FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from..............to..............
Commission file number 0-16823
SILVER SCREEN PARTNERS III, L.P.
(A Delaware Limited Partnership)
(Exact name of registrant as specified in its
Certificate and Agreement of Limited Partnership)
Delaware 13-3372004
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
936 Broadway
New York, New York 10010
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 995-7600
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such requirements for the
past 90 days.
YES X NO
--- ---
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
The financial information set forth below is set forth in the September 30,
1995 Second Quarter Report of Silver Screen Partners III, L.P. (the
"Partnership") filed herewith as Exhibit 20 and is incorporated herein by
reference.
Balance Sheets -- September 30, 1995 and December 31, 1994.
Statements of Operations -- For the Three and Nine Months
ended September 30, 1995 and 1994.
Statements of Partners' Equity -- For the Nine Months ended
September 30, 1995 and the Year ended December 31, 1994.
Statements of Cash Flows -- For the Nine Months ended
September 30, 1995 and 1994.
Notes to Financial Statements.
The financial statements included herein are unaudited. In the opinion of
the management of the Partnership, all adjustments necessary for a fair
presentation of the results of operations have been included and all adjustments
are of a normal recurring nature. The results of operations for the three and
nine months ended September 30, 1995 are not necessarily indicative of the
results of operations which may be expected for the entire year.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations
Revenues for the nine months and quarter ended September 30, 1995 were
approximately $2,876,000, and $705,000, respectively, as compared with
approximately $3,353,000 and $1,625,000 for the comparable periods in 1994.
Revenues for the first nine months and quarter ended September 1995 consisted of
income from the Joint Venture of approximately $2,675,000 and $634,000,
respectively, and investment revenues of approximately $200,000 and $71,000.
Revenues for the comparable period in 1994 consisted of income from the Joint
Venture of approximately $3,177,000 and $1,570,000, respectively, and investment
revenues of approximately $176,000 and $55,000. At this time, nearly all of the
films in which the Partnership has an interest have been released in the
theatrical, home video and pay cable markets. They are now making their way
through the remaining television markets around the world. Film revenues
decreased by approximately $502,000 for the
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nine months ended September 30, 1995 from the nine months ended September 30,
1994. The films generating income from the Joint Venture for the third quarter
of 1995 were "Good Morning Vietnam," "Adventures in Babysitting," "Oliver and
Company," and several other films at lesser amounts. Interest rates for the nine
months ended September 30, 1994 ranged from 5.00% to 6.02%, while those for the
comparable period in 1994 ranged from 2.75% to 4.87%. A decrease in funds
available for investment offset by increased interest rates resulted in an
increase in interest income of approximately $24,000.
Expenses for the nine months and quarter ended September 30, 1995 were
approximately $783,000 and $236,000, respectively, as compared with
approximately $704,000 and $193,000 for the comparable period in 1994. Expenses
increased approximately $79,000 for the nine months ended September 30, 1995
from the comparable period in 1994.
The increase in expenses is due principally to three factors. First, there
was a $138,000 reduction in the cost of the 10% per annum charge on the overhead
fee due to the Managing General Partner on June 14, 1994. Second, the
Partnership reduced its overall expense by $44,000. Third, the Partnership
incurred approximately $261,000 of costs associated with preparations for
negotiation of the sale by the Partnership of its interest in the Joint Venture.
These costs, which are considered to benefit each of the Partnership, Silver
Screen Partners II, L.P. and Silver Screen Partners IV, L.P. (collectively and
together with the Partnership, the "Silver Screen Partnerships"), have been
allocated among the Silver Screen Partnerships pro rata to the total original
limited partner capital contributions of each. See Item 5.
The Partnership generated net income of approximately $2,092,000 for the
nine months ended September 30, 1995, as compared with net income of
approximately $2,650,000 for the comparable period in 1994. The reduction in net
income is due to the decrease in film revenues and the increase of expenses as
stated above.
The Partnership became committed to fund nineteen films, all of which have
been completed and released, with total budgets amounting to approximately
$266,000,000, of which substantially all has been expended. Accordingly, all
Partnership Funds have been committed and the Partnership will not finance or
purchase any additional motion pictures.
