<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 March 31, 1998 Commission File No. 19324
Boston Celtics Limited Partnership
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(Exact name of registrant as specified in its charter)
Delaware 04-2936516
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
151 Merrimac Street, Boston, MA 02114
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(Address of principal executive offices) (Zip code)
(617) 523-6050
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(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 March 31, 1998 was 5,346,164 of Limited
Partnership Interest.
<PAGE> 2
Part I - Financial Information
Item I - Financial Statements
BOSTON CELTICS LIMITED PARTNERSHIP
and Subsidiaries
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, June 30,
1998 1997
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 24,365,452 $ 6,498,739
Marketable securities 6,133,212 42,572,683
Other short-term investments 74,501,608 49,671,153
Accounts receivable 54,396 2,667,438
Prepaid income taxes 432,895
Prepaid expenses 538,421 1,958,238
----------------------------
TOTAL CURRENT ASSETS 105,593,089 103,801,146
PROPERTY AND EQUIPMENT, net of depreciation of $870,560 in March and $715,793
in June 1,118,795 909,416
NATIONAL BASKETBALL ASSOCIATION FRANCHISE, net of amortization of $2,275,039
in March and $2,159,360 in June 3,894,542 4,010,221
OTHER INTANGIBLE ASSETS, net of amortization of $53,187 in March and $47,083
in June 900,857 903,477
OTHER ASSETS 9,397,334 9,575,396
----------------------------
$120,904,617 $119,199,656
============================
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 8,317,529 $ 12,877,723
Deferred game revenues 6,236,227 5,584,848
Federal and state income taxes payable 733,799
Notes payable to bank - current portion 2,500,000
Notes payable 17,256,489 16,409,617
Deferred compensation - current portion 1,771,107 1,767,263
----------------------------
TOTAL CURRENT LIABILITIES 34,315,151 39,139,451
DEFERRED FEDERAL AND STATE INCOME TAXES 20,100,000 20,100,000
NOTES PAYABLE TO BANK - noncurrent portion 50,000,000 47,500,000
DEFERRED COMPENSATION - noncurrent portion 9,174,365 10,380,296
OTHER NON-CURRENT LIABILITIES 6,037,500 9,870,000
<PAGE> 3
PARTNERS' CAPITAL (DEFICIT)
Boston Celtics Limited Partnership -
General Partner 315,339 226,817
Limited Partners 271,037 (8,527,928)
----------------------------
586,376 (8,301,111)
Celtics Limited Partnership - General Partner 50,090 (129,866)
Boston Celtics Communications Limited Partnership - General Partner 641,135 640,886
----------------------------
TOTAL PARTNERS' CAPITAL (DEFICIT) 1,277,601 (7,790,091)
----------------------------
$120,904,617 $119,199,656
============================
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE> 4
BOSTON CELTICS LIMITED PARTNERSHIP
and Subsidiaries
Condensed Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
-------------------------- --------------------------
March 31, March 31, March 31, March 31,
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Basketball regular season -
Ticket sales $32,906,000 $27,523,000 $20,109,000 $16,860,000
Television and radio broadcast rights fees 24,030,000 19,369,000 14,685,000 12,295,000
Other, principally promotional advertising 8,009,000 7,603,000 4,877,000 4,710,000
--------------------------------------------------------
64,945,000 54,495,000 39,671,000 33,865,000
--------------------------------------------------------
Costs and expenses:
Basketball regular season -
Team 35,803,000 28,175,000 21,457,000 16,930,000
Game 2,344,000 2,153,000 1,432,000 1,440,000
General and administrative 8,176,676 9,114,742 3,111,170 3,215,798
Selling and promotional 2,973,892 3,309,145 1,251,947 1,834,650
Depreciation 154,767 139,630 52,960 42,660
Amortization of NBA franchise and other intangible assets 121,783 123,527 39,432 41,175
--------------------------------------------------------
49,574,118 43,015,044 27,344,509 23,504,283
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15,370,882 11,479,956 12,326,491 10,360,717
Interest expense (4,389,111) (4,459,947) (1,439,243) (1,418,174)
Interest income 4,847,509 4,922,078 1,551,256 1,258,649
Net realized gains (losses) on disposition of marketable
