<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended Commission file number
- ----------------------------------- ------------------------------------
June 30, 1997 19324
Boston Celtics Limited Partnership
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 04-2936516
- ----------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
151 Merrimac Street, Boston, Massachusetts 02114
- ------------------------------------------ -----------------------------
(Address of principal executive offices) (Zip Code)
(617) 523-6050
- -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each Exchange
Title of each class on which registered
- ----------------------------------- ------------------------------------
Units Representing Assignments of New York Stock Exchange
Beneficial Ownership of Limited Boston Stock Exchange
Partnership Interests
Securities registered pursuant to Section 12(g) of the Act:
None
- -------------------------------------------------------------------------------
(Title of Class)
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 [ ].
<PAGE> 2
The aggregate market value of the 2,803,493 Units held by non-affiliates of the
Registrant as of September 19, 1997 was approximately $69,036,000, based on the
closing price of the Units on the New York Stock Exchange on that date of
$24.625 per Unit.
As of September 19, 1997, there were 5,346,164 Units outstanding.
BOSTON CELTICS LIMITED PARTNERSHIP
1997 FORM 10-K ANNUAL REPORT
INDEX
PART I
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Items 1.
and 2. Business and Properties............................................. 1
Item 3. Legal Proceedings................................................... 6
Item 4. Submission of Matters to a Vote of Security Holders................. 6
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters............................................................. 7
Item 6. Selected Financial Data............................................. 8
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations........................................... 9
Item 8. Financial Statements and Supplementary Data......................... 11
PART III
Item 10. Directors and Executive Officers of the Registrant.................. 12
Item 11. Executive Compensation.............................................. 15
Item 12. Security Ownership of Beneficial Owners and Management.............. 18
Item 13. Certain Relationships and Related Transactions...................... 18
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K..... 20
Signatures ................................................................... 49
</TABLE>
<PAGE> 3
PART I
------
Items 1 and 2. Business and Properties
- --------------------------------------
General
Boston Celtics Limited Partnership ("BCLP" or the "Partnership"), a
Delaware limited partnership, owns 99% of Celtics Limited Partnership ("CLP"),
which in turn owns and operates the Boston Celtics professional basketball team
(the "Boston Celtics") of the National Basketball Association (the "NBA"). BCLP
also wholly owns BCCLP Holding Corporation ("Holdings"), which in turn wholly
owns Celtics Capital Corporation ("CCC"). CCC holds investments of funds
derived from the sale by Boston Celtics Broadcasting Limited Partnership
("BCBLP") of Television Station WXFT - Channel 25 ("WFXT") of Boston,
Massachusetts in July 1995 and Radio Station WEEI - 590 AM of Boston,
Massachusetts ("WEEI") in June 1994. BCBLP was indirectly owned by BCLP and
Celtics Investments, Inc. ("CII"), BCLP's wholly-owned subsidiary.
BCLP's General Partner is Celtics, Inc. ("CI"); CLP's General Partner is
Boston Celtics Corporation ("BCC"); BCCLP's General Partner is Celtics
Communications, Inc. ("CCI"). Each of CI, BCC and CCI is a Delaware corporation
whose sole stockholders are Paul Gaston, Don Gaston (father of Paul Gaston) and
Walcott Partners, L.P. ("Walcott"), an affiliate of the Gaston family. Paul
Dupee's interest in CI was acquired by Walcott, and his interests in BCC and
CCI were acquired by Paul Gaston on November 30, 1996.
Basketball Operations
The Partnership, through CLP, owns and operates the Boston Celtics
professional basketball team of the NBA. The following table summarizes the
performance of the Boston Celtics during the past 15 basketball seasons:
<PAGE> 4
<TABLE>
<CAPTION>
Regular
Regular Season Place
Season of Finish in
Season Record Division Playoff Results
- ------- ------- ------------ ------------------------------------------
<S> <C> <C> <C>
1996-97 15-67 Seventh --
1995-96 33-49 Fifth --
1994-95 35-47 Third Lost in First Round of Conference Playoffs
1993-94 32-50 Fifth --
1992-93 48-34 Second Lost in First Round of Conference Playoffs
1991-92 51-31 First Lost in Conference Semifinals
1990-91 56-26 First Lost in Conference Semifinals
1989-90 52-30 Second Lost in First Round of Conference Playoffs
1988-89 42-40 Third Lost in First Round of Conference Playoffs
1987-88 57-25 First Lost in Conference Finals
1986-87 59-23 First Lost in Championship Finals
1985-86 67-15 First NBA Champions
1984-85 63-19 First Lost in Championship Finals
1983-84 62-20 First NBA Champions
1982-83 56-26 Second Lost in Conference Semifinals
</TABLE>
Sources of Revenues. The Boston Celtics derive their revenues principally
from the sale of tickets to home games and the licensing of television, cable
network and radio rights. The following table shows the contribution to
revenues of the basketball operations from these sources and from miscellaneous
other sources for each of the last three fiscal years:
<TABLE>
<CAPTION>
Contribution to Revenues
(in thousands)
- ------------------------------------------------------------------------------
Year
Ended Television, Cable Other Total
June 30, Ticket Sales and Radio Sources Revenues
- --------- -------------------- -------------------- ------- --------
Regular Regular
Season(1) Playoffs Season(2) Playoffs
--------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
1997 $31,813 $23,269 $7,916 $62,998
1996 35,249 22,072 7,459 64,780
1995 22,037 $1,518 20,956 $395 7,419 52,325
<FN>
<F1> Includes proceeds from exhibition games.
<F2> Includes the Boston Celtics' share of revenues under the NBA national
television contracts.
</FN>
</TABLE>
<PAGE> 5
The operations and financial results of the Boston Celtics are seasonal.
See "Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations - General."
Ticket Sales. The Boston Celtics play an equal number of home games and
away games during the 82-game NBA regular season. In addition, the Boston
Celtics play eight exhibition games prior to the commencement of the regular
season. Under the NBA Constitution and By-laws, the Boston Celtics receive all
revenues from the sale of tickets to regular season home games (subject to the
NBA gate assessment) and no revenue from the sale of tickets to regular season
away games. Generally, the Boston Celtics retain all revenues from the sale of
tickets to home exhibition games played in Boston as well as certain ticket
revenues from home exhibition games played at neutral sites. Under certain
circumstances, the Boston Celtics pay appearance fees to the visiting team for
exhibition games, and likewise the team may receive appearance fees for
exhibition games played elsewhere.
Effective with the 1995-1996 season, all Boston Celtics regular season
home games are played in the FleetCenter, an arena located in downtown Boston.
The seating capacity of the FleetCenter is approximately 19,300 as compared to
a seating capacity of 14,890 at the Boston Celtics prior home arena, the Boston
Garden. The policy of the Boston Celtics during the last several years has been
to limit the number of season tickets so that some tickets are available on a
per game basis. During the 1996-1997 season, approximately 13,000 season
tickets were sold, as compared to 15,000 in the 1995-96 season and 12,700 in
1994-95 season.
Television, Cable and Radio Broadcasting. The Partnership and the NBA
license the television and radio broadcast rights to Celtics basketball games.
The NBA, as agent for its members, licenses the national and international
broadcast of the games under agreements with NBC Sports, a division of the
National Broadcasting Company (the "NBC agreement"), and Turner Network
Television, Inc., an affiliate of Turner Broadcasting (the "TNT agreement").
Each of the NBA member teams shares equally in these license fees. In addition,
the Partnership licenses the local over the air rights to broadcast away games
under an agreement with Gillett Communications of Boston, Inc. (subsequently
assigned to Paramount Communications), licensee of Television Station UPN 38,
WSBK-TV (the "WSBK agreement") and licenses the cable rights to broadcast home
games to Sportschannel New England Limited Partnership (the "Sportschannel
agreement"). The Partnership licenses the rights to broadcast all games on
radio under an agreement with American Radio Systems, Inc., licensee of Radio
Station WEEI - 850AM (the "ARS agreement"). The NBC, TNT and WSBK agreements
extend through the 1997-98 season. The Sportschannel agreement extends through
the 1998-99 season, with a right to an additional extension by Sportschannel
through the 2000-01 season. The ARS agreement extends through the 1999-2000
season. There can be no assurance that the Partnership or the NBA, upon
expiration of the aforementioned agreements, will be able to enter into new
agreements on terms as favorable as those in the current agreements.
Generally, these agreements provide for the broadcast of a specified
number of games (pre-season, regular season and playoff games) at specified
rights fees, which in some cases increase over the term of the contract and in
some cases provide for revenue sharing, per game. The national agreements
provide that the licensee identify the games which it wishes to broadcast and
the local rights agreements provide for the preemption of games broadcast under
the national license agreements.
<PAGE> 6
The NBC agreement accounted for approximately 11% ($6,896,552) and 10%
($6,552,000) of the Partnership's total revenues for the years ended June 30,
1997 and 1996, respectively. No other agreement accounted for as much as 10% of
the Partnership's total revenues for the years ended June 30, 1997, 1996 and
1995.
Other Sources. Other sources of revenues for the basketball operations
include promotional and novelty revenues, including royalties from NBA
Properties, Inc. ("NBA Properties"). NBA Properties is a corporation organized
in 1967 to which each NBA member has assigned the exclusive rights to the
merchandising of its team name, insignia and other similar properties to the
extent such rights were not previously assigned to others prior to the
formation of NBA Properties. NBA Properties pays royalties to each NBA team in
consideration of the receipt of such rights. This assignment is subject to the
Boston Celtics' right to use their insignia and symbols in connection with the
promotion of the team in their home territory and retail sales in their home
arena. NBA Properties licenses other companies to manufacture and sell official
NBA items such as sneakers, basketballs, warm-up jackets and sweatshirts, as
well as certain non-sports items.
Basketball Team
Players. In general, the rules of the NBA permit each team to maintain an
active roster of 12 basketball players during each regular season and up to 20
players in the off-season. The By-laws of the NBA require each member team to
enter into a uniform player contract with each of its players. The following
table sets forth certain information concerning the players under contract with
the Boston Celtics as of September 19, 1997:
<TABLE>
<CAPTION>
Last Season
Name Position Years in NBA Under Contract
- ----------------- -------------- ------------ --------------
<S> <C> <C> <C>
Dana Barros Guard 8 2000-01
Chauncey Billups Guard - 1999-00
Bruce Bowen Forward 1 1998-99
Dee Brown Guard 7 1999-00
Andrew DeClercq Forward/Center 2 2001-02
Tyus Edney Guard 2 1998-99
Pervis Ellison Center 8 1999-00
Travis Knight Center 1 2003-04
Tony Massenburg Forward 5 1999-00
Ron Mercer Guard - 1999-00
Chris Mills Forward 4 2003-04
Greg Minor Forward 3 2003-04
Antoine Walker Forward 1 1998-99
</TABLE>
<PAGE> 7
Coaches, General Manager and other Team Personnel. The Head Coach of the
Boston Celtics, Rick Pitino, was appointed Head Coach, President and Director
of Basketball Operations of CLP following the 1996-97 season. Mr. Pitino was
most recently the Head Basketball Coach at the University of Kentucky since
1989, and served as the Head Coach of the New York Knickerbockers (1987-1989),
Head Coach at Providence College (1985-1987), assistant coach of the New York
Knickerbockers (1983-1985) and Head Coach at Boston University (1978-1983). Mr.
Pitino is under contract with the Boston Celtics as President and Director of
Basketball Operations of CLP through May 6, 2007, and as Head Coach of the
Boston Celtics for the first six full NBA seasons of the agreement (through the
2002-03 season).
James O'Brien is an Associate Coach of the Boston Celtics. Mr. O'Brien
was most recently an assistant coach at the University of Kentucky (1994-1997),
the Head Coach at the University of Dayton (1989-1994), and an assistant coach
of the New York Knickerbockers (1987-1989), prior to which he held a variety of
coaching positions from 1974 through 1987. Mr. O'Brien is under contract with
the Boston Celtics through the end of the 1999-2000 season.
Winston Bennett is an Assistant Coach of the Boston Celtics. Mr. Bennett
was most recently an assistant coach at the University of Kentucky (1994-1997).
Previously, Mr. Bennett worked as a broadcaster at the University of Kentucky
(1993-1994) and for the Cleveland Cavaliers of the NBA (1992-1993), prior to
which he played for the Cleveland Cavaliers (1988-1991) and the Miami Heat
(1991-1992) of the NBA. Mr. Bennett is under contract with the Boston Celtics
through the end of the 1998-99 season.
John Carroll is also an Assistant Coach of the Boston Celtics. Mr.
Carroll was most recently the Advance Pro Scout for the Orlando Magic of the
NBA (1996-1997) and for the Portland Trail Blazers of the NBA (1995-1996).
Previously, Mr. Carroll was the Head Coach at Duquesne University (1989-1995)
and an assistant coach at Seton Hall University (1982-1989). Mr. Carroll is
under contract with the Boston Celtics through the end of the 1998-99 season.
Shaun Brown is the Strength and Conditioning Coach of the Boston Celtics.
Mr. Brown was most recently the Strength and Conditioning Coach at the
University of Kentucky (1992-1997), the Strength and Conditioning Coach at
Providence College (1989-1992) and the Assistant Strength and Conditioning
Coach at Rutgers University (1987-1988). Mr. Brown is under contract with the
Boston Celtics through the end of the 1998-99 season.
Chris Wallace is the General Manager of the Boston Celtics. Mr. Wallace
was most recently the Director of Player Personnel (1996-1997) and a scout
(1992-1996) for the Miami Heat of the NBA. Previously, Mr. Wallace worked in
various scouting capacities for the Portland Trail Blazers, Denver Nuggets, Los
Angeles Clippers and New York Knickerbockers of the NBA. Mr. Wallace is under
contract with the Boston Celtics through the end of the 1999-2000 season.
Ed Lacerte is the Head Athletic Trainer and Physical Therapist of the
Boston Celtics and has served in that capacity since September 1987. Mr.
Lacerte is under contract with the Boston Celtics through the end of the
1999-00 season.
<PAGE> 8
Under its contracts with its coaches, general manager and other team
personnel (including individuals formerly employed in these positions), the
Boston Celtics had compensation expense totaling $5,441,000 during the 1996-97
season. During the 1997-98 season, the Boston Celtics are required to make
salary payments to its coaches, general manager and other team personnel
(including individuals formerly employed in these positions) totaling
$10,940,000.
Collective Bargaining Agreement. A collective bargaining agreement (the
"Collective Bargaining Agreement") was ratified by the NBA and the National
Basketball Players' Association ("NBPA") on September 15, 1995 and executed by
the parties on July 11, 1996. The Collective Bargaining Agreement is to be in
effect through June 30, 2001. The previous Collective Bargaining Agreement
expired on June 23, 1994. The Collective Bargaining Agreement provides for
maximum and minimum total team salaries to be paid to players. Both maximum and
minimum team salaries are determined based on estimates prior to the start of
each season. The maximum team salary (the "Salary Cap") for each team for a
particular season, subject to certain exceptions, is the greater of a
predetermined dollar amount or 48.04% of the projected Basketball-Related
Income (as defined in the Collective Bargaining Agreement) of all NBA teams,
divided by the number of NBA teams. The NBA has the right to terminate the
Collective Bargaining Agreement after the 1997-98 season if it is determined
that the aggregate salaries and benefits paid by all NBA teams for the 1997-98
season exceed 51.8% of Basketball-Related Income as defined in the Collective
Bargaining Agreement.
There are various exceptions to the Salary Cap limitations, including
exceptions relating to a team's re-signing its own veteran free agent players,
replacing injured players, and signing rookies up to 120% of the rookie salary
scale amount. These exceptions permit teams to have aggregate player
compensation exceeding the specified Salary Cap. For example, subject to
certain limitations, a team could re-sign its veteran free agents at any
salary, and could sign a new player to replace an injured player at a salary
equal to up to the lesser of 50% of the salary of such injured player or 108%
of the average player salary for the prior season, even if such new salaries
caused the team to exceed the Salary Cap. Teams in excess of the Salary Cap
face certain restrictions with respect to signing new players. The Salary Cap
for the 1997-98 season has been set at $26.9 million and as of September 19,
1997, the Boston Celtics' total team compensation is above the Salary Cap.
The minimum team salary is designed to result in payments by NBA teams of
total player salaries and benefits for a given season aggregating at least 75%
of the Salary Cap each season. There is also a provision for minimum individual
player salaries.
Since the adoption of the Salary Cap limitations under a predecessor
collective bargaining agreement, there have been various disputes among NBA
members and between the NBA and its members and the NBPA relating to the
interpretation and application of the limitations in specific situations. Such
disputes are resolved by an arbitrator or by a court-appointed special master
whose decision is subject to judicial review.
The Collective Bargaining Agreement also governs the rights of veteran
free agents, certain aspects of uniform player contracts, player pension and
other benefits, the NBA draft of college players and other matters affecting
the players.
<PAGE> 9
There can be no assurance that NBA and the NBPA, upon the expiration of
the current Collective Bargaining Agreement or upon the possible termination of
the Collective Bargaining Agreement after the 1997-98 season as described
above, will reach agreement on a new collective bargaining agreement with terms
as favorable as those in the current agreement. Further, there can be no
assurance that the NBA will not experience labor relations difficulties in the
future or significantly increased player salaries which could have a material
adverse effect on the Partnership's financial condition or results of
operations.
Basketball Facilities
Effective with the start of the 1995-96 basketball season, the Boston
Celtics play all of its home games at the FleetCenter located in Boston,
Massachusetts. On April 4, 1990, the Boston Celtics entered into a
License/Lease Agreement and an Office Lease Agreement (collectively, the "Lease
Agreement") with New Boston Garden Corporation ("NBGC"). The Lease Agreement
was amended in certain respects and restated as of April 14, 1993. NBGC, which
is unaffiliated with the Boston Celtics, developed the new building and sports
entertainment facility which has a seating capacity of approximately 19,300
spectators to replace the Boston Garden. The FleetCenter, which is located on a
site adjacent to the Boston Garden, was opened on September 30, 1995.
