UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended September 30, 1996
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 0-17469
CINEMA PLUS, L.P.
(Exact name of registrant as specified in its certificate
of Limited Partnership)
Delaware 13-3437795
(State or other jurisdiction of (IRS
Employer
incorporation or organization) Identification
No.)
1100 Avenue of the Americas, New York, New York 10036
(Address of principal executive offices) (Zip Code)
(212) 512-1000
(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____
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
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<CAPTION>
INDEX
PAGE
<S>
<C>
Balance Sheets at September 30, 1996 and December 31,
1995......................3
Statements of Operations for the Three and Nine Months
Ended September 30, 1996 and
1995......................................................
.. ..........4
Statements of Cash Flows for the Nine Months Ended
September 30, 1996 and
1995......................................................
.. ..........5
Notes to Financial
Statements................................................
.. ......................6
</TABLE>
<PAGE>
CINEMA PLUS, L.P
(A Delaware Limited Partnership)
BALANCE SHEETS
Unaudited
(000's Omitted)
<TABLE>
<CAPTION>
Unaudited
September
December 30,
31,
19 1
96 995
<S> <C> <C>
ASSETS
Cash and Cash Equivalents $97 192
Short-Term Investments 2,300 2,306
Receivable from HBO (Note 2) 1,340 1,334
Assured Return of Film
Investment Payment
Receivable (Note 4) 21,640 21,355
Motion Picture Production
Costs, net ofaccumulated
amortization of $98,017 and
$97,780, respectively
406 751
Total $ $
Assets 25,783 25,938
LIABILITIES AND PARTNERS'
CAPITAL
Liabilities:
Accrued Expenses and Accounts $ $
Payable 161 205
Payable to General Partners 478 718
(Note 5)
Deferred Revenue 0 177
Payable to HBO (Notes 3 & 4)
4,757 4,600
Total $ $
Liabilities 5,396 5,700
Partners' Capital (Note 7):
General Partners $ $
(172) (173)
Limited Partners
20,559 20,411
Total $ $
Partners' Capital 20,387 20,238
Total
Liabilities and Partners'
$ $
Capital 25,783 25,938
See accompanying notes to the financial
statements. </TABLE>
<PAGE>
CINEMA PLUS, L.P.
(A Delaware Limited
Partnership)
STATEMENTS OF OPERATIONS
Unaudited
(000's Omitted, except net income per unit)
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30,
Ended September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net Revenue from Motion
Pictures
(Note 7) $ $ $
$
10 218 1,245 655
Expenses:
Motion Picture (3) 122 237 412
Production Costs
Professional and
Other Fees 91 86 247 262
88 208 484 674
Income (Loss) from
Operations 78) 10 761 (19)
Assured Return of Film
Investment
Payment (Note 4) 365 324 285 1,168
HBO Interest Recoupment (80) (39) (210) (247)
(Note 4)
Interest Expense (Notes (42) (56) (127) (202)
3 & 6)
Interest Income
30 28 96 85
Net Income $ $ $ $
195 267 805 785
Net Income Attributable
to
General Partners $ $ $ $
2 3 8 8
Net Income Attributable
to Limited
Partners $ $ $ $
193 264 797 777
Net Income Per Unit of
Limited
Partnership Interest
(43,286 units) $ $ $ $
4.46 6.10 18.41 17.95
See accompanying notes to the financial
statements.
</TABLE>
<PAGE>
CINEMA PLUS, L.P.