The Joint Venture Films are: "Benji the Hunted," released June 17, 1987;
"Adventures in Babysitting," released July 1, 1987; "Can't Buy Me Love,"
released August 14, 1987; "Hello Again," released November 6, 1987; "Three Men
and a Baby," released November 25, 1987; "Good Morning Vietnam," released
December 23, 1987; "Shoot to Kill," released February 12, 1988; "D.O.A.,"
released March 18, 1988; "Return to Snowy River, Part II," released April 15,
1988; "Big Business," released June 10, 1988; "Who Framed Roger Rabbit,"
released August 5, 1988; "Cocktail," released July 29, 1988; "The Rescue,"
released June 22, 1988; "Heartbreak Hotel,"
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released September 30, 1988; "Ernest Saves Christmas," released November 11,
1988; "Oliver & Company," released November 18, 1988; "Honey, I Shrunk the
Kids," released June 23, 1989; and "Cheetah and Friends," released August 18,
1989. "Stakeout," which was financed approximately 25% by the Partnership and
75% by Silver Screen Partners II, L.P. (a separate limited partnership with the
same Managing General Partner formed to finance previous Disney films), was
released August 5, 1987.
All Partnership films (except "Oliver & Company") have been released in the
theatrical, home video and pay cable markets and are making their way through
the remaining television markets. The Partnership anticipates that future
revenues will be principally derived from the theatrical re-release and home
video release of "Oliver & Company." Between now and late 1997 the Partnership
expects that two of its films (other than "Oliver & Company") will be released
on either basic cable (USA Network) or syndicated television. During the quarter
ended September 30, 1995, the Partnership made no cash distributions to the
Partners because revenues generated were insufficient to warrant a distribution.
Although the Joint Venture Films have been released in most film markets around
the world, the Managing General Partner anticipates that the Partnership will
continue to receive revenues from certain film markets. Revenues in a particular
quarter may not be sufficient to justify making a cash distribution and
therefore, future cash distributions may fluctuate and there will be quarters
when no distributions will be paid.
Liquidity and Capital Resources
Inasmuch as the funding obligations of the Partnership with respect to the
financing of the Joint Venture Films have been fully complied with or reserved
against, the Partnership has no material commitments for capital expenditures
and does not intend to enter into any such commitments. Receipts from temporary
investments and from the Joint Venture, less reserves established as determined
by the Managing General Partner, are the sources of liquidity for the
Partnership. The Partnership has no material requirements for liquidity other
than its general and administrative expenses and quarterly distributions to
holders of Units of limited partnership interests. Such sources are considered
adequate for such needs.
4
<PAGE>
Item 3. Selected Financial Data
SILVER SCREEN PARTNERS III, L.P.
<TABLE>
<CAPTION>
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
Sept. 30, 1995 Sept. 30, 1995 Sept. 30, 1994 Sept. 30, 1994
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Revenues:
Income from $1,569,769 $3,177,296
Joint Venture $634,384 $2,675,267
Interest income 70,937 200,446 55,212 176,181
-------------- -------------- -------------- --------------
705,321 2,875,713 1,624,981 3,353,477
Costs and Expenses:
General and
administrative
expenses 235,863 783,228 193,269 703,748
-------------- -------------- -------------- --------------
Net income $469,458 $2,092,485 $1,431,712 $2,649,729
============== ============== ============== ==============
Net income per
$500 limited
partnership unit
(based on 600,000
Units outstanding) $0.77 $3.45 $2.36 $4.37
============== ============== ============== ==============
Cash distribution
per $500 limited
partnership unit $0.00 $2.30 $0.00 $3.70
============== ============== ============== ==============
Sept. 30, 1995 Sept. 30, 1994
-------------- --------------
Total assets $7,312,167 $6,685,957
============== ==============
</TABLE>
See notes to financial statements
5
<PAGE>
Item 3. Selected Financial Data (Continued)
The Joint Venture's fiscal year ends September 30, while the Partnership's
fiscal year ends December 31. The Partnership's September 30, 1995 statements
reflect the Joint Venture's result of operations for the period ended June 30,
1995
DISNEY-SILVER SCREEN III JOINT VENTURE
<TABLE>
<CAPTION>
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
June 30, 1995 June 30, 1995 June 30, 1994 June 30, 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues $1,391,296 $ 5,956,249 $3,670,069 $10,837,752
Costs and Expenses:
Amortization of film
production costs (32,384) (340,316) (93,423) (1,562,462)
Participation expense (349,955) (1,309,555) (794,537) (4,765,388)
--------- ------------- ------------- --------------
Net income $1,008,957 $ 4,306,378 $2,782,109 $ 4,509,902
============= ============= ============= ==============
Net income allocated
to:
Silver Screen
Partners III, L.P. $ 2,675,267 $ 3,177,296
The Walt Disney
Company 1,631,111 1,332,606
------------- --------------
$ 4,306,378 $ 4,509,902
============= ==============
June 30, 1995 Sept. 30, 1994
------------- --------------
Assets
Receivable from
Buena Vista Pictures
Distribution, Inc. $ 6,929,575 $ 7,656,313
Prepaid distributions
Silver Screen
Partners III, L.P. -- 1,462,750
Film production costs,
less accumulated
amortization of
$290,297,010 and
$289,956,694 at June
30, 1995 and Sept.
