American Entertainment Partners II L.P.
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 June 30, 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 Incorporation or Organization I.R.S. Employer 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 ____
Balance Sheets At June 30, At December 31,
(000's Omitted) 1997 1996
Assets
Cash and cash equivalents $ 391 $1,315
Motion pictures released,
net of accumulated amortization
of $21,093 in 1997
and $21,081 in 1996 50 62
Receivable from Twentieth Century Fox 226 _
Total Assets $ 667 $1,377
Liabilities and Partners' Capital
Liabilities:
Distribution payable $ _ $ 697
Accrued management fees 100 200
Accounts payable and accrued expenses 30 26
Unearned motion picture revenue _ 92
Total Liabilities 130 1,015
Partners' Capital:
General Partner 2 _
Limited Partners 535 362
Total Partners' Capital 537 362
Total Liabilities and
Partners' Capital $ 667 $1,377
Statement of Partners' Capital
(000's Omitted) General Limited
For the six months ended June 30, 1997 Partner Partners Total
Balance at December 31, 1996 $ _ $362 $362
Net income 2 173 175
Balance at June 30, 1997 $ 2 $535 $537
Statements of Operations
(000's Omitted Except Unit Information)
Three months Six months
ended June 30, ended June 30,
1997 1996 1997 1996
Net Revenues
Revenues from motion
picture exploitation $ 168 $ 227 $ 318 $ 470
Less: Amortization of motion
picture costs 6 8 12 35
Net Revenues 162 219 306 435
Other Income (Expenses)
Interest income 7 6 21 23
Management fees (50) (50) (100) (100)
General and administrative (21) (11) (41) (24)
Professional fees (5) (6) (11) (10)
Net Other Expenses (69) (61) (131) (111)
Net Income $ 93 $ 158 $ 175 $ 324
Net Income Allocated:
To the General Partner $ 1 $ 1 $ 2 $ 3
To the Limited Partners 92 157 173 321
$ 93 $ 158 $ 175 $ 324
Per limited partnership unit
(25,000 outstanding) $ 3.68 $ 6.24 $6.93 $12.82
Statements of Cash Flows
(000's Omitted)
For the six months ended June 30, 1997 1996
Cash Flows From Operating Activities
Net income $ 175 $ 324
Adjustments to reconcile net income to net cash
used for operating activities:
Amortization of motion picture costs 12 35
Increase (decrease) in cash
arising from changes in
operating assets and liabilities:
Receivable from Twentieth Century Fox (226) (470)
Accrued management fees (100) (100)
Accounts payable and accrued expenses 4 (14)
Unearned motion picture revenue (92) _
Net cash used for operating activities (227) (225)
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 (924) (1,673)
Cash and cash equivalents, beginning of period 1,315 2,085
Cash and cash equivalents, end of period $ 391 $ 412
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
June 30, 1997 and the results of operations for the three and six
months ended June 30, 1997 and 1996, statements of cash flows for
the six months ended June 30, 1997 and 1996 and the statement of
partners' capital for the six months ended June 30, 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 June 30, 1997 was approximately
$391,000 as compared to approximately $1,315,000 at December 31,
1996. The 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 half 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
$226,000 at June 30, 1997 from $0 at December 31, 1996 while the
Partnership's unearned motion picture revenue decreased to $0 at
June 30, 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 half of 1997 of $318,000 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 decreased from $200,000 at
December 31, 1996 to $100,000 at June 30, 1997. The balance at
December 31, 1996 represents the entire 1996 management fee,
while the balance at June 30, 1997 represents one half of the
1997 management fee.
Results of Operations
For the three and six months ended June 30, 1997, the Partnership
reported net income of approximately $93,000 and $175,000,
respectively, as compared to net income of $158,000 and $324,000
for the corresponding periods in 1996. The decreases in net
income are primarily due to decreases in revenues from motion
picture exploitation in foreign pay and free television markets.
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 months ended June 30, 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 $168,000 and
$6,000, respectively, compared to $227,000 and $8,000 during the
same period in 1996. For the six months ended June 30, 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 $318,000 and
$12,000, respectively, compared to $470,000 and $35,000 during
the same period in 1996. The decreases in revenues from motion
picture exploitation and amortization of motion picture costs are
primarily due to decreases in revenue received from both foreign
pay and free television markets. The Partnership currently
receives revenues from the distribution of the films in ancillary
markets.
General and administrative expenses for the three and six months
ended June 30, 1997 were approximately $21,000 and $41,000,
respectively, compared to $11,000 and $24,000 for the same
periods in 1996. During the 1997 periods, 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, were
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
June 30, 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: August 13, 1997 BY: /s/ Jeffrey C. Carter
President & Director
Date: August 13, 1997 BY: /s/ Daniel M. Palmier
Vice President & Chief Financial
Officer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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