(A Delaware Limited
Partnership) STATEMENTS OF
CASH FLOWS
Unaudited
(000's Omitted)
<TABLE>
<CAPTION>
For the Nine Months Ended September 30,
1996 1995
<S>
<C> <C>
Operating Activities:
Net Income $ $
805 785
Adjustments to Reconcile Net
Income to
Net Cash Provided by Operating
Activities:
(Increase) Decrease in (6) 962
Receivable from HBO
Increase in Assured Return of
Film
Investment Payment (285) (1,168)
Receivable
Decrease in Motion Picture 108 163
Production Costs
Amortization of Motion
Picture Production
Costs 237 412
Decrease in Accrued Expenses
and Accounts
Payable (44) (123)
Decrease in Payable to (240) (221)
General Partners
(Decrease) Increase in
Deferred Revenue (177) 23
Net Cash Provided by
Operating Activities 398 833
Investing Activities:
Purchase of Short-Term (4,241) (5,245)
Investments
Redemption of Short-Term
Investments 4,247 5,658
Net Cash Provided by
Investing Activities 6 413
Financing Activities:
Increase (Decrease) in Payable to 157
HBO (1,081)
Distributions Paid to Partners
(656) (437)
Net Cash Used by
Financing Activities (499) (1,518)
Decrease In Cash and Cash (95) (272)
Equivalents
Cash and Cash Equivalents at
beginning of year 192 359
Cash and Cash Equivalents at end $ $
of period 97 87
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
CINEMA PLUS, L.P.
(A Delaware Limited
Partnership) NOTES TO
FINANCIAL STATEMENTS
Unaudited
1. Basis of Presentation
The accompanying unaudited financial statements have
been prepared in accordance with generally accepted
accounting principles for interim financial reporting.
They do not include all information and footnotes required
by generally accepted accounting principles for complete
financial statements. The information furnished includes
all adjustments of a normal recurring nature which are, in
the opinion of management, necessary to present fairly the
Partnership's financial position as of September 30, 1996
and the results of its operations and changes in cash
flows for the periods ended September 30, 1996 and 1995.
Results of operations for the period ended September 30,
1996 are not necessarily indicative of the results that
may be expected for the entire year.
2. Receivable from HBO
(a) Network Receivable from HBO
Pursuant to the HBO License Agreement, the
Partnership has granted domestic network television
distribution rights in the Films to HBO, and HBO has
caused such rights to be licensed to Warner Bros. HBO
and Warner Bros. receive in the aggregate a distribution
fee of no more than 20% of the gross proceeds received
from the exploitation
of their network television distribution rights in each
Film. The remaining revenues, less distribution expenses
and guild residuals, are remitted to the Partnership.
During the nine month period ended September 30, 1996, a
second network license between Warner Bros. and ABC was
entered into with respect to the Film "Ricochet."
Accordingly, during the nine month period ended September
30, 1996, the Partnership recognized net revenue of
$887,000 with respect to "Ricochet." As of September 30,
1996, $1,340,000 is recorded as a network receivable from
HBO with respect to the Film "Ricochet."
(b) Foreign Receivable from HBO
As the HBO Commitment with respect to "Ricochet" has
been fully repaid, any additional foreign receipts for
this Film are being remitted to the Partnership net of any
guild residuals, distribution fees and expenses. During
the nine month period ended September 30, 1996, the
Partnership received $821,000 (including interest) from
the foreign distribution of the Film "Ricochet." As of
September 30, 1996, there is no foreign receivable from
HBO.
(c) Net Domestic Video
During the nine month period ended September 30, 1996,
the Partnership recognized revenue of $90,000 from net
domestic home video distribution of all of its Films.
During the nine month period ended September 30, 1996, the
Partnership received $150,000 from the net domestic video
distribution of all of its Films. As of September 30,
1996, there is no net domestic video receivable from HBO.
3. Payable to HBO
The payable to HBO at September 30, 1996 and
December 31, 1995 (including accrued interest) consists
of the following amounts:
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<CAPTION>
9/30/96 12/31/95
<S> <C> <C>
HBO Commitment $ $
365,000 404,000
Print and Advertising 214,000 228,000
Expenditures
HBO Interest Recoupment (See
Note 4) 4,178,000 3,968,000
Total $ $
4,757,000 4,600,000
</TABLE>
(a) HBO Commitment
During the nine month period ended September 30, 1996,
an aggregate of $58,000 (including interest) of the HBO
Commitments with respect to "Don't Tell Mom" and "Mom and
Dad Save the World" was repaid from net Foreign
Distribution Advances with respect to these Films. In
addition, interest was accrued in the amount of $127,000
for the nine months ended September 30, 1996. Based upon
current revised estimates of ultimate net foreign revenues
as of September 30, 1996, it is anticipated that HBO will
be unable to recoup the HBO Commitment in the amount of
$2,564,000 with respect to "Mom and Dad Save the World."
