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 June 30, 1996
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.)
c/o Chelsea Piers, Pier 62 - Suite 300
New York, New York 10011
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 336-6700
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
----- -----
1
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The financial information set forth below is set forth in the June 30, 1996
Second Quarter Report of Silver Screen Partners IV, L.P. (the "Partnership")
filed herewith as Exhibit 20 and is incorporated herein by reference.
Balance Sheets -- June 30, 1996 and December 31, 1995.
Statements of Operations -- For the Three and Six Months ended June
30, 1996 and 1995.
Statements of Partners' Equity -- For the Six Months ended June 30,
1996 and the Year ended December 31, 1995.
Statements of Cash Flows -- For the Six Months ended June 30, 1996 and
1995.
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 three and
six months ended June 30, 1996 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 six months and quarter ended June 30, 1996 were
approximately $53,333,000 and $35,793,000, respectively, as compared with
approximately $8,450,000 and $6,842,000, respectively, for the comparable
periods in 1995. Revenues for the first six months and quarter of 1996 consisted
of income from the Joint Venture of approximately $51,980,000 and $35,008,000
and interest income of approximately $1,353,000 and $785,000, while those for
the comparable periods in 1995 consisted of income from the Joint Venture of
approximately $7,125,000 and $6,185,000 and interest income of approximately
$1,325,000 and $657,000. Most of the films in which the Partnership has an
interest have been released in the theatrical, home video and pay cable markets.
However, income from the Joint Venture increased by approximately $44,855,000
due to Revenue Shortfall payments for "Scenes From A Mall," "One Good Cop," "The
2
<PAGE>
Marrying Man," "Oscar," "Run," "Rocketeer," "Wild Hearts Can't Be Broken" and
lesser film revenue amounts from other films in the portfolio. Interest rates
for the first six months of 1996 ranged from 4.7% to 5.79%, while those for the
comparable period in 1995 ranged from 5.0% to 6.04%. An increase in funds
available for investment offset by decreased interest rates resulted in an
increase in interest income of approximately $28,000.
Expenses for the six months ended June 30, 1996 were approximately
$1,697,000 as compared with approximately $2,097,000 for the comparable period
in 1995. The decrease in expenses is due to a lower cost (a decrease of
$203,000) of the 10% per annum charged on the remaining overhead fee payable, a
decrease in expenses associated with the sale of the Partnership's interest in
the Joint Venture of approximately $140,000, a decrease in audit costs of
$47,000 and a general decrease in expenses of $10,000.
The Partnership generated net income of approximately $51,636,000 for the
six months ended June 30, 1996, as compared with net income of approximately
$6,353,000 for the comparable period in 1995. The increase in net income is the
result of an increase in film revenues and the decrease 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 $598,750,000 has been expended as of June
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 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.
3
<PAGE>
During the quarter ended June 30, 1996, the Partnership made cash
distributions to the Partners which amounted to $36,363,636 in the aggregate.
Although all of the Joint Venture Films have been released, the Partnership
anticipates that future revenues will be derived from the sale of its interest
in the Joint Venture (see Investment in Joint Venture below) and that it will
continue to receive revenues and make quarterly cash distributions in the
future. However, revenues in upcoming quarters may be insufficient to justify
making a cash distribution.
Investment in Joint Venture
---------------------------
The investment in the Joint Venture was accounted for using the equity
method of accounting. Under the equity method, the investment was initially
recorded at cost, and was 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 investment in the Joint Venture on January 1, 1996 totaled
$95,691,312.
The Partnership entered into a Letter Agreement (the "Buyout Agreement")
with Disney dated September 11, 1995 providing for the sale to Disney of all of
the Partnership's interest in the Joint Venture. The Buyout Agreement provides
for the payment of the purchase price of $330,000,000, in cash (subject to
certain adjustments with respect to revenues received from the exploitation of
animated films.) Closing is scheduled to occur on November 30, 1998 subject to
satisfaction of certain customary conditions. In addition to the purchase price,
the Buyout Agreement provides that Buena Vista Pictures Distribution, Inc.
