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 March 31, 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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INDEX
PAGE
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Balance Sheets at March 31, 1996 and December 31,
1995...................3
Statements of Operations for the Three Months Ended
March 31, 1996 and
1995........................................................
..........4
Statements of Cash Flows for the Three Months Ended
March 31, 1996 and
1995........................................................
..........5
Notes to Financial
Statements..................................................
...............6
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CINEMA PLUS, L.P
(A Delaware Limited Partnership)
BALANCE SHEETS
Unaudited
(000's Omitted)
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Unaudited
March December
31, 31,
1 1
996 995
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ASSETS
Cash and Cash Equivalents $ $
1,032 192
Short-Term Investments 2,352 2,306
Receivable from HBO (Note 2) 352 1,334
Assured Return of Film
Investment Payment
Receivable (Note 4) 20,987 21,355
Motion Picture Production
Costs, net of
accumulated amortization of
$97,924 and
$97,780, respectively
564 751
Total $ $
Assets 25,287 25,938
LIABILITIES AND PARTNERS'
CAPITAL
Liabilities:
Accrued Expenses and Accounts $ $
Payable 201 205
Payable to General Partners 727 718
(Note 5)
Deferred Revenue 0 177
Payable to HBO (Notes 3 & 4)
4,625 4,600
Total $ $
Liabilities 5,553 5,700
Partners' Capital (Note 7):
General Partners $ $
(178) (173)
Limited Partners
19,912 20,411
Total $ $
Partners' Capital 19,734 20,238
Total
Liabilities and Partners'
$ $
Capital 25,287 25,938
See accompanying notes to the financial statements.
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CINEMA PLUS, L.P.
(A Delaware Limited Partnership)
STATEMENTS OF OPERATIONS
Unaudited
(000's Omitted, except net (loss) income per unit)
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For the Three
Months Ended March 31,
1996 1995
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Net Revenue from Motion
Pictures
(Note 7) $ $
162 266
Expenses:
Motion Picture 144 183
Production Costs
Professional and
Other Fees 69 79
213 262
(Loss) Income from
Operations (51) 4
Assured Return of Film
Investment
Payment (Note 4) (368) 396
HBO Interest Recoupment (77) (84)
(Note 4)
Interest Expense (Notes (43) (77)
3 & 6)
Interest Income
35 28
Net (Loss) Income $ $
(504) 267
Net (Loss) Income
Attributable to
General Partners $ $
(5) 3
Net (Loss) Income
Attributable to
Limited Partners $ $
(499) 264
Net (Loss) Income Per
Unit of
Limited Partnership
Interest
(43,286 units) $(11.5 $
3) 6.10
See accompanying notes to the financial statements.
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CINEMA PLUS, L.P.
(A Delaware Limited Partnership)
STATEMENTS OF CASH FLOWS
Unaudited
(000's Omitted)
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For the Three Months Ended March 31,
1996 1995
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Operating Activities:
Net (Loss) Income $ $
(504) 267
Adjustments to Reconcile Net
(Loss) Income to
Net Cash Provided by Operating
Activities:
Decrease in Receivable from 982 57
HBO
Decrease (Increase) in
Assured Return of Film
Investment Payment 368 (396)
Receivable
Decrease in Motion Picture 43 83
Production Costs
Amortization of Motion
Picture Production
Costs 144 183
Decrease in Accrued Expenses
and Accounts
Payable (4) (25)
Increase in Payable to 9 14
General Partners
(Decrease) Increase in
Deferred Revenue (177) 6
Net Cash Provided by
Operating Activities 861 189
Investing Activities:
Purchase of Short-Term (1,966) (1,337)
Investments
Redemption of Short-Term
Investments 1,920 1,253
Net Cash Used by
Investing Activities (46) (84)
Financing Activities:
Increase (Decrease) in Payable to
HBO 25 (182)
Net Cash Provided (Used)
by Financing
Activities
25 (182)
Increase (Decrease) In Cash and
Cash
Equivalents 840 (77)
Cash and Cash Equivalents at
beginning of year 192 359
Cash and Cash Equivalents at end $ $
of period 1,032 282
See accompanying notes to the financial statements.
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<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 March 31, 1996 and
the results of its operations and changes in cash flows for
the periods ended March 31, 1996 and 1995. Results of
operations for the period ended March 31, 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 three month period ended March 31, 1996, the
Partnership recognized net expenses of $102,000 with respect
to "Ricochet." As of March 31, 1996, $351,000 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 future foreign receipts for this Film
shall be remitted to the Partnership net of any guild
residuals, distribution fees and expenses. During the three
month period ended March 31, 1996, the Partnership received
$820,000 (including interest) from the foreign distribution
of the Film "Ricochet." As of March 31, 1996, $1,000 is
recorded as a foreign receivable from HBO.
(c) Net Domestic Video
During the three month period ended March 31, 1996, the
Partnership received $60,000 from the net domestic video
distribution of all of its Films. As of March 31, 1996,
there is no net domestic video receivable from HBO.
