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 March 31, 1997
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.)
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 March 31,
1997 First Quarter Report of Silver Screen Partners IV, L.P. (the "Partnership")
filed herewith as Exhibit 20 and is incorporated herein by reference.
Balance Sheets -- March 31, 1997 and December 31,
1996.
Statement of Operations -- For the Three Months ended
March 31, 1997 and 1996.
Statements of Partners' Equity -- For the Three
Months ended March 31, 1997 and the Year ended
December 31, 1996.
Statements of Cash Flows -- For the Three Months
ended March 31, 1997 and 1996.
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 months
ended March 31, 1997 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 three months ended March 31, 1997 were approximately
$4,986,000, as compared with approximately $17,540,000 for the comparable three
months in 1996. Revenues for the first three months of 1997 consisted of income
from the Joint Venture of approximately $4,904,000 and interest income of
approximately $83,000, while those for the comparable period in 1996 consisted
of income from the Joint Venture of approximately $16,971,000 and interest
income of approximately $568,000. Most of the films in which the Partnership has
an interest have been released in the theatrical, home video and pay cable
markets, and the final Revenue Shortfall payment was received this quarter.
Accordingly, income from the Joint Venture decreased by approximately
$12,067,000. Interest rates for the first three months of 1997 ranged from 4.8%
to 5.5%, while those for the comparable period in 1996 ranged from 4.7% to
5.79%. The decrease in funds available for investment resulted in a decrease in
interest income of approximately $485,000.
2
<PAGE>
Expenses for the three months ended March 31, 1997 were approximately
$171,000 as compared with approximately $990,000 for the comparable period in
1996. Interest on overhead fees payable (at 10% per annum) decreased by
approximately $551,000 in 1997, due to the fact that the overhead fee has been
drawn down in total by the Managing General Partner, and expenses in general
decreased by $268,000.
The Partnership generated net income of approximately $4,815,000 for the
three months ended March 31, 1997, as compared with net income of approximately
$16,550,000 for the comparable period in 1996. The decrease in net income is
primarily the result of a decrease in film revenues offset by a 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 March
31, 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.
During the quarter ended March 31, 1997, the Partnership made no cash
distributions to the Partners, because revenues generated were insufficient to
warrant a distribution. 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.
3
<PAGE>
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 Partnership entered into 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 expected.
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.
Closing under the Buyout Agreement with Disney is scheduled to occur
November 30, 1998. The Partnership currently expects to dissolve by the end of
1998 upon disposition of its remaining assets and distribution of cash to the
partners.
4
<PAGE>
ITEM 3. SELECTED FINANCIAL DATA.
SILVER SCREEN PARTNERS IV, L.P.
-------------------------------
Three Months Three Months
Ended Ended
March 31, 1997 March 31, 1996
-------------- --------------
Revenues
Income from Joint
Venture (Note 2) ............................ $ 4,903,755 $ 16,971,450
Interest income ............................... 82,665 568,369
------------ ------------
4,986,420 17,539,819
Expenses
General and administrative
expenses ................................... 171,377 990,317
------------ ------------
Net income ...................................... $ 4,815,043 $ 16,549,502
============ ============
Net income per a $500 limited
partnership unit (based on
800,000 Units outstanding) ................... $ 5.42 $ 20.48
============ ============
Cash distribution
per $500 limited
partnership unit ............................. $ 0.00 $ 15.00
============ ============
March 31, 1997 March 31, 1996
-------------- --------------
Total assets .................................... $ 81,338,786 $139,565,890
============ ============
See notes to financial statements.
5
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
Exhibit 20 -- 1997 First Quarter Report
(b) The Partnership did not file any reports on Form
8-K during the quarter ended March 31, 1997.
6
<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: May 15, 1997 By: /s/ Roland W. Betts
--------------------------------
Roland W. Betts, President
7
<PAGE>
S I L V E R S C R E E N P A R T N E R S I V, L. P.
F i r s t
Q u a r t e r
R e p o r t
M a r c h 3 1 , 1 9 9 7
F-1
<PAGE>
DEAR LIMITED PARTNER:
The 1997 first quarter cash distribution totals $7 million, bringing total
distributions since the Partnership's inception in 1988 to $585 million.
First quarter revenue was generated principally from a Revenue Shortfall
Payment from Buena Vista for "Blame It on the Bellboy." This is the final
Revenue Shortfall Payment the Partnership is due to receive. In addition, "The
Little Mermaid" and "Beauty and the Beast" produced 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 the Disney buyout of the Silver Screen IV-Disney
Joint Venture. As always, distributions depend on the amount of revenue
generated each quarter. There may be quarters when revenue is insufficient to
justify making a cash distribution.
Between now and the dissolution of the Partnership, current expectations
are that, after the current distribution and expenses, Silver Screen Partners IV
will distribute an additional $292 to $322 per unit to investors (this amount
includes all anticipated future quarterly distributions and the buyout proceeds
from Disney). The closing of the purchase by Disney is scheduled to occur on
November 30, 1998. The final distribution and dissolution of the Partnership is
expected to take place before December 31, 1998. These figures and dates
represent our best estimates as of today.
As you may be aware, a number of private investment groups have sent out
correspondence relating to a tender offer for units in Silver Screen Partners
IV, and there may be other such offers in the future. Silver Screen Partners IV
and Silver Screen Management Services, Inc. are not affiliated in any way with
these firms and can make no recommendation as to the merits of any past or
future tender offer. If and when you receive such solicitations, unless you are
interested in selling your units, no action by you is required. We hope this
information will help you in evaluating the various bids from the tender offer
groups.
Our Second Quarter Report will be mailed to you in July. 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., Eastern Standard Time.