securities and other short-term investments (8,805) 400,204 (7,759) 4,848
--------------------------------------------------------
Income before income taxes 15,820,475 12,342,291 12,430,745 10,206,040
Provision for income taxes 1,400,000 1,000,000 500,000 200,000
--------------------------------------------------------
Net income 14,420,475 11,342,291 11,930,745 10,006,040
Net income applicable to interests of General Partners 322,608 258,035 254,263 215,520
--------------------------------------------------------
Net income applicable to interests of Limited Partners $14,097,867 $11,084,256 $11,676,482 $ 9,790,520
========================================================
Net income per unit - basic $2.90 $2.09 $2.40 $2.01
Net income per unit - diluted $2.56 $1.92 $2.13 $1.83
Distributions declared per unit $1.00 $1.00
</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 Nine Months Ended
-----------------------------
March 31, March 31,
1998 1997
------------ ------------
<S> <C> <C>
CASH FLOWS FROM (USED BY) OPERATING ACTIVITIES
Receipts:
Basketball regular season receipts:
Ticket sales $ 32,819,142 $ 26,614,247
Television and radio broadcast rights fees 18,339,004 15,152,558
Other, principally promotional advertising 7,273,256 5,661,903
-----------------------------
58,431,402 47,428,708
Costs and expenses:
Basketball regular season expenditures:
Team expenses 30,453,919 27,930,313
Game expenses 2,239,188 1,902,806
General and administrative expenses 11,110,257 12,832,125
Selling and promotional expenses 3,067,845 2,867,595
-----------------------------
46,871,209 45,532,839
-----------------------------
11,560,193 1,895,869
Interest expense (2,586,176) (3,323,118)
Interest income 5,001,335 5,129,937
Payment of income taxes (233,306) (1,872,220)
Payment of deferred compensation (1,299,282) (3,814,344)
-----------------------------
NET CASH FLOWS FROM (USED BY) OPERATING ACTIVITIES 12,442,764 (1,983,876)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of:
Marketable securities (41,399,070) (30,996,438)
Short-term investments (557,767,039) (505,600,000)
Proceeds from sales of:
Marketable securities 54,870,332 40,466,725
Short-term investments 555,432,400 529,300,000
Capital expenditures (364,146) (51,746)
Other receipts (expenditures) 51,994 (119,269)
-----------------------------
NET CASH FLOWS FROM INVESTING ACTIVITIES 10,824,471 32,999,272
-----------------------------
NET CASH FLOWS FROM OPERATING AND INVESTING ACTIVITIES 23,267,235 31,015,396
<PAGE> 6
CASH FLOWS USED BY FINANCING ACTIVITIES
Proceeds from bank borrowings 50,000,000
Payment of bank borrowings (50,000,000)
Purchase of Boston Celtics Limited Partnership units (22,880,000)
Cash distributions to limited partners of Boston Celtics Limited Partnership (5,400,522) (5,935,876)
-----------------------------
NET CASH FLOWS USED BY FINANCING ACTIVITIES (5,400,522) (28,815,876)
-----------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 17,866,713 2,199,520
Cash and cash equivalents at beginning of period 6,498,739 5,982,128
-----------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 24,365,452 $ 8,181,648
=============================
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE> 7
Notes to Condensed Consolidated Financial Statements
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BOSTON CELTICS LIMITED PARTNERSHIP AND SUBSIDIARIES
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Note 1 - The condensed consolidated financial statements include the accounts
of the Boston Celtics Limited Partnership ("BCLP" or 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 1997 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 and
the Forms 10-Q for the quarters ended December 31, 1997 and September 30, 1997.
Note 3 - On April 17, 1998, the Partnership, together with Boston Celtics
Limited Partnership II ("BCLP II") and Castle Creek Partners L.P. ("Castle
Creek"), filed a Registration Statement on Form S-4 with the Securities and
Exchange Commission. BCLP II and Castle Creek are limited partnerships formed
in connection with a proposed reorganization of the Partnership as more fully
described in the Form S-4. The general partners of BCLP II and Castle Creek are
entities owned and controlled by affiliates of the Partnership.