Under the terms of the Lease Agreement, NBGC has granted to the Boston
Celtics a license to use the basketball facilities at the FleetCenter and
provides to the Celtics approximately 10,000 square feet of office space. NBGC
is responsible for maintaining the FleetCenter and providing administrative
personnel such as ushers, ticket takers, police and security personnel,
announcers, scorers and statisticians. At the Boston Celtics' request, NBGC is
responsible for making all box office ticket sales and remitting the proceeds
to the Boston Celtics. In general, NBGC receives only premium fee revenues
generated from preferred seating and executive boxes in the FleetCenter. Under
the terms of the Lease Agreement, the Boston Celtics do not share in revenue
from food and beverage concessions at the FleetCenter, but may sell programs at
each game subject to the payment of a commission to NBGC's concessionaires.
NBGC is also licensed by the Boston Celtics to sell merchandise bearing the
Boston Celtics' name, trademark and/or logo, subject to prior approval by, and
payment of a commission to, the Boston Celtics.
The Lease Agreement provides that it commenced on the day that the
FleetCenter was substantially completed and operational and extends for 10 full
basketball seasons (from the 1995-96 season to the 2004-2005 season). NBGC may,
at its option, extend the term of the Lease Agreement for five additional
basketball seasons (the "Extended Term"), provided NBGC notifies the Boston
Celtics during a specified period following the fifth anniversary of the
commencement of the term of the Lease Agreement of its intention to exercise
its option and subject to the NBGC making certain payments, based on its
revenues, to the Boston Celtics during the Extended Term.
Prior to the 1995-96 season, the Boston Celtics played most of their home
games in the Boston Garden, a 14,890 seating capacity indoor sports arena
located in downtown Boston. The Boston Garden was also owned by NBGC, and was
made available to the Boston Celtics under a License and Lease Agreement which
ended at the conclusion of the 1994-95 season.
<PAGE> 10
The Boston Celtics also lease approximately 16,000 square feet of space
at 151 Merrimac Street, Boston, Massachusetts. This facility houses the Boston
Celtics administrative offices. The term of this lease extends through December
2005, with an option to extend for one five-year renewal period. Under the
provisions of the Lease Agreement with NBGC, the Boston Celtics are reimbursed
for the cost of 10,000 square feet of office space during the 10-year term of
the Lease Agreement with NBGC.
Competition
The Boston Celtics are the only professional basketball team in the
Boston area. However, the Boston Celtics compete for spectator interest with
all forms of professional and amateur sports conducted in and near Boston.
During parts of the basketball season the Boston Celtics experience competition
from professional hockey (the Boston Bruins), professional football (the New
England Patriots), and professional baseball (the Boston Red Sox). In addition,
the colleges and universities in the Boston area, as well as public and private
schools, offer a full schedule of athletic events throughout the year. The
Boston Celtics also compete for attendance with the wide range of other
entertainment and recreational activities available in New England.
The Boston Celtics also compete with other United States and foreign
basketball teams, professional and otherwise, for available players.
Insurance
The Boston Celtics maintains accidental death and dismemberment,
disability and life insurance policies on most of its key players and on its
head coach. These disability policies cover injuries which result in permanent
and total disability, as well as temporary disability on injuries which cause
less severe damage, but loss of player services for more than half a playing
season. These policies would generally reimburse the Partnership for a
substantial percentage of the payments which it would be required to make to
such player under his contract. The waiting period for reimbursement under most
temporary disability policies is 41 games. This Key Man Disability Insurance
Plan is maintained by the NBA through a Master Policy Program, and underwritten
by a leading national insurance company.
The Boston Celtics participate in a workers' compensation policy and a
high limit comprehensive general liability and umbrella policy maintained by
the NBA. Included under that plan is protection for team sports participant's
liability covering claims which may result from, among other things, certain
injuries which may be incurred during player contests or exhibitions sponsored
by the Team.
The NBA has established a Disaster Plan which permits a team suffering an
air or similar disaster to draft players from the other NBA teams subject to
specified procedures. The NBA maintains an insurance policy that provides
compensation to the team suffering the disaster, as well as those teams whose
players are selected in such special draft.
In addition to basketball-related insurance, the Partnership maintains
various types of business insurance, including general liability insurance and
umbrella insurance.
<PAGE> 11
Employees
In addition to the players and coaches, see "Basketball Operations -
Basketball Team," as of September 19, 1997, the Boston Celtics have 43
full-time employees engaged in operating, marketing, advertising and
administrative activities. None of the Partnership's employees other than its
players are covered by collective bargaining agreements. The Partnership
considers its relations with its employees to be good.
Item 3. Legal Proceedings
- -------------------------
As a member of the NBA, the Partnership is a defendant along with the
other NBA members in various lawsuits incidental to the NBA's basketball
operations. The Partnership will generally be liable, jointly and severally,
with all other members of the NBA for the costs of defending such lawsuits and
any liabilities of the NBA which might result from such lawsuits. The
Partnership is not involved in any material legal proceedings. From time to
time, however, the Partnership may become a party to legal proceedings arising
in the ordinary course of business.
Item 4. Submission of Matters to a Vote of Security Holders
- -----------------------------------------------------------
None.
PART II
-------
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
- -----------------------------------------------------------------------------
The Partnership's Units are listed on the New York Stock Exchange and the
Boston Stock Exchange and are traded under the symbol "BOS". The following
table sets forth, for the periods indicated, the high and low sales prices per
Unit on the New York Stock Exchange and cash distributions per Unit to
Unitholders for the years ended June 30, 1997 and 1996, respectively.
<TABLE>
<CAPTION>
Year Ended June 30, 1997
----------------------------------
Sales Price Cash
------------------ Distribution
Period High Low Declared
- -------------- ------- ------- ------------
<S> <C> <C> <C>
First Quarter $22 1/2 $20 1/4
Second Quarter 22 3/4 20 5/8 $1.00
Third Quarter 24 3/8 22 3/8
Fourth Quarter 28 1/8 23 1/4
-------
$1.00
=======
</TABLE>
<PAGE> 12
<TABLE>
<CAPTION>
Year Ended June 30, 1996
----------------------------------
Sales Price Cash
------------------ Distribution
Period High Low Declared
- -------------- ------- ------- ------------
<S> <C> <C> <C>
First Quarter $27 $20 1/8
Second Quarter 28 3/8 22 7/8
Third Quarter 24 1/8 21 3/8
Fourth Quarter 25 1/8 21 5/8 $1.50
-------
$1.50
=======
</TABLE>
- -------------------
As of September 19, 1997, the approximate number of registered
unitholders of the Partnership's Units was 64,623.
Distributions may be declared from time to time in the sole discretion of
Celtics, Inc. as General Partner of the Partnership. See "Item 7 - Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources."
<PAGE> 13
Item 6. Selected Financial Data
- -------------------------------
Boston Celtics Limited Partnership and Subsidiaries consolidated -
(000's omitted, except for per unit data)
<TABLE>
<CAPTION>
Year Ended June 30
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Revenues $ 62,998 $ 64,780 $ 52,325 $ 44,583 $ 47,559
Costs and expenses 62,275 48,830 51,810 38,178 36,278
Interest income (expense), net 736 1,788 (2,567) (1,665) (982)
Net revenue from league expansion 7,114
Net proceeds from life insurance 5,592
Net realized gains (losses) on disposition of marketable
securities and other short-term investments 361 (101) 110 (3,595) 79
----------------------------------------------------
Income from continuing operations before income taxes 1,820 17,637 5,172 6,737 10,378
Provision for (benefit from) income taxes 1,400 1,850 (345) (600)
----------------------------------------------------
Income from continuing operations 420 15,787 5,517 7,337 10,378
Income (loss) from discontinued operations 83 10,639 2,145 (5,150)
Gain from disposal of discontinued operations 38,331 14,284
----------------------------------------------------
Net income $ 420 $ 54,201 $ 16,156 $ 23,766 $ 5,228
====================================================
Income from continuing operations applicable to Limited
Partners $ 358 $ 15,437 $ 5,396 $ 7,124 $ 10,214
Net income applicable to Limited Partners $ 358 $ 52,910 $ 15,545 $ 23,126 $ 5,157
Per unit:
Income from continuing operations $ 0.06 $ 2.59 $ 0.84 $ 1.11 $ 1.59
Net income $ 0.06 $ 8.89 $ 2.43 $ 3.61 $ 0.80
Distributions declared to BCLP unitholders $ 1.00 $ 1.50 $ 3.00 $ 1.25 $ 1.25
Cash distributions to Boston Celtics Communications
Limited Partners (the purchase price of BCCLP units) $ 2.40
</TABLE>
<PAGE> 14
<TABLE>
<CAPTION>
Balance Sheet Data:
June 30
1997 1996 1995 (1) 1994 (1) 1993 (1)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Current assets $103,801 $135,903 $186,101 $ 79,492 $ 50,976
Current liabilities 39,139 40,289 126,010 23,289 18,809
Total assets 119,200 145,233 210,655 102,933 73,347
Program broadcast rights payable - noncurrent portion 9,062 8,566 3,434
Deferred revenues - noncurrent portion 700 1,440
Deferred federal and state income taxes - noncurrent portion 20,100 20,100 6,000 2,900
Notes payable to bank - noncurrent portion 47,500 50,000 60,000 60,000 69,560
Deferred compensation - noncurrent portion 10,380 11,750 14,850 18,248 9,760
Other noncurrent liabilities 9,870 5,875 4,024 850
Minority interest in Boston Celtics Broadcasting Limited
Partnership 4,989 1,909
Partners' capital (deficit) (7,790) 16,520 (15,720) (12,829) (28,126)
<FN>
<F1> Balance sheet captions at June 30, 1995, 1994, and 1993 include amounts
pertaining to discontinued operations. Total assets as shown in the table
above include assets from discontinued operations of $52,893 in 1995,
$39,855 in 1994, and $36,524 in 1993. Long-term obligations, which
include program broadcast rights payable - noncurrent portion and notes
payable to bank - noncurrent portion as shown in the table above, include
amounts pertaining to discontinued operations of $19,062 in 1995, $18,566
in 1994, and $22,994 in 1993.
</FN>
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
- -------------------------------------------------------------------------------
General
Certain statements and information included herein may constitute
"forward-looking statements" within the meaning of the Federal Private
Securities Litigation Reform Act of 1995, including statements regarding the
Partnership's expectations, intentions or strategies regarding the future. Such
forward-looking statements may involve known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or
achievements of the Partnership to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Factors that could cause the Partnership's
financial condition, results of operation, liquidity and capital resources to
differ materially include the team's competitive success, uncertainties in
increases in players' salaries, the team's ability to attract and retain
talented players, uncertainties relating to labor relations involving players,
the risk of injuries to key players and uncertainties regarding media
contracts.
<PAGE> 15
Consolidated income from continuing operations and consolidated net
income of Boston Celtics Limited Partnership and its Subsidiaries for the year
ended June 30, 1997 was $420,000 or $0.06 per unit on revenues of $62,998,000
compared with consolidated income from continuing operations of $15,787,000 or
$2.59 per unit on revenues of $64,780,000 and consolidated net income of
$54,201,000 or $8.89 per unit during the year ended June 30, 1996. Consolidated
net income for the year ended June 30, 1996 included a gain on the sale of
Boston Celtics Broadcasting Limited Partnership in the amount of $38,331,000
and income from this discontinued operation of $83,000.
The Partnership reported a consolidated loss from continuing operations
and a consolidated net loss for the three months ended June 30, 1997 of
$10,922,000 or $2.10 per unit on revenues of $8,503,000 compared with a
consolidated loss from continuing operations and a consolidated net loss of
$767,000 or $0.13 per unit on revenues of $9,103,000 for the three months ended
June 30, 1996.
The consolidated statements of income for fiscal 1996 and 1995 include
the results of operations of television station WFXT, sold on July 7, 1995, and
radio station WEEI, sold on June 30, 1994, as discontinued operations. Gains on
their disposal were also included in discontinued operations.
Income from continuing operations for the year ended June 30, 1997
includes charges totaling $8,583,000 in the three months ended June 30, 1997
related to significant personnel changes, primarily in the basketball
operations. These charges consisted primarily of player contract termination
costs ($4,580,000), bonuses and relocation costs ($2,215,000), severance costs
($909,000) and salaries for the new coaching staff ($879,000). In addition, the
increase in the loss for the three months ended June 30, 1997 and the reduction
of net income for the year ended June 30, 1997 is a result of decreased
revenues from ticket sales as well as increases in player salaries and selling
and promotional expenses.
The Boston Celtics derive revenues principally from the sale of tickets
to home games and the licensing of television, cable network and radio rights.
A large portion of the Boston Celtics' annual revenues and operating expense is
determinable at the commencement of each basketball season based on season
ticket sales and the Boston Celtics' multi-year contracts with its players and
broadcast organizations.
The operations and financial results of the Boston Celtics are seasonal.
On a cash flow basis, the Boston Celtics receive a substantial portion of their
receipts from the advance sale of season tickets during the months of June
through October, prior to the commencement of the NBA regular season. Cash
receipts from playoff ticket sales are received in March of any year for which
the team qualifies for league playoffs. Most of the Boston Celtics' operating
expenses are incurred and paid during the regular season, which extends from
early November through late April.
<PAGE> 16
For financial reporting purposes the Boston Celtics recognize revenues
and expenses on a game-by-game basis. Because the NBA regular season begins in
November, the first quarter which ends on September 30th, will generally
include limited or no revenue and will reflect a net loss attributable to
general and administrative expenses incurred in the quarter. Based on the
present NBA game schedule, the Boston Celtics will generally recognize
approximately one-third of its annual regular season revenue in the second
quarter, approximately one-half of such revenue in the third quarter and the
remainder in the fourth quarter, and it will recognize its playoff revenue, if
any, in the fourth quarter.
Under provisions of the Internal Revenue Code applicable to public
limited partnerships, the Partnership will be taxable as a corporation
commencing on July 1, 1998. Alternatively, pursuant to recent tax legislation,
the Partnership could maintain partnership tax status by electing to pay a tax
of 3.5% of gross income. In response to these prospective changes in the tax
treatment of the Partnership, management is evaluating structural and other
alternatives. See "Item 7 - Management's Discussion and Analysis of Financial
Condition and Results of Operations - Tax Law Changes."
Results of Operations
The following discussion compares results of continuing operations of the
Partnership and its subsidiaries for the year ended June 30, 1997 compared with
the year ended June 30, 1996 and for the year ended June 30, 1996 compared with
the year ended June 30, 1995.
Revenues from regular season ticket sales decreased by $3,437,000 or 10%
in fiscal 1997 compared to 1996 and increased by $13,213,000 or 60% in fiscal
1996 compared to 1995. The decrease in 1997 was a result of reduced ticket
sales, believed to be primarily caused by the performance of the basketball
team. Ticket prices were not increased for the 1996-97 season. Increased ticket
sales in 1996 resulted primarily from the move to the FleetCenter arena, which
has an increased seating capacity of approximately 4,400 seats as compared to
the Boston Garden.
Regular season television and radio rights fees revenues increased by
$1,197,000 or 5% in fiscal 1997 compared to 1996 and $1,116,000 or 5% in fiscal
1996 compared to 1995. The increases were primarily the result of increases in
the NBA's national broadcasting contracts.
Other revenues, principally promotional advertising revenues, increased
$457,000 or 6% in 1997 as compared to 1996 and were relatively flat in fiscal
1996 as compared to 1995. The increase in fiscal 1997 is principally due to
increased revenues from promotional activities ($1,252,000), partially offset
by a decrease in proceeds received from NBA properties from the licensing of
novelty type products ($787,000).
The Boston Celtics played no playoff games in the 1996-97 or the 1995-96
seasons, accordingly, there were no playoff revenues or expenses in fiscal 1997
or 1996. The Boston Celtics played two home playoff games in fiscal 1995, which
resulted in $1,913,000 of playoff revenue. Playoff revenues vary from year to
year depending on the number of home games played and the availability of such
games for local television broadcast, and playoff expenses vary depending on
the number of games played.
<PAGE> 17
Team expenses increased by $13,050,000 or 47% in fiscal 1997 compared to
fiscal 1996 primarily due to increased player compensation as a result of
changes in team player personnel ($4,492,000). In addition, the increase is a
result of certain charges recorded in the three months ended June 30, 1997
related to personnel changes in the basketball operations, including player
contract termination costs ($4,580,000), bonuses and relocation costs
($1,715,000), severance costs ($878,000) and salaries for the new coaching
staff ($879,000). Team expenses decreased by $3,312,000 or 11% in fiscal 1996
compared to fiscal 1995 primarily due to decreased player compensation as a
result of changes in team player personnel ($3,311,000).
Game expenses, primarily NBA assessments on gate receipts, decreased by
$220,000 or 8% in fiscal 1997 compared to 1996 primarily as a result of the
decrease in revenues from ticket sales. Game expenses decreased by $274,000 or
10% in fiscal 1996 as compared to 1995 primarily as a result of the elimination
of arena rental expense (a reduction of $1,146,000 from fiscal 1995) partially
offset by an increase in NBA assessments due to the increased ticket revenues
($635,000).
Basketball playoff expense was $697,000 in fiscal 1995, consisting
primarily of expenses related to the two home games played. There were no
playoff games played in fiscal 1997 or 1996.
General and administrative expenses decreased $1,139,000 or 8% in fiscal
1997 compared to 1996, primarily as a result of decreases in personnel costs
($1,081,000), management fees ($735,000) and professional, consulting and legal
expenses ($198,000), partially offset by increased expense related to options
to acquire units of partnership interest ($875,000). General and administrative
expenses increased $967,000 or 7% in fiscal 1996 compared to 1995, primarily as
a result of increased professional, consulting and legal expenses ($1,076,000),
increased administrative salaries ($1,184,000) and increased management fees
($219,000), partially offset by reduced expense related to options to acquire
units of partnership interest ($1,322,000).
Selling and promotional expenses increased $1,707,000 or 57% in fiscal
1997 compared to 1996 and $281,000 or 10% in fiscal 1996 compared to 1995. The
increase in 1997 compared to 1996 is primarily attributable to increases in net
sponsorship costs and promotional events ($713,000), personnel costs
($476,000), and advertising and production costs ($381,000). The increase in
fiscal 1996 compared to 1995 is primarily attributable to increased net
sponsorship costs.
