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 the quarterly period ended
September 30, 2000
0-16690
(Commission File Number)
ML MEDIA OPPORTUNITY PARTNERS, L.P.
(Exact name of registrant as specified in its governing instruments)
Delaware
(State or other jurisdiction of organization)
13-3429969
(IRS Employer Identification No.)
Two World Financial Center
14th Floor
New York, New York 10281-6114
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(212) 236-6576
N/A
-------------------------------------------------------------------------------
Former name, former address and former fiscal year if changed since last report
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 .
ML Media Opportunity Partners, L.P.
Part 1 - Financial Information.
Item 1. Financial Statements.
TABLE OF CONTENTS
Consolidated Balance Sheets as of September 30, 2000 (Unaudited) and
December 31, 1999 (Unaudited)
Consolidated Statements of Operations for the three and nine months ended
September 30, 2000 (Unaudited) and September 30, 1999 (Unaudited)
Consolidated Statements of Cash Flows for the nine months ended September 30,
2000 (Unaudited) and September 30, 1999 (Unaudited)
Consolidated Statements of Changes in Partners' Capital for the nine months
ended September 30, 2000 (Unaudited)
Notes to Consolidated Financial Statements for the nine months ended
September 30, 2000 (Unaudited)
<PAGE>
<TABLE>
<CAPTION>
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2000 (UNAUDITED)
AND DECEMBER 31, 1999 (UNAUDITED)
September 30, December 31,
Notes 2000 1999
----- ------------- ------------
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents $ 11,079,078 $ 10,613,295
Interest and other receivables 81,317 70,734
------------- ------------
TOTAL ASSETS $ 11,160,395 $ 10,684,029
============= ============
LIABILITIES AND PARTNERS' CAPITAL:
Liabilities:
Accounts payable and accrued liabilities $ 2,401,434 $ 2,277,592
------------- ------------
Total Liabilities 2,401,434 2,277,592
------------- ------------
Commitments and contingencies 2,3
Partners' Capital:
General Partner:
Capital contributions, net of offering expenses $ 1,019,428 $ 1,019,428
Additional capital contributions 2 32,821,295 31,417,939
Transfer from General Partner
to Limited partners 2 (32,729,803) (31,340,480)
Cumulative cash distributions (362,496) (362,496)
Cumulative loss (640,343) (629,835)
------------- ------------
108,081 104,556
------------- ------------
Limited partners:
Capital contributions, net of offering expenses
(112,147.1 Units of Limited Partnership
Interest) 100,914,316 100,914,316
Transfer from General Partner
to Limited partners 2 32,729,803 31,340,480
Tax allowance cash distribution (2,040,121) (2,040,121)
Other cumulative cash distributions
2 (59,559,029) (59,559,029)
Cumulative loss (63,394,089) (62,353,765)
------------- ------------
8,650,880 8,301,881
------------- ------------
Total Partners' Capital 8,758,961 8,406,437
TOTAL LIABILITIES AND PARTNERS' CAPITAL ------------- ------------
$ 11,160,395 $ 10,684,029
============= ============
</TABLE>
See Notes to Consolidated Financial Statements (Unaudited).
<PAGE>
<TABLE>
<CAPTION>
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30 2000 (UNAUDITED)
AND SEPTEMBER 30, 1999 (UNAUDITED)
Three Months Nine Months
---------------- ---------------
September 30, September 30, September 30, September 30,
2000 1999 2000 1999
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Interest and other income
$ 147,737 $ 116,588 $ 448,252 $ 340,680
------------- ------------- ------------ ------------
Partnership Operating Expenses:
Professional fees and other 31,448 42,066 95,728 225,707
Services provided by the
General Partner 467,785 461,199 1,403,356 1,383,597
------------- ------------- ------------ ------------
499,233 503,265 1,499,084 1,609,304
------------- ------------- ------------ ------------
NET LOSS $ (351,496) $ (386,677) $ (1,050,832) $ (1,268,624)
============= ============= ============ ============
Per Unit of Limited Partnership
Interest:
NET LOSS $ (3.10) $ (3.41) $ (9.28) $ (11.20)
============= ============= ============ ============
Number of Units 112,147.1 112,147.1 112,147.1 112,147.1
</TABLE>
See Notes to Consolidated Financial Statements (Unaudited).
