FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE
REQUIRED)
For the transition period from...............to...........
Commission file number 0-17713
SILVER SCREEN PARTNERS IV, L.P.
(A Delaware Limited Partnership)
(Exact name of registrant as specified in its
Certificate and Agreement of Limited Partnership)
Delaware 06-1236433
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
936 Broadway
New York, New York 10010
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 995-7600
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
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, and (2) has been subject to such requirements for the
past 90 days.
YES X NO
--- ---
<PAGE>
I. PART FINANCIAL INFORMATION
Item 1. Financial Statements.
The financial information set forth below is set forth in the
September 30, 1995 Third Quarter Report of Silver Screen Partners IV, L.P. (the
"Partnership") filed herewith as Exhibit 20 and is incorporated herein by
reference.
Balance Sheets -- September 30, 1995 and December 31, 1994.
Statement of Operations -- For the Three and Nine Months ended
September 30, 1995 and 1994.
Statements of Partners' Equity -- For the Nine Months ended
September 30, 1995 and the Year ended December 31, 1994.
Statements of Cash Flows -- For the Nine Months ended September
30, 1995 and 1994.
Notes to Financial Statements.
The financial statements included herein are unaudited. In the
opinion of the management of the Partnership, all adjustments necessary for a
fair presentation of the results of operations have been included and all
adjustments are of a normal recurring nature. The results of operations for the
nine months ended September 30, 1995 are not necessarily indicative of the
results of operations which may be expected for the entire year.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations
Revenues for the nine months and quarter ended September 30, 1995
were approximately $9,414,000 and $965,000, respectively, as compared with
approximately $18,417,000 and $5,481,000 for the comparable periods in 1994.
Revenues for the nine months and quarter ended September 30, 1995 consisted of
income from the Joint Venture of approximately $7,456,000 and $331,000,
respectively, and investment revenues of approximately $1,958,000 and $634,000.
Revenues for the comparable periods in 1994 consisted of income from the Joint
Venture of approximately $17,161,000 and $5,029,000, respectively, and
investment revenues of approximately $1,256,000 and $453,000. Most of the films
in
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<PAGE>
which the Partnership has an interest have been released in the theatrical, home
video and pay cable markets. Therefore, income from the Joint Venture decreased
by approximately $9,705,000. The major portion of income from the Joint Venture
for the third quarter of 1995 was generated by "White Fang" and "Beauty and the
Beast." Interest rates for the first nine months of 1995 ranged from 5.1% to
5.9%, while those for the comparable period in 1994 ranged from 2.75% to 4.87%.
A decrease in funds available for investment offset by fluctuating interest
rates resulted in an increase in interest income of approximately $702,000.
Expenses for the nine months ended September 30, 1995 were
approximately $3,071,000 as compared with approximately $2,718,000 for the
comparable period in 1994. The increase in expenses is due principally to two
factors. First, there was a $16,000 increase in the aggregate cost of the 10%
per annum charge on the remaining overhead fee payable that was accrued in 1995
as compared to 1994. Second, the Partnership incurred approximately $370,000 of
costs associated with preparations for negotiation of the sale by the
Partnership of its interest in the Joint Venture. These costs, which are
considered to benefit each of the Partnership, Silver Screen Partners II, L.P.
and Silver Screen Partners III, L.P. (collectively and together with the
Partnership, the "Silver Screen Partnerships"), have been allocated among the
Silver Screen Partnerships pro rata to the total original limited partner
capital contributions of each. See Item 5. Other expenses decreased overall by
$34,000.
The Partnership generated net income of approximately $6,343,000
for the nine months ended September 30, 1995, as compared with net income of
approximately $15,699,000 for the comparable period in 1994. The decrease in net
income is primarily the result of a decrease in film revenues and the increase
in expenses as stated above.
The Partnership has commitments to thirty-three films, all of
which have been completed and released, with total budgets amounting to
approximately $599,000,000, of which approximately $598,760,000 has been
expended as of September 30, 1995. The Joint Venture Films are: "The Good
Mother," released November 4, 1988; "Beaches," released December 21, 1988;
"Three Fugitives," released January 27, 1989; "Disorganized Crime," released
April 14, 1989; "The Dead Poets Society," released June 2, 1989; "Turner and
Hooch," released July 28, 1989; "An Innocent Man," released October 6, 1989;
"Gross Anatomy," released October 20, 1989; "The Little Mermaid," released
November 15, 1989; "Blaze," released December 13, 1989; "Where the Heart Is,"
released February 23, 1990; "Pretty Woman," released March 23, 1990; "Ernest
Goes to Jail," released April 6, 1990; "Spaced Invaders," released April 27,
1990; "Dick Tracy," released June 15, 1990; "Betsy's Wedding," released June 22,
1990; "Taking Care of Business," released August 17, 1990; "Mr. Destiny,"
released
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<PAGE>
October 12, 1990; "Rescuers Down Under," released November 16, 1990; "White
Fang," released January 18, 1991; "Run," released February 1, 1991; "Scenes From
A Mall," released February 22, 1991; "The Marrying Man," released April 5, 1991;
"Oscar," released April 26, 1991; "One Good Cop," released May 3, 1991; "Wild
Hearts Can't Be Broken," released May 24, 1991; "The Rocketeer," released June
21, 1991; "The Doctor," released July 24, 1991; "V.I. Warshawski," released July
26, 1991; "True Identity," released August 23, 1991; "Deceived," released
September 27, 1991; "Beauty and the Beast," released November 15, 1991; and
"Blame it on the Bellboy," released February 28, 1992.