Total depreciation increased $48,000 or 34% in fiscal 1997 compared to
1996 and $55,000 or 63% in fiscal 1996 compared to 1995. The increases in 1997
and 1996 are primarily attributable to additional depreciation related to
additions to property and equipment and leasehold improvements in leased office
space and at the FleetCenter.
Interest expense decreased $515,000 or 8% in fiscal 1997 compared to 1996
and $2,687,000 or 30% in fiscal 1996 compared to 1995. The decrease in 1997 is
a result of the payment of an $85,000,000 borrowing in July 1995 as well as a
decrease in the deferred compensation liability. The decrease in 1996 is a
result of the payment of the $85,000,000 borrowing in July 1995, partially
offset by the interest expense on the notes issued on the redemption of
partnership units.
<PAGE> 18
The Partnership earned interest income from its marketable securities and
other short-term investments of $6,610,000 and $8,175,000 in fiscal 1997 and
1996, respectively. The decrease of $1,566,000 or 19% in fiscal 1997 compared
to 1996 is attributable to a reduced amount of available funds for short-term
investment. The increase in interest income of $1,667,000 or 26% in fiscal 1996
compared to 1995 is attributable to interest earned on the short-term
investment of larger amounts of available funds.
Liquidity and Capital Resources
The Partnership generated approximately $2,462,000, $15,359,000 and
$6,784,000 in cash from continuing operations in 1997, 1996 and 1995,
respectively. Capital expenditures amounted to approximately $136,000, $796,000
and $769,000 in 1997, 1996 and 1995, respectively. At June 30, 1997 the
Partnership had approximately $6,499,000 of cash and cash equivalents,
$42,573,000 of marketable securities and $49,671,000 of other short-term
investments, a portion of which were derived from the proceeds of the
Partnership's sale of its television and radio operations in 1996 and 1994,
respectively. In addition to these amounts, sources of funds available to the
Partnership include funds generated by operations and capital contributions
from partners. These resources will be used to repay commercial bank borrowings
and notes related to redeemed partnership units (see Note O of notes to
consolidated financial statements) and for general partnership purposes,
working capital needs or for possible investments and/or acquisitions. The
Partnership has a $50,000,000 loan from a commercial bank, all of which was
outstanding at June 30, 1997. The loan is secured by the assets of CLP and
contains certain financial and operating covenants. In addition, at June 30,
1997, the aggregate outstanding principal balance of the notes relating to
redeemed Partnership units amounted to approximately $16,410,000.
The management of the General Partner from time to time reviews and
evaluates investment and acquisition opportunities on behalf of the Partnership
and investments and/or acquisitions may be made or consummated by the General
Partner, on behalf of the Partnership, at such times and upon such prices and
other terms as the General Partner deems to be in the best interests of the
Partnership and all of its Unitholders.
During the year ended June 30, 1997, a cash distribution of $1.00 per
Unit was paid to the Unitholders of BCLP. Future distributions will be
determined by the General Partner based among other things on available
resources and the needs of the Partnership. Management believes that its cash,
cash equivalents, marketable securities and other short-term investments
together with cash from operating activities will provide adequate cash for the
Partnership and its subsidiaries to meet their cash requirements through June
30, 1998.
Tax Law Changes
Under provisions of the Internal Revenue Code applicable to public
limited partnerships, the Partnership will be taxable as a corporation
commencing on July 1, 1998. Alternatively, pursuant to recent tax legislation,
the Partnership could maintain partnership tax status by electing to pay a tax
of 3.5% of gross income. In response to these prospective changes in the tax
treatment of the Partnership, management is evaluating structural and other
alternatives.
<PAGE> 19
Item 8. Financial Statements and Supplementary Data
- ---------------------------------------------------
See Item 14.
PART III
--------
Item 10. Directors and Executive Officers of the Registrant
- -----------------------------------------------------------
General Partner
The General Partner of the Partnership is Celtics, Inc., a Delaware
corporation organized in 1986 (the "General Partner") which is wholly owned by
Walcott Partners, L.P., a Gaston family partnership. The Partnership's
activities are managed and controlled by the General Partner.
The General Partner of CLP is Boston Celtics Corporation (the "Basketball
General Partner"). Paul E. Gaston and Don F. Gaston (Paul Gaston's father) are
the sole stockholders of the Basketball General Partner. CLP's activities are
managed and controlled by the Basketball General Partner.
The General Partner of BCCLP is Celtics Communications, Inc. (the
"General Partner of the Broadcast Operations"). Paul E. Gaston and Don F.
Gaston are the sole stockholders of the General Partner of the Broadcast
Operations. Prior to their sale, the Broadcast Operations' activities were
managed and controlled by the General Partner of the Broadcast Operations.
The interest of Paul R. Dupee, Jr. in Celtics, Inc. was acquired by
Walcott Partners L.P. and his interests in Boston Celtics Corporation and
Celtics Communications, Inc. were acquired by Paul E. Gaston on November 30,
1996. See Note O of Notes to Consolidated Financial Statements for a
description of these transactions.
Management fee obligations of $820,000, $1,555,000, and $1,336,000
applicable to the Basketball General Partner were charged to operations during
the years ended June 30, 1997, 1996, and 1995, respectively. The Basketball
General Partner receives a management fee of $750,000 per annum subject to
annual increases based on annual cash flows from basketball operations after
June 30, 1989. In addition, the General Partner of the Broadcast Operations
received aggregate management fees of $10,000 and $998,000 in 1996 and 1995,
respectively, from BCCLP (as a result of revenues generated by Radio Station
WEEI AM-590) and BCBLP (based on 2% percent of sales) until these operations
were sold in the years ended June 30, 1994 and 1996.
In accordance with the partnerships' partnership agreements, each item of
income, gain, loss and deduction is allocated and distributions are made to the
partners and Unitholders in accordance with their respective percentage
interests (excluding earnings of subsidiary corporate entities which are taxed
directly).
<PAGE> 20
Directors and Executive Officers
The following table sets forth, for each of the directors and executive
officers of the General Partner, and certain officers of the Basketball
Subsidiary Partnership, his or her principal occupation, age and business
experience during the past five years. All of the directors and officers are
U.S. citizens and the business address of each is c/o Boston Celtics Limited
Partnership, 151 Merrimac Street, Boston, Massachusetts 02114.
<TABLE>
<CAPTION>
Name Age Position
- ---------------------- --- --------------------------------------------------------
<S> <C> <C>
Paul E. Gaston 40 Chairman of the Board
Paul R. Dupee, Jr. 54 Vice-Chairman of the Board (resigned November 30, 1996)
Stephen C. Schram 40 Director and President
Richard G. Pond 37 Executive Vice President, Chief Operating Officer,
Chief Financial Officer, Treasurer, and Secretary
Don F. Gaston 63 Director
Paula B. Gaston 63 Director
John H.M. Leithead 40 Director
John B. Marsh, III 40 Director
Arnold "Red" Auerbach 80 Vice Chairman of the Board of the Basketball Subsidiary
Partnership
Rick Pitino 45 President, Director of Basketball Operations of the
Basketball Subsidiary Partnership
Michael L. "M.L." Carr 45 Executive Vice President of Corporate Development of
the Basketball Subsidiary Partnership
Stuart Layne 43 Executive Vice President of Marketing and Sales of the
Basketball Subsidiary Partnership
William J. Reissfelder 33 Vice President and Controller
</TABLE>
The General Partner has an Audit Committee composed of Mr. Leithead and
Mr. Marsh, non-management directors, and Mr. Paul Gaston. The non-management
directors will be reimbursed for their expenses, and will receive directors'
fees equal to $1,000 per month and $2,500 per meeting attended with respect to
their services as directors of the General Partner. Messrs. Leithead and Marsh
received $27,000 each in such directors' fees in fiscal 1997. Directors are
named by the stockholders of the general partner and serve until their
successors are named. Thus, holders of limited partnership units have no vote
in the selection of directors of the General Partner. The General Partner's
officers are appointed by, and serve at the discretion of, the Board of
Directors.
Mr. Paul E. Gaston became Chairman of the Board of the Celtics, Inc., the
General Partner of the Partnership, in December 1992 and had been a Director
since September 1992. Mr. Gaston has been Chairman of the Board of the CLP
General Partner since September 1993. Upon its formation in November 1992, he
became Managing Director of Walcott Partners L.P., a Gaston family partnership
whose investments include limited partnership interests in the Partnership and
ownership of Celtics, Inc. From inception in 1990 to June 1992 he was
Co-chairman and since June 1992 has been Chairman of the Board of Directors of
Celtics Communications, Inc., the general partner of Boston Celtics
Communications Limited Partnership. Mr. Paul E. Gaston is the son of Don F. and
Paula B. Gaston.
<PAGE> 21
Mr. Dupee became Vice-Chairman of the Board of Directors of Boston
Celtics Incorporated in September 1983 and served as a Director of the BCCLP
General Partner since its inception in 1990. Effective November 30, 1996, Mr.
Dupee resigned from his positions as Vice-Chairman of the Board of Directors
and as Director of the BCCLP General Partner.
Mr. Schram was named President and became a Director of the General
Partner of the Partnership in December 1992. He became President and Director
of the BCCLP General Partner in August 1992. From 1984 to 1991, Mr. Schram was
a Vice President of the Fixed Income Securities Division of Morgan Stanley &
Co.
Mr. Pond was named Vice President, Controller and Secretary of the
General Partner of the Partnership in December 1992. He has been employed by
BCLP since July 1992. From July 1981 to June 1992, he was with the
international accounting firm of Ernst & Young LLP, most recently as a senior
audit manager. Effective July 1, 1996, Mr. Pond assumed his responsibilities as
Executive Vice President, Chief Financial Officer and, Treasurer, and effective
July 1, 1997, Mr. Pond assumed his responsibilities as Chief Operating Officer.
Mr. Don F. Gaston has served as a Director of the General Partners of
BCLP and CLP since his resignation as Chairman of the Board of BCLP in December
1992 and CLP in September 1993. He was succeeded in each of these positions by
his son, Paul E. Gaston. He became Chairman of the Board of Directors of Boston
Celtics Incorporated in September 1983 when he, together with Alan C. Cohen and
Paul R. Dupee, Jr., acquired the Boston Celtics franchise. He has served as a
Director of the BCCLP General Partner since its inception in 1990. Mr. Gaston
was Chairman of the Board of Providence Capitol, Ltd. from July 1982 until its
liquidation in December 1986. From 1962 to June 1982, he was associated with
Gulf & Western Industries, Inc. in various capacities, including Executive Vice
President, director and member of the Executive Committee. Mr. Gaston is the
husband and father respectively, of Paula B. Gaston and Paul E. Gaston.
Mrs. Paula B. Gaston became a Director of the General Partner of BCLP in
September 1992 and a Director of the General Partner of CLP in October 1992.
She is a private investor and is the wife of Mr. Don F. Gaston and the mother
of Paul E. Gaston.
Mr. Leithead became a Director of the BCLP General Partner in October
1992. Since September 1993 Mr. Leithead has been employed as an executive at
Arandell Schmidt. From 1985 to 1993, he was an executive of R.R. Donnelley &
Sons Company, and from 1979 to 1985 he was an executive in the National
Marketing Division for International Business Machines Corporation.
Mr. Marsh became a director in September 1992. Mr. Marsh is currently a
Director of Trading and Sales with ABSA Securities, Inc., where he is an
investment banker specializing in emerging markets. From 1991 to 1995, he was
Chief Executive Officer and President of Saicor Ltd., an investment banking
firm specializing in emerging markets. From 1988 to 1991 he was a Vice
President at Duetsche Bank Capital Corporation where he headed an international
arbitrage securities trading group. From 1985 to 1988 Mr. Marsh was a Vice
President in the international arbitrage department of Merrill Lynch Pierce
Fenner and Smith.
<PAGE> 22
Mr. Auerbach was named Vice Chairman of the Board of the Basketball
Subsidiary on May 6, 1997, prior to which he served as President of the Boston
Celtics basketball operations beginning in 1981. From 1950 to 1966, Mr.
Auerbach was head coach of the Boston Celtics and, during that period, the
Boston Celtics won the NBA championship 11 times. Mr. Auerbach was General
Manager of Boston Celtics Incorporated, or its predecessors, from 1966 to 1983.
Mr. Auerbach has been inducted into the Basketball Hall of Fame.
Mr. Pitino was named Head Coach, President and Director of Basketball
Operations of the Basketball Subsidiary Partnership on May 6, 1997. Previously,
Mr. Pitino was the Head Basketball Coach at the University of Kentucky since
1989.
Mr. Carr was named Executive Vice President of Corporate Development of
the Basketball Subsidiary Partnership effective July 1, 1997. Previously, Mr.
Carr was the Executive Vice President of Basketball Operations of the
Basketball subsidiary Partnership since June 1994 and coach of the Boston
Celtics since June 1995. Since 1987 he has owned and operated various
businesses. In 1992 he was named Executive Director of Community Affairs for
the Boston Celtics. Mr. Carr played professional basketball from 1973 to 1985.
From 1979 through 1985 he played for the Boston Celtics.
Mr. Layne has been associated with the Boston Celtics basketball
operations since March 1994. He was named Executive Vice President of Marketing
and Sales in May 1995. From March 1994 to May 1995 Mr. Layne was Vice President
of Planning and Special Events. Prior to joining the Boston Celtics, Mr. Layne
was with the Seattle Mariners professional baseball team as its Vice President
of Marketing for four years, and he previously worked in broadcasting with CBS
and Emmis Broadcasting for eleven years.
Mr. Reissfelder was named Vice President and Controller of the General
Partner of the Partnership in October 1996. From November 1994 to October 1996
he was the Controller of Open Environment Corporation, and from August 1985 to
November 1994 he was with the international accounting firm of Ernst & Young
LLP, most recently as a senior audit manager.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations promulgated thereunder, require
executive officers and directors of CI, the general partner of BCLP, to file
reports pertaining to their beneficial ownership of the Units of BCLP with the
Securities and Exchange Commission and the New York Stock Exchange when they
are first elected, and to report (with certain exceptions) subsequent changes
in their beneficial ownership of Units. In February 1996, Don F. Gaston and
Paula B. Gaston transferred 20,000 jointly-held Units of BCLP to Walcott
Partners L.P., an affiliate of the Gaston family. Mr. and Mrs. Gaston, Walcott
Partners L.P. and Draycott, Inc. (the general partner of Walcott Partners L.P.)
filed late four (4) Form 4s and two (2) Schedule 13Ds reporting the
aforementioned transfer of Units of BCLP. In each case, the failure to make the
required filings on a timely basis was inadvertent.
<PAGE> 23
Item 11. Executive Compensation
- -------------------------------
The following Summary Compensation Table sets forth the compensation of
each of the Chief Executive Officer and the four most highly compensated
executive officers of the Partnership whose annual salary and bonus, if any,
exceeded $100,000 for services in all capacities to the Partnership during the
last three fiscal years.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards
--------------------------- -------------------------
Fiscal Securities
Year Restricted Underlying
Ended Stock Options/
Name and Principal Position June 30, Salary ($) Bonus ($) Awards ($) SARs (#)
- ------------------------------- -------- ---------- -------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Paul E. Gaston 1997 $ 400,000 (1) (1) -
Chief Executive Officer 1996 400,000 (2) (2) -
and Chairman of the Board 1995 400,000 $ 828,112 - -
Stephen C. Schram 1997 400,000 - - -
Director and President 1996 400,000 3,658,363 (2) - -
1995 400,000 828,112 - -
Arnold "Red" Auerbach 1997 250,000 600,000 - -
Vice Chairman of the Board 1996 250,000 100,000 - -
of the Basketball Subsidiary 1995 250,000 100,000 - -
Rick Pitino (3) 1997 750,000 600,000 (4) - -
President and Director of 1996 - - - -
Basketball Operations of the 1995 - - - -
Basketball Subsidiary
M.L. Carr 1997 1,000,000 1,000,000 - -
Executive Vice President of 1996 1,000,000 - - -
Corporate Development of the 1995 500,000 - - -
Basketball Subsidiary
<PAGE> 24
<FN>
- -------------------
<F1> On June 27, 1997, the Audit Committee of the Board of Directors of CI
(the general partner of BCLP) voted to offer BCLP's three option holders
the right to exchange their options to purchase BCLP Units for an equal
number of Units of BCLP which vest after ten years and which contain
certain significant restrictions as to transferability, but which are
entitled to receive distributions with respect to such units (hereinafter
the "1997 Restricted Units"). The exchange ratio was determined based on
a written report received from an independent employee benefits
consultant regarding the respective values of the 1997 Restricted Units
and the options to purchase BCLP Units, and the option holders were
required to make this election on or prior to July 7, 1997. On June 30,
1997, Mr. Gaston elected to exchange his options to purchase 250,000 BCLP
Units for 250,000 1997 Restricted Units. Mr. Gaston, who is a member of
the Audit Committee, was recused from and did not participate in any of
the Audit Committee's deliberations pertaining to this matter. As a
result of this exchange, $519,000 was charged to compensation expense in
1997, representing the difference between the fair market value of the
1997 Restricted Units and the in-the-money value of the optioned Units.
<F2> On June 28, 1996, the annual incentive payment arrangements between BCLP
and Messrs. Gaston and Schram were modified to permit each of them to
elect to acquire Units of BCLP which vest after ten years and which
contain certain significant restrictions as to transferability, but which
are entitled to receive distributions with respect to such units
(hereinafter the "1996 Restricted Units") in lieu of cash payment. Mr.
Gaston elected to receive the 1996 Restricted Units in lieu of the
$3,658,363 cash incentive compensation payment to which he was entitled.
Mr. Gaston did not receive a cash bonus for the year ended June 30, 1996.
Mr. Schram elected to receive his payment in cash. Based upon a written
report received from an independent employee benefits consultant
regarding the appropriate discount to be applied, the Audit Committee of
the Board of Directors of CI awarded 234,886 1996 Restricted Units to Mr.