("BV") will continue to account for and make payments to the Joint Venture, as
required by the Distribution Agreement for all revenues received by BV through
April 30, 1998.
As a result of the Buyout Agreement the Partnership is using the cost
method of accounting starting January 1, 1996. Under the cost method,
distributions received are recognized as income and investments will be reduced
in proportion that actual cash received bears to ultimate revenues expended.
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
4
<PAGE>
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.
The Partnership has had discussions with the New York City Department of
Finance with respect to the Partnership's unincorporated business tax liability
for periods through December 31, 1995. The Partnership has recently reached an
agreement in principle with New York City in connection with its liability for
unincorporated business tax and a final agreement is expected before the close
of the current quarter. It is anticipated that the amount of liability under
this final agreement will have no material adverse effect on liquidity.
5
<PAGE>
ITEM 3. SELECTED FINANCIAL DATA.
<TABLE>
<CAPTION>
SILVER SCREEN PARTNERS IV, L.P.
--------------------------------
Three Months Six Months Three Months Six Months
Ended Ended Ended Ended
June 30, 1996 June 30, 1996 June 30, 1995 June 30, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Income from Joint Venture $35,008,242 $ 51,979,692 $ 6,185,395 $ 7,125,106
Interest income ......... 785,063 1,353,432 656,935 1,324,699
------------- ------------- ------------- -------------
$35,793,305 $ 53,333,124 $ 6,842,330 $ 8,449,805
Costs and Expenses:
General and
administrative
expenses ............... 706,362 1,696,679 1,025,964 2,096,680
------------- ------------- ------------- -------------
Net income ................ $35,086,943 $ 51,636,445 $ 5,816,366 $ 6,353,125
============= ============= ============= =============
Net income per $500
limited partnership
unit (based on 800,000
Units outstanding) ...... $ 43.42 $ 63.90 $ 7.20 $ 7.86
============= ============= ============= =============
Cash distribution
per $500 limited
partnership unit ........ $ 30.00 $ 45.00 $ 15.00 $ 30.00
============= ============= ============= =============
June 30, 1996 June 30, 1995
------------- -------------
Total assets .............. $150,884,175 $168,474,248
============= =============
</TABLE>
See notes to financial statements.
6
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
Exhibit 20 -- 1996 Second Quarter Report
(b) The Partnership did not file any reports on Form 8-K during
the quarter ended June 30, 1996.
7
<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: August, 1996 By: /s/ Roland W. Betts
--------------------------------
Roland W. Betts, President
8
<PAGE>
Silver Screen Management Services, Inc.
Chelsea Piers-Pier 62
Suite 300
New York, NY 10011
(212) 336-6700
Recorded News Update:
(800) 444-SILV
Second
Quarter
Report
June 30, 1996
C 1996 Silver Screen Management Services, Inc.
9
<PAGE>
D E A R L I M I T E D P A R T N E R:
The 1996 second quarter cash distribution totals $42 million, bringing
total distributions since the Partnership's inception in 1988 to $551 million.
Second quarter revenue was generated principally from five Revenue
Shortfall Payments from Buena Vista for "The Marrying Man," "Oscar," "One Good
Cop," "Wild Hearts Can't Be Broken," and "The Rocketeer." In addition, "The
Little Mermaid" and "Beauty and the Beast" continued to produce Partnership
revenue this quarter from sales of film-related merchandise.
Future Partnership revenue 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. In addition, the payment of the
Disney buyout of the Partnership's interest in the Silver Screen IV-Disney Joint
Venture is scheduled to occur on November 30, 1998. We expect that the final
distribution and dissolution of the Partnership will take place by the end of
1998.
Our Third Quarter Report will be mailed to you in October. If you need any
assistance in the meantime, please contact our Investor Relations Department
between the hours of 10 A.M. and 2 P.M.