During the quarter ended September 30, 1995, the Partnership made
cash distributions to the Partners which amounted to approximately $12,121,212
in the aggregate. Although all of the Joint Venture Films have been released,
the Partnership anticipates that it will continue to receive revenues and make
quarterly cash distributions in the future.
Liquidity and Capital Resources
Inasmuch as the funding obligations of the Partnership with
respect to the financing of the Joint Venture Films have been fully complied
with or reserved against, the Partnership has no material commitments for
capital expenditures and does not intend to enter into any such commitments.
Receipts from temporary investments and from the Joint Venture, less reserves
established as determined by the Managing General Partner, are the sources of
liquidity for the Partnership. The Partnership has no material requirements for
liquidity other than its general and administrative expenses and quarterly
distributions to holders of Units of limited partnership interests. Such sources
are considered adequate for such needs.
4
<PAGE>
Item 3. Selected Financial Data
SILVER SCREEN PARTNERS IV, L.P.
<TABLE>
<CAPTION>
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
Sept. 30, 1995 Sept. 30, 1995 Sept. 30, 1994 Sept. 30, 1994
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Revenues:
Income from
Joint Venture $330,902 $7,456,008 $5,028,548 $17,160,641
Interest income $633,755 1,958,454 452,526 1,256,443
-------- ---------- ---------- -----------
$964,657 9,414,462 5,481,074 18,417,084
Costs and Expenses:
General and
administrative
expenses $974,408 3,071,088 957,724 2,718,173
-------- ---------- ---------- -----------
Net income ($9,751) $6,343,374 $4,523,350 $15,698,911
-------- ---------- ---------- -----------
Net income per
$500 limited
partnership unit
(based on 800,000
Units outstanding) ($0.01) $7.85 $5.60 $19.43
------ ----- ----- ------
Cash distribution
per $500 limited
partnership unit $15 $60.00 $15.00 $59.00
--- ------ ------ ------
Sept. 30, 1995 Sept. 30, 1994
-------------- --------------
Total assets $149,744,019 $195,976,033
------------ ------------
</TABLE>
See notes to financial statements
5
<PAGE>
Item 3. Selected Financial Data (Continued)
The Joint Venture's fiscal year ends September 30, while the Partnership's
fiscal year ends December 31.The Partnership's September 30, 1995 statements
reflect the Joint Venture's results of operations for the period ended June 30,
1995.
DISNEY-SILVER SCREEN IV JOINT VENTURE
<TABLE>
<CAPTION>
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
June 30, 1995 June 30,1995 June 30, 1994 June 30, 1994
------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Revenues: $ 16,688,328 $ 73,047,786 $ 24,460,652 $ 85,062,183
Costs and expenses:
Amortization of film
production costs ($10,567,372) ($52,212,131) ($11,020,440) ($43,527,566)
Participation expense:
The Walt Disney
Company: ($ 4,090,916) ($ 2,474,508) ($ 2,123,200) ($ 5,335,096)
Third party participants: ($ 2,151,463 (3,148,415) (2,079,301) (5,792,380)
------------ ------------ ------------ ------------
Net Income: ($ 121,423) $ 15,212,732 $ 9,237,711 $ 30,407,141
============ ============ ============ ============
Net income allocated to:
Silver Screen Partners
IV, L.P. $ 7,456,008 $ 17,160,641
The Walt Disney Company $ 7,756,724 $ 13,246,500
------------ ------------
$ 15,212,732 $ 30,407,141
============ ============
June 30, 1995 September 30, 1994
------------- ------------------
Assets
Receivable from Buena Vista
Pictures Distribution, Inc. $ 27,989,236 $ 32,357,177
Receivable from Silver
Screen Partners IV, L.P. $ 348,474 $ 524,183
Film production costs, less
accumulated amortization
of $616,644,612 and
$564,432,481 at June 30,
1995 and September 30,
1994, respectively $138,070,309 $190,665,946
------------
$166,408,019 $223,547,306
============ ============
Liabilities and Venturers'
Capital Accounts and
distributions payable to:
Silver Screen Partners IV,
L.P. $ 10,564,796 $ 8,776,150
The Walt Disney Company $ 14,495,960 $ 18,311,333
Deferred Revenue $ 2,129,911 $ 4,177,042
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
June 30, 1995 June 30,1995 June 30, 1994 June 30, 1994
------------- ------------ ------------- -------------
<S> <C> <C>
Venturers' capital:
Silver Screen Partners IV,
L.P. $103,890,596 $151,533,822
The Walt Disney Company $ 35,326,756 $ 40,748,959
------------ ------------
$166,408,019 $223,547,306
============ ============
</TABLE>
7
<PAGE>
Item 5. Other Information.