<PAGE>
<TABLE>
<CAPTION>
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 (UNAUDITED)
AND SEPTEMBER 30, 1999 (UNAUDITED)
2000 1999
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(1,050,832) $(1,268,624)
Adjustments to reconcile net loss
to net cash provided by operating activities: 1,403,356 1,383,597
Services provided by the General Partner
Changes in operating assets and liabilities:
Interest and other receivables (10,583) 12,585
Other assets - 89,191
Accounts payable and accrued liabilities 123,842 148,073
----------- -----------
Net cash provided by operating activities 465,783 364,822
----------- -----------
Net increase in cash and cash equivalents 465,783 364,822
Cash and cash equivalents at beginning of year 10,613,295 10,152,858
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements (Unaudited).
<PAGE>
<TABLE>
<CAPTION>
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CHANGES
IN PARTNERS' CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 (UNAUDITED)
General Limited
Partner Partners Total
-------------- ------------- ------------
<S> <C> <C> <C>
Partners' Capital as of January 1, 2000 $ 104,556 $ 8,301,881 $ 8,406,437
Net loss (10,508) (1,040,324) (1,050,832)
Additional capital contributions 1,403,356 - 1,403,356
Transfer from General Partner to Limited partners (1,389,323) 1,389,323 -
-------------- ------------- ------------
Partners' Capital as of September 30, 2000 $ 108,081 $ 8,650,880 $ 8,758,961
============== ============= ============
</TABLE>
See Notes to Consolidated Financial Statements (Unaudited).
ML MEDIA OPPORTUNITY PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
(UNAUDITED)
1. ORGANIZATION AND BASIS OF PRESENTATION
ML Media Opportunity Partners, L.P. (the "Partnership") was formed and the
Certificate of Limited Partnership was filed under the Delaware Revised Uniform
Limited Partnership Act on June 23, 1987. Operations commenced on March 23, 1988
with the first closing of the sale of units of limited partnership interest
("Units"). Subscriptions for an aggregate of 112,147.1 Units were accepted and
are now outstanding.
Media Opportunity Management Partners (the "General Partner") is a joint
venture, organized as a general partnership under the laws of the State of New
York, between RP Opportunity Management, L.P. ("RPOM"), a limited partnership
under Delaware law, and ML Opportunity Management Inc. ("MLOM"), a Delaware
corporation and an indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc.
The General Partner was formed for the purpose of acting as general partner of
the Partnership. The General Partner's total initial capital contribution
amounted to $1,132,800 which represents 1% of the total Partnership capital
contributions.
Pursuant to the terms of the Amended and Restated Agreement of Limited
Partnership (the "Partnership Agreement"), the General Partner is liable for all
general obligations of the Partnership to the extent not paid by the
Partnership. The limited partners are not liable for the obligations of the
Partnership in excess of the amount of their contributed capital.
The Partnership was formed to acquire, finance, hold, develop, improve,
maintain, operate, lease, sell, exchange, dispose of and otherwise invest in and
deal with media businesses and direct and indirect interests therein. As of
September 22, 1997, with the closing of the sale of MV Technology Limited
("MVT"), the Partnership disposed of its last Media Business (as defined in the
Partnership Agreement). As a result, as of September 22, 1998 (one year
following the disposition of its last Media Business), pursuant to the
Partnership Agreement, the Partnership is in dissolution and its only remaining
activity is to wind up its affairs, which includes providing for or resolving
its remaining obligations and contingencies, and making a final cash
distribution, if any, to its partners.
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information. They do not include all information and footnotes required by
generally accepted accounting principles for complete financial statements. In
the opinion of the General Partner, the financial statements include all
adjustments necessary to reflect fairly the financial position of the
Partnership as of September 30, 2000 and the results of operations, cash flows
and partners' capital of the Partnership for the interim periods presented. All
adjustments are of a normal recurring nature. The results of operations for the
nine months ended September 30, 2000 are not necessarily indicative of the
results of operations for the entire year.
Additional information, including the audited year end 1999 Financial
Statements and the Significant Accounting Policies, is included in the
Partnership's filing on Form 10-K for the year ended December 31, 1999 on file
with the Securities and Exchange Commission.