As a result, the Partnership's Payable to HBO has been
reduced by $108,000 for "Mom and Dad Save the World"
during the nine months ended September 30, 1996, with a
corresponding reduction to the capitalized Motion Picture
Production Costs of this Film.
(b) Print and Advertising Expenditures
During the nine month period ended September 30, 1996,
the Partnership recognized $1,000 from the domestic
theatrical distribution of its Films, all of which has
been applied to the payable of print and advertising
expenditures incurred to date. During the nine month
period ended September 30, 1996, the Partnership repaid to
HBO a portion of the print and advertising expenses
incurred for the Film
"Mom & Dad Save the World" in the amount of $23,000 from
the net domestic video revenue received with respect to
that Film. During the nine month period ended September
30, 1996, the Partnership increased its payable to HBO for
print and advertising expenses incurred for the Film "Mom
& Dad Save the World" in the amount of $10,000.
4. Assured Return of Film Investment Payment and the HBO
Interest Recoupment
Based on the anticipated performance of each of the
four Films in release at September 30, 1996, it is
expected that HBO will be required to make an Assured
Return of Film Investment Payment ("ARFIP") with respect
to each of these Films. Accordingly, $21,640,000 (amount
present valued) was recorded by the Partnership as a
receivable from HBO in the accompanying financial
statements as of September 30, 1996.
With respect to any Film for which an ARFIP is made,
HBO will be thereafter entitled to receive from the
Partnership any additional revenues received by the
Partnership with respect to that Film until the entire
amount of such ARFIP has been recouped by HBO. If HBO has
not recouped the ARFIP for a Film by July 1999, the
Partnership will be required to pay to HBO within one
month thereafter an amount (the "HBO Interest Recoupment")
equal to the lesser of: (a) the sum of the unrecouped
ARFIP and the non-standard television residuals for such
Film or (b) the Per Film Interest (as defined below).
"Per Film Interest" represents the interest income earned
on Partnership funds awaiting investment in Films divided
by the four Partnership Films. Accordingly, an HBO
Interest recoupment in the amount of $4,178,000 (amount
present valued) has been recorded by the Partnership and
included in the Payable to HBO in the accompanying
financial statements as of September 30, 1996.
5. Payable to General Partners
A portion of the Production and Overhead Fee is paid to
the General Partners in accordance with a set schedule.
Interest accrues on the balance at a rate equal to the
interest rate earned by the Partnership on the short-term
investment of its funds. Accordingly, as of September 30,
1996, $478,000 is recorded as a Payable to General
Partners in the accompanying financial statements.
6. Supplemental Disclosure of Cash Flow Information
The Partnership paid $16,000 and $323,000 of interest
in the nine months ended September 30, 1996 and 1995,
respectively.
7. Current Operations
The Partnership has financed four Films. All of these
Films have completed their domestic theatrical and initial
video releases and are being distributed in various
ancillary media. No other films will be financed by the
Partnership.
During the nine months ended September 30, 1996, the
Partnership recognized net revenue in the amounts of
$1,000, $280,000, $887,000 and $90,000 with respect to the
domestic theatrical, foreign, network television and net
domestic video markets, respectively, of its Films.
During the nine months ended September 30, 1996, the third
party participation expense for "Don't Tell Mom" was
increased by $13,000 thereby decreasing the Partnership's
net revenue for the period.
For the purpose of computing net income per unit, the
income has been allocated 99% to the limited partners and
1% to the Administrative General Partner.
8. Additional Information
Additional information, including the audited 1995
Financial Statements and the Summary of Significant
Accounting Policies, is included in the Partnership's
Annual Report on Form 10-K for the year ended December 31,
1995 on file with the Securities and Exchange Commission.