Note 4 - 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 5 - On December 15, 1997, Celtics Limited Partnership ("CLP"), the
Partnership's 99%-owned limited partnership which owns and operates the Boston
Celtics basketball team, entered into a $60,000,000 credit facility with its
commercial bank, consisting of a $50,000,000 term loan and a $10,000,000
revolving line of credit. As of March 31, 1998, no borrowings were outstanding
against the $10,000,000 revolving line of credit. The proceeds from the
$50,000,000 term loan were used to repay a separate $50,000,000 loan from a
commercial bank.
Under the terms of the $50,000,000 term loan agreement, interest is payable
quarterly in arrears at a fixed annual rate of 6.29% from December 15, 1997
through December 15, 2007. Principal payments are due in equal quarterly
installments of $2,500,000 commencing on January 1, 2003, with the final
payment due on December 15, 2007, the maturity date of the loan.
<PAGE> 8
The $10,000,000 revolving line of credit agreement expires on December 15,
2000, with two automatic one-year extensions cancelable at the option of the
commercial bank. Interest on any borrowings under the revolving line of credit
accrues at the Partnership's option of either LIBOR plus 0.70% or the greater
of the bank's Base Rate or the Federal Funds Effective Rate plus 0.50%.
Borrowings under the term loan and revolving line of credit are secured by all
of the assets of and are the liability of CLP. The loan agreement contains
certain restrictions and various provisions and covenants customary in lending
arrangements of this type, including limitations on distributions to partners
of CLP.
Note 6 - In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings per Share ("Statement 128"). Statement 128 replaced
the calculation of primary and fully-diluted earnings per unit with basic and
diluted earnings per unit. Unlike primary earnings per unit, basic earnings per
unit excludes any dilutive effects of options, warrants and convertible
securities. Diluted earnings per unit is similar to the Partnership's
previously reported primary earnings per unit. All earnings per unit amounts
for all periods presented have been restated to conform to the Statement 128
requirements.
The following table sets forth the computation of basic and diluted earnings
per unit:
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
-------------------------- --------------------------
March 31, March 31, March 31, March 31,
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Numerator for basic and diluted earnings per unit:
Net income before interests of General Partners $14,420,475 $11,342,291 $11,930,745 $10,006,040
Applicable to interests of General Partners of subsidiary
partnerships 180,205 146,073 136,319 116,626
--------------------------------------------------------
14,240,270 11,196,218 11,794,426 9,889,414
Applicable to 1% General Partnership interest of BCLP 142,403 111,962 117,944 98,894
--------------------------------------------------------
Applicable to interests of Limited Partners $14,097,867 $11,084,256 $11,676,482 $ 9,790,520
========================================================
Denominator:
Denominator for basic earnings per unit - weighted average
shares 4,861,278 5,293,979 4,861,278 4,861,278
Effect of dilutive securities:
Options to purchase units of Partnership interest 165,721 244,441 143,439 253,521
Restricted stock 484,886 234,886 484,886 234,886
--------------------------------------------------------
Denominator for diluted earnings per unit 5,511,885 5,773,306 5,489,603 5,349,685
========================================================
Basic earnings per unit $2.90 $2.09 $2.40 $2.01
========================================================
Diluted earnings per unit $2.56 $1.92 $2.13 $1.83
========================================================
</TABLE>
<PAGE> 9
Note 7 - In June 1997, the Financial Accounting Standards Board issued
Statement No. 130, "Reporting Comprehensive Income" ("Statement 130").
Statement 130 is effective for fiscal years beginning after December 15, 1997.
The Partnership believes that the adoption of Statement 130 will not have a
material impact on the Partnership's condensed consolidated financial
statements.