30, 1994, respectively 6,217,762 6,558,078
------------- --------------
$13,147,337 $15,677,141
============= ==============
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
June 30, 1995 June 30, 1995 June 30, 1994 June 30, 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Liabilities and
Venturers' Capital
Accounts and
distributions payable
to:
The Walt Disney
Company $ 6,557,483 $ 7,079,481
Silver Screen Partners
III, L.P. 372,092 --
Deferred Revenue -- 2,039,582
Venturers' capital:
Silver Screen Partners
III, L.P. 2,286,480 2,201,826
The Walt Disney
Company 3,931,282 4,356,252
------------- --------------
$13,147,337 $15,677,141
============= ==============
</TABLE>
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<PAGE>
Item 5. Other Information.
The registrant and The Walt Disney Company ("Disney") have entered into a
letter agreement (the "Letter Agreement") dated September 11, 1995, executed by
the registrant on September 29, 1995, providing for the purchase by Disney, on
the terms and conditions set forth in the Letter Agreement, of all of the
registrant's rights and interests in and with respect to Disney-Silver Screen
III Joint Venture, the Joint Venture which owns the library of films. The
information contained in the Letter Agreement is incorporated herein by
reference. The Letter Agreement is filed herewith as Exhibit 10.
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<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 10 -- Letter Agreement dated September 11, 1995 between
The Walt Disney Company and the registrant
(executed by the registrant on September 29,
1995), with Terms and Conditions attached thereto.
Exhibit 20 -- 1995 Third Quarter Report
Exhibit 27 -- To be filed supplementally.
(b) The Partnership did not file any reports on Form 8-K during the
quarter ended September 30, 1995.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
SILVER SCREEN PARTNERS III, L.P.
a Delaware limited partnership
By: Silver Screen Management, Inc.,
Managing General Partner
Date: November 14, 1995 By: /s/ Roland W. Betts
--------------------------
Roland W. Betts, President
10
Via Facsimile (212) 995-0483
September 11, 1995
Roland Betts
Silver Screen Management, Inc.
936 Broadway
New York, New York 10011
Re: Disney-Silver Screen Partners III Joint Venture
Dear Roland:
Enclosed please find the Terms and Conditions which reflect the business deal
with respect to the buyout by Disney of Silver Screen Partners III, L.P.'s
("Silver Screen III") interest in the Disney-Silver Screen Partners III Joint
Venture.
Please indicate your acceptance of and agreement to the enclosed Terms and
Conditions by countersigning and returning to us a copy of this letter no later
than September 29, 1995. Upon receipt of such countersignature, Disney and
Silver Screen III will promptly prepare and execute a long-form purchase
agreement (the "Purchase Agreement") giving effect to the agreement of the
parties in accordance with the enclosed Terms and Conditions. Until such time as
the Purchase Agreement is executed, the enclosed Terms and Conditions shall
constitute a binding agreement of the parties with respect to the subject matter
therein as of the date of your acceptance of the Terms and Conditions.
Very truly yours,
/s/ Robert S. Moore
- - - - - - - -------------------
Robert S. Moore
cc: Stephen Bollenbach
Sandy Litvack
Ted Philip
<PAGE>
BUYOUT OF SILVER SCREEN PARTNERS III, L.P.
TERMS AND CONDITIONS
PURCHASER: The Walt Disney Company or (subject to the
provisions under "Assignment" below) an affiliate
("Disney").
