<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1997 Commission File No. 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 Number)
151 Merrimac Street, Boston, MA 02114
- ---------------------------------------- ------------------------------------
(Address of principal executive offices) (Zip code)
(617) 523-6050
- -------------------------------------------------------------------------------
(Registrant's telephone number including area code)
Indicate by checkmark whether the registrant (1) has filed reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements
for the past 90 days.
Yes [X] No [ ]
The number of Units outstanding as of September 30, 1997 was 5,346,164 Units
representing Limited Partnership Interests.
<PAGE> 2
Part I - Financial Information
Item I - Financial Statements
BOSTON CELTICS LIMITED PARTNERSHIP
and Subsidiaries
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
September 30, June 30,
1997 1997
------------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 11,334,403 $ 6,498,739
Marketable securities 27,462,397 42,572,683
Other short-term investments 70,488,948 49,671,153
Accounts receivable 196,784 2,667,438
Prepaid federal and state income taxes 432,895
Deferred game costs 7,335,477
Prepaid expenses and other current assets 2,546,279 1,958,238
------------------------------
TOTAL CURRENT ASSETS 119,364,288 103,801,146
PROPERTY AND EQUIPMENT, net of depreciation of $756,969 in
September and $715,793 in June 1,082,562 909,416
NATIONAL BASKETBALL ASSOCIATION FRANCHISE, net of amortization
of $2,197,920 in September and $2,159,360 in June 3,971,661 4,010,221
OTHER INTANGIBLE ASSETS, net of amortization of $49,699 in
September and $47,083 in June 900,861 903,477
OTHER ASSETS 9,684,970 9,575,396
------------------------------
$135,004,342 $119,199,656
==============================
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 11,240,443 $ 12,877,723
Deferred game revenues 28,780,776 5,584,848
Federal and state income taxes payable 233,799
Notes payable to bank - current portion 3,750,000 2,500,000
Notes payable 16,691,907 16,409,617
Deferred compensation - current portion 1,997,693 1,767,263
------------------------------
TOTAL CURRENT LIABILITIES 62,694,618 39,139,451
DEFERRED FEDERAL AND STATE INCOME TAXES 20,100,000 20,100,000
NOTES PAYABLE TO BANK - noncurrent portion 46,250,000 47,500,000
DEFERRED COMPENSATION - noncurrent portion 10,061,795 10,380,296
OTHER NON-CURRENT LIABILITIES 7,527,500 9,870,000
<PAGE> 3
PARTNERS' CAPITAL (DEFICIT)
Boston Celtics Limited Partnership -
General Partner 188,684 226,817
Limited Partners (12,303,161) (8,527,928)
------------------------------
(12,114,477) (8,301,111)
Celtics Limited Partnership - General Partner (156,065) (129,866)
Boston Celtics Communications Limited Partnership - General
Partner 640,971 640,886
------------------------------
TOTAL PARTNERS' CAPITAL (DEFICIT) (11,629,571) (7,790,091)
------------------------------
$135,004,342 $119,199,656
==============================
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE> 4
BOSTON CELTICS LIMITED PARTNERSHIP
and Subsidiaries
Condensed Consolidated Statements of Income (Loss)
Unaudited
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------
September 30, September 30,
1997 1996
------------- -------------
<S> <C> <C>
Costs and expenses:
General and administrative $ 2,877,083 $ 2,552,805
Selling and promotional 497,021 427,377
Depreciation 48,053 48,215
Amortization of NBA franchise and other intangible assets 41,176 41,176
------------------------------
(3,463,333) (3,069,573)
Interest expense (1,479,028) (1,608,547)
Interest income 1,566,690 1,837,563
Net realized gains on disposition of marketable
securities and other short-term investments 10,038 133,069
------------------------------
Loss from continuing operations before income taxes (3,365,633) (2,707,488)
Provision for income taxes 500,000 500,000
------------------------------
Net loss (3,865,633) (3,207,488)
Net loss applicable to interests of General Partners (64,509) (57,242)
------------------------------
Net loss applicable to interests of Limited Partners ($3,801,124) ($3,150,246)
==============================
Net loss per Unit ($0.71) ($0.54)
Average units outstanding throughout the period 5,346,164 5,876,164
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE> 5
BOSTON CELTICS LIMITED PARTNERSHIP
and Subsidiaries
Condensed Consolidated Statements of Cash Flows
Unaudited
<TABLE>
<CAPTION>
For the Three Months Ended
------------------------------
September 30, September 30,
1997 1996
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts:
Basketball regular season receipts:
Ticket sales $ 23,488,716 $ 19,101,711
Television and radio broadcast rights fees 1,705,500 1,363,709
Other, principally promotional advertising 498,319 503,725
-----------------------------
25,692,535 20,969,145
Costs and expenses:
Basketball regular season expenditures:
Team expenses 8,966,264 7,554,936
Game expenses 19,856 54,562
General and administrative expenses 4,713,619 7,526,175
Selling and promotional expenses 910,613 711,000
-----------------------------
14,610,352 15,846,673
-----------------------------
11,082,183 5,122,472
Interest expense (1,132,352) (1,111,704)
Interest income 1,701,788 1,753,469
Income taxes refunded (paid) 166,694 (452,062)
Payment of deferred compensation (128,184) (2,305,799)
-----------------------------
NET CASH FLOWS FROM OPERATING ACTIVITIES 11,690,129 3,006,376
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of:
Marketable securities (27,330,855) (3,463,751)
Short-term investments (166,600,000) (250,100,000)
Proceeds from sales of:
Marketable securities 19,905,165 9,497,187
Short-term investments 168,092,400 251,200,000
Capital expenditures (221,199) (19,099)
Other receipts (expenditures) (699,976) (796,504)
-----------------------------
NET CASH FLOWS FROM (USED BY) INVESTING ACTIVITIES (6,854,465) 6,317,833
-----------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 4,835,664 9,324,209
Cash and cash equivalents at beginning of period 6,498,739 5,982,128
-----------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 11,334,403 $ 15,306,337
=============================
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE> 6
Notes to Condensed Consolidated Financial Statements
- -------------------------------------------------------------------------------
BOSTON CELTICS LIMITED PARTNERSHIP AND SUBSIDIARIES
- -------------------------------------------------------------------------------
Note 1 - The condensed 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. Certain amounts in 1996 have been
reclassified to permit comparison.
Note 2 - The unaudited interim condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial statements and with instructions to Form 10-Q and Article 10
of Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) necessary for a fair presentation have been
included therein. Operating results for interim periods are not indicative of
the results that may be expected for the full year. Such financial statements
should be read in conjunction with the consolidated financial statements and
footnotes thereto of Boston Celtics Limited Partnership and Subsidiaries
included in the annual report on Form 10-K for the year ended June 30, 1997.
Note 3 - Revenues and costs applicable to the regular season are recognized in
income proportionately over the 82 games played in the regular season. The
excess of revenue received or costs incurred over amounts recognized in income
are included in deferred game costs or deferred game revenues on the condensed
consolidated balance sheets.
Note 4 - 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 of Statement 128 on net loss per unit for
the three months ended September 30, 1997 and September 30, 1996 is not
expected to be material.
<PAGE> 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations
- -------------------------------------------------------------------------------
BOSTON CELTICS LIMITED PARTNERSHIP AND SUBSIDIARIES
- -------------------------------------------------------------------------------
Certain statements and information included herein are
"forward-looking statements" within the meaning of the Federal Private
Securities Litigation Reform Act of 1995, including statements regarding the
Partnership's expectations, intentions and strategies regarding the future.
Such forward-looking statements 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 as to
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.
General
The Partnership had a consolidated net loss of $3,866,000 or $0.71 per
unit in the three months ended September 30, 1997 compared with a consolidated
net loss of $3,207,000 or $0.54 per unit in the three months ended September
30, 1996. The Partnership had consolidated cash flows from operating activities
of $11,690,000 in the three months ended September 30, 1996 compared with
consolidated cash flows from operating activities of $3,006,000 in the three
months ended September 30, 1996.
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
expenses are 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.
For financial reporting purposes the Boston Celtics recognize revenues
and expenses on a game-by-game basis. Because the National Basketball
Association ("NBA") regular season begins in late October or early November,
the Partnership's first fiscal quarter, which ends on September 30th, will
generally include limited or no revenue and will reflect a loss attributable to
general and administrative and selling and promotional expenses incurred in the
quarter. Based on the present NBA game schedule, the Partnership 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 any of its playoff
revenue in the fourth quarter.
Results of Operations
The following discussion compares results of operations of the
Partnership and its subsidiaries for the three months ended September 30, 1997
compared with the three months ended September 30, 1996.
<PAGE> 8
The Boston Celtics recognize revenues and direct expenses for the
basketball operations ratably over the regular season games played. Since the
NBA regular season begins in late October or early November, the Boston
Celtics realize only costs attributable to general and administrative and
selling and promotional expenses during the first quarter of each year. All
revenues and team and game expenses have been deferred during the quarter ended
September 30.
General and administrative expenses increased $325,000 or 13% in the
three-month period ended September 30, 1997 compared to the comparable period
in 1996. The increase in 1997 was primarily attributable to increases in
professional expenses ($183,000) and personnel expenses ($169,000).
Selling and promotional expenses increased $70,000 or 16% in the
three-month period ended September 30, 1997 compared to the comparable period
in 1996. The increase in 1997 was attributable to increases in salary and other
personnel costs related to marketing ($70,000).