9. Legal Proceedings
On August 14, 1995 a lawsuit styled as a class action was
filed by two holders of
Cinema Plus limited partnership units in the United States
District Court of the Western District of Pennsylvania
against HBO Film Management, Inc. and Entertainment
Finance Services, Inc., the general partners of Cinema
Plus, Home Box Office, Inc., and Kidder, Peabody & Co.,
Incorporated and Smith Barney Inc., two of the
underwriters of the original sale of limited partnership
units of Cinema Plus. Cinema Plus has not been named as a
defendant in the lawsuit. The lawsuit alleges various
violations of law by the defendants in connection with the
original sale of limited partnership units of Cinema Plus
and the subsequent operation of Cinema Plus. The action
was dismissed on March 4, 1996. On March 20, 1996 the
plaintiffs filed a Notice of Appeal in the Third Circuit
Court of Appeals. Oral argument before the Third Circuit
Court of Appeals was heard on October 3, 1996. The
defendants believe the lawsuit to be without merit and are
vigorously defending it.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results
of Operations
a. Financial Condition
As of September 30, 1996, the Partnership held cash and
cash equivalents of $97,000 and short-term investments of
$2,300,000.
The Partnership invested in the production of four Films.
As of September 30, 1996, an aggregate of $98,423,000
(including the HBO Commitments) had been incurred toward
the production and theatrical release of these Films.
Prior to the receipt of the ARFIP receivable, no
significant cash outlays are expected to be made by the
Partnership other than its operating expenses and the
satisfaction of the Partnership's payables to HBO (except
for the HBO Interest Recoupment). Subsequent to the
receipt of the ARFIP in 1998 and 1999, additional cash
outlays are expected to be made to HBO for payment of the
HBO Interest Recoupment, as well as to pay the
Partnership's operating expenses and to make distributions
to partners. In the event that the Partnership terminates
or is dissolved prior to the time that an Assured Return
of Film Investment Payment is to be made, provision will
be made in accordance with the limited partnership
agreement for payment of such Assured Return of Film
Investment Payment at the time, and to the limited
partners to whom, it would otherwise become due. Such
provision may include the appointment of a liquidating
trustee to receive such payments and transmit them to the
former limited partners.
As of September 30, 1996, the Partnership's net payable
to HBO totaled $4,757,000. Of this amount, $4,178,000
relates to the HBO Interest Recoupment which is payable
within one month after the last ARFIP proceeds are
received from HBO. Based on current estimates of ultimate
net revenues, it is anticipated that the remainder of the
payable to HBO at September 30, 1996 will be substantially
repaid to HBO within the next two years.
Since the Partnership is not anticipating significant
future revenues (other than those used to repay HBO) until
the Assured Return of Film Investment Payments are
received from HBO in 1998 and 1999, the Partnership's
future operating expenses are expected to be met from
current cash
and short-term investments. Management believes that the
cash and short-term investments held at September 30, 1996
are sufficient to meet its liquidity needs without the
need to obtain external financing from a third party or
its General Partners. During the nine month period ended
September 30, 1996, the Partnership made a distribution to
the partners in the amount of $656,000 ($15 per unit).
However, future cash distributions will be made only as
significant cash becomes available from the exploitation
of the Films in excess of the payables due to HBO or as
the Assured Return of Film Investment Payments are
received from HBO.
b. Results of Operations
For the three month period ended September 30, 1996,
the Partnership recorded net revenue of $10,000 due
primarily to the performance of its Films in the network
television and foreign markets. For the three months
ended September 30, 1996, the Partnership recorded an
increase in the Assured Return of Film Investment Payment
of $365,000 primarily due to the decrease in the discount
period. The Partnership recorded HBO Interest Recoupment
expense of $80,000 due primarily to the decrease in the
discount period.
