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 March 31, 1997
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 Identification No.
Incorporation or Organization
3 World Financial Center, 29th Floor,
New York, NY Attn: Andre Anderson 10285-2900
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 ____
Balance Sheets At March 31, At December 31,
(000's Omitted) 1997 1996
Assets
Cash and cash equivalents $ 601 $ 1,315
Motion pictures released, net of
accumulated amortization of $21,087
in 1997 and $21,081 in 1996 56 62
Receivable from Twentieth Century Fox 58 --
Total Assets $ 715 $ 1,377
Liabilities and Partners' Capital
Liabilities:
Distribution payable $ -- $ 697
Accrued management fees 250 200
Accounts payable and accrued expenses 21 26
Unearned motion picture revenue -- 92
Total Liabilities 271 1,015
Partners' Capital:
General Partner 1 --
Limited Partners 443 362
Total Partners' Capital 444 362
Total Liabilities and
Partners' Capital $ 715 $ 1,377
Statement of Partners' Capital
(000's Omitted)
For the three months ended March 31, 1997
General Limited
Partner Partners Total
Balance at December 31, 1996 $ -- $ 362 $ 362
Net income 1 81 82
Balance at March 31, 1997 $ 1 $ 443 $ 444
Statements of Operations
(000's Omitted Except Unit Information)
For the three months ended March 31, 1997 1996
Net Revenues
Revenues from motion picture exploitation $ 150 $ 243
Less: Amortization of motion picture costs 6 27
Net revenues 144 216
Other Income (Expenses)
Interest income 14 17
Management fees (50) (50)
General and administrative (20) (13)
Professional fees (6) (4)
Net Other Expenses (62) (50)
Net Income $ 82 $ 166
Net Income Allocated:
To the General Partner $ 1 $ 2
To the Limited Partners 81 164
$ 82 $ 166
Per limited partnership unit
(25,000 outstanding) $ 3.25 $ 6.58
Statements of Cash Flows
(000's Omitted)
For the three months ended March 31, 1997 1996
Cash Flows From Operating Activities
Net income $ 82 $ 166
Adjustments to reconcile net
income to net cash used for
operating activities:
Amortization of motion picture costs 6 27
Increase (decrease) in cash arising
from changes in operating assets
and liabilities:
Receivable from Twentieth Century Fox (58) (243)
Accrued management fees 50 (150)
Accounts payable and accrued expenses (5) (13)
Unearned motion picture revenue (92) --
Net cash used for operating activities (17) (213)
Cash Flows From Financing Activities
Cash distributions (697) (1,448)
Net cash used for financing activities (697) (1,448)
Net decrease in cash and cash equivalents (714) (1,661)
Cash and cash equivalents,
beginning of period 1,315 2,085
Cash and cash equivalents, end of period $ 601 $ 424
Notes to the Financial Statements
The unaudited interim financial statements should be read in conjunction with
the Partnership's annual 1996 audited financial statements within Form 10-K.
The unaudited financial statements include all normal and reoccurring
adjustments which are, in the opinion of management, necessary to present a
fair statement of financial position as of March 31, 1997 and the results of
operations and cash flows for the three months ended March 31, 1997 and 1996
and the statement of partners' capital for the three months ended March 31,
1997. Results of operations for the period are not necessarily indicative of
the results to be expected for the full year.
No significant events have occurred subsequent to fiscal year 1996, and no
material contingencies exist which would require disclosure in this interim
report per Regulation S-X, Rule 10-01, Paragraph (a)(5).
Part 1. 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
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 March 31, 1997 was approximately
$601,000 as compared to approximately $1,315,000 at December 31, 1996. The
$714,000 decrease is primarily attributable to the payment of the 1996
cash distribution in February 1997 totaling approximately $697,000 and the
payment of Partnership expenses during the first quarter of 1997. The
Partnership's cash balance is expected to provide sufficient liquidity to
enable the Partnership to fund cash distributions and meet its operating
expenses.
In February 1997, the Partnership paid the 1996 annual distribution
totaling $697,000 of which $690,000 or $27.60 per Unit was paid to the
Limited Partners and $7,000 was paid to the General Partner.
The Partnership's receivable from Fox increased to approximately $58,000
at March 31, 1997 from $0 at December 31, 1996 while the Partnership's
unearned motion picture revenue decreased to $0 at March 31, 1997 from
approximately $92,000 at December 31, 1996. The increase in receivable
from Fox as well as the decrease in unearned motion picture revenue is due
to the recognition during the first quarter of 1997 of $150,000 of motion
picture revenue from Fox. The Partnership had recorded the unearned
motion picture revenue balance at December 31, 1996 due to cash receipts
in excess of revenues accrued through December 31, 1996.
Accrued management fees increased from $200,000 at December 31, 1996 to
$250,000 at March 31, 1997. The balance at December 31, 1996 represents
the entire 1996 management fee, while the balance at March 31, 1997
represents one quarter of the 1997 management fee and the entire 1996
management fee, which was unpaid as of March 31, 1997.
Results of Operations
For the three month period ended March 31, 1997, the Partnership reported
net income of approximately $82,000 as compared to approximately $166,000
for the same period in 1996. The decrease in net income primarily
reflects a decrease in revenues generated from motion picture exploitation
in foreign pay and free television markets and the domestic syndicated
market due to the mature stage of the films. 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.
For the three month period ended March 31, 1997, 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 $150,000 and $6,000, respectively, compared to $243,000
and $27,000 during the same period in 1996. The decreases in revenues
from motion picture exploitation and amortization of motion picture costs
are primarily attributable to the mature stage of the films. The
Partnership currently receives revenues from the distribution of the films
in ancillary markets.
General and administrative expenses for the three months ended March 31,
1997 were approximately $20,000, compared to $13,000 for the same period
in 1996. During the 1997 period, certain expenses incurred by an
unaffiliated third party service provider in servicing the Partnership,
which were voluntarily absorbed by affiliates of the General Partner in
prior periods, will be reimbursed to the General Partner and its
affiliates.
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 March 31, 1997.
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: May 13, 1997 BY: /s/ Moshe Braver
Director and President
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