SELLER: Silver Screen Partners III, L.P. ("Partnership").
PURCHASE PRICE: $125 million, in cash in immediately available
funds (subject to any Purchase Price Adjustment).
BUYOUT: Purchase by Disney of all of Partnership's rights
and interests in, to and under (i) the Joint
Venture Agreement dated as of September 25, 1986
(the "Joint Venture Agreement") between The Walt
Disney Company and Silver Screen Partners III,
L.P., as amended, (ii) the Distribution Agreement,
dated as of September 25, 1986 (the "Distribution
Agreement", together with the Joint Venture
Agreement, are sometimes collectively referred to
as the "Agreements") between Disney-Silver Screen
III Joint Venture (the "Joint Venture") and Buena
Vista Distribution Co., Inc. ("BVD"), as amended,
(iii) the Silver Screen III films and (iv)
Partnership's general partner interest in the
Joint Venture (collectively, the "Partnership's
Interest"). Closing of the Buyout shall occur on
the Payment Date (as defined below).
PAYMENT DATE: September 30, 1997 (or such later date as mutually
agreed to by the parties), on which date after
payment of the Purchase Price, all right, title
and interest in the Partnership's Interest shall
be automatically transferred to Disney, and
Partnership shall not be entitled to receive any
revenues from, shall have no further right, title
or interest in, and shall have no further
obligations or liabilities with respect to, the
Partnership's Interest. Prior to the Payment Date,
Disney will not assert any ownership interest in
the Partnership's Interest for any purpose,
including for any tax purpose. Disney agrees that
it shall have no right to set-off, counterclaim or
other similar remedy with respect to its payment
obligations hereunder.
PURCHASE PRICE ADJUSTMENT: The Purchase Price will be reduced,
dollar-for-dollar, by each dollar which
Partnership receives under the Joint Venture
Agreement during the period from October 1, 1995
to the Payment Date from any exploitation of the
film "Oliver & Co.", except for any exploitation
of such film in the domestic theatrical market.
DOCUMENTATION: The parties will prepare, execute and deliver a
long-form purchase agreement (the "Purchase
Agreement") as soon as practicable which will
document the terms and conditions set forth
herein. In addition to the terms and conditions
set forth herein, the Purchase Agreement will
contain (a) representations and warranties of
Disney and Partnership as to: (i) due execution of
the Purchase Agreement, (ii) due authorization to
enter into and perform under the Purchase
Agreement, (iii) enforceability of the Purchase
Agreement, and (iv) in the case of Partnership,
(x) right, title and interest in and to the
Partnership's Interest free and clear of all liens
and encumbrances other than any lien or
encumbrance arising out of actions of Disney and
other than as provided hereunder and (y)
Partnership not having taken any action or entered
into any agreement to bind the Joint Venture or
Disney or which would constitute a violation or
infringement of the rights granted to the Joint
Venture or Disney under the Joint Venture
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Agreement; and (b) the following conditions to the
parties' respective obligations to consummate the
Buyout: (i) no provision of any applicable law
prohibits the closing of the Buyout, (ii) no
order, judgment or injunction prohibits the
closing of the Buyout, (iii) any applicable
waiting period under the HSR Act (as defined
below) shall have expired or been terminated, (iv)
absence of any pending litigation or proceeding
before any court, or governmental or
administrative body which seeks to prohibit
closing of the Buyout and which has a substantial
likelihood of success on the merits, (v) accuracy
of representations and warranties in all material
respects, and (vi) as a condition to Disney's
obligation to close, a certificate from
Partnership as to (x) right, title and interest in
and to the Partnership's Interest free and clear
of all liens and encumbrances other than any lien
or encumbrance arising out of the actions of
Disney and other than as provided hereunder and
(y) Partnership not having taken any action or
entered into any agreement to bind the Joint
Venture or Disney or which would constitute a
violation or infringement of the rights granted to
the Joint Venture or Disney under the Joint
Venture Agreement.
In the event that no Purchase Agreement is
executed by the parties, these Terms and
Conditions will govern the closing of the Buyout.