The registrant and The Walt Disney Company ("Disney") have
entered into a letter agreement (the "Letter Agreement") dated September 11,
1995, executed by the registrant on September 29, 1995, providing for the
purchase by Disney, on the terms and conditions set forth in the Letter
Agreement, of all of the registrant's rights and interests in and with respect
to Disney-Silver Screen IV Joint Venture, the Joint Venture which owns the
library of films. The information contained in the Letter Agreement is
incorporated herein by reference. The Letter Agreement is filed herewith as
Exhibit 10.
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<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 10 -- Letter Agreement dated September 11, 1995 between
The Walt Disney Company and the registrant
(executed by the registrant on September 29,
1995), with Terms and Conditions attached thereto.
Exhibit 20 -- 1995 Third Quarter Report
Exhibit 27 -- To be filed supplementally.
(b) The Partnership did not file any reports on Form 8-K during the
quarter ended September 30, 1995.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
SILVER SCREEN PARTNERS IV, L.P.,
a Delaware limited partnership
By: Silver Screen Management Services,
Inc., Managing General Partner
Date: November 14, 1995 By: /s/ Roland W. Betts
-------------------
Roland W. Betts, President
10
Via Facsimile (212) 995-0483
September 11, 1995
Roland Betts
Silver Screen Management Services, Inc.
936 Broadway
New York, New York 10011
Re: Disney-Silver Screen Partners IV Joint Venture
Dear Roland:
Enclosed please find the Terms and Conditions which reflect the business deal
with respect to the buyout by Disney of Silver Screen Partners IV, L.P.'s
("Silver Screen IV") interest in the Disney-Silver Screen Partners IV Joint
Venture.
Please indicate your acceptance of and agreement to the enclosed Terms and
Conditions by countersigning and returning to us a copy of this letter no later
than September 29, 1995. Upon receipt of such countersignature, Disney and
Silver Screen IV will promptly prepare and execute a long-form purchase
agreement (the "Purchase Agreement") giving effect to the agreement of the
parties in accordance with the enclosed Terms and Conditions. Until such time as
the Purchase Agreement is executed, the enclosed Terms and Conditions shall
constitute a binding agreement of the parties with respect to the subject matter
therein as of the date of your acceptance of the Terms and Conditions.
Very truly yours,
/s/ Robert S. Moore
- - - - - - - -------------------
Robert S. Moore
cc: Stephen Bollenbach
Sandy Litvack
Ted Philip
<PAGE>
BUYOUT OF SILVER SCREEN PARTNERS IV, L.P.
TERMS AND CONDITIONS
PURCHASER: The Walt Disney Company or (subject to the
provisions under "Assignment" below) an affiliate
("Disney").
SELLER: Silver Screen Partners IV, L.P. ("Partnership").
PURCHASE PRICE: $330 million, in cash in immediately
available funds (subject to any Purchase Price
Adjustment).
BUYOUT: Purchase by Disney of all of Partnership's rights
and interests in, to and under (i) the Joint
Venture Agreement dated as of December 23, 1987
(the "Joint Venture Agreement") between The Walt
Disney Company and Silver Screen Partners IV,
L.P., as amended, (ii) the Distribution Agreement,
dated as of December 23, 1987 (the "Distribution
Agreement", together with the Joint Venture
Agreement, are sometimes collectively referred to
as the "Agreements") between Disney-Silver Screen
IV Joint Venture (the "Joint Venture") and Buena
Vista Distribution, Inc. ("BVD"), as amended,
(iii) the Silver Screen IV films and (iv)
Partnership's general partner interest in the
Joint Venture (collectively, the "Partnership's
Interest"). Closing of the Buyout shall occur on
the Payment Date (as defined below).
REVENUE SHORTFALL PAYMENTS: Partnership shall be entitled to its share of any
Revenue Shortfall Payments (as defined in the
Distribution Agreement), as such Revenue Shortfall
Payments are received by the Joint Venture under
the Agreements, it being understood that such
Revenue Shortfall Payments are not in respect of
the Buyout.