<PAGE> 10
Management's Discussion and Analysis of Financial
Condition and Results of Operations
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BOSTON CELTICS LIMITED PARTNERSHIP AND SUBSIDIARIES
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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 relating to prospective revenues,
expenses (including player and other team costs), capital expenditures, tax
burdens, earnings and distributions, and 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, uncertainties regarding
media contracts and uncertainties relating to tax law changes and the resulting
proposed reorganization of the Partnership's structure as discussed below.
General
The Partnership had consolidated net income of $14,420,000, or $2.90 per
unit ($2.56 assuming dilution), on revenues of $64,945,000 in the nine months
ended March 31, 1998, compared with consolidated net income of $11,342,000, or
$2.09 per unit ($1.92 assuming dilution), on revenues of $54,495,000 in the
nine months ended March 31, 1997. The Partnership had consolidated net income
of $11,931,000, or $2.40 per unit ($2.13 assuming dilution), on revenues of
$39,671,000 in the three months ended March 31, 1998, compared with
consolidated net income of $10,006,000, or $2.01 per unit ($1.83 assuming
dilution), on revenues of $33,865,000 in the three months ended March 31, 1997.
The Partnership had consolidated cash flows from operating activities of
$12,443,000 in the nine months ended March 31, 1998 compared with consolidated
cash flows used in operating activities of $1,984,000 in the nine months ended
March 31, 1997.
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 early in each basketball season based on season ticket sales
and the Boston Celtics' multi-year contracts with its players and broadcast
organizations.
<PAGE> 11
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 playoff revenue
in the fourth quarter.
Results of Operations
The following discussion compares results of continuing operations of the
Partnership and its subsidiaries for the nine-month and three-month periods
ended March 31, 1998 with the nine-month and three-month periods ended March
31, 1997.
The Boston Celtics recognize revenues and direct expenses for the
basketball operations ratably over the regular season games played.
Revenues from ticket sales recognized in income increased $5,383,000 or
20% in the nine months ended March 31, 1998 and $3,249,000 or 19% in the three
months ended March 31, 1998, compared to the same periods in 1997. The
increases are primarily a result of increased ticket sales. The increase in
the three months ended March 31, 1998 was partially offset by the effect of the
team having played one fewer game in the three months ended March 31, 1998 than
in 1997 ($457,000).
Television and radio revenues increased $4,661,000 or 24% in the nine
months ended March 31, 1998 and $2,390,000 or 19% in the three months ended
March 31, 1998, compared to the same periods in 1997. The increases are a
result of an increase in revenue from the national network and cable television
rights agreements ($4,661,000 in the nine-month period and $2,724,000 in the
three-month period). The increase in the three months ended March 31, 1998 was
partially offset by the effect of the team having played one fewer game in the
three months ended March 31, 1998 than in 1997 ($334,000).
Other regular season revenues increased $406,000 or 5% in the nine months
ended March 31, 1998 and $167,000 or 4% in the three months ended March 31,
1998 compared to the same periods in 1997. The increases are a result of
increased promotional and novelty income ($406,000 in the nine-month period and
$278,000 in the three-month period). The increase in the three months ended
March 31, 1998 was partially offset by the effect of the team having played one
fewer game in the three months ended March 31, 1998 than in 1997 ($111,000).
<PAGE> 12
Team expenses increased $7,628,000 or 27% in the nine months ended March
31, 1998 and $4,527,000 or 27% in the three months ended March 31, 1998
compared to the same periods in 1997. The increases are a result of increases
in player and coaching staff compensation ($7,285,000 in the nine-month period
and $4,553,000 in the three-month period) and other team expenses ($343,000 in
the nine-month period and $393,000 in the three-month period). The increase in
the three months ended March 31, 1998 was partially offset by the effect of the
team having played one fewer game in the three months ended March 31, 1998 than
in 1997 ($497,000).
Game expenses increased $191,000 or 9% in the nine months ended March 31,
1998 and decreased $8,000 or 1% in the three months ended March 31, 1998
compared to the same periods in 1997. The increase in the nine months ended
March 31, 1998 is a result of an increase in league assessments on ticket
sales. The decrease in the three months ended March 31, 1998 is a result of the
effect of the team having played one fewer game in the three months ended March
31, 1998 than in 1997 ($33,000), partially offset by an increase in league
assessments ($25,000).