Gaston. Mr. Gaston, who is a member of the Audit Committee, was recused
from and did not participate in any of the Audit Committee's
deliberations pertaining to this matter.
<F3> Mr. Pitino's employment commenced on May 6, 1997.
<F4> Represents a deferred bonus payable to Mr. Pitino upon the earlier of May
6, 2003, the termination of his employment agreement or a change in
control as defined in the employment agreement.
</FN>
</TABLE>
The Partnership did not grant any options or appreciation rights relating
to its units during the year ended June 30, 1997. The following table sets
forth information concerning unit option exercises during the year ended June
30, 1997.
<PAGE> 25
Aggregated Option Exercises and Option Values
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-The-Money
Options at Options at
Fiscal Year-End Fiscal Year End
(#) ($)
--------------- ----------------
Units Acquired Value Realized Exercisable/ Exercisable/
Name on Exercise (#) ($) Unexercisable Unexercisable
- ----------------- ------------------------ -------------- --------------- ----------------
<S> <C> <C> <C> <C>
Paul E. Gaston 250,000 Restricted Units (1) 0/0 0/0
Stephen C. Schram 0 0 250,000/0 (2) $3,812,500/0 (3)
<FN>
<F1> See Note 1 under Summary Compensation Table above.
<F2> Options became exercisable in installments as follows:
Aggregate Amount of
Period Option Exercisable
--------------------------------- -------------------
June 30, 1994 - June 29, 1995 1%
June 30, 1995 - June 29, 1996 60%
June 30, 1996 - June 29, 1997 80%
June 30, 1997 - December 31, 2003 100%
<F3> Represents the difference between the market price on June 30, 1997 and
the exercise price on that date.
</FN>
</TABLE>
<PAGE> 26
Employment and Consulting Agreements
The Partnership
In August 1993, the Board of Directors of the General Partner of BCLP
approved compensation arrangements and incentive plans for Paul E. Gaston,
Chairman of the Board and Stephen C. Schram, President, respectively, of the
Partnership. Mr. Gaston and Mr. Schram shall each be employed on an at will
basis, with compensation at the rate of $400,000 per annum. In June 1997, the
Board of Directors of the General Partner of BCLP approved an increase in Mr.
Gaston's compensation to $1,000,000 per annum. The incentive plan, which is
subject to annual review, provides that each of Mr. Gaston and Mr. Schram shall
receive annual incentive payments, commencing with the fiscal year ending June
30, 1994, of 5% of the amount by which Consolidated Net Income before taxes on
income of BCLP for the related fiscal year exceeds $8,000,000, payable not
later than 10 days after the issuance of audited financial statements of BCLP.
During the year ended June 30, 1997, no annual incentive compensation payments
were made to Messrs. Gaston and Schram, and during the year ended June 30,
1995, annual incentive compensation payments in the amount of $828,000 were
made to each of Messrs. Gaston and Schram. Mr. Gaston did not receive a cash
incentive compensation payment for the year ended June 30, 1996, but rather
elected to receive an aggregate award of 234,866 Restricted Units of BCLP. Mr.
Schram elected to receive his $3,658,363 incentive compensation payment for the
year ended June 30, 1996 in cash.
Under an agreement dated July 1, 1996, Thomas M. Bartlett, Jr. agreed to
serve as a consultant to BCLP from July 1, 1996 through June 30, 2001. In
return for Mr. Bartlett's services, he will receive an annual retainer of
$200,000 payable in equal quarterly installments commencing July 1, 1996.
The Basketball Operations
Under an agreement dated as of March 13, 1981, as amended, Red Auerbach
has been retained to serve as a consultant to the Boston Celtics for the
remainder of his life. For such services, Mr. Auerbach will receive
compensation totaling $250,000 per year for his lifetime. In fiscal 1997, Mr.
Auerbach received bonus payments totaling $600,000, and in each of 1996 and
1995, Mr. Auerbach received bonus payments of $100,000. In the event of Mr.
Auerbach's death, his wife shall be entitled to receive for the balance of her
life monthly payments equal to those that would have otherwise been paid to Mr.
Auerbach. Mr. Auerbach shall advise the Boston Celtics with respect to, among
other things, the team's selections in the NBA college draft, evaluation of
college and professional players and the performance of the team and the
players for as long as he is physically able to perform such services.
Under an agreement dated May 6, 1997, Rick Pitino agreed to serve as
President and Director of Basketball Operations of the Basketball Subsidiary
through May 6, 2007, and as Head Coach of the team for the first six full NBA
seasons of the agreement (through the 2002-03 season). Under the agreement, Mr.
Pitino will receive annual salaries of $6,750,000 through May 6, 2003 and
$2,000,000 through May 6, 2007. Mr. Pitino was also granted a bonus in the
amount of $600,000, payable on the earlier of May 6, 2003 or upon a change in
control of the Basketball Subsidiary. In addition, in the event of a Change in
Control as defined in the agreement, Mr. Pitino will receive the lesser of
$22,000,000 or any unpaid amounts for the remainder of the term of the
agreement.
<PAGE> 27
Under an agreement dated June 1, 1990, as amended September 21, 1994,
David R. Gavitt agreed to serve as a consultant to the Basketball Subsidiary
through May 31, 1998. In return for Mr. Gavitt's services, he will receive an
annual salary at the rate of $300,000 through June 1997, $200,000 through June
1998, $100,000 through June 2000 and $50,000 through June 2001.
Under the terms of an agreement dated August 30, 1995, Alan Cohen agreed
to serve as a consultant for the Basketball Subsidiary through August 30, 1998
at an annual retainer fee of $260,000.
Compensation Committee Interlocks and Insider Participation
The non-management directors of the Audit Committee of the Board, Messrs.
Leithead and Marsh, performed the functions of a compensation committee during
the year ended June 30, 1997. No such committee member was during the year
ended June 30, 1997, or previously was, an officer or employee of the
Partnership or any subsidiary or during the year ended June 30, 1997 had any
affiliated relationship requiring disclosure.
Item 12. Security Ownership of Certain Beneficial Owners and Management
- -----------------------------------------------------------------------
The following table sets forth certain information regarding the
Partnership's Units beneficially owned on September 19, 1997 by (i) each person
who is known by the Partnership to beneficially own more than five percent (5%)
of the outstanding Units, by (ii) each director of the General Partner, by
(iii) each executive named in the Summary Compensation Table and by (iv) all
directors and executive officers of the General Partner as a group. All
information with respect to beneficial ownership has been furnished by the
respective Unitholders to the Partnership.
<PAGE> 28
<TABLE>
<CAPTION>
Percent of
5% Unitholders, Number of Outstanding
Directors and Executive Officers Units Units(1)
- ------------------------------------ ------------- -----------
<S> <C> <C>
Don F. Gaston and Paula B. Gaston 723,885 (2) 13.4%
33 East 63rd Street
New York, New York 10021
Paul E. Gaston 1,812,886 (3) 34.7
33 East 63rd Street
New York, New York 10021
Stephen C. Schram 250,900 (4) 4.4
33 East 63rd Street
New York, New York 10021
Arnold "Red" Auerbach 5,000 --
151 Merrimac Street
Boston, Massachusetts 02114
David R. Murphey, III 493,200 9.1
Murphey Capital, Inc.
P.O. Box 18065
Tampa, Florida 33681-8065
All directors and executive officers
as a group (7 persons) 2,792,671 (4) 49.4
<FN>
<F1> Percent of Outstanding Units for a particular Unitholder will be greater
than such Unitholder's percentage interest in the Partnership, due to the
1% interest in the Partnership held by the General Partner.
<F2> Includes 320,000 Units held by Brookwood Investments Limited Partnership,
a partnership owned by Don F. and Paula B. Gaston of which Don F. Gaston
is the General Partner. Does not include 1,320,000 Units held by Walcott
Partners L. P. See Note (3) below.
<F3> Includes 1,320,000 Units held by Walcott Partners L. P., a Gaston family
partnership, 250,000 restricted units issued June 30, 1997, 234,886
restricted units issued June 28, 1996, and 7,000 Units held by Paul
Gaston's spouse and minor children. The General Partner of Walcott
Partners L.P. is Draycott, Inc., wholly-owned by Paul E. Gaston who is
the only officer and director. For the purpose of this table, Mr. Paul E.
Gaston is deemed to be the beneficial owner of these Units.
<F4> Includes 250,000 units issuable upon exercise of options which are
currently exercisable.
</FN>
</TABLE>
Unless otherwise indicated, all parties have both exclusive voting and
investing power.
<PAGE> 29
Item 13. Certain Relationships and Related Transactions
- -------------------------------------------------------
In 1997, the Partnership reimbursed Conanicut Aircraft, Inc.
("Conanicut"), a company wholly-owned by Paul E. Gaston who is its only officer
and director, $100,869 for the business use in the fiscal year ended June 30,
1997 of an aircraft based on standard charter rates for comparable aircraft.
The reimbursement was reviewed and approved by the Audit Committee of the Board
of Directors of CI, which is the general partner of BCLP. Paul E. Gaston, who
is a member of the Audit Committee, was recused from and did not participate in
any of the Audit Committee's deliberations pertaining to this matter.
Management fee obligations of $820,000, $1,555,000, and $1,336,000
applicable to the Basketball General Partner were charged to operations during
the years ended June 30, 1997, 1996, and 1995, respectively. The Basketball
General Partner receives a management fee of $750,000 per annum subject to
annual increases based on annual cash flows from basketball operations after
June 30, 1989. In addition, Celtics Communications, Inc., general partner of
BCCLP and BCBLP, received aggregate management fees of $10,000 and $998,000 in
1996 and 1995, respectively, from BCCLP (as a result of revenues generated by
Radio Station WEEI AM-590) and BCBLP based on 2% percent of sales until these
operations were sold in the years ended June 30, 1994 and 1996.
PART IV
-------
Item 14. Exhibits, and Reports on Form 8-K
- ------------------------------------------
(a) The following documents are filed as part of this report:
1. Financial Statements:
The financial statements listed in the accompanying List of Financial
Statements and Financial Statement Schedules are filed as part of this report.
2. Exhibits:
The Exhibits listed below are filed as part of this report.
(3) (a) -- Certificate of Limited Partnership of Boston
Celtics Limited Partnership, as amended (1)
(b) -- Agreement of Limited Partnership of Boston
Celtics Limited Partnership (1)
(c) -- Certificate of Incorporation of Celtics, Inc. (1)
(d) -- By-laws of Celtics, Inc. (1)
(e) -- First Amendment to Amended and Restated Agreement
of Limited Partnership (7)
<PAGE> 30
(4) (a) -- Form of Certificate of Limited Partnership
Interest (1)
(b) -- Form of Unit Certificate (1)
(c) -- Form of Eligibility Certification (1)
(10) (a) -- Form of Transfer Agent Agreement by and among
Boston Celtics Limited Partnership, The First
National Bank of Boston, N.A., Celtics, Inc. and
BC ALP, Inc. (1)
(b) -- Joint Venture Agreement by and among NBA member
organizations (1)
(c) -- Constitution and By-laws of the National
Basketball Association (1)
(d) -- Agreement dated December 20, 1985 between CBS
Sports, a division of CBS, Inc., and the NBA
(confidential treatment previously granted) (1)
(e) -- Agreement dated June 18, 1984, as amended on
April 9, 1986, between Turner Broadcasting
System, Inc. and the NBA (confidential treatment
previously granted) (1)
(f) -- Amendment dated January 19, 1988 to Agreement
dated June 18, 1984, as amended on April 9, 1986,
between Turner Broadcasting System Inc. and the
NBA (confidential treatment previously granted)
(2)
(g) -- Telecast Rights Agreement, dated April 3, 1984,
among Boston Celtics Incorporated, Gannett
Massachusetts Broadcasting, Inc. and Gannett Co.,
Inc. (confidential treatment previously granted)
(1)
(h) -- Agreement, dated as of October 1, 1987, between
Sportschannel New England Limited Partnership and
Boston Celtics Limited Partnership (confidential
treatment previously granted) (2)
(i) -- Radio Broadcasting Rights Agreement dated October
27, 1986, between Boston Celtics Incorporated,
Helen Broadcasting Partnership Limited
Partnership and Papa Gino's of America, Inc.
(confidential treatment previously granted) (1)
(j) -- License and Lease Agreement, dated July 1, 1983,
between New Boston Garden Corporation and Boston
Celtics Incorporated (confidential treatment
previously granted) (1)
<PAGE> 31
(k) -- Amendment to License and Lease Agreement dated
July 1, 1983 between New Boston Garden
Corporation and Boston Celtics Incorporated (3)
(l) -- Promotional Agreement, dated as of July 1987,
between Boston Celtics Limited Partnership and
The Hartford Civic Center and Coliseum Authority
(confidential treatment previously granted) (2)
(m) -- Agreement, dated May 13, 1981, as amended,
between Arnold Auerbach and Boston Celtics
Incorporated (1)
(n) -- Agreement, dated December 8, 1983, as amended,
between Jan Volk and Boston Celtics Incorporated
(1)
(o) -- Form of Revolving Credit Agreement, dated as of
November 24, 1986, between Boston Celtics Limited
Partnership and the First National Bank of
Boston (1)
(p) -- Collective bargaining agreement, dated as of
November 1, 1988, between the NBA and the
National Basketball Players Association (4)
(q) -- Asset Purchase Agreement among Boston Celtics
Broadcasting Limited Partnership, Celtics
Communications, Inc. and WFXT, Inc. dated as of
November 21, 1989, including exhibits thereto, as
amended (5)
(r) -- Asset Purchase Agreement by and among Boston
Celtics Acquisitions Limited Partnership, Celtics
Communications, Inc., The Helen Broadcasting
Company Limited Partnership and The Helen
Broadcasting Corp. dated as of October 30, 1989,
including exhibits thereto and letter agreement
dated May 11, 1990 (5)
(s) -- Facility One Revolving Credit Note made by Boston
Celtics Acquisitions Limited Partnership and
Boston Celtics Limited Partnership in favor of
Shawmut Bank, N.A. dated May 11, 1990 (5)
(t) -- Facility Two Revolving Credit Note made by Boston
Celtics Acquisitions Limited Partnership and
Boston Celtics Limited Partnership in favor of
Shawmut Bank, N.A. dated May 11, 1990 (6)
(u) -- Revolving Credit Note made by Boston Celtics
Broadcasting Limited Partnership and Boston
Celtics Limited Partnership in favor of Shawmut
Bank, N.A. dated May 11, 1990 (6)
<PAGE> 32
(v) -- Accommodation Fee Agreement between Boston
Celtics Limited Partnership, Boston Celtics
Acquisitions Limited Partnership, Celtics
Holdings Corp. and Boston Celtics Communications
Limited Partnership dated as of May 11, 1990 (6)
(w) -- Accommodation Fee Agreement between Boston
Celtics Limited Partnership, Boston Celtics
Broadcasting Limited Partnership, Celtics Sub
Corp. and Boston Celtics Communications Limited
Partnership dated as of May 11, 1990 (6)
(x) -- Revolving Credit and Term Loan Agreement among
Boston Celtics Broadcasting Limited Partnership,
Celtics Sub Corp., Boston Celtics Communications
Limited Partnership, Boston Celtics Limited
Partnership and Shawmut Bank, N.A. dated as of
May 11, 1990 (6)
(y) -- Revolving Credit and Term Loan Agreement among
Boston Celtics Acquisitions Limited Partnership,
Celtics Holdings Corp., Boston Celtics
Communications Limited Partnership, Boston
Celtics Limited Partnership and Shawmut Bank,
N.A. dated as of May 11, 1990 (6)
(z) -- Agreement dated November 29, 1989 by and between
the National Basketball Association and Turner
Network Television, Inc. (confidential treatment
previously granted) (7)
(aa) -- NBA/NBC Network Television Agreement dated
November 9, 1989 by and between the National
Basketball Association and NBC Sports, a division
of National Broadcasting Company, Inc.
(confidential treatment previously granted) (7)
(bb) -- License/Lease Agreement dated April 4, 1990
between Boston Celtics Limited Partnership and
New Boston Garden Corporation (confidential
treatment previously granted) (7)
(cc) -- Office Lease Agreement dated April 4, 1990
between Boston Celtics Limited Partnership and
New Boston Garden Corporation (confidential
treatment previously granted) (7)
(dd) -- Letter Agreement dated June 1, 1990 between
Boston Celtics Limited Partnership and David R.