2. Liquidity and Summary of Investment Status
As of September 30, 2000, the Partnership had $11,079,078 in cash and cash
equivalents.
As of September 30, 2000, the Partnership's obligations and contingencies
relating to its former investments amounted to approximately $1.7 million, in
the aggregate, and are recorded as a liability in the financial statements of
the Partnership. The General Partner intends to resolve these obligations and
contingencies as soon as practicable.
The General Partner currently anticipates that the pendency of certain
litigation, as described below, related claims against the Partnership for
indemnification, other costs and expenses related to such litigation, and the
involvement of management, will adversely affect (a) the timing of the
termination of the Partnership, (b) the amount of proceeds which may be
available for distribution, and (c) the timing of the distribution to limited
partners of any net proceeds that remain after resolving such obligations and
contingencies.
Pursuant to an amendment to the Partnership Agreement dated March 24, 1997,
the Partnership's obligation to pay a Partnership Management Fee and a Property
Management Fee for 1996 and subsequent periods was terminated. Therefore,
although the General Partner continues to provide services on behalf of the
Partnership, the Partnership did not pay for these services and will not pay for
such services in the future. However, in accordance with generally accepted
accounting principles, for financial reporting purposes, amounts equal to these
services for the three and nine months ended September 30, 2000 of $467,785 and
$1,403,356, respectively, and for the three and nine months ended September 30,
1999 of $461,199 and $1,383,597, respectively, have been treated in the
accompanying statements of operations as an expense with a corresponding
increase in General Partner's capital due to the capital contributions for
services provided by the General Partner. In conjunction with the General
Partner's capital increase, a transfer was made to the limited partners' capital
for the limited partners' share (99%) of the capital contribution of such
services. The foregoing expense and capital transfer have no effect on the
capital of the limited partners or the General Partner.
3. Legal Proceedings
On August 29, 1997, a purported class action was commenced in New York
Supreme Court, New York County, on behalf of the limited partners of the
Partnership, against the Partnership, the General Partner, the General Partner's
two partners, MLOM and RPOM, Merrill Lynch & Co., Inc. and Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch"). The action concerns the
Partnership's payment of certain management fees and expenses to the General
Partner and the payment of certain purported fees to an affiliate of RPOM.
Specifically, the plaintiffs allege breach of the Partnership Agreement,
breach of fiduciary duties and unjust enrichment by the General Partner in that
the General Partner allegedly: (1) improperly failed to return to plaintiffs and
the alleged class members certain uninvested capital contributions in the amount
of $18.5 million (less certain reserves), (2) improperly paid itself management
fees in the amount of $18.3 million, and (3) improperly paid Multivision Cable
TV Corp., an affiliate of RPOM, supposedly duplicative management fees in an
amount in excess of $6 million. In addition, plaintiffs assert a claim for
quantum meruit, supposedly seeking credit for, and counsel fees based on, the
benefit received by the limited partners as a result of the voluntary payment
made by Merrill Lynch to the Partnership in March 1997, in the amount of
approximately $23 million, representing management fees, certain expenses, and
interest paid by the Partnership to the General Partner since 1990.
With respect to Merrill Lynch & Co., Inc., Merrill Lynch, MLOM and RPOM,
plaintiffs claim that these defendants aided and abetted the General Partner in
the alleged breach of the Partnership Agreement and in the alleged breach of the
General Partner's fiduciary duties. Plaintiffs seek, among other things, an
injunction barring defendants from paying themselves management fees or expenses
not expressly authorized by the Partnership Agreement, an accounting,
disgorgement of the alleged improperly paid fees and expenses, return of
uninvested capital contributions, counsel fees, and compensatory and punitive
damages. Defendants believe that they have good and meritorious defenses to the
action, and vigorously deny any wrongdoing with respect to the alleged claims.
Defendants moved to dismiss the complaint and each claim for relief therein. On
March 3, 1999, the New York Supreme Court issued an order granting defendants'
motion and dismissing plaintiffs' complaint in its entirety, principally on the
grounds that the claims are derivative and plaintiffs lack standing to bring
suit because they failed to make a pre-litigation demand on the General Partner.