General and administrative expenses decreased $938,000 or 10% in the
nine-month period ended March 31, 1998 and $105,000 or 3% in the three-month
period ended March 31, 1998 as compared to the same periods in 1997. The
decrease in the nine-month period ended March 31, 1998 is primarily a result of
a decrease in option expense ($2,107,000), partially offset by increases in
professional expenses ($792,000) and personnel costs ($459,000). The decrease
in the three-month period ended March 31, 1998 is primarily a result of a
decrease in option expense ($635,000), partially offset by an increase in
professional expenses ($602,000).
Selling and promotional expenses decreased $335,000 or 10% in the
nine-month period ended March 31, 1998 and $583,000 or 32% in the three-month
period ended March 31, 1998 as compared to the same periods in 1997 due to
decreases in promotional and other general marketing expenses ($338,000 in the
nine-month period and $364,000 in the three-month period) and decreases in
sponsorship expenses ($438,000 in the nine-month period and $478,000 in the
three-month period). These decreases were partially offset by increases in
salaries and other costs related to marketing and ticket sales ($365,000 in the
nine-month period and $202,000 in the three-month period).
Depreciation and amortization expenses increased $15,000 or 11% in the
nine-month period ended March 31, 1998 as compared to the same period in 1997
as a result of additions to property and equipment and leasehold improvements
in leased office space and at the FleetCenter.
Interest expense decreased $71,000 or 2% in the nine months ended March
31, 1998 as compared to the same period in 1997. The decrease is primarily a
result of a decrease in the deferred compensation liability.
Interest income decreased $75,000 or 2% in the nine-month period ended
March 31, 1998 as compared to the same period in 1997. The decrease is
attributable to a reduced amount of available funds for short-term investment
over the nine-month period, partially offset by an increase in the interest
rate earned on those invested funds. Interest income increased $293,000 or 23%
in the three-month period ended March 31, 1998 as compared to the same period
in 1997. The increase is attributable to an increased amount of available funds
for short-term investment over the three-month period as well as an increase in
the interest rate earned on those invested funds.
<PAGE> 13
The provision for income taxes increased $400,000 or 40% in the
nine-month period ended March 31, 1998 as compared to the same period in 1997.
No provision for income taxes is required by the Partnership 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 the
Partnership, are subject to income taxes. The increase in the provision for
income taxes is a result of increased interest income at CCC.
Liquidity and Capital Resources
The Partnership generated approximately $12,443,000 in cash from
operating activities in the nine months ended March 31, 1998 and used
approximately $1,984,000 in cash in operating activities in the nine months
ended March 31, 1997. Capital expenditures amounted to approximately $364,000
and $52,000 in the nine months ended March 31, 1998 and 1997, respectively. At
March 31, 1998 the Partnership had approximately $24,365,000 of available cash,
$6,133,000 of marketable securities and $74,502,000 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 payable related to redeemed partnership units and for general
partnership purposes, working capital needs or for possible investments or
acquisitions.
On December 15, 1997, Celtics Limited Partnership ("CLP"), the
Partnership's 99%-owned limited partnership which owns and operates the Boston
Celtics basketball team, entered into a $60,000,000 credit facility with its
commercial bank, consisting of a $50,000,000 term loan and a $10,000,000
revolving line of credit. As of March 31, 1998, no borrowings were outstanding
against the $10,000,000 revolving line of credit. The proceeds from the
$50,000,000 term loan were used to repay a separate $50,000,000 loan from a
commercial bank. Principal payments on the term loan agreement are due in equal
quarterly installments of $2,500,000 commencing on January 1, 2003, with the
final payment due on December 15, 2007, the maturity date of the loan. The
$10,000,000 revolving line of credit agreement expires on December 15, 2000,
with two automatic one-year extensions cancelable at the option of the
commercial bank. Borrowings under the term loan and revolving line of credit
are secured by all of the assets of and are the liability of CLP. The loan
agreement contains certain restrictions and various provisions and covenants
customary in lending arrangements of this type, including limitations on
distributions to partners of CLP.