AGREEMENTS: Upon acceptance of these Terms and Conditions by
the parties:
(1) Disney shall have the right in perpetuity to
enter into distribution, licensing or other
arrangements with respect to the exploitation
of the Silver Screen III films in any media
now known and unknown and by any means and/or
devices now known and unknown for any period
of time, without the prior approval of
Partnership. Subject to the preceding
sentence, Disney agrees that until the
closing of the Buyout, the Silver Screen III
films will continue to be exploited in
accordance with the Distribution Agreement.
(2) BVD will account for and will make payments
to the Joint Venture as required by the
Distribution Agreement, with respect to
receipts received by BVD from the Silver
Screen III films through August 31, 1997
(including revenues from the arrangements
referred to in clause (1) above). A final
payment will be made by the Payment Date, or
earlier, to Partnership of its share of Joint
Venture revenues payable as of August 31,
1997. BVD agrees to use methods and
procedures in its calculation of revenues
payable to the Joint Venture consistent with
methods and procedures utilized by BVD in the
past with respect to accountings and payments
previously made by BVD to the Joint Venture
in connection with the Silver Screen III
films. Partnership waives all rights to
audits and all audit claims arising from or
under the terms of the Agreements, whether
currently outstanding, now existing or
hereafter arising, and all statements with
respect to payments due to the Joint Venture
will be binding upon Partnership absent
manifest error, except that Partnership will
have the right to audit future statements
solely for the purpose of ensuring that BVD
is in compliance with this clause (2) and
that no manifest error exists in the
statements. Such limited audit right must be
exercised by Partnership within 30 days after
receipt by Partnership of a statement or such
right shall be deemed waived.
(3) (a) Subject to subclause (d) below of this
clause (3), Disney irrevocably releases
Partnership and its affiliates from, any
claims, known and unknown, which Disney may
have now or in the future against Partnership
arising from any acts, omissions or conduct
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<PAGE>
of Partnership during the course of the
Agreements; provided, however, that this
release does not include (i) any breach of
these Terms and Conditions or the Purchase
Agreement, if applicable, and (ii) any breach
of Paragraph 31 of the Joint Venture
Agreement by Partnership, it being understood
that the provisions of such Paragraph 31
shall survive the closing of the Buyout.
(b) Subject to subclause (d) below of this
clause (3), Partnership irrevocably waives,
and releases Disney and its affiliates from,
any rights and claims, known and unknown,
which Partnership may have now or in the
future, with respect to its interest in the
Joint Venture and the Silver Screen III
films, other than its continued right to
receive accounting and payments in accordance
with (2) above through and until the Payment
Date (for receipts from Silver Screen III
films through and including August 31, 1997)
and except as expressly provided in these
Terms and Conditions (including clause (4)
below). Partnership's waived rights and
claims include, without limitation (except as
otherwise provided in these Terms and
Conditions):
-- all rights to audits and all audit
claims except to the extent provided
in (2) above
-- rights and claims to any revenues or
royalties, whether or not explicitly
expressed in the Agreements with
respect to stage plays, ice shows, new
technologies, or any other
exploitation or payments derived
therefrom or with respect to any
revenues or royalties derived from
rights not previously exploited or
from rights previously exploited but
not previously accounted for to
Partnership
-- any rights or claims with respect to
home video royalty re-negotiation
(c) Although the foregoing respective
releases by Disney and by Partnership in as
the releasing party (the "Releasing Party")
is not a general release, as to the matters
being released, each Releasing Party
expressly waives and relinquishes all rights
and benefits afforded by Section 1542 of the
Civil Code of the State of California, which
provides:
"A general release does not extend
to claims which the creditor does
not know or suspect to exist in his
favor at the time of executing the
release, which if known by him must
have materially affected his
settlement with the debtor."
