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, 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 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, 1997 and December 31,
1996...................3
Statements of Operations for the Three Months Ended
March 31, 1997 and
1996........................................................
..........4
Statements of Cash Flows for the Three Months Ended
March 31, 1997 and
1996........................................................
..........5
Notes to Financial
Statements..................................................
...............6
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<PAGE>
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
997 996
<S> <C> <C>
ASSETS
Cash and Cash Equivalents $ $
896 176
Short-Term Investments 2,227 2,275
Receivable from HBO (Note 2) 1,431 2,098
Assured Return of Film
Investment Payment
Receivable (Note 4) 21,798 21,540
Motion Picture Production
Costs, net of
accumulated amortization of
$98,136 and
$98,067, respectively
331 316
Total $ $
Assets 26,683 26,405
LIABILITIES AND PARTNERS'
CAPITAL
Liabilities:
Accrued Expenses and Accounts $ $
Payable 163 216
Payable to General Partners 490 484
(Note 5)
Payable to HBO (Notes 3 & 4)
4,828 4,805
Total $ $
Liabilities 5,481 5,505
Partners' Capital (Note 7):
General Partners $ $
(164) (167)
Limited Partners
21,366 21,067
Total $ $
Partners' Capital 21,202 20,900
Total
Liabilities and Partners'
$ $
Capital 26,683 26,405
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 profit (loss) per unit)
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For the Three
Months Ended March 31,
1997 1996
<S> <C> <C>
Net Revenue from Motion
Pictures
(Note 7) $ $
263 162
Expenses:
Motion Picture 69 144
Production Costs
Professional and
Other Fees 52 69
121 213
Profit (Loss) from
Operations 142 (51)
Assured Return of Film
Investment
Payment (Note 4) 258 (368)
HBO Interest Recoupment (79) (77)
(Note 4)
Interest Expense (Notes (41) (43)
3 & 6)
Interest Income
22 35
Net Profit (Loss) $ $
302 (504)
Net Profit (Loss)
Attributable to
General Partners $ $
3 (5)
Net Profit (Loss)
Attributable to
Limited Partners $ $
299 (499)
Net Profit (Loss) Per
Unit of
Limited Partnership
Interest
(43,286 units) $ $(11.5
6.91 3)
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)
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For the Three Months Ended March 31,
1997 1996
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Operating Activities:
Net Profit (Loss) $ $
302 (504)
Adjustments to Reconcile Net
Profit (Loss) to
Net Cash Provided by Operating
Activities:
Decrease in Receivable from 667 982
HBO
(Increase) Decrease in
Assured Return of Film
Investment Payment (258) 368
Receivable
(Increase) Decrease in Motion
Picture
Production Costs (84) 43
Amortization of Motion Picture
Production Costs 69 144
Decrease in Accrued Expenses
and Accounts
Payable (53) (4)
Increase in Payable to 6 9
General Partners
Decrease in Deferred Revenue
0 (177)
Net Cash Provided by
Operating Activities 649 861
Investing Activities:
Purchase of Short-Term (1,936) (1,966)
Investments
Redemption of Short-Term
Investments 1,984 1,920
Net Cash Provided (Used)
by Investing
Activities
48 (46)
Financing Activities:
Increase in Payable to HBO
23 25
Net Cash Provided by
Financing Activities 23 25
Increase In Cash and Cash 720 840
Equivalents
Cash and Cash Equivalents at
beginning of year 176 192
Cash and Cash Equivalents at end $ $
of period 896 1,032
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 March 31, 1997 and
the results of its operations and changes in cash flows for
the periods ended March 31, 1997 and 1996. Results of
operations for the period ended March 31, 1997 are not
necessarily indicative of the results that may be expected
for the entire year.
2. Receivable from HBO
The Receivable from HBO at March 31, 1997 and December
31, 1996 consists of the following amounts:
3/31/97 12/31/96
Network $1,352,000 $1,335,000
Foreign 3,000
11,000
Net Domestic Video 56,000
609,000
Syndication 20,000
0 Interest 0
143,000
$1,431,000
$2,098,000
(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, 1997, the
Partnership recognized net revenue of $17,000 with respect
to "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 three
month period ended March 31, 1997, the Partnership
recognized foreign revenue (excluding UK non-standard
television) of $3,000. During the three month period ended
March 31, 1997, the Partnership received a cash payment of
$11,000 (including interest) from the foreign distribution
of the Film "Ricochet."
(c) Net Domestic Video Receivable from HBO
During the three month period ended March 31, 1997, the
Partnership recognized revenues of $59,000 from net domestic
home video distribution of all of its Films. During the
three month period ended March 31, 1997, the Partnership
received a cash payment of $612,000 from the net domestic
video distribution of all of its Films.
(d) Syndication Receivable from HBO
Domestic syndication television rights in the Films are
licensed by HBO (or a subdistributor designated by HBO) on
behalf of the Partnership. HBO and its subdistributor, if
any, receive distribution fees aggregating no more than
37.5% of the gross receipts from such license. Gross
receipts less distribution fees and expenses and guild
residuals are remitted to the Partnership. During the three
month period ended March 31, 1997, the Partnership
recognized net revenue from syndicated television of
$20,000.