The Reorganization (described below) will have a significant impact on
the liquidity and capital resources requirements of the Partnership and its
successor entities.
<PAGE> 14
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. Management believes that its cash, cash
equivalents and marketable securities together with cash from operations,
available amounts under its revolving line of credit and planned borrowings in
connection with the Reorganization (described below) will provide adequate cash
for the Partnership and its subsidiaries to meet their cash requirements
through March 31, 1999.
During the nine months ended March 31, 1998, a cash distribution of $1.00
per unit was paid to unitholders of Boston Celtics Limited Partnership on
January 14, 1998 (declared December 11, 1997 to unitholders of record on
December 26, 1997). During the nine months ended March 31, 1997, a cash
distribution of $1.00 per unit was paid to unitholders of Boston Celtics
Limited Partnership on December 16, 1996 (declared November 18, 1996 to
unitholders of record on November 29, 1996). Future distributions will be
determined by the General Partner based, among other things, on available
resources and the needs of the Partnership.
Reorganization of the Partnership
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 has proposed a reorganization (the
"Reorganization") of the Partnership structure as more fully disclosed in the
Registration Statement on Form S-4 (Registration No. 333-50367), filed with the
Securities and Exchange Commission on April 17, 1998 by the Partnership, BCLP
II and Castle Creek.
The Reorganization as proposed in the Form S-4 will have a significant
impact on the capitalization and liquidity of the Partnership. Under the terms
of the Reorganization, existing holders of the Partnership's units may, on the
terms and conditions of the Reorganization plan as set forth and more fully
described in the Form S-4, continue their investment in the business of the
Partnership in the form of either publicly traded equity interests in Boston
Celtics Limited Partnership II ("BCLP II"), a newly formed Delaware limited
partnership that will be subject to corporate-level taxation, plus publicly
traded debt instruments with annual interest payments (the "Subordinated
Debentures") issued by the Partnership, or in the form of transfer-restricted
equity interests in Castle Creek Partners, L.P. ("Castle Creek"), a newly
formed Delaware limited partnership that will be a private entity with
"pass-through" taxation. As a result of the Reorganization, the Partnership
will become a 99%-owned subsidiary partnership of BCLP II, and BCLP II will be
a publicly traded entity.
<PAGE> 15
The portion of those assets presently held directly or indirectly by the
Partnership, including the net assets of the Boston Celtics basketball team
(the "Team"), will be owned directly or indirectly by BCLP II and Castle Creek,
respectively, after the Reorganization in proportion to the number of holders
of BCLP Units who, at their option, continue their investment in BCLP II
compared to those who elect an investment in Castle Creek (the "Proportionate
Election"). After the Reorganization, the Team will be owned indirectly by BCLP
II and Castle Creek, respectively, in exact proportion to the Proportionate
Election. The pre-Reorganization net assets of BCLP (other than the Team) will
also be held directly or indirectly by BCLP II and Castle Creek, respectively,
in proportion to the Proportionate Election.
In anticipation of and in connection with the Reorganization, the
Partnership will consummate several transactions designed to facilitate the
Reorganization which will have a significant impact on the capitalization and
liquidity of the Partnership, including, but not limited to, the borrowing of
approximately $30 million from a commercial bank, the transfer of approximately
$41 million of investment assets to Castle Creek and the issuance of the
Subordinated Debentures. Further, it is anticipated that in excess of 50% of
the existing holders of units of partnership interest will elect to receive
Castle Creek Interests, which will result in BCLP II owning an indirect
minority interest position in the net assets of the Team.
The above information is a summary of the Reorganization and should be
read in conjunction with the Partnership's Registration Statement on Form S-4.
Year 2000 Compliance
The inability of computers, software and other equipment utilizing
microprocessors to recognize and properly process data fields containing a
two-digit year is commonly referred to as the Year 2000 Compliance issue. As
the year 2000 approaches, such systems may be unable to accurately process
certain date-based information.