Sincerely,
/s/ Roland W. Betts /s/ Tom A. Bernstein
- ------------------- ------------------------
Roland W. Betts Tom A. Bernstein
President Executive Vice President
10
<PAGE>
B A L A N C E S H E E T S
(Unaudited)
<TABLE>
<CAPTION>
June 30, 1996 December 31, 1995
------------- -----------------
<S> <C> <C>
ASSETS
Current assets:
Cash ............................................. $ 328,233 $ 392,505
------------ ------------
Temporary investments (at cost plus accrued
interest, which approximates market) (Note 1) ... 69,310,984 42,422,608
------------ ------------
Total current assets ............................. 69,639,217 42,815,113
Investment in Joint Venture (Note 2) ............. 81,244,958 95,691,312
------------ ------------
$150,884,175 $138,506,425
============ ============
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Due to managing general partner .................. $ 42,293 $ 60,728
Overhead fees payable (Note 3) ................... 22,666,126 25,542,750
------------ ------------
Total current liabilities ........................ 22,708,419 25,603,478
Other liabilities ................................ 100,000 100,000
------------ ------------
Total liabilities ................................ 22,808,419 25,703,478
------------ ------------
Partners' equity:
General partners ................................. -- --
Limited partners ................................. 128,075,756 112,802,947
------------ ------------
Total partners' equity ........................... 128,075,756 112,802,947
------------ ------------
$150,884,175 $138,506,425
============ ============
</TABLE>
See notes to financial statements.
11
<PAGE>
S T A T E M E N T S O F O P E R A T I O N S
(Unaudited)
<TABLE>
<CAPTION>
Three Months Six Months Three Months Six Months
Ended Ended Ended Ended
June 30, 1996 June 30, 1996 June 30, 1995 June 30, 1995
------------- ------------- ------------- -------------
REVENUES:
<S> <C> <C> <C> <C>
Income from Joint Venture (Note 2) ....... $35,008,242 $51,979,692 $6,185,395 $7,125,106
Interest income .......................... 785,063 1,353,432 656,935 1,324,699
----------- ----------- ---------- ----------
35,793,305 53,333,124 6,842,330 8,449,805
COSTS AND EXPENSES:
General and administrative expenses ...... 706,362 1,696,679 1,025,964 2,096,680
----------- ----------- ---------- ----------
Net income ............................... $35,086,943 $51,636,445 $5,816,366 $6,353,125
=========== =========== ========== ==========
NET INCOME ALLOCATED TO:
General partners ......................... $ 350,869 $ 516,364 $ 58,164 $ 63,531
Limited partners ......................... 34,736,074 51,120,081 5,758,202 6,289,594
----------- ----------- ---------- ----------
$35,086,943 $51,636,445 $5,816,366 $6,353,125
=========== =========== ========== ==========
Net income per a $500 limited partnership
unit (based on 800,000 units outstanding) $ 43.42 $ 63.90 $ 7.20 $ 7.86
=========== =========== ========== ==========
</TABLE>
See notes to financial statements.
S T A T E M E N T S OF P A R T N E R S ' E Q U I T Y
(Unaudited)
<TABLE>
<CAPTION>
Year Ended December 31, 1995
and Six Months Ended June 30, 1996
========================================================
General Partners Limited Partners Total
---------------- ---------------- -----
<S> <C> <C> <C>
Balance, January 1, 1995 ................................... $ -- $165,350,987 $165,350,987
Net income, 1995 ........................................... 80,580 7,977,440 8,058,020
Distributions, 1995 ........................................ (606,060) (60,000,000) (60,606,060)
Allocation under Treasury Regulation Section 1.704-1(b) .... 525,480 (525,480) --
--------- ------------ ------------
Balance, December 31, 1995 ................................. -- 112,802,947 112,802,947
NET INCOME, SIX MONTHS 1996 ................................ 516,364 51,120,081 51,636,445
DISTRIBUTIONS DURING SIX MONTHS 1996 ....................... (363,636) (36,000,000) (36,363,636)
ALLOCATION UNDER TREASURY REGULATION SECTION 1.704-1(b) .... (152,728) 152,728 --
--------- ------------ ------------
$ -- $128,075,756 $ 128,075,756
========= ============ ============
</TABLE>
See notes to financial statements.