(e) Interest Receivable
During the three month period ended March 31, 1997, the
Partnership received interest payments of $143,000 with
respect to audits of the Film's domestic consumer video
revenues.
3. Payable to HBO
The payable to HBO at March 31, 1997 and December 31,
1996 (including
accrued interest) consists of the following amounts:
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3/31/97 12/31/96
<S> <C> <C>
HBO Commitment $ $
305,000 357,000
Print and Advertising 193,000 197,000
Expenditures
HBO Interest Recoupment (See
Note 4) 4,330,000 4,251,000
Total $ $
4,828,000 4,805,000
</TABLE>
(a) HBO Commitment
During the three month period ended March 31, 1997, an
aggregate of $176,000 (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 $40,000 for the three months
ended March 31, 1997. Furthermore, the Partnership's
Payable to HBO has increased by $84,000 for "Mom and Dad
Save the World." This increase of $84,000 is offset by a
corresponding increase in the capitalized Motion Picture
Production Costs of this Film. This adjustment was due to a
change in the estimates of ultimate net foreign revenues as
of March 31, 1997. It is currently anticipated that HBO
will be unable to recoup the HBO Commitment in the amount of
$2,520,000 (down from $2,604,000) with respect to "Mom and
Dad Save the World."
(b) Print and Advertising Expenditures
During the three month period ended March 31, 1997, the
Partnership recognized $4,000 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.
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, 1997, 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, $21,798,000 (amount present valued) was
recorded by the Partnership as a receivable from HBO in the
accompanying financial statements as of March 31, 1997.
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 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
$4,330,000 (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, 1997.
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, 1997,
$490,000 is recorded as a Payable to General Partners in the
accompanying financial statements.
6. Supplemental Disclosure of Cash Flow Information
The Partnership paid $57,000 and $11,000 of interest in
the three months ended March 31, 1997 and 1996,
respectively.
7. Current Operations
The Partnership has financed four Films. All of these
Films have completed their domestic theatrical and 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, 1997, the
Partnership recognized net revenue in the amounts of $4,000,
$180,000, $17,000, $59,000 and $20,000 with respect to the
domestic theatrical, foreign, network television, net
domestic video and domestic syndication markets,
respectively, of its Films. During the three months ended
March 31, 1997, the third party participation expense for
"Don't Tell Mom" was increased by $17,000 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.
As is required by its limited partnership agreement, the
Partnership will dissolve at the expiration of its term on
September 30, 1997, and the Partnership Assets shall thereupon be
liquidated and distributed in accordance with such agreement.
Provisions shall be made, as necessary, prior to such date for
the establishment of a trust for the purpose, among others, of
receiving and distributing the Assured Return of Film Investment
Payments in accordance with the limited partnership agreement at
the time, and to the limited partners to whom, they would
otherwise become due.
8. Additional Information
Additional information, including the audited 1996
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, 1996 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 March 31, 1997, the Partnership held cash and cash
equivalents of $896,000 and short-term investments of
$2,227,000.
The Partnership invested in the production of four Films.
As of March 31, 1997, an aggregate of $98,467,000 (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. As is required by its limited partnership agreement,
the Partnership will dissolve at the expiration of its term on
September 30, 1997, and the Partnership Assets shall thereupon be
liquidated and distributed in accordance with such agreement.
Provisions shall be made, as necessary, prior to such date for
the establishment of a trust for the purpose, among others, of
receiving and distributing the Assured Return of Film Investment
Payments in accordance with the limited partnership agreement at
the time, and to the limited partners to whom, they would
otherwise become due.
As of March 31, 1997, the Partnership's net payable to
HBO totaled $4,828,000. Of this amount, $4,330,000 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, 1997 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, 1997 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
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 March 31, 1997, the
Partnership recorded net revenue of $263,000 due primarily
to the performance of its Films in the foreign markets and
domestic consumer video markets. For the three months ended
March 31, 1997, the Partnership recorded an increase in the
Assured Return of Film Investment Payment of $258,000
primarily due to a decrease in the discount period. The
Partnership recorded HBO Interest Recoupment expense of
$79,000 due primarily to the decrease in the discount
period.
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 due primarily
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.
<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
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<CAPTION>
EXHIBIT
NUMBERDESCRIPTIONPAGE NUMBER
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<C>
27 Financial Data Schedule
</TABLE>
B). The Partnership did not file any reports on Form 8-
K during the quarter ended March
31, 1997.
<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, 1997 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 first quarter ended March 31, 1997 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-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 896,000
<SECURITIES> 2,227,000
<RECEIVABLES> 23,229,000
<ALLOWANCES> 0
<INVENTORY> 331,000
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 26,683,000
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 21,202,000
<TOTAL-LIABILITY-AND-EQUITY> 26,683,000
<SALES> 0
<TOTAL-REVENUES> 543,000
<CGS> 0
<TOTAL-COSTS> 121,000
<OTHER-EXPENSES> 79,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 41,000
<INCOME-PRETAX> 302,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 302,000
<EPS-PRIMARY> 6.91
<EPS-DILUTED> 0
</TABLE>