Interest expense decreased $130,000 or 8% in the three months ended
September 30, 1997 compared to the comparable period in 1996. The decrease in
1997 was primarily a result of a decrease in the deferred compensation
liability.
Interest income decreased $271,000 or 15% in the three-month period
ended September 30, 1997 compared to the same period in 1996. The decrease is
attributable to a reduction in funds available for investment.
Liquidity and Capital Resources
The Partnership generated approximately $11,690,000 and $3,006,000 in
cash flows from operations in the three months ended September 30, 1997 and
1996, respectively. Capital expenditures amounted to approximately $221,000 and
$19,000 in the three months ended September 30, 1997 and 1996, respectively. At
September 30, 1997 the Partnership had approximately $11,334,000 of available
cash, $27,462,000 of marketable securities and $70,489,000 of other short-term
investments. 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 and for general partnership
purposes, working capital needs or for possible investments or acquisitions.
The Partnership has a $50,000,000 loan from a commercial bank, all of which was
outstanding at September 30, 1997. The loan is secured by the assets of Celtics
Limited Partnership, BCLP's 99%-owned limited partnership which owns and
operates the Boston Celtics basketball team, and contains certain financial and
operating covenants. In addition, at September 30, 1997, the aggregate
outstanding principal balance of the notes relating to redeemed Partnership
units amounted to approximately $16,692,000.
Management of the Partnership from time to time reviews and evaluates
investment and acquisition opportunities on behalf of the Partnership and
investments 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.
<PAGE> 9
No cash distributions to unitholders of BCLP were declared or paid
during the quarters ended September 30, 1997 and 1996. 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 September 30, 1998.
Tax Law Changes
Under provisions of the Internal Revenue Code applicable to public
limited partnerhsips, 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% gross income. In response to these prospective changes in the tax
treatment of the Partnership, management is evaluating structural and other
alternatives.
<PAGE> 10
Part II - Other Information
- -------------------------------------------------------------------------------
BOSTON CELTICS LIMITED PARTNERSHIP AND SUBSIDIARIES
- -------------------------------------------------------------------------------
ITEM 6 - Exhibits and Reports on Form 8-K
Exhibits -
Exhibit (11) - Statement re: computation of earnings per unit.
Exhibit (27) - Financial data schedule.
Reports on Form 8-K -
None.
<PAGE> 11
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of
1934, as amended, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
BOSTON CELTICS LIMITED PARTNERSHIP
--------------------------------------
(Registrant)
By: Celtics, Inc., its General Partner
Dated: November 7, 1997 By: /s/ Richard G. Pond
----------------------------------
Richard G. Pond
Executive Vice President and
Chief Financial Officer
<PAGE> 12
Exhibit (11) - Statement Re: Computation of Earnings per Unit
<TABLE>
<CAPTION>
Three Months Ended
September 30,
-----------------------------
1997 1996
------------ ------------
<S> <C> <C>
Average units outstanding 5,346,164 5,876,164
Net effect of dilutive stock options based on the
treasury stock method using the average market price 0 0
-----------------------------
Average units outstanding 5,346,164 5,876,164
Units equivalent to 1% General Partnership interest
of BCLP 54,002 59,355
-----------------------------
Average units outstanding 5,400,166 5,935,519
=============================
Net loss
Loss before interests of General Partners ($3,865,633) ($3,207,488)
Applicable to interests of:
General Partners of subsidiary partnerships (26,114) (25,421)
1% General Partnership interest of BCLP (38,395) (31,821)
-----------------------------
(64,509) (57,242)
-----------------------------
Applicable to interests of Limited Partners ($3,801,124) ($3,150,246)
=============================
Per Limited Partnership Unit ($0.71) ($0.54)
=============================
</TABLE>
<PAGE> 13
<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 SEPTEMBER 30, 1997 AND THE RELATED CONSOLIDATED STATEMENT OF
INCOME FOR THE THREE MONTH PERIOD ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> SEP-30-1997
<CASH> 11,334
<SECURITIES> 27,462
<RECEIVABLES> 207
<ALLOWANCES> 10
<INVENTORY> 0
<CURRENT-ASSETS> 119,364
<PP&E> 1,840
<DEPRECIATION> 757
<TOTAL-ASSETS> 135,004
<CURRENT-LIABILITIES> 62,695
<BONDS> 46,250
0
0
<COMMON> 0
<OTHER-SE> (11,630)
<TOTAL-LIABILITY-AND-EQUITY> 135,004
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 3,463
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,479
<INCOME-PRETAX> (3,366)
<INCOME-TAX> 500
<INCOME-CONTINUING> (3,866)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,866)
<EPS-PRIMARY> (.71)
<EPS-DILUTED> (.71)
</TABLE>