Gavitt (confidential treatment previously
granted) (7)
(ee) -- Television Broadcasting Rights Agreement between
Boston Celtics Limited Partnership and Boston
Celtics Broadcasting Limited Partnership dated as
of July 27, 1990 (7)
<PAGE> 33
(ff) -- Extended, Amended and Restated Radio Broadcasting
Rights Agreement among Boston Celtics Limited
Partnership and Boston Celtics Acquisitions
Limited Partnership dated May 11, 1990 (7)
(gg) -- Letter Agreement dated April 4, 1990 between the
Boston Celtics Limited Partnership and New Boston
Garden Corporation (confidential treatment
requested) (7)
(hh) -- Letter Agreement regarding Demand Promissory Note
made by Boston Celtics Broadcasting Limited
Partnership to Shawmut Bank, N.A. dated February
8, 1991 (8)
(ii) -- Demand Promissory Note made by Boston Celtics
Broadcasting Limited Partnership and Boston
Celtics Limited Partnership, dated as of February
11, 1991 (8)
(jj) -- Agreement dated October 23, 1990 by and among
Boston Celtics Broadcasting Limited Partnership,
Celtics Sub Corp., Boston Celtics Communications
Limited Partnership and Boston Celtics Limited
Partnership regarding the effectiveness of the
Stage II Television Loan Agreement (9)
(kk) -- Revolving Credit and Term Loan Agreement dated as
of November 1, 1990 by and among Boston Celtics
Broadcasting Limited Partnership, Boston Celtics
Communications Limited Partnership, Boston
Celtics Limited Partnership and Shawmut Bank,
N.A. (9)
(ll) -- Revolving Credit Note dated November 1, 1990 made
by Boston Celtics Broadcasting Limited
Partnership and Boston Celtics Limited
Partnership in favor of Shawmut Bank, N.A. (9)
(mm) -- Security Agreement dated November 1, 1990 by and
between Boston Celtics Broadcasting Limited
Partnership and Shawmut Bank, N.A. (9)
(nn) -- Guaranty dated November 1, 1990 executed by
Boston Celtics Communications Limited Partnership
in favor of Shawmut Bank, N.A. (9)
(oo) -- Agreement dated October 23, 1990 by and among
Boston Celtics Acquisitions Limited Partnership,
Celtics Holdings Corp., Boston Celtics
Communications Limited Partnership, Boston
Celtics Limited Partnership and Shawmut Bank,
N.A. regarding the effectiveness of the Stage II
Radio Loan Agreement (9)
<PAGE> 34
(pp) -- Revolving Credit and Term Loan Agreement dated
November 1, 1990 by and among Boston Celtics
Communications Limited Partnership, Boston
Celtics Limited Partnership and Shawmut Bank,
N.A. (9)
(qq) -- Facility One Revolving Credit Note dated November
1, 1990 made by Boston Celtics Communications
Limited Partnership and Boston Celtics Limited
Partnership in favor of Shawmut Bank, N.A. (9)
(rr) -- Facility Two Revolving Credit Note dated November
1, 1990 made by Boston Celtics Communications
Limited Partnership and Boston Celtics Limited
Partnership in favor of Shawmut Bank, N.A. (9)
(ss) -- Security Agreement dated November 1, 1990 by and
between Boston Celtics Communications Limited
Partnership and Shawmut Bank, N.A. (9)
(tt) -- Amendment No. 1 to revolving Credit and Term Loan
Agreement (Radio) (Stage Two) among Boston
Celtics Communications Limited Partnership,
Boston Celtics Limited Partnership and Shawmut
Bank, N.A. dated as of April 10, 1991 (9)
(uu) -- Stage Two--Radio Facility One (Amended) Revolving
Credit Note made by Boston Celtics Communications
Limited Partnership and Boston Celtics Limited
Partnership in favor of Shawmut Bank, N.A. dated
April 10, 1991 (9)
(vv) -- Stage Two --Radio Facility Two (Amended)
Revolving Credit Note made by Boston Celtics
Communications Limited Partnership and Boston
Celtics Limited Partnership in favor of Shawmut
Bank, N.A. dated April 10, 1991 (9)
(ww) -- Letter Agreement Relating to Security Agreement
between Boston Celtics Communications Limited
Partnership and Shawmut Bank, N.A. dated April
10, 1991 (9)
(xx) -- Amendment No. 1 to revolving Credit and Term Loan
Agreement (Television) (Stage Two) among Boston
Celtics Broadcasting Limited Partnership, Boston
Celtics Communications Limited Partnership,
Boston Celtics Limited Partnership and Shawmut
Bank, N.A. dated as of April 10, 1991 (9)
(yy) -- Stage Two--Television (Amended) Revolving Credit
Note made by Boston Celtics Broadcasting Limited
Partnership and Boston Celtics Limited
Partnership in favor of Shawmut Bank, N.A. Dated
April 10,1991 (9)
<PAGE> 35
(zz) -- Letter Agreement Relating to the Communications
Limited Partnership Guaranty between Boston
Celtics Communications Limited Partnership and
Shawmut Bank, N.A. dated April 10, 1991 (9)
(aaa) -- Letter Agreement Relating to Security Agreement
between Boston Celtics Broadcasting Limited
Partnership and Shawmut Bank, N.A. dated April
10, 1991 (9)
(bbb) -- Intercreditor Agreement among Boston Celtics
Broadcasting Limited Partnership, WFXT, Inc. and
Shawmut Bank, N.A. dated as of April 10, 1991 (9)
(ccc) -- Ten-Year Convertible Subordinated Note made by
Boston Celtics Broadcasting Limited Partnership
in favor of WFXT, Inc. dated April 10, 1991 (9)
(ddd) -- Letter Agreement Regarding Amendments No. 1 and 2
to Revolving Credit and Term Loan Agreements
between Boston Celtics Communications Limited
Partnership and Shawmut Bank, N.A. dated April
10, 1991 (9)
(eee) -- Amendment No. 2 to revolving Credit and Term Loan
Agreement (Radio) (Stage Two) among Boston
Celtics Communications Limited Partnership,
Boston Celtics Limited Partnership and Shawmut
Bank, N.A. dated as of April 10, 1991 (9)
(fff) -- Agreement Regarding Deferral of Radio Broadcast
Rights Payments among Boston Celtics
Communications Limited Partnership, Boston
Celtics Limited Partnership and Shawmut Bank,
N.A. dated as of April 10, 1991 (9)
(ggg) -- Agreement No. 2 to revolving Credit and Term Loan
Agreement (Television) (Stage Two) among Boston
Celtics Broadcasting Limited Partnership, Boston
Celtics Communications Limited Partnership,
Boston Celtics Limited Partnership and Shawmut
Bank, N.A. dated as of April 10, 1991 (9)
(hhh) -- Agreement Regarding Deferral of Television
Broadcast Rights Payments among Boston Celtics
Broadcasting limited Partnership, Boston Celtics
Limited Partnership and Shawmut Bank, N.A. dated
as of April 10, 1991 (9)
(iii) -- Modification Agreement Regarding Interest Rates
among Boston Celtics Broadcasting Limited
Partnership, Boston Celtics Communications
Limited Partnership, Boston Celtics Limited
Partnership and Shawmut Bank, N.A. dated as of
April 10, 1991 (9)
<PAGE> 36
(jjj) -- Letter of Waiver and Amendment Regarding Various
Loan Agreements among Shawmut Bank, N.A., Boston
Celtics Limited Partnership, Boston Celtics
Broadcasting Limited Partnership and Boston
Celtics Communications Limited Partnership dated
March 27, 1992. (10)
(kkk) -- Three year extension, dated July 6, 1992, of
agreement dated December 8, 1983, as amended,
between Jan Volk and Boston Celtics Incorporated.
(10.1)
(lll) -- Credit Agreement among Celtics Limited
Partnership ("CLP"), Boston Celtics Limited
Partnership ("BCLP") and Shawmut Bank, N.A.
("Shawmut"), dated as of January 21, 1993. (11)
(mmm) -- Revolving Credit Note from CLP to Shawmut, dated
as of January 21, 1993. (11)
(nnn) -- Security Agreement between CLP and Shawmut, dated
as of January 21, 1993. (11)
(ooo) -- Merger Agreement dated as of December 8, 1992 by
and among Boston Celtics Limited Partnership,
BCCLP Holding Corporation, BCCLP Acquisition
Limited Partnership and Boston Celtics
Communications Limited Partnership. (12)
(ppp) -- Second Amended and Restated Agreement of Limited
Partnership of Boston Celtics Communications
Limited Partnership dated May 6, 1993. (13)
(qqq) -- Agreement dated October 1, 1993, between Boston
Celtics Limited Partnership and Fox Television
Stations, Inc. ("FTS") that provides that,
subject to certain conditions, a subsidiary of
FTS would purchase an option to acquire ownership
interests in BCBLP which, together with existing
rights, could eventually result in FTS becoming
the sole owner of WFXT. (13)
(rrr) -- Financing Agreement dated October 29, 1993 by and
among Boston Celtics Communications Limited
Partnership Holding Corporation and Shawmut Bank,
N.A. (14)
(sss) -- Promissory Note dated October 29, 1993 executed
by BCCLP Holding Corporation in favor of Shawmut
Bank, N.A. (14)
(ttt) -- Unit Option Agreement dated December 31, 1993 by
and between Boston Celtics Limited Partnership
and Paul E. Gaston. (15)
<PAGE> 37
(uuu) -- Unit Option Agreement dated December 31, 1993 by
and between Boston Celtics Limited Partnership
and Stephen C. Schram. (15)
(vvv) -- Unit Option Agreement dated December 31, 1993 by
and between Boston Celtics Limited Partnership
and Thomas M. Bartlett, Jr. (15)
(www) -- Financing Agreement dated September 15, 1994
between Boston Celtics Communications Limited
Partnership and Shawmut Bank, N.A. (16)
(xxx) -- Promissory Note dated September 15, 1994 executed
by Boston Celtics Communications Limited
Partnership and Shawmut Bank, N.A. (16)
(yyy) -- Credit Agreement dated October 31, 1994 by and
among BCCLP and Shawmut Bank, N.A. (17)
(zzz) -- Assignment and Security Agreement dated October
31, 1994 by and between BCCLP and Shawmut Bank,
N.A. (17)
(aaaa) -- Commercial Promissory Note between BCCLP and
Shawmut Bank, N.A. (17)
(bbbb) -- Support Agreement between BCLP and Shawmut Bank,
N.A. (17)
(cccc) -- Second Amendment To Agreement To Purchase
Partnership Interests by and among BCBLP and CCI
and FTS dated November 29, 1994. (18)
(dddd) -- Unit Redemption Agreement dated August 30, 1995
between Boston Celtics Limited Partnership and
Alan N. Cohen. (19)
(eeee) -- Unit Redemption Agreement dated August 30, 1995
between Boston Celtics Limited Partnership and
Gordon Cohen. (19)
(ffff) -- Unit Redemption Agreement dated August 30, 1995
between Boston Celtics Limited Partnership and
Laurie Cohen-Fenster. (19)
(gggg) -- Promissory Note dated August 1, 1995 by BCLP to
Alan N. Cohen. (19)
(hhhh) -- Promissory Note dated August 1, 1995 by BCLP to
Alan N. Cohen. (19)
(iiii) -- Consulting Agreement dated August 30, 1995
between Celtics Limited Partnership and Alan N.
Cohen. (19)
(jjjj) -- Press Release dated August 30, 1995. (19)
<PAGE> 38
(kkkk) -- Restricted Unit Agreement dated June 28, 1996
between Boston Celtics Limited Partnership and
Paul E. Gaston. (20)
(llll) -- Letter from Paul Gaston electing to accept all
incentive compensation for 1996 in restricted
units. (20)
(mmmm) -- Consulting agreement dated July 1, 1996 between
Boston Celtics Limited Partnership and Thomas M.
Bartlett Jr. (20)
(nnnn) -- Unit Purchase Agreement dated November 30, 1996
between Boston Celtics Limited Partnership,
Celtics Capital Corporation and Westbury
Partners, L.P. (21)
(oooo) -- Unit Purchase Agreement dated November 30, 1996
between Boston Celtics Limited Partnership,
Celtics Capital Corporation and Paul R. Dupee,
Jr. (21)
(pppp) -- Stock Purchase Agreement dated November 30, 1996
between Paul E. Gaston and Paul R. Dupee, Jr.
pertaining to the shares of Boston Celtics
Corp. (21)
(qqqq) -- Stock Purchase Agreement dated November 30, 1996
between Walcott Partners, L.P. and Paul R. Dupee,
Jr. pertaining to the shares of Celtics, Inc.(21)
(rrrr) -- Stock Purchase Agreement dated November 30, 1996
between Paul E. Gaston and Paul R. Dupee, Jr.
pertaining to the shares of Celtics
Communications, Inc. (21)
(ssss) -- Press Release dated November 30, 1996. (21)
(tttt) -- Letter Agreement dated June 30, 1997 between
Boston Celtics Limited Partnership and Paul E.
Gaston pertaining to the election to exchange
options to purchase Limited Partnership Units for
Restricted Units.
(11) Statement Re: Computation of Earnings Per Unit
for the years ended June 30, 1997, 1996 and 1995
(27) Financial Data Schedule
(1) Incorporated by reference from the exhibits filed with the Partnership's
registration statement on Form S-1 filed under the Securities Act of 1933
(File No. 33-9796).
(2) Incorporated by reference from exhibits filed with the Partnership's
report on Form 10-K filed with the Securities and Exchange Commission for
the year ended June 30, 1987.
<PAGE> 39
(3) Incorporated by reference from exhibits filed with the Partnerships'
report on Form 10-K filed with the Securities and Exchange Commission for
the year ended June 30, 1988.
(4) Incorporated by reference from exhibits filed with the Partnership's
report on Form 10-K filed with the Securities and Exchange Commission for
the year ended June 30, 1989.
(5) Incorporated by reference from the exhibits filed with the Partnership's
Current Report on Form 8-K filed with the Securities and Exchange
Commission on May 24, 1990.
(6) Incorporated by reference from the exhibits filed with the Registration
Statement on Form S-1 of Boston Celtics Communications Limited
Partnership and the Partnership filed under the Securities Act of 1933
(File No. 33-34768).
(7) Incorporated by reference from the exhibits filed with the Report on Form
10-K of the Registrant filed with the Securities and Exchange Commission
for the year ended June 30, 1990.
(8) Incorporated by reference from the exhibits filed with the Report on Form
10-K of Boston Celtics Communications Limited Partnership filed with the
Securities and Exchange Commission for the year ended December 31, 1990.
(9) Incorporated by reference from the exhibits filed with Boston Celtics
Communications Limited Partnership's report on Form 8 filed with the
Securities and Exchange Commission on April 15, 1991.
(10) Incorporated by reference to the exhibits filed with Boston Celtics
Communications Limited Partnership report on Form 10-K filed with the
Securities and Exchange Commission on April 15, 1992.
(10.1)Incorporated by reference to the exhibits filed with the report on Form
10-K filed with the Securities and Exchange Commission for the year ended
June 30, 1992 (File No. 0-19324).
(11) Incorporated by reference to the exhibits filed with the report on Form
8-K filed with the Securities and Exchange Commission on January 22, 1993
(File No. 0-19324).
(12) Incorporated by reference to the exhibits filed with the Boston Celtics
Communications Limited Partnership report on Schedule 13E-3 filed with
the Securities and Exchange Commission on December 9, 1992.
(b) Reports on Form 8-K filed in the fourth quarter of 1993 - Form 8-K
dated May 14, 1993.
(c) Exhibits - The response to this portion of Item 14 is filed as a
part of this report.
(d) Financial Statement Schedules - The response to this portion of
Item 14 is filed as part of this report.
(13) Incorporated by reference to the exhibits filed with the report on Form
10-K/A Amendment No. 1 filed with the Securities and Exchange Commission
on October 20, 1993 (File No. 0-19324).
<PAGE> 40
(14) Incorporated by reference to the exhibits filed with the report on Form
10-Q filed with the Securities and Exchange Commission on November 15,
1993 (File No. 0-19324).
(15) Incorporated by reference to the exhibits filed with the report on Form
10-Q filed with the Securities and Exchange Commission on February 14,
1994 (File No. 0-19324).
(16) Incorporated by reference to the exhibits filed with the report on Form
10-K filed with the Securities and Exchange Commission on September 28,
1994 (File No. 0-19324).
(17) Incorporated by reference to the exhibits filed with the report on Form
10-Q filed with the Securities and Exchange Commission on November 14,
1994 (File No. 0-19324).
(18) Incorporated by reference to the exhibits filed with the report on Form
10-Q filed with the Securities and Exchange Commission on February 14,
1995 (File No. 0-19324).
(19) Incorporated by reference to the exhibits filed with the report on Form
8-K filed with the Securities and Exchange Commission on August 31, 1995
(File No. 0-19324).
(20) Incorporated by reference to the exhibits filed with the report on Form
10-K filed with the Securities and Exchange Commission on September 27,
1996 (File No. 0-19324).
(21) Incorporated by reference to the exhibits filed with the report on Form
8-K filed with the Securities and Exchange Commission on December 2, 1996
(File No. 0-19324).
<PAGE> 41
ANNUAL REPORT ON FORM 10-K
ITEM 8, ITEM 14(a)(1) and (2)(c) and (d)
LIST OF FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
CERTAIN EXHIBITS
YEAR ENDED JUNE 30, 1997
BOSTON CELTICS LIMITED PARTNERSHIP
BOSTON, MASSACHUSETTS
<PAGE> 42
FORM 10-K -- ITEM 14(a)(1) and (2)
BOSTON CELTICS LIMITED PARTNERSHIP
LIST OF CONSOLIDATED FINANCIAL STATEMENTS
The following consolidated financial statements of Boston Celtics Limited
Partnership and Subsidiaries are included in Item 8:
Consolidated Balance Sheets at June 30, 1997 and 1996.
Consolidated Statements of Income for each of the three years in the period
ended June 30, 1997.
Consolidated Statements of Partners' Capital (Deficit) for each of the three
years in the period ended June 30, 1997.
Consolidated Statements of Cash Flows for each of the three years in the period
ended June 30, 1997.
Notes to Consolidated Financial Statements.
All schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable and therefore have been omitted.
<PAGE> 43
Report of Independent Auditors
To the General Partner
Boston Celtics Limited Partnership
We have audited the accompanying consolidated balance sheets of Boston Celtics
Limited Partnership and Subsidiaries as of June 30, 1997 and 1996, and the
related consolidated statements of income, partners' capital (deficit) and cash
flows for each of the three years in the period ended June 30, 1997. 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Boston
Celtics Limited Partnership and Subsidiaries at June 30, 1997 and 1996, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended June 30, 1997, in conformity with generally
accepted accounting principles.