On June 8, 2000, the New York Supreme Court, Appellate Division - First
Department issued a Decision and Order, unanimously affirming the New York
Supreme Court's dismissal of the plaintiffs' complaint in its entirety. On June
13, 2000, the New York Supreme Court denied plaintiffs' motion to clarify or
modify the Court's March 3, 1999 order. On June 23, 2000, plaintiffs filed a
motion for reargument with respect to certain portions of the Appellate
Division's Decision and Order. On August 17, 2000, the Appellate Division, First
Department issued an order denying plaintiffs' motion for reargument of their
appeal. Also on August 17, 2000, plaintiffs filed a motion in the Supreme Court
seeking leave to file an amended class action complaint. Defendants have filed
papers in opposition to plaintiffs' motion and oral argument is scheduled for
December 7, 2000.
The Partnership Agreement provides for indemnification, to the fullest
extent provided by law, for any person or entity named as a party to any
threatened, pending or completed lawsuit by reason of any alleged act or
omission arising out of such person's activities as a General Partner or as an
officer, director or affiliate of either RPOM, MLOM or the General Partner,
subject to specified conditions. In connection with the purported class action
noted above, the Partnership has received notices of requests for
indemnification from the following defendants named therein: the General
Partner, MLOM, RPOM, Merrill Lynch & Co., Inc., and Merrill Lynch. For the three
and nine months ended September 30, 2000, the Partnership incurred approximately
$28,000 and $82,000, respectively, for legal costs relating to such
indemnification. For the three and nine months ended September 30, 1999, the
Partnership incurred approximately $30,000 and $111,000, respectively, for legal
costs relating to such indemnification. Such cumulative costs amount to
approximately $596,000 through September 30, 2000.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Liquidity and Capital Resources.
As of September 30, 2000, Registrant had $11,079,078 in cash and cash
equivalents.
Pursuant to the Amended and Restated Agreement of Limited Partnership (the
"Partnership Agreement"), Registrant is in dissolution and its only remaining
activity is to wind up its affairs, which includes providing for or resolving
its remaining obligations and contingencies (see below), and making a final cash
distribution, if any, to its partners. As of September 30, 2000, Registrant's
obligations and contingencies relating to its former investments amounted to
approximately $1.7 million, in the aggregate, and are recorded as a liability in
the financial statements of Registrant. The General Partner intends to resolve
these obligations and contingencies as soon as practicable. However, as a result
of outstanding litigation (see below), Registrant has experienced a delay in its
liquidation.
Registrant's ongoing cash needs will be to fund its existing obligations
and costs in connection with the liquidation of Registrant, as well as providing
for costs and expenses related to the purported class action lawsuit described
below. Media Opportunity Management Partners (the "General Partner") currently
anticipates that the pendency of such litigation, as described below, related
claims against Registrant for indemnification, other costs and expenses related
to such litigation, and the involvement of management, will adversely affect (a)
the timing of the termination of Registrant, (b) the amount of proceeds which
may be available for distribution, and (c) the timing of the distribution to the
limited partners of any net proceeds that remain after resolving such
obligations and contingencies.
Pursuant to an amendment to the Partnership Agreement (the "Amendment")
dated March 24, 1997, Registrant's obligation to pay a Partnership Management
Fee and a Property Management Fee for 1996 and subsequent periods was
terminated. Therefore, although the General Partner continues to provide
services on behalf of Registrant, Registrant did not pay for these services and
will not pay for such services in the future. However, in accordance with
generally accepted accounting principles, for financial reporting purposes, an
amount equal to these services for the three and nine months ended September 30,
2000 of $467,785 and $1,403,356, respectively, has been treated in the
accompanying statements of operations as an expense with a corresponding
increase in General Partner's capital due to the capital contributions for
services provided by the General Partner. In conjunction with the General
Partner's capital increase, a transfer was made to the limited partners' capital
for the limited partners' share (99%) of the capital contribution of such
services. The foregoing expense and capital transfer have no effect on the
capital of the limited partners or the General Partner.
On August 29, 1997, a purported class action was commenced in New York
Supreme Court, New York County, on behalf of the limited partners of Registrant,
against Registrant, the General Partner, the General Partner's two partners, ML
Opportunity Management Inc. ("MLOM") and RP Opportunity Management, L.P.
