UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 33-11101
AMERICAN ENTERTAINMENT PARTNERS II L.P.
(Exact name of registrant as specified in its charter)
Delaware 13-3388759
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) identification No.)
3 World Financial Center, 29th Floor,
New York, NY ATTN: Andre Anderson 10285
(Address of principal executive offices) (Zip code)
(212) 526-3237
(Registrant's telephone number, including area code)
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
Statements of Financial Condition
(000's Omitted)
September 30, December 31,
1995 1994
Assets
Cash and cash equivalents $ 363 $ 1,373
Motion pictures released, net of
accumulated amortization of $21,029
in 1995 and $20,998 in 1994 114 145
Receivable from Twentieth Century Fox 1,855 1,375
Total Assets $ 2,332 $ 2,893
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 30 $ 39
Accrued management fees 150 200
Distribution payable - 792
Total Liabilities 180 1,031
Partners' Capital:
General Partner 3 -
Limited Partners 2,149 1,862
Total Partners' Capital 2,152 1,862
Total Liabilities and Partners' Capital $ 2,332 $ 2,893
Statement of Partners' Capital
For the nine months ended September 30, 1995
(000's Omitted)
General Limited
Partner Partners Total
Balance at December 31, 1994 $ - $ 1,862 $ 1,862
Net income 3 287 290
Balance at September 30, 1995 $ 3 $ 2,149 $ 2,152
Statements of Operations
(000's Omitted Except Unit Information)
Three months ended Nine months ended
September 30, September 30,
1995 1994 1995 1994
Revenues
Revenues from motion picture exploitation $ 309 $ 165 $ 505 $ 572
Less: Amortization of motion picture costs 10 21 31 108
Net Revenues 299 144 474 464
Other Income (Expenses)
Interest income 6 5 26 14
Management fees (50) (50) (150) (150)
Professional fees (7) (3) (26) (24)
General and administrative (11) (10) (34) (37)
Net Other Expenses (62) (58) (184) (197)
Net Income $ 237 $ 86 $ 290 $ 267
Net Income Allocated:
To the General Partner $ 2 $ 1 $ 3 $ 3
To the Limited Partners 235 85 287 264
$ 237 $ 86 $ 290 $ 267
Per limited partnership unit
(25,000 outstanding) $ 9.40 $ 3.40 $ 11.48 $ 10.56
Statements of Cash Flows
For the nine months ended September 30, 1995 and 1994
(000's Omitted)
1995 1994
Cash Flows from Operating Activities:
Net income $ 290 $ 267
Adjustments to reconcile net income to net cash
used for operating activities:
Amortization of motion picture costs 31 108
Decrease in cash arising from changes
in operating assets and liabilities:
Receivable from Twentieth Century Fox (480) (572)
Accrued management fees (50) (50)
Accounts payable and accrued expenses (9) (25)
Net cash used for operating activities (218) (272)
Cash Flows from Financing Activities:
Cash distributions (792) (608)
Net cash used for financing activities (792) (608)
Net decrease in cash and cash equivalents (1,010) (880)
Cash and cash equivalents at beginning of period 1,373 1,265
Cash and cash equivalents at end of period $ 363 $ 385
Notes to the Financial Statements
The unaudited interim financial statements should be read in conjunction with
the Partnership's annual 1994 audited financial statements within Form 10-K.
The unaudited financial statements include all adjustments which are, in the
opinion of management, necessary to present a fair statement of financial
position as of September 30, 1995 and the results of operations for the three
and nine months ended September 30, 1995 and 1994, and cash flows for the nine
months ended September 30, 1995 and 1994, and the statement of changes in
partners' capital for the nine months ended September 30, 1995. Results of
operations for the periods are not necessarily indicative of the results to be
expected for the full year.
No significant events have occurred subsequent to fiscal year 1994, and no
material contingencies exist which would require disclosure in this interim
report per Regulation S-X, Rule 10-01, Paragraph (a)(5).
Part I, Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
The Partnership's principal source of funds is the proceeds received from
Twentieth Century Fox Film Corporation ("Fox") pursuant to the Distribution
Agreement, as defined in the Partnership's prospectus. According to the terms
set forth in the Partnership Agreement, effective January 1993, the Partnership
receives proceeds from Fox on an annual basis. Accordingly, all future cash
distributions from the Partnership's investment in the Joint Venture films will
be paid to limited partners on an annual basis.