/s/ Ernst & Young LLP
---------------------------------------
Boston, Massachusetts
September 19, 1997
<PAGE> 44
BOSTON CELTICS LIMITED PARTNERSHIP
and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, June 30,
1997 1996
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 6,498,739 $ 5,982,128
Marketable securities 42,572,683 46,763,501
Other short-term investments 49,671,153 78,723,365
Accounts receivable 2,667,438 3,777,729
Prepaid federal and state income taxes 432,895
Prepaid expenses 1,856,627 656,396
Other current assets 101,611
----------------------------
TOTAL CURRENT ASSETS 103,801,146 135,903,119
PROPERTY AND EQUIPMENT, net 909,416 1,184,813
NATIONAL BASKETBALL ASSOCIATION FRANCHISE, net of amortization of
$2,159,360 in 1997 and $2,005,120 in 1996 4,010,221 4,164,461
OTHER INTANGIBLE ASSETS, net of amortization of $47,083 in 1997 and
$36,621 in 1996 903,477 913,939
OTHER ASSETS 9,575,396 3,067,140
----------------------------
$119,199,656 $145,233,472
============================
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 12,877,723 $ 15,420,321
Deferred game revenues 5,584,848 4,629,704
Federal and state income taxes payable 539,325
Notes payable to bank - current portion 2,500,000
Notes payable 16,409,617 15,353,949
Deferred compensation - current portion 1,767,263 4,345,367
----------------------------
TOTAL CURRENT LIABILITIES 39,139,451 40,288,666
DEFERRED REVENUES - noncurrent portion 699,871
DEFERRED FEDERAL AND STATE INCOME TAXES 20,100,000 20,100,000
NOTES PAYABLE TO BANK - noncurrent portion 47,500,000 50,000,000
DEFERRED COMPENSATION - noncurrent portion 10,380,296 11,749,666
OTHER NON-CURRENT LIABILITIES 9,870,000 5,875,000
<PAGE> 45
PARTNERS' CAPITAL (DEFICIT)
Boston Celtics Limited Partnership -
General Partner 226,817 284,422
Limited Partners (8,527,928) 15,688,456
----------------------------
(8,301,111) 15,972,878
Celtics Limited Partnership - General Partner (129,866) (92,988)
Boston Celtics Communications Limited Partnership -
General Partner 640,886 640,379
----------------------------
TOTAL PARTNERS' CAPITAL (DEFICIT) (7,790,091) 16,520,269
----------------------------
$119,199,656 $145,233,472
============================
</TABLE>
See notes to consolidated financial statements.
<PAGE> 46
BOSTON CELTICS LIMITED PARTNERSHIP
and Subsidiaries
Consolidated Statements of Income
<TABLE>
<CAPTION>
For the Year Ended
-----------------------------------------
June 30, June 30, June 30,
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Basketball regular season -
Ticket sales $31,813,019 $35,249,625 $22,036,880
Television and radio broadcast rights fees 23,269,159 22,071,992 20,956,405
Other, principally promotional advertising 7,915,626 7,458,651 7,418,487
Basketball playoffs 1,913,481
-----------------------------------------
62,997,804 64,780,268 52,325,253
-----------------------------------------
Costs and expenses:
Basketball regular season-
Team 40,941,156 27,891,264 31,203,697
Game 2,386,042 2,606,218 2,880,566
Basketball playoffs 696,583
General and administrative 13,913,893 15,053,333 14,085,982
Selling and promotional 4,680,168 2,973,488 2,692,208
Depreciation 189,324 140,894 86,347
Amortization of NBA franchise and other intangible assets 164,702 164,703 164,703
-----------------------------------------
62,275,285 48,829,900 51,810,086
-----------------------------------------
722,519 15,950,368 515,167
Interest expense (5,872,805) (6,387,598) (9,074,657)
Interest income 6,609,541 8,175,184 6,507,902
Net revenue from league expansion 7,113,665
Net realized gains (losses) on disposition of marketable
securities and other short-term investments 361,051 (101,138) 110,254
-----------------------------------------
Income from continuing operations before income taxes 1,820,306 17,636,816 5,172,331
Provision for (benefit from) income taxes 1,400,000 1,850,000 (345,000)
-----------------------------------------
Income from continuing operations 420,306 15,786,816 5,517,331
Discontinued operations:
Income from discontinued operations (less applicable income
taxes of $30,000 in 1996 and $7,095,000 in 1995 82,806 10,638,675
Gain from disposal of discontinued operations (less applicable
income taxes of $17,770,000) 38,330,907
-----------------------------------------
Net income 420,306 54,200,529 16,156,006
Net income applicable to interests of General Partners 62,246 1,291,014 610,815
-----------------------------------------
Net income applicable to interests of Limited Partners $ 358,060 $52,909,515 $15,545,191
=========================================
<PAGE> 47
Per unit:
Income from continuing operations $0.06 $2.59 $0.84
Net income $0.06 $8.89 $2.43
Distributions declared $1.00 $1.50 $3.00
Average units and unit equivalents outstanding throughout the period 5,672,552 5,950,679 6,399,722
</TABLE>
See notes to consolidated financial statements.
<PAGE> 48
BOSTON CELTICS LIMITED PARTNERSHIP
and Subsidiaries
Consolidated Statements of Partners' Capital (Deficit)
<TABLE>
<CAPTION>
Limited Partners
--------------------------
Total Units Amount
------------- --------- -------------
<S> <C> <C> <C>
BALANCE AT JUNE 30, 1994 ($12,829,500) 6,399,722 ($12,542,458)
Net income for the year ended June 30, 1995 16,156,006 15,545,191
Distributions:
Boston Celtics Limited Partnership to unitholders
Cash - $1.50 per unit (9,697,083) (9,599,583)
Declared - $1.50 per unit (9,697,082) (9,599,582)
Cash by Boston Celtics Broadcasting Limited Partnership
to Celtics Communications, Inc. (General Partner's Share) (74,000)
Cash by Celtics Limited Partnership to Boston Celtics
Corporation (General Partner's Share) (165,000)
Purchase of 99% of General Partner's interest in Boston
Celtics Communications Limited Partnership 74,858
Unrealized gain on marketable securities 511,354 506,241
------------------------------------------
BALANCE AT JUNE 30, 1995 (15,720,447) 6,399,722 (15,690,191)
Net income for the year ended June 30, 1996 54,200,529 52,909,515
Distributions:
Cash by Boston Celtics Limited Partnership to unitholders -
$1.50 per unit (8,547,925) (8,461,917)
Cash by Boston Celtics Broadcasting Limited Partnership to
Celtics Communications, Inc. (General Partner's Share) (152,887)
Cash by Celtics Limited Partnership to Boston Celtics
Corporation (General Partner's Share) (200,000)
Sale of General Partner's interest in Boston Celtics
Broadcasting Limited Partnership 13,705
Purchase of Boston Celtics Limited Partnership units for
the treasury (16,306,546) (758,444) (16,306,546)
Issuance of Boston Celtics Limited Partnership units from
the treasury 3,658,363 234,886 3,658,363
Unrealized loss on marketable securities (424,523) (420,768)
------------------------------------------
<PAGE> 49
BALANCE AT JUNE 30, 1996 16,520,269 5,876,164 15,688,456
Net income for the year ended June 30, 1997 420,306 358,060
Distributions:
Cash by Boston Celtics Limited Partnership to unitholders -
$1.00 per unit (5,935,876) (5,876,164)
Cash by Celtics Limited Partnership to Boston Celtics
Corporation (General Partner's Share) (95,000)
Purchase of Boston Celtics Limited Partnership units for
the treasury (22,880,000) (780,000) (22,880,000)
Issuance of Boston Celtics Limited Partnership units from
the treasury 4,331,250 250,000 4,331,250
Unrealized loss on marketable securities (151,040) (149,530)
-------------------------------------------
BALANCE AT JUNE 30, 1997 ($ 7,790,091) 5,346,164 ($ 8,527,928)
===========================================
</TABLE>
See notes to consolidated financial statements.
<PAGE> 50
BOSTON CELTICS LIMITED PARTNERSHIP
and Subsidiaries
Consolidated Statements of Partners' Capital (Deficit)
(continued)
<TABLE>
<CAPTION>
General Partners' Interests
--------------------------------------------------
Boston Celtics
Limited Celtics Limited
Total Partnership Partnership
------------ --------------- ---------------
<S> <C> <C> <C>
BALANCE AT JUNE 30, 1994 ($ 287,042) ($127,387) ($ 54,311)
Net income for the year ended June 30, 1995 610,815 157,019 114,117
Distributions:
Boston Celtics Limited Partnership to unitholders
Cash - $1.50 per unit (97,500) (97,500)
Declared - $1.50 per unit (97,500) (97,500)
Cash by Boston Celtics Broadcasting Limited Partnership
to Celtics Communications, Inc. (General Partner's Share) (74,000)
Cash by Celtics Limited Partnership to Boston Celtics
Corporation (General Partner's Share) (165,000) (165,000)
Purchase of 99% of General Partner's interest in Boston
Celtics Communications Limited Partnership 74,858
Unrealized gain on marketable securities 5,113 5,113
----------------------------------------------
BALANCE AT JUNE 30, 1995 (30,256) (160,255) (105,194)
Net income for the year ended June 30, 1996 1,291,014 534,440 212,206
Distributions:
Cash by Boston Celtics Limited Partnership to unitholders -
$1.50 per unit (86,008) (86,008)
Cash by Boston Celtics Broadcasting Limited Partnership
to Celtics Communications, Inc. (General Partner's Share) (152,887)
Cash by Celtics Limited Partnership to Boston Celtics
Corporation (General Partner's Share) (200,000) (200,000)
Sale of General Partner's interest in Boston Celtics
Broadcasting Limited Partnership 13,705
Purchase of Boston Celtics Limited Partnership units for
the treasury
Issuance of Boston Celtics Limited Partnership units from
the treasury
Unrealized loss on marketable securities (3,755) (3,755)
----------------------------------------------
<PAGE> 51
BALANCE AT JUNE 30, 1996 831,813 284,422 (92,988)
Net income for the year ended June 30, 1997 62,246 3,617 58,122
Distributions:
Cash by Boston Celtics Limited Partnership to unitholders -
$1.00 per unit (59,712) (59,712)
Cash by Celtics Limited Partnership to Boston Celtics
Corporation (General Partner's Share) (95,000) (95,000)
Purchase of Boston Celtics Limited Partnership units for
the treasury
Issuance of Boston Celtics Limited Partnership units from
the treasury
Unrealized loss on marketable securities (1,510) (1,510)
---------------------------------------------
BALANCE AT JUNE 30, 1997 $ 737,837 $226,817 ($129,866)
=============================================
</TABLE>
<PAGE> 52
BOSTON CELTICS LIMITED PARTNERSHIP
and Subsidiaries
Consolidated Statements of Partners' Capital (Deficit)
(continued)
<TABLE>
<CAPTION>
General Partners' Interests
----------------------------------
Boston Celtics Boston Celtics
Communications Broadcasting
Limited Limited
Partnership Partnership
-------------- ---------------
<S> <C> <C>
BALANCE AT JUNE 30, 1994 ($122,686) $ 17,342
Net income for the year ended June 30, 1995 144,619 195,060
Distributions:
Boston Celtics Limited Partnership to unitholders
Cash - $1.50 per unit
Declared - $1.50 per unit
Cash by Boston Celtics Broadcasting Limited Partnership to
Celtics Communications, Inc. (General Partner's Share) (74,000)
Cash by Celtics Limited Partnership to Boston Celtics Corporation
(General Partner's Share)
Purchase of 99% of General Partner's interest in Boston Celtics
Communications Limited Partnership 74,858
Unrealized gain on marketable securities
-----------------------------
BALANCE AT JUNE 30, 1995 96,791 138,402
Net income for the year ended June 30, 1996 543,588 780
Distributions:
Cash by Boston Celtics Limited Partnership to unitholders -
$1.50 per unit
Cash by Boston Celtics Broadcasting Limited Partnership to Celtics
Communications, Inc. (General Partner's Share) (152,887)
Cash by Celtics Limited Partnership to Boston Celtics Corporation
(General Partner's Share)
Sale of General Partner's interest in Boston Celtics Broadcasting
Limited Partnership 13,705
Purchase of Boston Celtics Limited Partnership units for the treasury
Issuance of Boston Celtics Limited Partnership units from the treasury
Unrealized loss on marketable securities
-----------------------------
BALANCE AT JUNE 30, 1996 640,379 0
Net income for the year ended June 30, 1997 507
Distributions:
Cash by Boston Celtics Limited Partnership to unitholders -
$1.00 per unit
Cash by Celtics Limited Partnership to Boston Celtics Corporation
(General Partner's Share)
Purchase of Boston Celtics Limited Partnership units for the treasury
Issuance of Boston Celtics Limited Partnership units from the treasury
Unrealized loss on marketable securities
-----------------------------
BALANCE AT JUNE 30, 1997 $640,886 $ 0
=============================
</TABLE>
<PAGE> 53
BOSTON CELTICS LIMITED PARTNERSHIP
and Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
For the Year Ended
--------------------------------------------
June 30, June 30, June 30,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts:
Basketball regular season receipts:
Ticket sales $ 33,132,256 $ 31,322,745 $ 27,539,038
Television and radio broadcast rights fees 22,009,139 19,908,800 20,344,641
Other, principally promotional advertising 8,141,716 8,424,038 6,382,803
Basketball playoff receipts 360,895 2,278,100
--------------------------------------------
63,283,111 60,016,478 56,544,582
Costs and expenses:
Basketball regular season expenditures:
Team expenses 34,390,240 26,066,875 24,632,232
Game expenses 2,273,709 2,481,007 2,880,566
Basketball playoff expenses 719,799
General and administrative expenses 15,650,961 13,996,805 13,069,984
Selling and promotional expenses 3,730,578 1,333,238 2,544,114
--------------------------------------------
56,045,488 43,877,925 43,846,695
--------------------------------------------
7,237,623 16,138,553 12,697,887
Interest income 6,319,302 9,553,938 4,692,024
Interest expense (4,422,737) (4,624,043) (8,044,898)
Proceeds from league expansion 4,490,673 4,814,814
Payment of income taxes (2,372,220) (4,973,883) (3,751,320)
Payment of deferred compensation (4,300,147) (5,226,095) (3,624,319)
--------------------------------------------
NET CASH FLOWS FROM CONTINUING OPERATIONS 2,461,821 15,359,143 6,784,188
NET CASH FLOWS (USED BY) FROM DISCONTINUED OPERATIONS (2,931,742) 23,981,166
--------------------------------------------
NET CASH FLOWS FROM OPERATING ACTIVITIES 2,461,821 12,427,401 30,765,354
<PAGE> 54
CASH FLOWS (USED BY) FROM INVESTING ACTIVITIES
Purchases of:
Marketable securities (43,482,870) (55,272,268) (76,285,589)
Short term investments (594,400,000) (116,150,000) (143,000,000)
Proceeds from sales of:
Marketable securities 47,925,944 53,355,561 54,237,041
Short term investments 617,500,000 103,300,000 77,000,000
Proceeds from the sale of Boston Celtics Broadcasting Limited
Partnership 79,200,000
Cash portion of net assets of Boston Celtics Broadcasting
Limited Partnership sold (1,602,071)
Capital expenditures (136,279) (796,424) (769,431)
Other receipts (expenditures) (441,129) 293,503 (825,359)
--------------------------------------------
NET CASH FLOWS (USED BY) FROM INVESTING ACTIVITIES 26,965,666 62,328,301 (89,643,338)
--------------------------------------------
NET CASH FLOWS (USED BY) FROM OPERATING AND INVESTING ACTIVITIES 29,427,487 74,755,702 (58,877,984)
</TABLE>
<PAGE> 55
BOSTON CELTICS LIMITED PARTNERSHIP
and Subsidiaries
Consolidated Statements of Cash Flows (Continued)
<TABLE>
<CAPTION>
For the Year Ended
--------------------------------------------
June 30, June 30, June 30,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS (USED BY) FROM FINANCING ACTIVITIES
Proceeds from bank borrowings 85,000,000
Payment of bank borrowings (80,000,000) (10,000,000)
Purchase of Boston Celtics Limited Partnership units (22,880,000) (1,941,450)
Purchase of interest in Boston Celtics Communications Limited
Partnership from Celtics Communications Inc. (792,000)
Cash distributions:
To its minority interest holder from Boston Celtics
Broadcasting Limited Partnership (7,797,244) (3,774,000)
To limited partners of Boston Celtics Limited Partnership (5,935,876) (18,061,500) (9,599,583)
To General Partners (95,000) (536,395) (486,500)
--------------------------------------------
NET CASH FLOWS (USED BY) FROM FINANCING ACTIVITIES (28,910,876) (108,336,589) 60,347,917
--------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 516,611 (33,580,887) 1,469,933
Cash and cash equivalents at beginning of period 5,982,128 39,563,015 38,093,082
--------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 6,498,739 $ 5,982,128 $ 39,563,015
============================================
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Conversion of convertible subordinated note payable for 25%
interest in Boston Celtics Broadcasting Limited Partnership $ 10,000,000
Notes payable for acquisition of Boston Celtics Limited
Partnership units $ 14,365,096
Net non-cash assets of Boston Celtics Broadcasting Limited
Partnership sold $ 9,517,608
</TABLE>
See notes to consolidated financial statements.
<PAGE> 56
Note A - Basis of Presentation
Principles of Consolidation: The consolidated financial statements include the
accounts of the Boston Celtics Limited Partnership ("BCLP," the "Partnership")
and its majority-owned and controlled subsidiaries and partnerships. BCLP,
through its subsidiaries, owns and operates the Boston Celtics professional
basketball team of the National Basketball Association and holds investments.
All intercompany transactions are eliminated in consolidation.
Discontinued operations: The consolidated financial statements for fiscal 1996
and 1995 include the results of operations of the Communications Group, which
comprised Television Station WFXT - Channel 25 of Boston, Massachusetts (sold
July 7, 1995) and Radio Station WEEI of Boston, Massachusetts (sold June 30,
1994) as discontinued operations. Gains on their disposal were also included in
discontinued operations. Revenues of discontinued operations were $534,000 and
$51,897,000 for the years ended June 30, 1996 and 1995, respectively.
Note B - Significant Accounting Policies
Cash Equivalents: Cash equivalents represent short-term investments with
maturities at date of purchase of three months or less. Marketable securities
represent investments with maturities greater than three months.
Estimates and Assumptions: The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reported period. Actual results could differ from those estimates.
Concentration of Credit Risk: Financial instruments which potentially subject
the Partnership to credit risk consist principally of cash equivalents,
short-term investments, marketable securities and accounts receivable. The
Partnership's cash equivalents, short-term investments and marketable
securities represent investments with relatively short maturities in the
securities of highly rated financial institutions and United States government
entities. The Partnership performs periodic credit evaluations of its
customers' financial condition and generally does not require collateral.
Credit losses have been consistently within management's expectations.