("RPOM"), Merrill Lynch & Co., Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch"). The action concerns Registrant's payment of
certain management fees and expenses to the General Partner and the payment of
certain purported fees to an affiliate of RPOM.
Specifically, the plaintiffs allege breach of the Partnership Agreement,
breach of fiduciary duties and unjust enrichment by the General Partner in that
the General Partner allegedly: (1) improperly failed to return to plaintiffs and
the alleged class members certain uninvested capital contributions in the amount
of $18.5 million (less certain reserves), (2) improperly paid itself management
fees in the amount of $18.3 million, and (3) improperly paid Multivision Cable
TV Corp., an affiliate of RPOM, supposedly duplicative management fees in an
amount in excess of $6 million. In addition, plaintiffs assert a claim for
quantum meruit, supposedly seeking credit for, and counsel fees based on, the
benefit received by the limited partners as a result of the voluntary payment
made by Merrill Lynch to Registrant in March 1997, in the amount of
approximately $23 million, representing management fees, certain expenses, and
interest paid by Registrant to the General Partner since 1990.
With respect to Merrill Lynch & Co., Inc., Merrill Lynch, MLOM and RPOM,
plaintiffs claim that these defendants aided and abetted the General Partner in
the alleged breach of the Partnership Agreement and in the alleged breach of the
General Partner's fiduciary duties. Plaintiffs seek, among other things, an
injunction barring defendants from paying themselves management fees or expenses
not expressly authorized by the Partnership Agreement, an accounting,
disgorgement of the alleged improperly paid fees and expenses, return of
uninvested capital contributions, counsel fees, and compensatory and punitive
damages. Defendants believe that they have good and meritorious defenses to the
action, and vigorously deny any wrongdoing with respect to the alleged claims.
Defendants moved to dismiss the complaint and each claim for relief therein. On
March 3, 1999, the New York Supreme Court issued an order granting defendants'
motion and dismissing plaintiffs' complaint in its entirety, principally on the
grounds that the claims are derivative and plaintiffs lack standing to bring
suit because they failed to make a pre-litigation demand on the General Partner.
On June 8, 2000, the New York Supreme Court, Appellate Division - First
Department issued a Decision and Order, unanimously affirming the New York
Supreme Court's dismissal of the plaintiffs' complaint in its entirety. On June
13, 2000, the New York Supreme Court denied plaintiffs' motion to clarify or
modify the Court's March 3, 1999 order. On June 23, 2000, plaintiffs filed a
motion for reargument with respect to certain portions of the Appellate
Division's Decision and Order. On August 17, 2000, the Appellate Division, First
Department issued an order denying plaintiffs' motion for reargument of their
appeal. Also on August 17, 2000, plaintiffs filed a motion in the Supreme Court
seeking leave to file an amended class action complaint. Defendants have filed
papers in opposition to plaintiffs' motion and oral argument is scheduled for
December 7, 2000.
The Partnership Agreement provides for indemnification, to the fullest
extent provided by law, for any person or entity named as a party to any
threatened, pending or completed lawsuit by reason of any alleged act or
omission arising out of such person's activities as a General Partner or as an
officer, director or affiliate of either RPOM, MLOM or the General Partner,
subject to specified conditions. In connection with the purported class action
noted above, Registrant has received notices of requests for indemnification
from the following defendants named therein: the General Partner, MLOM, RPOM,
Merrill Lynch & Co., Inc., and Merrill Lynch. For the three and nine months
ended September 30, 2000, Registrant incurred approximately $28,000 and $82,000,
respectively, for legal costs relating to such indemnification. For the three
and nine months ended September 30, 1999, the Partnership incurred approximately
$30,000 and $111,000, respectively, for legal costs relating to such
indemnification. Such cumulative costs amount to approximately $596,000 through
September 30, 2000.
Forward Looking Information
In addition to historical information contained or incorporated by
reference in this report on Form 10-Q, Registrant may make or publish
forward-looking statements about management expectations, strategic objectives,
business prospects, anticipated financial performance, and other similar
matters. In order to comply with the terms of the safe harbor for such
statements provided by the Private Securities Litigation Reform Act of 1995,
Registrant notes that a variety of factors, many of which are beyond its
control, affect its operations, performance, business strategy, and results and
could cause actual results and experience to differ materially from the
expectations expressed in these statements. These factors include, but are not
limited to, the effect of changing economic and market conditions, trends in
business and finance and in investor sentiment, the level of volatility of
interest rates, the impact of current, pending, and future legislation and
regulation both in the United States and throughout the world, and the other
risks and uncertainties detailed in this Form 10-Q. Registrant undertakes no
responsibility to update publicly or revise any forward-looking statements.