PAYMENT DATE: November 30, 1998 (or such later date as mutually
agreed to by the parties), on which date after
payment of the Purchase Price, all right, title
and interest in the Partnership's Interest shall
be automatically transferred to Disney, and
Partnership shall not be entitled to receive any
revenues from, shall have no further right, title
or interest in, and shall have no further
obligations or liabilities with respect to, the
Partnership's Interest. Prior to the Payment Date,
Disney will not assert any ownership interest in
the Partnership's Interest for any purpose,
including for any tax purpose. Disney agrees that
it shall have no right to set-off, counterclaim or
other similar remedy with respect to its payment
obligations hereunder.
CONTINGENT ADDITIONAL On the Payment Date, Disney will make an
PAYMENT: additional payment (the "Contingent Additional
Payment") to Partnership as follows: (i) if prior
to the Payment Date, "The Little Mermaid" has not
been re-released in the domestic theatrical market
nor in the domestic home video market, then the
Contingent Additional Payment shall be in the
principal amount of $4 million; (ii) if the
re-release date of "The Little Mermaid" in the
domestic theatrical market occurs at any time
during the six-month period immediately preceding
the Payment Date, then the Contingent Additional
Payment shall be equal to the greater of (a) $4
million or (b) an amount equal to what
Partnership's share of revenues would have been
under the Agreements for any receipts from such
domestic theatrical release received during the
period from the re-release date to October 31,
1998 (as set forth in a statement prepared by
Disney and provided to Partnership together with
the Contingent Additional Payment, which statement
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<PAGE>
shall be binding upon Partnership absent manifest
error subject to satisfaction of the limited audit
rights set forth under "Agreements" below); or
(iii) if the re-release date of "The Little
Mermaid" in the domestic theatrical market occurs
more than six months immediately prior to the
Payment Date, then the Contingent Additional
Payment shall be equal to what Partnership's share
of revenues would have been under the Agreements
for any receipts from such domestic theatrical
release received during the period from May 1,
1998 to October 31, 1998 (as set forth in a
statement prepared by Disney and provided to
Partnership together with the Contingent
Additional Payment, which statement shall be
binding upon Partnership absent manifest error
subject to satisfaction of the limited audit
rights set forth under "Agreements" below).
PURCHASE PRICE ADJUSTMENT: The Purchase Price will be reduced,
dollar-for-dollar, by each dollar which
Partnership receives under the Joint Venture
Agreement during the period from October 1, 1995
to the Payment Date from any exploitation of the
films "The Little Mermaid", "Beauty & the Beast"
and "Rescuers Down Under", other than in respect
of any Revenue Shortfall Payment and except for
any exploitation of "The Little Mermaid" in the
domestic theatrical market.
DOCUMENTATION: The parties will prepare, execute and deliver a
long-form purchase agreement (the "Purchase
Agreement") as soon as practicable which will
document the terms and conditions set forth
herein. In addition to the terms and conditions
set forth herein, the Purchase Agreement will
contain (a) representations and warranties of
Disney and Partnership as to: (i) due execution of
the Purchase Agreement, (ii) due authorization to
enter into and perform under the Purchase
Agreement, (iii) enforceability of the Purchase
Agreement, and (iv) in the case of Partnership,
(x) right, title and interest in and to the
Partnership's Interest free and clear of all liens
and encumbrances other than any lien or
encumbrance arising out of actions of Disney and
other than as provided hereunder and (y)
Partnership not having taken any action or entered
into any agreement to bind the Joint Venture or
Disney or which would constitute a violation or
infringement of the rights granted to the Joint
Venture or Disney under the Joint Venture
Agreement; and (b) the following conditions to the
parties' respective obligations to consummate the
Buyout: (i) no provision of any applicable law
prohibits the closing of the Buyout, (ii) no
order, judgment or injunction prohibits the
closing of the Buyout, (iii) any applicable
waiting period under the HSR Act (as defined
below) shall have expired or been terminated, (iv)
absence of any pending litigation or proceeding
before any court, or governmental or
administrative body which seeks to prohibit
closing of the Buyout and which has a substantial
likelihood of success on the merits, (v) accuracy
of representations and warranties in all material
respects, and (vi) as a condition to Disney's
obligation to close, a certificate from
Partnership as to (x) right, title and interest in
and to the Partnership's Interest free and clear
of all liens and encumbrances other than any lien
or encumbrance arising out of the actions of
Disney and other than as provided hereunder and
(y) Partnership not having taken any action or
entered into any agreement to bind the Joint
Venture or Disney or which would constitute a
violation or infringement of the rights granted to
the Joint Venture or Disney under the Joint
Venture Agreement.
In the event that no Purchase Agreement is
executed by the parties, these Terms and
Conditions will govern the closing of the Buyout.