The Partnership believes that its internal hardware and software
applications are Year 2000 compliant. In addition, the Partnership is
communicating with external service providers to ensure that the providers are
taking the appropriate actions to address Year 2000 issues. However, there can
be no assurance that the systems of third parties on which the Partnership's
systems rely will convert, or that a conversion that is incompatible with the
Partnership's systems, would not have an adverse effect on the Partnership's
systems.
The estimated cost to address Year 2000 issues is not expected to have a
material impact on the Partnership's business, operations or financial
condition.
<PAGE> 16
Part II - Other Information
- -------------------------------------------------------------------------------
BOSTON CELTICS LIMITED PARTNERSHIP AND SUBSIDIARIES
- -------------------------------------------------------------------------------
ITEM 6 - Exhibits and Reports on Form 8-K
Exhibits -
Exhibit (27) - Financial data schedules.
Reports on Form 8-K -
None.
<PAGE> 17
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: May 8, 1998 By: /s/ Richard G. Pond
------------------------------------
Richard G. Pond
Executive Vice President and
Chief Financial Officer
<PAGE> 18
<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 MARCH 31, 1998 AND THE RELATED CONSOLIDATED STATEMENT OF
INCOME FOR THE NINE-MONTH PERIOD ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 24,365
<SECURITIES> 6,133
<RECEIVABLES> 64
<ALLOWANCES> 10
<INVENTORY> 0
<CURRENT-ASSETS> 105,593
<PP&E> 1,989
<DEPRECIATION> 870
<TOTAL-ASSETS> 120,904
<CURRENT-LIABILITIES> 34,315
<BONDS> 50,000
0
0
<COMMON> 0
<OTHER-SE> 1,278
<TOTAL-LIABILITY-AND-EQUITY> 120,904
<SALES> 64,945
<TOTAL-REVENUES> 64,945
<CGS> 0
<TOTAL-COSTS> 49,574
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,389
<INCOME-PRETAX> 15,820
<INCOME-TAX> 1,400
<INCOME-CONTINUING> 14,420
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,420
<EPS-PRIMARY> 2.90
<EPS-DILUTED> 2.56
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS 3-MOS
<FISCAL-YEAR-END> JUN-30-1997 JUN-30-1997 JUN-30-1997 JUN-30-1998
<PERIOD-END> SEP-30-1996 DEC-31-1996 MAR-31-1997 SEP-30-1997
<CASH> 15,306 11,527 8,182 11,334
<SECURITIES> 40,816 44,603 37,317 27,462
<RECEIVABLES> 1,631 997 774 207
<ALLOWANCES> 10 10 10 10
<INVENTORY> 0 0 0 0
<CURRENT-ASSETS> 143,501 109,335 93,298 119,364
<PP&E> 1,729 1,754 1,541 1,840
<DEPRECIATION> 575 623 666 757
<TOTAL-ASSETS> 152,099 117,813 107,081 135,004
<CURRENT-LIABILITIES> 50,244 39,964 19,583 62,695
<BONDS> 50,000 50,000 50,000 46,250
0 0 0 0
0 0 0 0
<COMMON> 0 0 0 0
<OTHER-SE> 13,304 (10,950) (1,173) (11,630)
<TOTAL-LIABILITY-AND-EQUITY> 152,099 117,813 107,081 135,004
<SALES> 0 20,630 54,495 0
<TOTAL-REVENUES> 0 20,630 54,495 0
<CGS> 0 0 0 0
<TOTAL-COSTS> 3,070 19,511 43,015 3,463
<OTHER-EXPENSES> 0 0 0 0
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 1,609 3,042 4,460 1,479
<INCOME-PRETAX> 2,707 2,136 12,342 (3,366)
<INCOME-TAX> 500 800 1,000 500
<INCOME-CONTINUING> 3,207 1,336 11,342 (3,866)
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 3,207 1,336 11,342 (3,866)
<EPS-PRIMARY> (.56) 0.23 2.09 (.78)
<EPS-DILUTED> (.56) 0.22 1.92 (.78)
</TABLE>
