principal amount of
approximately $2,152,000 (discounted) and an increase of
approximately $7,336,000 due to the reduction in the discount
period.
8. Receivables and Payables
Analysis of the Joint Venture's receivables and payables is
as follows:
AT DECEMBER 31, 1995
Receivable Payable Payable
from to to
Distributor TriStar
Partnership
(000's omitted)
Net Proceeds and Gross Receipts $ 24,082 $ 2,423 $21,659
Accrued Special Recoupment
Payments 62,590
46,948 15,642
Total $ 86,672
$49,371 $37,301
AT DECEMBER 31, 1994
Receivable Payable Payable
from to to
Distributor TriStar
Partnership
(000's omitted)
Net Proceeds and Gross Receipts $28,210 $2,535 $25,675
Accrued Special Recoupment
Payments 53,072
39,147 13,925
Total $81,282
$41,682 $39,600
9. PF Interest Payments
Payments in respect of PF Interest films began December 8,
l987 and will be made annually by the Distributor. In any of
the years l988 through l995 in which the annual cash return to
the Partnership from the PF Interest films would cause the
Partnership's cumulative non-compounded return on the amount of
the Partnership's total contributions for PF Interest films to
exceed l4% per year, the balance of the amount due will be
carried forward and, to the extent not applied in later years to
generate a l4% return to the Partnership, will be payable
without interest to the Partnership on December 23, l996. On
that date, the Distributor will make a final payment based on
the gross receipts through the date of the payment in l996, and
also on the additional gross receipts estimated to be received
by the Distributor from the distribution of all PF Interest
films (subject to discount under certain circumstances) during
the next seven years. Following the final payment, the
Partnership's PF Interests in films will cease. As of December
31, 1995, $24,155,000, (net of the Acceleration Payments and
related interest described below) is carried forward and
included in the receivable from the Distributor and payable to
the Partnership in the accompanying financial statements.
The Distributor made payments equating a l4% return each
year, through the Joint Venture, to the Partnership of
$3,l42,000 in 1995, 1994 and 1993 based upon revenue for the PF
Interest Films released.
l0. Deferred Revenue
On December 8, l987, the Distributor was contractually
obligated to make a payment to the Partnership of $3,l42,000
representing a return to the Partnership equal to l4% of the
amount of the Partnership's total funds to be contributed for PF
Interests in films. Because net proceeds generated from TSPI
with respect to the PF Interest film were not sufficient to
provide a l4% return to the Partnership, $2,684,000 was advanced
to the Partnership. This advance will be recouped by the
Distributor from the December 23, l996 PF Payment. There will be
no further payments of $3,142,000 after December 31, 1995. The
deferred revenue amount has been reflected as a reduction to the
receivable from the Distributor due in December l996.
11. Acceleration Payment
With respect to PF Interest films, if in any calendar year
the Partnership recognizes income for federal income tax
purposes in excess of the payment received in December for that
year (the "Excess"), TriStar is required to make an acceleration
payment to the Partnership, through the Joint Venture, with
respect to the Excess. The amount of the acceleration payment
is equal to the Excess multiplied by the maximum federal income
tax rate in effect for the year of the Excess (the "Acceleration
Payment"). The Acceleration Payment is recoupable with
interest, by TriStar, with certain exceptions, from the payment
to be received by the Partnership with respect to the PF
Interest films in December 1996. The Partnership received,
through the Joint Venture, approximately $360,000 and $7,548,000
in March 1993 and l992 with respect to the Acceleration Payment
for 1992 and l991, respectively. For the years ended December
31, 1995, 1994 and 1993, approximately $1,034,000, $721,000 and
$586,000 of interest expense has been recognized on the 1993,
1992 and l991 Acceleration Payments and has been offset against
Interest Income in the accompanying financial statements.
12. 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 $2,363,000 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 adjustment was necessary in 1995.
<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 ML Delphi Premier
Partners, L.P. 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> 714,000
<SECURITIES> 588,000
<RECEIVABLES> 37,411,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 41,311,000
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 41,258,000
<TOTAL-LIABILITY-AND-EQUITY> 41,311,000
<SALES> 0
<TOTAL-REVENUES> 289,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 657,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 788,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 788,000
<EPS-PRIMARY> 62.00
<EPS-DILUTED> 0
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