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<PAGE>
AGREEMENTS: Upon acceptance of these Terms and Conditions by
the parties:
(1) Disney shall have the right in perpetuity to
enter into distribution, licensing or other
arrangements with respect to the exploitation
of the Silver Screen IV films in any media
now known and unknown and by any means and/or
devices now known and unknown for any period
of time, without the prior approval of
Partnership. Subject to the preceding
sentence, Disney agrees that until the
closing of the Buyout, the Silver Screen IV
films will continue to be exploited in
accordance with the Distribution Agreement.
(2) BVD will account for and will make payments
to the Joint Venture as required by the
Distribution Agreement, with respect to
receipts received by BVD from the Silver
Screen IV films and any Revenue Shortfall
Payments through April 30, 1998 (including
revenues from the arrangements referred to in
clause (1) above). A final payment will be
made by the Payment Date, or earlier, to
Partnership of its share of Joint Venture
revenues payable as of April 30, 1998.
Thereafter, Partnership has no further right
to any revenues earned by the Silver Screen
IV films other than the Contingent Additional
Payment, if any, due on the Payment Date. BVD
agrees to use methods and procedures in its
calculation of revenues payable to the Joint
Venture consistent with methods and
procedures utilized by BVD in the past with
respect to accountings and payments
previously made by BVD to the Joint Venture
in connection with the Silver Screen IV
films. Partnership waives all rights to
audits and all audit claims arising from or
under the terms of the Agreements, whether
currently outstanding, now existing or
hereafter arising, and all statements with
respect to payments due to the Joint Venture
will be binding upon Partnership absent
manifest error, except that Partnership will
have the right to audit future statements
solely for the purpose of ensuring that BVD
is in compliance with this clause (2) and
that no manifest error exists in the
statements. Such limited audit right must be
exercised by Partnership within 30 days after
receipt by Partnership of a statement or such
right shall be deemed waived.
(3) (a) Subject to subclause (d) below of this
clause (3), Disney irrevocably releases
Partnership and its affiliates from, any
claims, known and unknown, which Disney may
have now or in the future against Partnership
arising from any acts, omissions or conduct
of Partnership during the course of the
Agreements; provided, however, that this
release does not include (i) any breach of
these Terms and Conditions or the Purchase
Agreement, if applicable, and (ii) any breach
of Paragraph 31 of the Joint Venture
Agreement by Partnership, it being understood
that the provisions of and such Paragraph 31
shall survive the closing of the Buyout.
(b) Subject to subclause (d) below of this
clause (3), Partnership irrevocably waives,
and releases Disney and its affiliates from,
any rights and claims, known and unknown,
which Partnership may have now or in the
future with respect to its interest in the
Joint Venture and the Silver Screen IV films,
other than its continued right to receive
accountings and payments in accordance with
(2) above through and until Payment Date (for
receipts from Silver Screen IV films through
and including April 30, 1998, or later, if
applicable, with respect to any Revenue
Shortfall Payment or any Contingent
Additional Payment) and except as expressly
-3-
<PAGE>
provided in these Terms and Conditions
(including clause (4) below). Partnership's
waived rights and claims include, without
limitation (except as otherwise provided in
these Terms and Conditions):
-- all rights to audits and all audit
claims except to the extent provided
in (2) above
-- rights and claims to any revenues or
royalties, whether or not explicitly
expressed in the Agreements, with
respect to stage plays, ice shows, new
technologies, or any other
exploitation or payments derived
therefrom or with respect to any
revenues or royalties derived from
rights not previously exploited or
from rights previously exploited but
not previously accounted for to
Partnership
-- any rights or claims with respect to
home video royalty re-negotiations
(c) Although the foregoing respective
releases by Disney and by Partnership as the
releasing party (the "Releasing Party") is
not a general release, as to matters being
released, each Releasing Party expressly
waives and relinquishes all rights and
benefits afforded by Section 1542 of the
Civil Code of the State of California, which
provides:
"A general release does not extend
to claims which the creditor does
not know or suspect to exist in his
favor at the time of executing the
release, which if known by him must
have materially affected his
settlement with the debtor."