For the three month period ended September 30, 1995, the
Partnership recorded net revenue of $218,000 due primarily
to the performance of its Films in the foreign markets
offset by amortization of related Motion Picture
Production Costs of $122,000. For the three months ended
September 30, 1995, the Partnership recorded an increase
in the Assured Return of Film Investment Payment of
$324,000 due primarily to the decrease in the discount
period. The Partnership recorded HBO Interest Recoupment
expense of $39,000 due primarily to the decrease in the
discount period.
For the nine month period ended September 30, 1996, the
Partnership recorded net revenue of $1,245,000 due
primarily to the performance of its Films in the network
television and foreign markets offset by amortization of
related Motion Picture Production Costs of $237,000. For
the nine months ended September 30, 1996, the Partnership
recorded an increase in the Assured Return of Film
Investment Payment of $285,000 primarily due to the
decrease in the discount period offset in part by an
increase in the ultimate net revenue projections with
respect to "Ricochet." The Partnership recorded HBO
Interest Recoupment expense of $210,000 due primarily to
the decrease in the discount period.
For the nine month period ended September 30, 1995, the
Partnership recorded net revenue of $655,000 due primarily
to the performance of its Films in the foreign markets
offset by amortization of related Motion Picture
Production Costs of $412,000. For the nine months ended
September 30, 1995, the Partnership recorded an increase
in the Assured Return of Film Investment Payment of
$1,168,000 primarily due to the decrease in the discount
period. The Partnership recorded HBO Interest Recoupment
expense of $247,000 due primarily to the decrease in the
discount period.
<PAGE>
PART II-OTHER INFORMATION
Item 1. Legal Proceedings
On August 14, 1995 a lawsuit styled as a class action
was filed by two holders of
Cinema Plus limited partnership units in the United
States District Court of the Western District of
Pennsylvania against HBO Film Management, Inc. and
Entertainment Finance Services, Inc., the general
partners of Cinema Plus, Home Box Office, Inc., and
Kidder, Peabody & Co., Incorporated and Smith Barney
Inc., two of the underwriters of the original sale of
limited partnership units of Cinema Plus. Cinema
Plus has not been named as a defendant in the
lawsuit. The lawsuit alleges various violations of
law by the defendants in connection with the original
sale of
limited partnership units of Cinema Plus and the
subsequent operation of Cinema Plus. The action was
dismissed on March 4, 1996. On March 20, 1996 the
plaintiffs filed a Notice of Appeal in the Third
Circuit Court of Appeals. Oral argument before the
Third Circuit Court of Appeals was heard on October
3, 1996. The defendants believe the lawsuit to be
without merit and are vigorously defending it.
Item 2. Changes in Securities
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
<TABLE>
<CAPTION>
EXHIBIT
NUMBERDESCRIPTIONPAGE NUMBER
<S> <C>
<C>
27 Financial Data
Schedule
</TABLE>
B). The Partnership did not file any reports on Form
8K during the quarter ended
September 30, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and
Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned
thereunto duly authorized.
CINEMA PLUS, L.P.
a Delaware Limited
Partnership
By: Entertainment Finance
Services, Inc.,
as Administrative
General Partner
November 12, 1996 By: /s/ Bradley J. Wechsler
Date Bradley J. Wechsler
President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial
information extracted from Balance Sheets and Statements
of Operations for the third quarter ended September 30,
1996 Form 10Q of Cinema Plus, L.P. and is qualified in
its entirety by reference to such financial statements.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 97,000
<SECURITIES> 2,300,000
<RECEIVABLES> 22,980,000
<ALLOWANCES> 0
<INVENTORY> 406,000
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 25,783,000
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 20,387,000
<TOTAL-LIABILITY-AND-EQUITY> 25,783,000
<SALES> 0
<TOTAL-REVENUES> 1,626,000
<CGS> 0
<TOTAL-COSTS> 484,000
<OTHER-EXPENSES> 210,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 127,000
<INCOME-PRETAX> 805,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 805,000
<EPS-PRIMARY> 18.41
<EPS-DILUTED> 0
</TABLE>