Results of Operations.
Three months ended September 30, 2000 and 1999.
Registrant generated a net loss of approximately $351,000 in the three
months ended September 30, 2000, which was comprised of services provided by the
General Partner of approximately $468,000 and professional fees and other
expenses of approximately $31,000, partially offset by interest and other income
of approximately $148,000.
Registrant generated a net loss of approximately $387,000 in the three
months ended September 30, 1999, which was comprised of services provided by the
General Partner of approximately $461,000, and professional fees and other
expenses of approximately $42,000, partially offset by interest and other income
of approximately $116,000.
The decrease in net loss of approximately $35,000 from the 1999 period is
primarily attributable to a decrease in professional fees and an increase in
interest and other income due to higher cash balances at the Parent level and
higher interest rates for the 2000 period, partially offset by an increase in
services provided by the General Partner.
Registrant's net income, excluding services provided by the General
Partner, due to the termination of Registrant's obligation to pay for management
fees since 1996, was approximately $116,000 and $75,000, for the three months
ended September 30, 2000 and 1999, respectively.
Nine months ended September 30, 2000 and 1999.
Registrant generated a net loss of approximately $1.1 million in the first
nine months of 2000, which was comprised of services provided by the General
Partner of approximately $1.4 million and professional fees and other expenses
of approximately $96,000, partially offset by interest and other income of
approximately $448,000.
Registrant generated a net loss of approximately $1.3 million in the first
nine months of 1999, which was comprised of services provided by the General
Partner of approximately $1.4 million and professional fees and other expenses
of approximately $226,000, partially offset by interest and other income of
approximately $341,000.
The decrease in net loss of approximately $218,000 from the 1999 period is
primarily attributable to a decrease in professional fees and other expenses,
including wind up costs incurred in 1999, and an increase in interest and other
income due to higher cash balances at the Parent level and higher interest rates
for the 2000 period, partially offset by an increase in services provided by the
General Partner.
Registrant's net income, excluding services provided by the General
Partner, due to the termination of Registrant's obligation to pay for management
fees since 1996, was approximately $353,000 and $115,000, for the nine months
ended September 30, 2000 and 1999, respectively.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
As of September 30, 2000, Registrant maintains a portion of its cash
equivalents in financial instruments with original maturities of three months or
less. These financial instruments are subject to interest rate risk, and will
decline in value if interest rates increase. A significant increase or decrease
in interest rates would not have a material effect on Registrant's financial
position.
PART II - OTHER INFORMATION.
Item 1. Legal Proceedings.
On August 29, 1997, a purported class action was commenced in New York
Supreme Court, New York County, on behalf of the limited partners of Registrant,
against Registrant, the General Partner, the General Partner's two partners,
MLOM and RPOM, Merrill Lynch & Co., Inc. and Merrill Lynch. The action concerns
Registrant's payment of certain management fees and expenses to the General
Partner and the payment of certain purported fees to an affiliate of RPOM.
Specifically, the plaintiffs allege breach of the Partnership Agreement,
breach of fiduciary duties and unjust enrichment by the General Partner in that
the General Partner allegedly: (1) improperly failed to return to plaintiffs and
the alleged class members certain uninvested capital contributions in the amount
of $18.5 million (less certain reserves), (2) improperly paid itself management
fees in the amount of $18.3 million, and (3) improperly paid Multivision Cable
TV Corp., an affiliate of RPOM, supposedly duplicative management fees in an
amount in excess of $6 million. In addition, plaintiffs assert a claim for
quantum meruit, supposedly seeking credit for, and counsel fees based on, the
benefit received by the limited partners as a result of the voluntary payment
made by Merrill Lynch to Registrant in March 1997, in the amount of
approximately $23 million, representing management fees, certain expenses, and
interest paid by Registrant to the General Partner since 1990.