(d) If the Buyout fails to close on the
Payment Date as a result of any breach by a
party of these Terms and Conditions or of the
Purchase Agreement, or as a result of a
failure to satisfy a condition precedent to
closing because of any act or omission of a
party, nothing contained herein or in the
Purchase Agreement will limit any rights or
obligations of the parties existing at law or
in equity. Furthermore, it is understood and
agreed that if the Buyout shall fail to close
on the Payment Date for any reason other than
the breach of these Terms and Conditions or
of any provision contained in the Purchase
Agreement by Partnership, or the failure of a
condition precedent to be satisfied because
of any action or omission of Partnership,
then the parties shall negotiate for a period
of 60 days (or such longer period as the
parties shall agree, the "Workout Period")
after the Payment Date to consummate the
Buyout. If at the end of the Workout Period
the Buyout still has not occurred then (i)
the waivers and releases contained in this
section captioned "Agreements" shall be void
and of no force and effect and Disney and
Partnership shall once again have all the
rights and claims previously waived or
released, (ii) the Agreements shall continue
to govern the relationship, rights and
obligations of the parties with respect to
the Partnership's Interest, except that the
relevant dates under Paragraph 16 of the
Joint Venture Agreement and Paragraph 21 of
the Distribution Agreement shall be tolled
until the last day of the Workout Period and
the earliest date contained in such
Paragraphs shall be revised to be the date
which is the first day after the Workout
Period and each other date in such Paragraphs
shall be revised and extended accordingly,
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<PAGE>
(iii) the term of the Distribution Agreement
under Paragraph 1.2 thereof shall be extended
until the latest date in Paragraph 21 of the
Distribution Agreement as revised and
extended in accordance with clause (ii) above
and (iv) any and all distribution, licensing
or other arrangements entered into by Disney
in accordance with clause (1) above shall
remain in full force and effect.
(4) Notwithstanding clause (3) above, the
following rights and interests of Partnership
shall only be irrevocably and automatically
waived as of (and shall not be waived prior
to) the closing of the Buyout: (i) the right
that no amendment or waiver (other than as
contemplated hereunder) of the Agreements
shall be made without Partnership's consent;
(ii) revenues actually received by the Joint
Venture with respect to a Silver Screen IV
film will continue to be allocated in
accordance with Paragraph 13 of the Joint
Venture Agreement in the case of receipts by
the Joint Venture and in accordance with the
Distribution Agreement in the case of
receipts by BVD (subject to clause (2)
above); and (iii) Paragraphs 15, 19.1, 22.4,
24 and 33 of the Joint Venture Agreement and
Paragraph 19 of the Distribution Agreement.
HSR ACT FILINGS: Filings under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 ("HSR Act") will be made
by Disney and Disney and the applicable waiting
period will have expired or been terminated prior
to the Payment Date.
CONFIDENTIALITY Each of Disney and Partnership agrees to keep
confidential and will not disclose the existence
of this transaction or the terms hereof to any
person, other than its managing partner, officers,
employees, directors and advisors, as applicable,
who need to know and who are bound by the same
confidentiality undertakings and other than as
required by applicable law (including securities
laws), without the prior written consent of the
other party (not to be unreasonably withheld). In
connection with any disclosure required by
applicable law (including securities laws), the
party proposing to make such disclosure shall
obtain the prior written approval of the other
party (not to be unreasonably withheld) with
respect to the proposed disclosure. In addition,
each of Disney and Partnership agrees that no
public announcement of this transaction or the
terms hereof shall be made without the prior
written approval of the other party (not to be
unreasonably withheld) and any response to
inquiries or other communications with respect to
this transaction or the terms hereof shall be
limited to the previously approved disclosure
hereunder. It is agreed that either party may file
these Terms and Conditions and/or the Purchase
Agreement as an exhibit to any report filed by
such party under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), if so
required under the Exchange Act.
EXPENSES: Each party shall bear its own costs and expenses
(including fees and expenses of counsel and other
advisors) incurred in connection with the Buyout.
NO RELIANCE: Each party acknowledges and represents that it has
independently, and without reliance upon the other
party or any of its affiliates, and based on such
documents, information and advice of advisors as
it has deemed appropriate, made its own analysis
and decision to enter into the transaction.
CO-OPERATION; Disney and Partnership will co-operate and each
FURTHER ASSURANCES: use its reasonable best efforts to take, or cause
to be taken, all actions and to do, or cause to be
done, all things necessary or desirable under
-5-
<PAGE>
applicable laws and regulations to consummate the
transactions contemplated hereby. Disney and
Partnership each agree to execute and deliver such
other documents, certificates, agreements and
other writings and to take such other actions as
may be necessary or desirable in order to
consummate or implement expeditiously the
transactions contemplated hereby.
GOVERNING LAW: State of California
ASSIGNMENT: Neither Partnership nor Disney may assign its
rights or obligations under these Terms and
Conditions or the Purchase Agreement without the
prior written consent of the other party;
provided, however, that Disney may assign its
rights and obligations hereunder or under the
Purchase Agreement to an affiliate so long as The
Walt Disney Company remains liable for the payment
obligations hereunder.
-6-
<PAGE>
THE TERMS AND CONDITIONS REFERRED TO
ABOVE ARE HEREBY ACCEPTED AND AGREED TO
ON SEPTEMBER 29, 1995.