(d) If the Buyout fails to close on the
Payment Date as a result of any breach by a
party of these Terms and Conditions or of the
Purchase Agreement, or as a result of a
failure to satisfy a condition precedent to
closing because of any act or omission of a
party, nothing contained herein or in the
Purchase Agreement will limit any rights or
obligations of the parties existing at law or
in equity. Further, it is understood and
agreed that if the Buyout shall fail to close
on the Payment Date for any reason other than
the breach of these Terms and Conditions or
of any provision contained in the Purchase
Agreement by Partnership, or the failure of a
condition precedent to be satisfied because
of any action or omission of Partnership,
then the parties shall negotiate for a period
of 60 days (or such longer period as the
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parties shall agree, the "Workout Period")
after the Payment Date to consummate the
Buyout. If at the end of the Workout Period
the Buyout still has not occurred then (i)
the waivers and releases contained in this
Section captioned "Agreements" shall be void
and of no force and effect and Disney and
Partnership shall once again have all the
rights and claims previously waived or
released, (ii) the Agreements shall continue
to govern the relationship, rights and
obligations of the parties with respect to
the Partnership's Interest, except that the
relevant dates under Paragraph 16 of the
Joint Venture Agreement and Paragraph 21 of
the Distribution Agreement shall be tolled
until the last day of the Workout Period and
the earliest date contained in such
Paragraphs shall be revised to be the date
which is the first day after the Workout
Period and each other date in such Paragraphs
shall be revised and extended accordingly,
(iii) the term of the Distribution Agreement
under Paragraph 1.2 thereof shall be extended
until the latest date in Paragraph 21 of the
Distribution Agreement as revised and
extended in accordance with subclause (ii)
above and (iv) any and all distribution,
licensing or other arrangements entered into
by Disney in accordance with clause (1) above
shall remain in full force and effect.
(4) Notwithstanding clause (3) above, the
following rights and interests of Partnership
shall only be irrevocably and automatically
waived as of (and shall not be waived prior
to) the closing of the Buyout: (i) the right
that no amendment or waiver (other than as
contemplated hereunder) of the Agreements
shall be made without Partnership's consent;
(ii) revenues actually received by the Joint
Venture with respect to a Silver Screen III
film will continue to be allocated in
accordance with Paragraph 13 of the Joint
Venture Agreement in the case of receipts by
the Joint Venture and in accordance with the
Distribution Agreement in the case of
receipts by BVD (subject to clause (2)
above); and (iii) Paragraphs 15, 19.1, 22.4,
24 and 33 of the Joint Venture Agreement.
HSR ACT FILINGS: Filings under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 ("HSR Act") will be
made by Disney and Partnership and the
applicable waiting period will have expired
or been terminated prior to the Payment Date.
CONFIDENTIALITY Each of Disney and Partnership agrees to keep
confidential and will not disclose the
existence of this transaction or the terms
hereof to any person, other than its managing
partner, officers, employees, directors and
advisors, as applicable, who need to know and
who are bound by the same confidentiality
undertakings and other than as required by
applicable law (including securities laws),
without the prior written consent of the
other party (not to be unreasonably
withheld). In connection with any disclosure
required by applicable law (including
securities laws), the party proposing to make
such disclosure shall obtain the prior
written approval of the other party (not to
be unreasonably withheld) with respect to the
proposed disclosure. In addition, each of
Disney and Partnership agrees that no public
announcement of this transaction or the terms
hereof shall be made without the prior
written approval of the other party (not to
be unreasonably withheld) and any response to
inquiries or other communications with
respect to this transaction or the terms
hereof shall be limited to the previously
approved disclosure hereunder. It is agreed
that either party may file these Terms and
Conditions and/or the Purchase Agreement as
an exhibit to any report filed by such party
under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") if so required
under the Exchange Act.
EXPENSES: Each party shall bear its own costs and
expenses (including fees and expenses of
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counsel and other advisors) incurred in
connection with the Buyout.
NO RELIANCE: Each party acknowledges and represents that
it has independently, and without reliance
upon the other party or any of its
affiliates, and based on such documents,
information and advice of advisors as it has
deemed appropriate, made its own analysis and
decision to enter into the transaction.
CO-OPERATION; FURTHER ASSURANCES: Disney and Partnership will co-operate and
each use its reasonable best efforts to take,
or cause to be taken, all actions and to do,
or cause to be done, all things necessary or
desirable under applicable laws and
regulations to consummate the transactions
contemplated hereby. Disney and Partnership
each agree to execute and deliver such other
documents, certificates, agreements and other
writings and to take such other actions as
may be necessary or desirable in order to
consummate or implement expeditiously the
transactions contemplated hereby.
GOVERNING LAW: State of California
ASSIGNMENT: Neither Partnership nor Disney may assign its
rights or obligations under these Terms and
Conditions or the Purchase Agreement without
the prior written consent of the other party;
provided, however, that Disney may assign its
rights and obligations hereunder or under the
Purchase Agreement to an affiliate so long as
The Walt Disney Company remains liable for
the payment obligations hereunder.