Marketable Securities and Other Short Term Investments: The Partnership
accounts for marketable securities and other short-term investments in
accordance with Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities" which
established the accounting and reporting requirements for investments in equity
securities that have readily determinable fair values and for all investments
in debt securities. All affected investment securities are classified as
securities to be held to maturity, for trading, or available-for-sale.
Financial Instruments: The carrying value of financial instruments such as cash
equivalents, accounts receivable and accounts payable approximate their fair
values based on the short-term maturities of these instruments. The carrying
value of long-term debt approximates its fair value based on references to
similar instruments.
<PAGE> 57
Franchise and Other Intangible Assets: These assets, consisting principally of
the National Basketball Association franchise and other intangible assets are
being amortized primarily on a straight-line basis over 40 years.
Property and Equipment: Property and equipment is stated at cost and is being
depreciated over estimated useful lives of from five to fifteen years using
straight line or accelerated methods of depreciation as appropriate. Building
and leasehold improvements are depreciated over the lesser of the remaining
lives of the leases or the assets.
Basketball Operations: Revenues, principally ticket sales and television and
radio broadcasting fees, generally are recorded as revenues at the time the
game to which such proceeds relate is played. Team expenses, principally player
and coaches salaries, related fringe benefits and insurance, and game and
playoff expenses, principally National Basketball Association attendance
assessments and travel, are recorded as expense on the same basis. Accordingly,
advance ticket sales and payments on television and radio broadcasting
contracts and payments for team and game expenses not earned or incurred are
recorded as deferred revenues and deferred expenses, respectively, and
amortized ratably as regular season games are played. General and
administrative and selling and promotional expenses are charged to operations
as incurred.
Stock Options: The Partnership accounts for stock options in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees." The Partnership has adopted the disclosure provisions only of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS 123). Adoption of SFAS 123 did not have a material impact
on the Partnership's financial statements.
Income Taxes: No provision for income taxes is required by BCLP as its income
and expenses are taxable to or deductible to their partners. Celtics Capital
Corporation ("CCC"), BCCLP Holding Corporation ("Holdings") and Celtics
Investments, Inc. ("CII"), wholly-owned subsidiary corporations of BCLP, are
subject to income taxes and report their income tax provision, including the
income (losses) of subsidiary partnerships Boston Celtics Communications
Limited Partnership ("BCCLP") and Boston Celtics Broadcasting Limited
Partnership ("BCBLP") (prior to the sale of BCBLP on July 7, 1995), using the
liability method in accordance with Financial Accounting Standards Board
Statement 109, "Accounting for Income Taxes" (see Note M). Under this method,
deferred tax assets and liabilities are determined based on differences between
financial reporting and tax bases of assets and liabilities and are measured
using tax rates and laws that will be in effect when the differences are
expected to reverse.
Under provisions of the Internal Revenue Code applicable to public limited
partnerships, the Partnership will be taxable as a corporation commencing on
July 1, 1998. Alternatively, pursuant to recent tax legislation, the
Partnership could maintain partnership tax status by electing to pay a tax of
3.5% of gross income. In response to these prospective changes in the tax
treatment of the Partnership, management is evaluating structural and other
alternatives.
Net Income Per Unit: Net income per Unit is based upon the weighted average
number of units outstanding each year plus any unit equivalents attributable to
options, if material.
<PAGE> 58
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, "Earnings per Share" ("Statement 128"), which is required to be adopted on
December 31, 1997. At that time, the Company will be required to change the
method currently used to compute earnings per unit and to restate all prior
periods. Under the new requirements for calculating primary earnings per unit,
the dilutive effect of rights to purchase units of Partnership interest will be
excluded. The impact is expected to result in an increase in primary income
from continuing operations per unit for the years ended June 30, 1997 and June
30, 1996 of $0.01 and $0.09 per unit, respectively, and is expected to result
in an increase in primary net income per unit for the years ended June 30, 1997
and June 30, 1996 of $0.01 and $0.28, respectively. The impact of Statement 128
on the calculation of primary income from continuing operations per unit and
primary net income per unit for the year ended June 30, 1995 is not expected to
be material.
Note C - Marketable Securities and Other Short Term Investments
The following is a summary of marketable securities which are classified as
available-for-sale securities:
<TABLE>
<CAPTION>
Gross Gross Estimated
Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
June 30, 1997:
U.S. corporate debt securities $16,719,000 $ 17,734 ($ 30,767) $16,705,967
U.S. government securities 25,917,892 42,120 (93,296) 25,866,716
-------------------------------------------------------
$42,636,892 $ 59,854 ($124,063) $42,572,683
=======================================================
June 30, 1996:
U.S. corporate debt securities $ 7,952,261 $ 630 ($ 63,625) $ 7,889,266
U.S. government securities 38,724,409 426,956 (277,130) 38,874,235
-------------------------------------------------------
$46,676,670 $427,586 ($340,755) $46,763,501
=======================================================
</TABLE>
Gross realized gains and losses on available-for-sale securities are as
follows:
<PAGE> 59
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
U.S. corporate debt securities
Gross realized gains $ 521 $131,697
Gross realized (losses) (34,805) (1,455)
U.S. government securities
Gross realized gains 596,981 78,770
Gross realized (losses) (201,646) (310,150)
-----------------------
Net realized gains (losses) $ 361,051 ($101,138)
=======================
</TABLE>
The net adjustment to unrealized holding gains and losses on available-for-sale
securities included as a separate component of Partners' Capital (Deficit)
resulted in losses of $151,040 in 1997 and $424,523 in 1996.
The amortized cost and estimated fair value of available-for-sale securities at
June 30, 1997, by contractual maturity, are shown below. Expected maturities
will differ from contractual maturities because the issuers of the securities
may have the right to prepay obligations without prepayment penalties.
<TABLE>
<CAPTION>
Estimated
Cost Fair Value
----------- -----------
<S> <C> <C>
Due in one year or less $25,872,690 $25,869,364
Due after one year through three years 10,203,560 10,205,554
Due after three years 6,560,643 6,497,765
--------------------------
$42,636,893 $42,572,683
==========================
</TABLE>
Other short term investments, which consist primarily of private placement
notes with a commercial bank with a maturity of under one year, are classified
as held-to-maturity and are carried at amortized cost, which approximates
market value. In addition, the Partnership has a $6,000,000 convertible note
receivable from an unrelated company which has been classified as
held-to-maturity and is carried at amortized cost, which approximates market
value. This note has been recorded in other noncurrent assets. The note bears
interest at LIBOR plus 1%, with quarterly interest payments beginning in May
1999 and quarterly payments of principal plus interest beginning February 2002
through the maturity of the note in January 2007. The note is secured by
substantially all of the assets of this company. There were no unrealized gains
or losses in any of these investments at June 30, 1997.
<PAGE> 60
Note D - Property and Equipment
Property and equipment are summarized as follows:
<TABLE>
<CAPTION>
June 30,
------------------------
1997 1996
---------- ----------
<S> <C> <C>
Building and leasehold improvements $1,184,244 $1,333,932
Furniture and fixtures 440,965 377,350
------------------------
1,625,209 1,711,282
Less accumulated depreciation 715,793 526,469
------------------------
Net property and equipment $ 909,416 $1,184,813
========================
</TABLE>
Note E - Deferred Compensation and Other Compensation Arrangements
Certain player contracts provide for guaranteed compensation payments which are
deferred until a future date. Operations are charged amounts equal to the
present value of future guaranteed payments in the period in which the
compensation is earned. The present value of payments due under these
agreements is as follows:
Years ending June 30, 1998 $ 1,767,000
1999 1,497,000
2000 1,254,000
2001 1,156,000
2002 1,082,000
2003 and thereafter 5,392,000
-----------
$12,148,000
===========
On June 28, 1996, the annual incentive payment arrangements between BCLP and
Paul E. Gaston, Chairman of the Board of Celtics, Inc. ("CI"), the general
partner of BCLP, were modified to permit him to elect to acquire Units of BCLP
which contain certain significant restrictions as to vesting and
transferability (hereinafter the "Restricted Units") in lieu of a cash payment.
Mr. Gaston elected to receive Restricted Units in lieu of the $3,658,363 cash
incentive compensation payment to which he was entitled for the year ended June
30, 1996. Based on a written report received from an independent employee
benefits consultant regarding the appropriate discount to be applied, the Audit
Committee of the Board of Directors of CI awarded 234,866 Restricted Units to
Mr. Gaston. Mr. Gaston, who is a member of the Audit Committee, was recused
from and did not participate in any of the Audit Committee's deliberations
pertaining to this matter. The fair market value of the Restricted Units
awarded to Mr. Gaston will not be deductible for tax purposes currently,
however, they will be deductible in the taxable year in which the restrictions
pertaining to those Restricted Units expire.
<PAGE> 61
Note F - Notes Payable
Notes payable represent outstanding borrowings by Celtics Limited Partnership
("CLP"), BCLP's 99% owned limited partnership which owns and operates the
Boston Celtics basketball team, under a $50,000,000 loan with its commercial
bank. The loan agreement as amended permits borrowings of up to $50,000,000
through December 31, 1997, with the available amount declining thereafter by
$1,250,000 per quarter. The term of the loan extends through December 31, 2002.
Interest is payable quarterly in arrears at a fixed annual rate of 6.35% from
October 4, 1995 through December 31, 2002. Prior to October 4, 1995, the
initial $30,000,000 borrowing bore interest at a fixed rate of 6.4% and
borrowings in excess of the initial $30,000,000 bore interest at optional
floating rates (7.375% and 4.875% at June 30, 1995 and 1994).
Effective January 1, 1998, the loan agreement requires quarterly payments of
principal in the amount necessary to reduce the outstanding principal balance
to equal the declining available borrowings, if necessary, together with
interest. The borrowings under the bank loan are secured by all of the assets
of and are the liability of CLP. The agreement relating to the commercial bank
borrowing includes various provisions and covenants customary in lending
arrangements of this type including limitations on distributions to
unitholders.
Aggregate maturities of notes payable at June 30, 1997 are as follows:
Years ending June 30, 1998 $ 2,500,000
1999 5,000,000
2000 5,000,000
2001 5,000,000
2002 5,000,000
2003 and thereafter 27,500,000
Interest charged to operations in connection with borrowings (including an
$80,000,000 BCCLP loan with interest at floating rates (6.25% at June 30, 1995)
from a commercial bank which was repaid on July 7, 1995, a $10,000,000 note
payable with interest at 10% which was converted into a 25% interest in BCBLP
on July 7, 1995, a BCBLP term loan with interest at optional floating rates
(6.375% at June 30, 1994) from a commercial bank which was repaid during fiscal
year 1995 and a $15,000,000 short-term loan with interest at 4% from the
commercial bank borrowed and repaid during fiscal year 1994) were $3,219,000,
$3,366,000, and $8,478,000 ($3,219,000, $3,366,000 and $7,890,000 from
continuing operations) in the years ended June 30, 1997, 1996 and 1995,
respectively.
Note G - Related Party Transactions
Management fee obligations of $820,000, $1,555,000 and $1,336,000 applicable to
Boston Celtics Corporation, general partner of CLP, were charged to operations
during the years ended June 30, 1997, 1996 and 1995, respectively. Boston
Celtics Corporation receives a management fee of $750,000 per annum, subject to
annual increases based on annual cash flows from basketball operations after
June 30, 1989. In addition, Celtics Communications, Inc., general partner of
BCCLP and BCBLP, received aggregate management fees of $10,000 and $998,000 in
1996 and 1995, respectively, from BCCLP and BCBLP. The BCCLP fee was based on
revenues generated by Radio Station WEEI AM-590 and the BCBLP fee was based on
2% percent of sales until these operations were sold in the years ended June
30, 1994 and June 30, 1996, respectively.
<PAGE> 62
Note H - Commitments and Contingencies
The Partnership has employment agreements with officers, coaches and players of
the basketball team (CLP). Certain of the contracts provide for guaranteed
payments which must be paid even if the employee is injured or terminated. The
basketball team players are covered by the terms of a collective bargaining
agreement which expires on June 30, 2001. Amounts required to be paid under
such contracts in effect as of September 19, 1997, including option years and
$10,343,000 included in accrued expenses at June 30, 1997, but excluding
amounts previously earned (see Note E - Deferred Compensation), are as follows:
Years ending June 30, 1998 $38,789,000
1999 39,674,000
2000 39,298,000
2001 24,569,000
2002 17,910,000
2003 and thereafter 33,800,000
BCLP maintains disability and life insurance policies on most of its key
players. The level of insurance coverage maintained is based on BCLP's
determination of the insurance proceeds which would be required to meet its
guaranteed obligations in the event of permanent or total disability of its key
players.
The Partnership and its subsidiaries are also committed under noncancelable,
long-term operating leases, substantially all of which are related to CLP, for
certain of its facilities and equipment. Rent expense charged to operations
during the years ended June 30, 1997, 1996 and 1995 was $292,000, $282,000, and
$2,272,000 ($292,000, $282,000 and $1,667,000 from continuing operations),
respectively. Minimum annual payments, including renewable option periods,
required by these operating leases are as follows:
Years ending June 30, 1998 $ 290,000
1999 304,000
2000 319,000
2001 334,000
2002 350,000
2003 and thereafter 1,361,000
Note I - Options to Acquire Units of Partnership Interest
<PAGE> 63
On December 31, 1993, the Partnership granted options to three employees to
acquire 530,000 Limited Partnership Units of BCLP (Units) at the price of
$16.25 per Unit, less all cash distributions per Unit made by the Partnership
from July 31, 1993 to the date of exercise. All of the options expire ten years
from the date of grant, and at June 30, 1997, all of the options were fully
vested. On June 27, 1997, the Audit Committee of the Board of Directors of CI
(the general partner of BCLP) voted to offer the three option holders the right
to exchange their options to purchase BCLP Units for an equal number of
restricted Units of Partnership interest. The exchange ratio was determined
based on a written report received from an independent employee benefits
consultant regarding the respective values of the restricted Units and the
options to purchase BCLP Units, and the option holders were required to make
this election on or prior to July 7, 1997. On June 30, 1997, Paul E. Gaston
elected to exchange his options to purchase 250,000 BCLP Units for 250,000
restricted Units of Partnership interest. Mr. Gaston, who is a member of the
Audit Committee, was recused from and did not participate in any of the Audit
Committee's deliberations pertaining to this matter. As a result of this
exchange, $519,000 was charged to compensation expense in 1997, representing
the difference between the fair market value of the restricted Units and the
in-the-money value of the optioned Units.
In addition to exercising the right to purchase units pursuant to the options,
a holder may exercise a Unit Appreciation Right, entitling the holder to
receive an amount equal to the excess of the fair market value of a Unit,
determined on the date of exercise over the exercise price of the related
option on the date the Unit Appreciation Right was granted in which event
options for an equivalent number of units will be canceled. In the sole
discretion of the General Partner of BCLP payments of amounts payable pursuant
to Unit Appreciation Rights may be made solely in Units, solely in cash, or in
a combination of cash and Units. The compensation element of the options,
$2,208,000, $1,851,000 and $3,174,000 in the years ended June 30, 1997, 1996
and 1995, respectively, is being charged to earnings ratably over the period
from the date of grant until the date of exercise based on the difference
between the exercise and market price of the optioned Units at the end of each
quarter. The market price of Limited Units of BCLP on June 30, 1997 was $24.75.
Note J - Benefit Plans
Certain of the Partnership's subsidiaries have defined contribution plans
covering substantially all employees who meet certain eligibility requirements.
Participants may make contributions to the plans up to 15% of their
compensation (as defined). Contributions to these plans are matched by the
Partnership and its subsidiaries 100% on the first 7% of compensation
contributed by each participant. Contributions are fully vested after three
years of service. Costs of the plans charged to operations amounted to
$300,000, $206,000, and $375,000 ($300,000, $206,000 and $129,000 from
continuing operations) during the years ended June 30, 1997, 1996 and 1995,
respectively.
Players, coaches, trainers and the general manager of the basketball operation
are covered by multiemployer defined benefit pension plans administered by the
National Basketball Association. Costs of these plans charged to operations
amounted to $368,000, $359,000, and $325,000 during the years ended June 30,
1997, 1996 and 1995, respectively.
<PAGE> 64
Note K - Cash Flows
Reconciliations of net income to net cash flows from operating activities are
as follows:
<TABLE>
<CAPTION>
Year Ended June 30,
----------------------------------------
1997 1996 1995
---------- ----------- -----------
<S> <C> <C> <C>
Net income $ 420,306 $54,200,529 $16,156,006
Items not affecting cash flows from operating activities:
Depreciation 189,324 149,046 766,264
Amortization 164,702 166,211 343,695
Provision for doubtful accounts 185,193
Increase in note issued on redemption of Partnership interest 1,055,668 988,853
Changes in:
Accrued interest receivable (264,625) 1,445,311 (1,815,877)
Accounts receivable 1,126,788 (378,126) (4,616,167)
Notes receivable (80,772) 4,444,444 (4,444,444)
Accounts payable and accrued expenses 816,434 (5,395,131) 10,117,311
Deferred compensation (3,947,474) (3,683,023) (1,751,374)
Deferred revenues 255,273 (2,756,599) 8,086,174
Other non-current liabilities 3,995,000 1,851,250 850,000
Net realized gains (losses) on disposition of marketable securities
and other short-term investments (361,051) 101,138 (110,254)
Minority interest in earnings of BCBLP 27,391 6,853,486
Gain on sale of BCBLP (38,330,907)
Other (907,752) (402,986) 145,341
----------------------------------------
Net cash flows from operating activities $2,461,821 $12,427,401 $30,765,354
========================================
</TABLE>
The change in accounts receivable is after write-offs, net of recoveries, of
$397,544 in 1995.