SILVER SCREEN PARTNERS IV, L.P.
By: SILVER SCREEN MANAGEMENT SERVICES, INC.,
Its Managing Partner
By: /s/ Roland W. Betts
--------------------------
Roland W. Betts, President
THE WALT DISNEY COMPANY
By: /s/ David K. Thompson
-----------------------------------------------
David K. Thompson
Senior Vice President-Assistant General Counsel
Third
Quarter
Report
o
September 30,
1995
[LOGO]
<PAGE>
DEAR LIMITED PARTNER:
The 1995 third quarter cash distribution totals $12 million, bringing total
distributions since the Partnership's inception in 1988 to $473 million.
Third quarter revenue was generated principally from "Taking Care of
Business" in the form of a Revenue Shortfall Payment from Buena Vista. "Dick
Tracy" and "Deceived" contributed revenue from the U.S. network television
market, and "The Little Mermaid" continued to produce Partnership revenue this
quarter from sales of film-related merchandise.
Partnership revenue in the future is expected to be generated from the 33
films in the portfolio as they continue to travel through the U.S. and foreign
television markets and from Revenue Shortfall Payments for a number of films.
Next quarter, "Dead Poets Society" will become available to appear on basic
cable television (USA Network).
The 1995 Annual Report and tax information will be mailed to you by March
15. If you need any assistance in the meantime, please contact our Investor
Relations Department.
Sincerely,
/s/ Roland W. Betts /s/ Tom A. Bernstein
Roland W. Betts Tom A. Bernstein
President Executive Vice President
<PAGE>
BALANCE SHEETS
(Unaudited)
September 30, 1995 December 31, 1994
- - - - - - - --------------------------------------------------------------------------------
Assets
Current assets:
Cash $ 287,753 $ 3,279,252
Temporary investments (at cost plus
accrued interest,
which approximates market) (Note 1) 42,856,622 59,582,252
- - - - - - - --------------------------------------------------------------------------------
Total current assets 43,144,375 62,861,504
Investment in Joint Venture (Note 2) 106,599,644 130,533,642
- - - - - - - --------------------------------------------------------------------------------
$149,744,019 $193,395,146
================================================================================
Liabilities and partners' equity
Current liabilities:
Due to managing general partner $ 58,179 $ 7,715
Overhead fees payable (Note 3) 26,376,327 27,936,444
- - - - - - - --------------------------------------------------------------------------------
Total current liabilities 26,434,506 27,944,159
Other liabilities 100,000 100,000
- - - - - - - --------------------------------------------------------------------------------
26,534,506 28,044,159
Partners' equity:
General partners -- --
Limited partners 123,209,513 165,350,987
- - - - - - - --------------------------------------------------------------------------------
Total partners' equity 123,209,513 165,350,987
- - - - - - - --------------------------------------------------------------------------------
$149,744,019 $193,395,146
================================================================================
See notes to financial statements.
<PAGE>
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
Sept. 30, 1995 Sept. 30, 1995 Sept. 30, 1994 Sept. 30, 1994
- - - - - - - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Income from Joint Venture (Note 2) $ 330,902 $ 7,456,008 $ 5,028,548 $17,160,641
Interest income 633,755 1,958,454 452,526 1,256,443
- - - - - - - ------------------------------------------------------------------------------------------------------------------------------------
964,657 9,414,462 5,481,074 18,417,084
Costs and expenses:
General and administrative expenses 974,408 3,071,088 957,724 2,718,173
- - - - - - - ------------------------------------------------------------------------------------------------------------------------------------
Net income $ (9,751) $ 6,343,374 $ 4,523,350 $15,698,911
====================================================================================================================================
Net income allocated to:
General partners $ (98) $ 63,434 $ 45,233 $ 156,989
Limited partners (9,653) 6,279,940 4,478,117 15,541,922
- - - - - - - ------------------------------------------------------------------------------------------------------------------------------------
$ (9,751) $ 6,343,374 $ 4,523,350 $15,698,911
====================================================================================================================================
Net income per a $500 limited
partnership unit (based on
800,000 units outstanding) $ (0.01) $ 7.85 $ 5.60 $ 19.43
====================================================================================================================================
</TABLE>
See notes to financial statements.
STATEMENTS OF PARTNERS' EQUITY
(Unaudited
<TABLE>
<CAPTION>
Year Ended December 31, 1994
and Nine Months Ended September 30, 1995
- - - - - - - ------------------------------------------------------------------------------------------------------------------------------------
General Partners Limited Partners Total
- - - - - - - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, January 1, 1994 $ -- $ 200,558,118 $ 200,558,118
Net income, 1994 213,585 21,144,941 21,358,526
Distributions, 1994 (565,657) (56,000,000) (56,565,657)
Allocation under Treasury Regulation Section 1.704-1(b) 352,072 (352,072) --
- - - - - - - ------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1994 -- 165,350,987 165,350,987
Net income, nine months 1995 63,434 6,279,940 6,343,374
Distributions during nine months 1995 (484,848) (48,000,000) (48,484,848)
Allocation under Treasury Regulation Section 1.704-1(b) 421,414 (421,414) --
- - - - - - - ------------------------------------------------------------------------------------------------------------------------------------
$ -- $ 123,209,513 $ 123,209,513
====================================================================================================================================
</TABLE>
See notes to financial statements.