With respect to Merrill Lynch & Co., Inc., Merrill Lynch, MLOM and RPOM,
plaintiffs claim that these defendants aided and abetted the General Partner in
the alleged breach of the Partnership Agreement and in the alleged breach of the
General Partner's fiduciary duties. Plaintiffs seek, among other things, an
injunction barring defendants from paying themselves management fees or expenses
not expressly authorized by the Partnership Agreement, an accounting,
disgorgement of the alleged improperly paid fees and expenses, return of
uninvested capital contributions, counsel fees, and compensatory and punitive
damages. Defendants believe that they have good and meritorious defenses to the
action, and vigorously deny any wrongdoing with respect to the alleged claims.
Defendants moved to dismiss the complaint and each claim for relief therein. On
March 3, 1999, the New York Supreme Court issued an order granting defendants'
motion and dismissing plaintiffs' complaint in its entirety, principally on the
grounds that the claims are derivative and plaintiffs lack standing to bring
suit because they failed to make a pre-litigation demand on the General Partner.
On June 8, 2000, the New York Supreme Court, Appellate Division - First
Department issued a Decision and Order, unanimously affirming the New York
Supreme Court's dismissal of the plaintiffs' complaint in its entirety. On June
13, 2000, the New York Supreme Court denied plaintiffs' motion to clarify or
modify the Court's March 3, 1999 order. On June 23, 2000, plaintiffs filed a
motion for reargument with respect to certain portions of the Appellate
Division's Decision and Order. On August 17, 2000, the Appellate Division, First
Department issued an order denying plaintiffs' motion for reargument of their
appeal. Also on August 17, 2000, plaintiffs filed a motion in the Supreme Court
seeking leave to file an amended class action complaint. Defendants have filed
papers in opposition to plaintiffs' motion and oral argument is scheduled for
December 7, 2000.
The Partnership Agreement provides for indemnification, to the fullest
extent provided by law, for any person or entity named as a party to any
threatened, pending or completed lawsuit by reason of any alleged act or
omission arising out of such person's activities as a General Partner or as an
officer, director or affiliate of either RPOM, MLOM or the General Partner,
subject to specified conditions. In connection with the purported class action
noted above, Registrant has received notices of requests for indemnification
from the following defendants named therein: the General Partner, MLOM, RPOM,
Merrill Lynch & Co., Inc., and Merrill Lynch. For the three and nine months
ended September 30, 2000, Registrant incurred approximately $28,000 and $82,000,
respectively, for legal costs relating to such indemnification. Such cumulative
costs amount to approximately $596,000 through September 30, 2000.
Registrant is not aware of any other material
legal proceedings.
Item 2. Changes in Securities and Use of Proceeds.
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security
Holders.
None
Item 5. Other Information.
None
Item 6. Exhibits and Reports on Form 8-K.
A). Exhibits:
Exhibit # Description
27. Financial Data Schedule
B). Reports on Form 8-K
None
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.
ML MEDIA OPPORTUNITY PARTNERS, L.P.
By: Media Opportunity Management Partners
General Partner
By: RP Opportunity Management, L.P.
General Partner
By: IMP Opportunity Management Inc.
Dated: November 13, 2000 /s/ I. Martin Pompadur
------------------------------------------
I. Martin Pompadur
Director and President
(principal executive officer
of the Registrant)
Dated: November 13, 2000 /s/ Elizabeth McNey Yates
-------------------------------------------
Elizabeth McNey Yates
Executive Vice President
<PAGE>
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.
ML MEDIA OPPORTUNITY PARTNERS, L.P.
By: Media Opportunity Management Partners
General Partner
By: ML Opportunity Management, Inc.
Dated: November 13, 2000 /s/ Kevin K. Albert
-------------------------------------------
Kevin K. Albert
Director and President
Dated: November 13, 2000 /s/ James V. Caruso
-------------------------------------------
James V. Caruso
Director and Executive Vice President
Dated: November 13, 2000 /s/ Anthony J. Lafaire
-------------------------------------------
Anthony J. Lafaire
Director and Vice President
Dated: November 13, 2000 /s/ Sandhya Rana
-------------------------------------------
Sandhya Rana
Vice President and Treasurer
(principal accounting officer and
principal financial officer
of Registrant)