12
<PAGE>
S T A T E M E N T S O F C A S H F L O W S
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
June 30, 1996 June 30, 1995
---------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ............................................. $ 51,636,445 $ 6,353,125
Adjustments to reconcile net income to net
cash provided by operating activities:
(Increase) decrease in accrued interest receivable ... (180,204) 337,443
Charge on overhead fees payable ...................... 564,552 1,327,616
Net change in operating assets and liabilities:
(Decrease) increase in due to managing general partner (18,435) 28,657
------------ -----------
Net cash provided by operating activities .............. 52,002,358 8,046,841
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in Joint Venture ........................... -- (78,566)
Distributions received from Joint Venture
in excess of equity in income ........................ -- 16,928,802
Decrease in investment in Joint Venture ................ 14,446,354 --
(Purchase) sale of temporary investments, net .......... (26,708,172) 10,876,871
------------ -----------
Net cash (used in) provided by investing activities .... (12,261,818) 27,727,107
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners .............................. (36,363,636) (36,363,636)
Decrease in overhead fees payable ...................... (3,441,176) (2,540,692)
------------ -----------
Net cash used in financing activities .................. (39,804,812) (38,904,328)
------------ -----------
Net decrease in cash ................................... (64,272) (3,130,380)
Cash, beginning of year ................................ 392,505 3,279,252
------------ -----------
Cash at end of six months .............................. $ 328,233 $ 148,872
============ ===========
</TABLE>
See notes to financial statements.
13
<PAGE>
N o t e s t o F i n a n c i a l S t a t e m e n t s
1. TEMPORARY INVESTMENTS
Temporary investments represent investments in commercial paper.
2. INVESTMENT IN JOINT VENTURE
The investment in the Joint Venture was accounted for using the equity method of
accounting. Under the equity method, the investment was initially recorded at
cost, and was 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
investment in the Joint Venture on January 1, 1996 totaled $95,691,312.
The Partnership entered into a Letter Agreement (the "Buyout Agreement") with
Disney dated September 11, 1995 providing for the sale to Disney of all of the
Partnership's interest in the Joint Venture. The Buyout Agreement provides for
the payment of the purchase price of $330,000,000, in cash (subject to certain
adjustments with respect to revenues received from the exploitation of animated
films). Closing is scheduled to occur on November 30, 1998 subject to
satisfaction of certain customary conditions. In addition to the purchase price,
the Buyout Agreement provides that Buena Vista Pictures Distribution, Inc.
("BV") will continue to account for and make payments to the Joint Venture, as
required by the Distribution Agreement for all revenues received by BV through
April 30, 1998.
As a result of the Buyout Agreement the Partnership is using the cost method of
accounting starting January 1, 1996. Under the cost method, distributions
received are recognized as income and investments will be reduced in proportion
that actual cash received bears to ultimate revenues expended.
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 the
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 six
months is $1,123,376. Any amount remaining in such account on January 2, 1997
will be paid to the MGP on such date. As of June 30, 1996, the balance of such
overhead fee account was $22,666,126.
<PAGE>
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED BALANCE SHEET AS OF JUNE 30, 1996, AND THE STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> Jun-30-1996
<CASH> 328
<SECURITIES> 69,311
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 69,639
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 150,884
<CURRENT-LIABILITIES> 22,708
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 128,076
<TOTAL-LIABILITY-AND-EQUITY> 150,884
<SALES> 51,980
<TOTAL-REVENUES> 53,333
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,697
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 51,636
<INCOME-TAX> 0
<INCOME-CONTINUING> 51,636
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 51,636
<EPS-PRIMARY> 63.90
<EPS-DILUTED> 0
</TABLE>