<PAGE>
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended
September 30, 1995 September 30, 1994
- - - - - - - ------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 6,343,374 $ 15,698,911
Adjustments to reconcile net income to net cash
provided by operating activities:
Decrease in accrued interest receivable 266,966 46,407
Charge on overhead fee payable 1,980,574 1,963,637
Net change in operating assets and liabilities:
Increase in due to managing general partner 50,464 (10,667)
- - - - - - - ------------------------------------------------------------------------------------------------
Net cash provided by operating activities 8,641,378 17,698,288
- - - - - - - ------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Investments in Joint Venture (78,566) (474,999)
Distributions received from Joint Venture in excess
of equity in income 24,012,564 11,590,244
Sales (purchases) of temporary investments, net 16,458,664 18,700,737
- - - - - - - ------------------------------------------------------------------------------------------------
Net cash provided by investing activities 40,392,662 29,815,982
- - - - - - - ------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Distributions to partners (48,484,848) (47,676,768)
(Decrease) Increase in overhead fee payable (3,540,691) 68,379
- - - - - - - ------------------------------------------------------------------------------------------------
Net cash used in financing activities (52,025,539) (47,608,389)
- - - - - - - ------------------------------------------------------------------------------------------------
Net decrease in cash (2,991,499) (94,119)
Cash, beginning of year 3,279,252 103,994
- - - - - - - ------------------------------------------------------------------------------------------------
Cash at end of nine months $ 287,753 $ 9,875
================================================================================================
</TABLE>
See notes to financial statements.
<PAGE>
Notes to Financial Statements
1. Temporary Investments
Temporary investments represent investments in commercial paper.
2. Investment in Joint Venture
The investment in the Joint Venture is accounted for using the equity method of
accounting. Under the equity method, the investment is initially recorded at
cost, and is thereafter increased by additional investments, adjusted by the
Partnership's share of the Joint Venture's results of operations, and reduced by
distributions received from the Joint Venture. The Joint Venture's fiscal year
ends September 30, while the partnership's fiscal year ends December 31. The
Statements of Operations reflects the Joint Venture's results of operations for
the nine months ended June 30, 1995.
The investment in Joint Venture is as follows:
- - - - - - - --------------------------------------------------------------------------------
Balance, January 1, 1995 $130,533,642
Investments, January 1, 1995 to
September 30, 1995 78,566
Income from Joint Venture for the
nine months ended June 30, 1995 7,456,008
Distributions, nine months 1995 (31,468,572)
- - - - - - - --------------------------------------------------------------------------------
Balance, September 30, 1995 $106,599,644
- - - - - - - --------------------------------------------------------------------------------
For each Joint Venture film, all revenues received by the Joint Venture are
allocated and distributed first to the Partnership and Disney in proportion to
their respective actual investments in the film until each has recovered its
investment; second, net of participations, to Disney until it recovers any
amounts paid for cost overruns; and thereafter, net of participations, 75% to
the Partnership and 25% to Disney (adjusted for any Disney investment in the
film other than cost overruns) until the Partnership has received an amount
equal to 150% of its investment; and thereafter, 62-1/2% to the Partnership and
37-1/2% to Disney (adjusted for any Disney investment in the film other than
cost overruns). Allocations of revenues from acquired films may vary from
allocations applicable to other films.
3. Overhead Fees Payable
The Partnership Agreement provides that overhead fees received by the
Partnership for the benefit of the Managing General Partner ("MGP") will remain
on account with the Partnership with the understanding that the MGP may draw
from such account from time to time, in order to cover its actual operating
expenses not reimbursed from other sources. Such amounts are included in
temporary investments and earn interest which accrues to the Partnership. The
fees remaining on account will earn 10% per annum (compounded quarterly) for the
MGP. The amount included in general and administrative expenses for the nine
months is $1,980,574. Any amount remaining in such account on January 2, 1997
will be paid to the MGP on such date. As of September 30, 1995, the balance of
such overhead fee account was $26,376,327.
<PAGE>
Silver Screen Management Services, Inc.
936 Broadway
New York, NY 10010
(212) 995-7600
Recorded News Update:
(800) 444-SILV
(c) 1995 Silver Screen Management Services, Inc.