The Partnership's cash balance at September 30, 1995 was approximately $363,000
compared to approximately $1,373,000 at December 31, 1994. The $1,010,000
decrease is primarily the result of the payment of the 1994 cash distribution,
totaling approximately $792,000, the payment of the Partnership's 1994 annual
management fee and the payment of 1995 first, second and third quarter
Partnership expenses. The Partnership's cash balance is expected to provide
sufficient liquidity to enable the Partnership to meet its expenses.
During the third quarter of 1993, the General Partner engaged an independent
audit firm to perform a distribution audit to ensure that the Partnership is
receiving its allocable share of the revenues generated by the Joint Venture
films. The audit was completed during the second quarter of 1994 and the
results indicated that, overall, Fox properly allocated revenues to the
Partnership. Nevertheless, it was determined that approximately $75,000 of
additional revenue was owed to the Partnership by Fox, of which approximately
$50,000 was received by the Partnership during 1994. In accordance with a
settlement agreement between Fox and the Partnership executed in January 1995,
the Partnership received the remaining $25,000 on February 2, 1995.
The Partnership's receivable from Fox totaled approximately $1,855,000 at
September 30, 1995, as compared to approximately $1,375,000 at December 31,
1994. The increase is primarily attributable to the Joint Venture's
recognition of revenues of $505,000 during the first nine months of 1995,
offset by the collection of $25,000 received from Fox on February 2, 1995, as
mentioned above.
Accrued management fees decreased from $200,000 at December 31, 1994, which
represents the entire 1994 management fee paid during the 1995 first quarter,
to $150,000 at September 30, 1995, which represents three-fourths of the 1995
management fee.
Distribution payable decreased from approximately $792,000 at December 31, 1994
to $0 at September 30, 1995, due to the payment of the 1994 annual cash
distribution during the first quarter of 1995.
Results of Operations
For the three and nine months ended September 30, 1995, the Partnership
reported net income of approximately $237,000 and $290,000, respectively, as
compared to net income of approximately $86,000 and $267,000 for the
corresponding periods in 1994. The increase during the three-month period is
mainly due to the increase in revenues generated from motion picture
exploitation. Motion picture profits are based on current estimates of
ultimate film revenues and costs. These estimates are subject to review
periodically as more information about a film's distribution becomes available.
Such reviews can result in significant adjustments to prior estimates. The
increase during the nine-month period is primarily due to an increase in
interest income and net revenues.
For the three months ended September 30, 1995, the Partnership recognized
revenues from motion picture exploitation and amortization of motion picture
costs with respect to its investment in the released films of approximately
$309,000 and $10,000, respectively, as compared to approximately $165,000 and
$21,000, respectively, for the same periods in 1994. For the nine months ended
September 30, 1995, the Partnership recognized revenues from motion picture
exploitation and amortization of motion picture costs with respect to its
investment in the released films of approximately $505,000 and $31,000,
respectively, as compared to approximately $572,000 and $108,000, respectively,
for the corresponding periods in 1994. The increase in revenues from motion
picture exploitation in the three-month period is due to higher revenues from
home video and foreign syndicated television. The decrease in revenues from
motion picture exploitation for the nine-month period is primarily attributable
t o the mature stage of the films. The Partnership currently receives revenues
from the distribution of the films in ancillary markets.
Interest income increased from approximately $5,000 and $14,000 for the three
and nine months ended September 30, 1994, to approximately $6,000 and $26,000
for the three and nine months ended September 30, 1995. The increase is
primarily due to higher interest rates earned on the Partnership's cash
balance.
Professional fees for the three and nine months ended September 30, 1995
totaled approximately $7,000 and $26,000, respectively, compared to
approximately $3,000 and $24,000 for the same periods in 1994. The increases
are due to increased legal expense for services rendered in connection with an
audit of the Joint Venture by the city of New York. Total expenses incurred by
the Partnership during the first nine months of 1995 were relatively unchanged
from the corresponding period in 1994.
PART II OTHER INFORMATION
Items 1-5 Not applicable
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K - No reports on Form 8-K were filed
during the quarter ended September 30, 1995.
SIGNATURES
Pursuant to the requirements 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.
AMERICAN ENTERTAINMENT PARTNERS II L.P.
BY: AEP PREMIERE CORPORATION II
General Partner
Date: November 14, 1995 BY: /s/ Moshe Braver
Name: Moshe Braver
Title: Director and President
Date: November 14, 1995 BY: /s/ Joseph Donaldson
Name: Joseph Donaldson
Title: Vice President and
Chief Financial Officer
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<PERIOD-END> SEP-30-1995
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