5
<PAGE>
THE TERMS AND CONDITIONS REFERRED TO
ABOVE ARE HEREBY ACCEPTED AND AGREED TO
ON SEPTEMBER 29, 1995.
SILVER SCREEN PARTNERS III, L.P.
By: SILVER SCREEN MANAGEMENT, INC.,
Its Managing Partner
By: /s/ Roland W. Betts
--------------------------
Roland W. Betts, President
THE WALT DISNEY COMPANY
By: /s/ David K. Thompson
-----------------------------------------------
David K. Thompson
Senior Vice President-Assistant General Counsel
Silver Screen III
Third Quarter Report
September 30, 1995
[LOGO]
<PAGE>
Dear Limited Partner:
The 1995 third quarter cash distribution totals $2.1 million, bringing
total distributions since the Partnership's inception in 1987 to over $424
million.
Third quarter revenue was generated principally from the foreign free
television market for "Adventures in Babysitting" and "Roger Rabbit."
Nearly all of the films in our portfolio have been released in existing
cycles and territories. Two films in the Silver Screen III portfolio have yet to
become available to appear on either U.S. syndicated television or basic cable
television (USA Network). We anticipate that these two films ("Who Framed Roger
Rabbit" and "Three Men and A Baby") will be released in these markets between
now and late 1997. However, as indicated in previous reports, revenue in
upcoming quarters may be insufficient to justify making a cash distribution.
The 1995 Annual Report and tax information will be mailed to you by March
15. If you need any assistance in the meantime, please contact our Investor
Relations Department.
Sincerely,
/s/ Roland W. Betts /s/ Tom A. Bernstein
Roland W. Betts Tom A. Bernstein
President Executive Vice President
<PAGE>
Balance Sheets (Unaudited)
September 30, 1995 December 31, 1994
================================================================================
Assets
Current assets:
Cash $ 57,145 $ 103,007
Temporary investments (at cost
plus accrued interest,
which approximates market) (Note 1) 4,996,223 5,939,989
- - - - - - - --------------------------------------------------------------------------------
Total current assets 5,053,368 6,042,996
Investment in Joint Venture (Note 2) 2,258,799 893,266
- - - - - - - --------------------------------------------------------------------------------
$7,312,167 $6,936,262
================================================================================
Liabilities and partners' equity
Current liabilities:
Accounts payable
Due to managing general partner $ 46,916 $ 38,496
- - - - - - - --------------------------------------------------------------------------------
Total current liabilities 46,916 38,496
Other liabilities 106,790 106,790
- - - - - - - --------------------------------------------------------------------------------
153,706 145,286
- - - - - - - --------------------------------------------------------------------------------
Partners' equity:
General partners -- --
Limited partners 7,158,461 6,790,976
- - - - - - - --------------------------------------------------------------------------------
Total partners' equity 7,158,461 6,790,976
- - - - - - - --------------------------------------------------------------------------------
$7,312,167 $6,936,262
================================================================================
See notes to financial statements.
<PAGE>
Statements of Operations (Unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
Sept. 30, 1995 Sept. 30, 1995 Sept. 30, 1994 Sept. 30, 1994
====================================================================================================================================
<S> <C> <C> <C> <C>
Revenues:
Income from Joint Venture (Note 2) $ 634,384 $2,675,267 $1,569,769 $3,177,296
Interest income 70,937 200,446 55,212 176,181
- - - - - - - ------------------------------------------------------------------------------------------------------------------------------------
705,321 2,875,713 1,624,981 3,353,477
Costs and expenses:
General and administrative expenses 235,863 783,228 193,269 703,748
- - - - - - - ------------------------------------------------------------------------------------------------------------------------------------
Net income $ 469,458 $2,092,485 $1,431,712 $2,649,729
====================================================================================================================================
Net income allocated to:
General partners $ 4,695 $ 20,925 $ 14,317 $ 26,497
Limited partners 464,763 2,071,560 1,417,395 2,623,232
- - - - - - - ------------------------------------------------------------------------------------------------------------------------------------
$ 469,458 $2,092,485 $1,431,712 $2,649,729
====================================================================================================================================
Net income per a $500 limited
partnership unit
(based on 600,000 units outstanding) $ 0.77 $ 3.45 $ 2.36 $ 4.37
====================================================================================================================================
</TABLE>
See notes to financial statements.