Note L - Quarterly Results (Unaudited)
A summary of operating results, net income per unit based on the average units
outstanding throughout each year calculated for financial statement purposes
only, and cash distributions for the quarterly periods in the two years ended
June 30, 1997 is set forth below (000's omitted, except for per unit amounts):
<PAGE> 65
<TABLE>
<CAPTION>
Quarter Ended
-------------------------------------------------------------
September 30, December 31, March 31, June 30,
1996 1996 1997 1997 Total
------------- ------------ --------- -------- -------
<S> <C> <C> <C> <C> <C>
Year Ended June 30,1997:
Revenues $ 0 $20,630 $33,865 $ 8,503 $62,998
Income (loss) from continuing operations (3,207) 4,544 10,006 (10,923) 420
Net income (loss) (3,207) 4,544 10,006 (10,923) 420
Net income (loss) applicable to Limited Partners (3,150) 4,444 9,791 (10,727) 358
Per Unit:
Income (loss) from continuing operations applicable
to Limited Partners ($.54) $.76 $1.83 ($2.10) $.06
Net income (loss) applicable to Limited Partners ($.54) $.76 $1.83 ($2.10) $.06
Distributions declared to BCLP unitholders: $1.00 $1.00
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
-------------------------------------------------------------
September 30, December 31, March 31, June 30,
1995 1995 1996 1996 Total
------------- ------------ --------- -------- -------
<S> <C> <C> <C> <C> <C>
Year Ended June 30, 1996:
Revenues $ 0 $21,615 $34,062 $9,103 $64,780
Income (loss) from continuing operations (3,008) 8,649 10,913 (767) 15,787
Net income (loss) 36,205 7,849 10,913 (767) 54,200
Net income (loss) applicable to Limited Partners 35,301 7,707 10,677 (776) 52,909
Per Unit:
Income (loss) from continuing operations applicable
to Limited Partners ($.49) $1.46 $1.84 ($.13) $2.59
Net income (loss) applicable to Limited Partners $5.75 $1.33 $1.84 ($.13) $8.89
Distributions declared to BCLP unitholders: $1.50 $1.50
</TABLE>
Note M - Income Taxes
For financial reporting purposes a valuation allowance of $7.9 million was
established in 1994 to reduce the deferred tax assets (principally related to
intangibles) acquired in the merger to the amount considered realizable on a
more likely than not basis. The allowance was eliminated in 1995 as a result of
the closing of the agreement between BCLP and Fox Television, Inc. (see Note A
- - Basis of Presentation). Taxes related to the agreement have been provided as
a component of income from discontinued operations. Components of deferred tax
liabilities and assets, all of which relate to Holdings or its subsidiary
partnerships BCCLP and BCBLP, are as follows:
<PAGE> 66
<TABLE>
<CAPTION>
June 30
---------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Deferred tax liabilities:
Deposit related to issuance of option to acquire 26%
partnership interest in BCBLP (tax over financial
basis) $ 6,000,000
Financial basis in excess of tax basis of assets
related to restructuring of ownership of BCCLP $20,100,000 $20,100,000 11,000,000
---------------------------------------
Total deferred tax liabilities 20,100,000 20,100,000 17,000,000
Deferred tax assets:
Intangibles arising from acquisition of BCBLP in a
merger accounted for as a transaction between entities
under common control (tax over financial basis) 11,000,000
---------------------------------------
Net deferred tax assets 11,000,000
---------------------------------------
Net deferred tax liability $20,100,000 $20,100,000 $ 6,000,000
=======================================
</TABLE>
At June 30, 1997, deferred taxes of $20,100,000 represent the tax effected
difference between the tax and financial statement bases of the net assets of
Holdings and CII.
At June 30, 1997, the tax basis of the net assets of BCLP and CLP exceeded
their financial bases by approximately $45,000,000, consisting primarily of
Deferred Compensation of $13,000,000, other compensation of $4,000,000 and the
National Basketball Franchise of $28,000,000. A substantial part of the
Deferred Compensation will be paid prior to July 1, 1998, when BCLP may become
subject to federal income taxes. No deferred tax assets or liabilities have
been provided for these differences because BCLP and CLP are not subject to
income taxes.
The provision for income taxes included in the consolidated statements of
income consists of the following:
<PAGE> 67
<TABLE>
<CAPTION>
1997 1996 1995
---------- ----------- ----------
<S> <C> <C> <C>
Current:
Federal $1,100,000 $ 2,550,000 $5,000,000
State 300,000 800,000 1,750,000
---------------------------------------
Total current 1,400,000 3,350,000 6,750,000
---------------------------------------
Deferred:
Federal 12,500,000
State 3,800,000
---------------------------------------
Total deferred 16,300,000
---------------------------------------
$1,400,000 $19,650,000 $6,750,000
=======================================
</TABLE>
A reconciliation of the statutory federal income tax rate applied to reported
pre-tax earnings of CII, CCC, Holdings, BCCLP and BCBLP ($3,270,000 in 1997,
$60,252,000 in 1996 and $23,400,000 in 1995) before deduction of taxable
minority interest ($6,800,000 in 1995) to the effective tax rate of the
provision is:
<TABLE>
<CAPTION>
1997 1996 1995
----- ----- ------
<S> <C> <C> <C>
Statutory federal income tax rate 34.0% 34.0% 34.0%
State income taxes, net of federal tax benefit 6.2 6.3 6.3
Income tax applicable to sale of BCBLP charged to
discontinued operations when the sale was realized (11.7)
Benefit from recognition of deferred tax assets
resulting from prior merger transaction (8.2)
Other 2.6 0.5 0.5
--------------------------
Effective tax rate 42.8% 32.6% 29.1%
==========================
</TABLE>
Note N - Accounts Payable and Accrued Expenses
The balances include accrued compensation of $11,163,000 and $12,265,000 at
June 30, 1997 and 1996, respectively, and accrued management fees of $70,000
and $805,000 due to the general partners of the Partnership and its
subsidiaries at June 30, 1997 and 1996, respectively.
Note O - Redemptions of Partnership Interests
<PAGE> 68
On November 30, 1996, the Partnership, through its wholly-owned subsidiary CCC,
acquired an aggregate of 780,000 units representing assignments of beneficial
ownership of limited partnership interest in BCLP. The units were acquired from
a principal unitholder and an entity which is an affiliate of the unitholder
for an aggregate purchase price of $22,880,000, or $29.3333 for each unit
acquired. On June 30, 1997, the Partnership purchased these units from CCC. The
units acquired have been classified as treasury units and the purchase price
has been recorded as a reduction of BCLP Limited Partners Capital (Deficit).
Upon the acquisition of the units, the principal unitholder resigned from his
positions as Vice Chairman of the Board and as a director of Celtics, Inc.
On August 30, 1995 the Partnership redeemed an aggregate of 758,444 units
representing assignments of beneficial ownership of limited partnership
interest in BCLP. The redeemed units were beneficially owned by a principal
unitholder and his family. The principal unitholder received two notes from
BCLP in exchange for 668,144 units acquired by BCLP from him. The two notes
have an aggregate initial face amount of $14,365,096 equal to $21.50 per unit
for each unit acquired from him. The two notes, which are due and payable on
July 1, 2000 (unless prepaid earlier pursuant to mandatory prepayment
provisions contained therein) also provide that the amounts to be paid to such
unitholder pursuant to the terms of the notes will be increased by specified
amounts on each July 1 during their term. If the principal unitholder holds the
two notes until July 1, 2000, he would be entitled to receive aggregate
payments (excluding interest) in the amount of $20,044,320 equal to $30.00 per
unit for each unit acquired from him. Each of the notes bear interest payable
quarterly at the rate of 7.76% per annum. Interest of $2,247,134 and $2,008,909
related to these notes was charged to operations in 1997 and 1996,
respectively. At June 30, 1997, the aggregate balance of the notes, including
scheduled increases in the note balances, amounted to $16,409,617. Under the
terms of the redemption, the principal unitholder's family members were paid
$1,941,450, equal to $21.50 in cash for each of the 90,300 units acquired from
them.
<PAGE> 69
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.
BOSTON CELTICS LIMITED PARTNERSHIP
By: Celtics, Inc., General Partner
-----------------------------------
Date: September 26, 1997 By: /s/ PAUL E. GASTON
-----------------------------------
Paul E. Gaston
Chairman of the Board and Director
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 and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title* Date
- ----------------------- --------------------------- ------------------
<S> <C> <C>
/s/ STEPEN C. SCHRAM Director and President September 26, 1997
Stephen C. Schram
/s/ DON F. GASTON Director September 26, 1997
Don F. Gaston
/s/ PAULA B. GASTON Director September 26, 1997
Paula B. Gaston
/s/ JOHN H.M. LEITHEAD Director September 26, 1997
John H.M. Leithead
/s/ JOHN B. MARSH, III Director September 26, 1997
John B. Marsh, III
/s/ RICHARD G. POND Executive Vice President, September 26, 1997
Richard G. Pond Chief Financial Officer and
Chief Accounting Officer
<FN>
<F*> Title indicates position with General Partner.
</FN>
</TABLE>
<PAGE> 70
Exhibit 10 (tttt)
June 30, 1997
Mr. Paul E. Gaston
Celtics Group
33 East 63rd Street
New York, NY 10021
Re: Exchange of Options for Restricted Units
Dear Paul:
Pursuant to authorization by the Audit Committee of Celtics, Inc., the purpose
of this letter is to permit you to elect to exchange options to purchase units
of Boston Celtics Limited Partnership (BCLP) granted to you under the Unit
Option (Non-Assignable) dated December 31, 1993 (the Option Agreement) for
Restricted Units of BCLP described below. The proposed exchange of such options
for such Restricted Units has been reviewed and approved by the Audit Committee
of the Board of Celtics, Inc.
Election to Exchange Options for Restricted Units
At your request, and with the approval of the Audit Committee of the Board of
Directors of Celtics, Inc., you may elect to receive units representing
assignments of beneficial ownership of limited partnership interests of BCLP
subject to restrictions as set forth herein (the Restricted Units) in exchange
for your surrender of an equal number of units granted to you under the Option
Agreement. You may exercise this exchange right for all of the units covered by
the Option Agreement.
(i) Restrictions. All Restricted Units granted hereunder in exchange
for surrendered units granted under the Option Agreement shall be
subject to the following restrictions.
(a) a required period of employment with BCLP, or any of its
subsidiaries or affiliates (the "Company"), of ten (10) years
from the date of this letter, prior to the vesting of the
Restricted Units; (b) except for any transfer by you to any
partnership of which you are the general partner, a
prohibition against the sale, assignment, transfer, pledge,
hypothecation or other encumbrance of the Restricted Units
for a period of ten (10) years from the date of this letter;
<PAGE> 71
(c) a requirement that all such Restricted Units be forfeited in
the event of termination of your employment during any period
in which such Restricted Units are subject to restriction;
and
(d) a prohibition against your employment by any competitor of
the Company and against your dissemination of any secret or
confidential information belonging to the Company.
All restrictions on Restricted Units awarded pursuant hereto shall
expire at such time or times as herein provided.
(ii) Registration of Restricted Units. Restricted Units awarded pursuant
hereto shall be registered in your name and, if such Restricted
Units are certificated, shall be deposited with the Company.
(iii) Rights of Holder of Restricted Units. Subject to the terms and
conditions hereof, during any period in which Restricted Units are
subject to forfeiture or restrictions on transfer, you shall have
all of the rights of a holder of units of BCLP (Units) with respect
to such Restricted Units, including the right to vote such
Restricted Units and the right to receive all distributions paid
with respect to Units on the same basis as if the Restricted Units
were deemed to be Units. Any securities distributed with respect to
Restricted Units shall be restricted to the same extent and subject
to the same terms and conditions as the Restricted Units to which
they are attributable.
(iv) Lapse of Restrictions. Subject to the terms and conditions hereof,
at the end of the time period during which the Restricted Units are
subject to forfeiture or restrictions on transfer, such Restricted
Units will be delivered free of all restrictions to you (or to your
legal representative, beneficiary or heir).
(v) Death; Change in Control.
(a) Notwithstanding any provision hereof to the contrary, in the
event of your death or in the event of a Change in Control
you, or your estate, the beneficiaries thereof, or the
authorized legal representative of your estate or the
beneficiaries thereof, as the case may be, for a period of
five (5) years from and after the date of your death or a
Change in Control (as the case may be), shall have the right
to sell all or a portion of the Restricted Units granted
hereunder to BCLP at a price and on such other terms to be
determined by the Audit Committee, based upon advice received
from an investment banking firm or financial advisor
specifically retained by the Audit Committee for such
purpose. You or the authorized legal representative of your
estate or the beneficiaries thereof shall notify the
Executive Vice President and Chief Financial Officer of
Celtics, Inc. in writing of any election to sell Restricted
Units granted hereunder to BCLP. It is specifically agreed
that, in determining the price at which any Restricted Units
granted hereunder are to be sold to BCLP:
<PAGE> 72
(1) The value of such Restricted Units is to be determined
as of the date of the written notice of any election to
sell such Restricted Units.
(2) Such Restricted Units are (x) no longer subject to any
of the restrictions set forth herein; (y) shall be
deemed to be freely tradable and not subject to any
restrictions with respect to resale which may be
imposed by Rule 144 promulgated under the Securities
Act of 1933, as amended, or otherwise; and (z) shall
not be subject to the application of any block,
blockage or similar discount.
(b) For purposes hereof, a "Change in Control" shall have
occurred if:
(1) any "Person," as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (other than BCLP and any
partnership or corporation owned, directly or
indirectly, by the security holders of BCLP in
substantially the same proportions as their ownership
of securities of BCLP) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of BCLP
representing 50% or more of the combined voting power
of BCLP's then outstanding securities;
(2) the security holders of BCLP approve a merger or
consolidation of BCLP with any other corporation or
partnership, other than (A) a merger or consolidation
which would result in the voting securities of BCLP
outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into voting securities of the surviving
entity) more than 60% of the combined voting power of
the voting securities of BCLP or such surviving entity
outstanding immediately after such merger or
consolidation, (B) a recapitalization or restructuring
of BCLP (or any transaction having a similar effect),
or (C) a merger or consolidation effected to implement
a recapitalization or restructuring of BCLP (or similar
transaction); or
(3) the security holders of BCLP approve a plan of complete
liquidation of BCLP or an agreement for the sale or
disposition by BCLP of all or substantially all of
BCLP's assets (or any transaction having a similar
effect). In order to elect the foregoing exchange
option, you must return an executed counterpart hereof
to the undersigned by telecopy at (617) 720-7833 on or
before July 7, 1997. If your signed election is not
received by the close of business on such date, you
will be deemed not to have made an election to make any
exchange.
<PAGE> 73
Very truly yours,
BOSTON CELTICS LIMITED PARTNERSHIP
By: CELTICS, INC., its General Partner
By: /s/ RICHARD G. POND
------------------------------------
Richard G. Pond
Executive Vice President,
Chief Financial Officer, Secretary
and Treasurer
AGREED TO AND ACCEPTED ON
THIS 30TH DAY OF JUNE, 1997.
---- ----
By: /s/ PAUL E. GASTON
------------------------------------
Paul E. Gaston
<PAGE> 74
Exhibit (11) - Statement Re: Computation of Earnings per Unit
<TABLE>
<CAPTION>
For The Year Ended
June 30,
-----------------------------------------
1997 1996 1995
--------- ----------- -----------
<S> <C> <C> <C>
Average units outstanding (1) 5,421,671 5,766,897 6,399,722
Net effect of dilutive stock options based on the
treasury stock method using average market price 250,881 183,782 0
-----------------------------------------
Average units and equivalent units outstanding 5,672,552 5,950,679 6,399,722
=========================================
Income from continuing operations:
Income before interests of General Partners $ 420,306 $15,786,816 $ 5,517,331
Applicable to interests of:
General Partners of subsidiary partnerships 58,629 193,665 67,187
1% General Partnership interest of BCLP 3,617 155,932 54,498
-----------------------------------------
62,246 349,597 121,685
-----------------------------------------
Applicable to interests of Limited Partners $ 358,060 $15,437,219 $ 5,395,646
=========================================
Per Limited Partnership Unit $ 0.06 $ 2.59 $ 0.84
=========================================
Net income (loss)
Net income (loss) before interests of General
Partners $ 420,306 $54,200,529 $16,156,006
Applicable to interests of:
General Partners of subsidiary partnerships 58,629 756,574 453,796
1% General Partnership interest of BCLP 3,617 534,440 157,019
-----------------------------------------
62,246 1,291,014 610,815
-----------------------------------------
Applicable to interests of Limited Partners $ 358,060 $52,909,515 $15,545,191
=========================================
Per Limited Partnership Unit $ 0.06 $ 8.89 $ 2.43
=========================================
</TABLE>
<PAGE> 75
<TABLE>
<CAPTION>
(1) Computation of Average Units Outstanding
For The Year Ended June 30,
----------------------------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Days in year 365 366 365
Computation of average units outstanding:
Units outstanding July 1 - August 29 5,876,164 6,399,722 6,399,722
Units outstanding August 30 - November 29 5,876,164 5,641,278 6,399,722
Units outstanding November 30- June 28 5,096,164 5,641,278 6,399,722
Units outstanding June 29 5,096,164 5,876,164 6,399,722
Units outstanding June 30 5,346,164 5,876,164 6,399,722
---------------------------------------
Average units outstanding 5,421,671 5,766,897 6,399,722
=======================================
</TABLE>
<PAGE> 76
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET OF BOSTON CELTICS LIMITED PARTNERSHIP AND ITS
SUBSIDIARIES AS OF JUNE 30, 1997 AND THE RELATED CONSOLIDATED STATEMENT OF
INCOME FOR THE YEAR ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<CASH> 6,499
<SECURITIES> 42,573
<RECEIVABLES> 2,677
<ALLOWANCES> 10
<INVENTORY> 0
<CURRENT-ASSETS> 103,801
<PP&E> 1,625
<DEPRECIATION> 716
<TOTAL-ASSETS> 119,200
<CURRENT-LIABILITIES> 39,139
<BONDS> 47,500
<COMMON> 0
0
0
<OTHER-SE> (7,790)
<TOTAL-LIABILITY-AND-EQUITY> 119,200
<SALES> 62,998
<TOTAL-REVENUES> 62,998
<CGS> 0
<TOTAL-COSTS> 62,275
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,873
<INCOME-PRETAX> 1,820
<INCOME-TAX> 1,400
<INCOME-CONTINUING> 420
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 420
<EPS-PRIMARY> 0.06
<EPS-DILUTED> 0.06
</TABLE>