3. Payable to HBO
The payable to HBO at March 31, 1996 and December 31,
1995 (including accrued interest) consists of the following
amounts:
3/31/96 12/31/95
HBO Commitment $ $
364,000 404,000
Print and Advertising 216,000 228,000
Expenditures
HBO Interest Recoupment (See
Note 4) 4,045,000 3,968,000
Total $ $
4,625,000 4,600,000
(a) HBO Commitment
During the three month period ended March 31, 1996, an
aggregate of $40,000 (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 $43,000 for the three months
ended March 31, 1996. Based upon current revised estimates
of ultimate net foreign revenues as of March 31, 1996, it is
anticipated that HBO will be unable to recoup the HBO
Commitment in the amount of $2,499,000 with respect to "Mom
and Dad Save the World." As a result, the Partnership's
Payable to HBO has been reduced by $43,000 for "Mom and Dad
Save the World" during the three months ended March 31,
1996, with a corresponding reduction to the capitalized
Motion Picture Production Costs of this Film.
(b) Print and Advertising Expenditures
During the three month period ended March 31, 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 three month period ended March 31,
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 $11,000 from the net
domestic video revenue received with respect to that Film.
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 March 31, 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, $20,987,000 (amount present valued) was
recorded by the Partnership as a receivable from HBO in the
accompanying financial statements as of March 31, 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 this ARFIP for a Film by July 1999, the
Partnership will be required to pay to HBO at that time 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
$4,045,000 (amount present valued) has been recorded by the
Partnership and included in the Payable to HBO in the
accompanying financial statements as of March 31, 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 March 31, 1996,
$727,000 is recorded as a Payable to General Partners in the
accompanying financial statements.
6. Supplemental Disclosure of Cash Flow Information
The Partnership paid $11,000 and $66,000 of interest in
the three months ended March 31, 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 three months ended March 31, 1996, the
Partnership recognized net revenue (expense) in the amounts
of $1,000, $262,000 and ($102,000) with respect to the
domestic theatrical, foreign and network television markets,
respectively, of its Films. During the three months ended
March 31, 1996, the third party participation expense for
"Don't Tell Mom" was decreased by $1,000 thereby increasing
the Partnership's net revenue for the period.
For the purpose of computing net (loss) income per
unit, the (loss) 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. 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 March 31, 1996, the Partnership held cash and cash
equivalents of $1,032,000 and short-term investments of
$2,352,000.
The Partnership invested in the production of four Films.
As of March 31, 1996, an aggregate of $98,488,000 (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 March 31, 1996, the Partnership's net payable to
HBO totaled $4,625,000. Of this amount, $4,045,000 relates
to the HBO Interest Recoupment which is not payable until
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 March 31, 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 March 31, 1996 are
sufficient to meet its liquidity needs without the need to
obtain external financing from a third party or its General
Partners. Cash distributions will be made only as
signficant 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 March 31, 1996, the
Partnership recorded net revenue of $162,000 due primarily
to the performance of its Films in the foreign markets
offset by amortization of related Motion Picture Production
Costs of $144,000. For the three months ended March 31,
1996, the Partnership recorded a decrease in the Assured
Return of Film Investment Payment of $368,000 primarily due
to an increase in the ultimate net revenue projections with
respect to "Ricochet" offset, in part, by the decrease in
the discount period. The Partnership recorded HBO Interest
Recoupment expense of $77,000 due primarily to the decrease
in the discount period.
For the three month period ended March 31, 1995, the
Partnership recorded net revenue of $266,000 due primarily
to the performance of its Films in the foreign markets
offset by amortization of related Motion Picture Production
Costs of $183,000. For the three months ended March 31,
1995, the Partnership recorded an increase in the Assured
Return of Film Investment Payment of $396,000 due primarily
to the decrease in the discount period. The Partnership
recorded HBO Interest Recoupment expense of $84,000 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. 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
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EXHIBIT
NUMBERDESCRIPTIONPAGE NUMBER
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27 Financial Data Schedule
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B). The Partnership did not file any reports on Form 8-
K during the quarter ended March
31, 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
May 14, 1996 By: /s/ Bradley J. Wechsler
Date Bradley J. Wechsler
President
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<ARTICLE> 5
<LEGEND> This schedule contains summary financial
information extracted from Balance Sheets and Statements of
Operations for the first quarter ended March 31, 1996 Form
10Q of Cinema Plus, L.P. and is qualified in its entirety by
reference to such financial statements.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,032,000
<SECURITIES> 2,352,000
<RECEIVABLES> 21,339,000
<ALLOWANCES> 0
<INVENTORY> 564,000
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 25,287,000
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 19,734,000
<TOTAL-LIABILITY-AND-EQUITY> 25,287,000
<SALES> 0
<TOTAL-REVENUES> 197,000
<CGS> 0
<TOTAL-COSTS> 213,000
<OTHER-EXPENSES> 445,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 43,000
<INCOME-PRETAX> (504,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (504,000)
<EPS-PRIMARY> (11.53)
<EPS-DILUTED> 0
</TABLE>