Statements of Partners' Equity (Unaudited)
<TABLE>
<CAPTION>
Year Ended December 31, 1994
and Nine Months Ended September 30, 1995
====================================================================================================================================
General Partners Limited Partners Total
- - - - - - - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, January 1, 1994 $ -- $ 6,692,075 $ 6,692,075
Net income, 1994 28,739 2,845,162 2,873,901
Distributions, 1994 (555,000) (2,220,000) (2,775,000)
Allocation under Treasury Regulation Section 1.704-1(b) 526,261 (526,261) --
- - - - - - - ------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1994 -- 6,790,976 6,790,976
Net income, nine months 1995 20,925 2,071,560 2,092,485
Distributions during nine months 1995 (345,000) (1,380,000) (1,725,000)
Allocation under Treasury Regulation Section 1.704-1(b) 324,075 (324,075) --
- - - - - - - ------------------------------------------------------------------------------------------------------------------------------------
$ -- $ 7,158,461 $ 7,158,461
====================================================================================================================================
</TABLE>
See notes to financial statements.
<PAGE>
Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended
September 30, 1995 September 30, 1994
===================================================================================================
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,092,485 $ 2,649,729
Adjustments to reconcile net income to net cash
provided by operating activities:
Charge on overhead fee payable -- 138,414
(Increase) decrease in accrued interest receivable 17,980 (5,107)
Net change in operating assets and liabilities:
(Decrease) increase in due to managing general partner 8,420 (50,943)
- - - - - - - ---------------------------------------------------------------------------------------------------
Net cash provided by operating activities 2,118,885 2,732,093
- - - - - - - ---------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Distributions received from Joint Venture
in excess of equity in income (1,365,533) 2,902,884
Investments in Joint Venture -- --
Sales (purchases) of temporary investments, net 925,786 157,087
- - - - - - - ---------------------------------------------------------------------------------------------------
Net cash provided by investing activities (439,747) 3,059,971
- - - - - - - ---------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Distributions to partners (1,725,000) (2,775,000)
Decrease in overhead fee payable -- (3,142,873)
- - - - - - - ---------------------------------------------------------------------------------------------------
Net cash used in financing activities (1,725,000) (5,917,873)
- - - - - - - ---------------------------------------------------------------------------------------------------
Net (decrease) increase in cash (45,862) (125,809)
Cash, beginning of year 103,007 199,157
- - - - - - - ---------------------------------------------------------------------------------------------------
Cash at end of nine months $ 57,145 $ 73,348
===================================================================================================
</TABLE>
See notes to financial statements.
<PAGE>
Notes to Financial Statements
1. Temporary Investments
Temporary investments represent investments in commercial paper.
2. Investment in Joint Venture
The investment in the Joint Venture is accounted for using the equity method of
accounting. Under the equity method, the investment is initially recorded at
cost, and is thereafter increased by additional investments, adjusted by the
Partnership's share of the Joint Venture's results of operations and reduced by
distributions received from the Joint Venture. The Joint Venture's fiscal year
ends September 30, while the Partnership's fiscal year ends December 31. The
Statements of Operations reflects the Joint Venture's results of operations for
the nine months ended June 30, 1995.
The investment in Joint Venture is as follows:
================================================================================
Balance, January 1, 1995 $ 893,266
Investments (credits), January 1, 1995 to
September 30, 1995 --
Income from Joint Venture for the nine
months ended June 30, 1995 2,675,267
Distributions, nine months 1995 (1,309,734)
- - - - - - - --------------------------------------------------------------------------------
Balance, September 30, 1995 $ 2,258,799
================================================================================
For each Joint Venture film, all revenues received by the Joint Venture (except
for "Roger Rabbit") are allocated and distributed first to the Partnership and
Disney in proportion to their respective investments in the film until each has
recovered its investment; second, net of participations, to Disney until it
recovers any amounts paid for cost overruns; and thereafter, net of
participations, 75% to the Partnership and 25% to Disney (adjusted for any
Disney investment in the film other than cost overruns).
<PAGE>
Silver Screen Management, Inc.
936 Broadway
New York, NY 10010
(212) 995-7600
Recorded News Update:
(800) 333-SILV
(c) 1995 Silver Screen Management, Inc.