Sincerely,
/s/ Roland W. Betts /s/ Tom A. Bernstein
- -------------------- ---------------------
Roland W. Betts Tom A. Bernstein
President Executive Vice President
F-2
<PAGE>
B A L A N C E S H E E T S
(Unaudited)
- ---------------------------
March 31, December 31,
1997 1996
------------ ------------
ASSETS
Current Assets:
Cash ........................................... $ 269,129 $ 314,835
Temporary investments (at cost, plus accrued
interest, which approximates market) ......... 8,220,620 25,794,708
------------ ------------
Total current assets ........................... 8,489,749 26,109,543
Investment in Joint Venture .................... 72,849,037 74,211,904
------------ ------------
$ 81,338,786 $100,321,447
============ ============
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Due to managing general partner ................ $ 46,676 $ 4,960
Accrued unincorporated business tax ............ 153,419 153,419
Overhead fees payable .......................... -- 23,839,420
------------ ------------
Total liabilities .............................. 200,095 23,997,799
------------ ------------
Partners' equity:
General partners ............................... -- --
Limited partners ............................... 81,138,691 76,323,648
------------ ------------
Total partners' equity ......................... 81,138,691 76,323,648
------------ ------------
$ 81,338,786 $100,321,447
============ ============
See notes to financial statements.
F-3
<PAGE>
S T A T E M E N T S O F O P E R A T I O N S
(Unaudited)
- -----------------------------------------------
Three Months Three Months
Ended Ended
March 31, March 31,
1997 1996
----------- -----------
REVENUES:
Income from Joint Venture ...................... $ 4,903,755 $16,971,450
Interest income ................................ 82,665 568,369
----------- -----------
4,986,420 17,539,819
COSTS AND EXPENSES:
General and administrative expenses ............ 171,377 990,317
----------- -----------
Net income ..................................... $ 4,815,043 $16,549,502
=========== ===========
NET INCOME ALLOCATED TO:
General partners ............................... $ 481,504 $ 165,495
Limited partners ............................... 4,333,539 16,384,007
----------- -----------
$ 4,815,043 $16,549,502
=========== ===========
Net income per a $500 limited partnership
unit (based on 800,000 units outstanding) .... $ 5.42 $ 20.48
=========== ===========
See notes to financial statements.
S T A T E M E N T S O F P A R T N E R S ' E Q U I T Y
(Unaudited)
- ----------------------------------------------------------
Year Ended December 31, 1996
and Three Months Ended March 31, 1997
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
------------- ----------- -----------
<S> <C> <C> <C>
Balance, January 1, 1996 ...................... $ -- $ 112,802,947 $ 112,802,947
Net income, 1996 .............................. 2,908,830 72,652,274 75,561,104
Distributions, 1996 ........................... (6,840,403) (105,200,000) (112,040,403)
Allocation under Treasury Regulation
Section 1.704-1(b) ......................... 3,931,573 (3,931,573) --
----------- ------------- -------------
Balance, December 31, 1996 .................... -- 76,323,648 76,323,648
Net income, three months 1997 ................. 481,504 4,333,539 4,815,043
Distributions during three months 1997......... -- -- --
Allocation under Treasury Regulation
Section 1.704-1(b) ......................... (481,504) 481,504 --
----------- ------------- -------------
$ -- $ 81,138,691 $ 81,138,691
=========== ============= =============
</TABLE>
See notes to financial statements.
F-4
<PAGE>
S t a t e m e n t s o f C a s h F l o w s
(Unaudited)
- -----------------------------------------------
Three Months Three Months
Ended Ended
March 31, 1997 March 31, 1996
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ..................................... $ 4,815,043 $ 16,549,502
Adjustments to reconcile net income
to net cash provided by operating
activities:
Decrease (increase) in accrued
interest receivable ......................... 136,621 (43,340)
Charge on overhead fee payable ................. 13,244 564,552
Net change in operating assets
and liabilities:
Increase in due to managing general partner .... 41,716 66,623
------------ ------------
Net cash provided by operating activities ...... 5,006,624 17,137,337
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease in investment in Joint Venture ........ 1,362,866 4,716,757
Sale (purchase) of temporary investments, net .. 17,437,468 (6,079,353)
------------ ------------
Net cash provided by (used in)
investing activities ......................... 18,800,334 (1,362,596)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners ...................... -- (12,121,212)
Decrease in overhead fee payable ............... (23,852,664) (4,000,000)
------------ ------------
Net cash used in financing activities .......... (23,852,664) (16,121,212)
------------ ------------
Net decrease in cash ........................... (45,706) (346,471)
Cash, beginning of year ........................ 314,835 392,505
------------ ------------
Cash at end of three months .................... $ 269,129 $ 46,034
============ ============
See notes to financial statements.
F-5
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Temporary Investments
- ---------------------
Temporary investments represent investments in commercial paper.
Investment in Joint Venture
- ---------------------------
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 began 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.
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.
Overhead Fees Payable
- ---------------------
The Partnership Agreement provided that overhead fees received by the
Partnership for the benefit of the Managing General Partner ("MGP") would remain
on account with the Partnership with the understanding that the MGP would draw
from such account from time to time, in order to cover its actual operating
expenses not reimbursed from other sources. Such amounts were included in the
temporary investments and earned interest which accrued to the Partnership. The
remaining fees on account earned 10% per annum (compounded quarterly) for the
MGP. The amount included in general and administrative expenses for the three
months ended March 31, 1997 is $13,244. Pursuant to the Partnership Agreement,
the overhead was paid on January 2, 1997.
F-6
<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
F-7
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED BALANCE SHEET AS OF MARCH 31, 1997, AND THE STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED MARCH 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-END> Mar-31-1997
<CASH> 269
<SECURITIES> 8,221
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,490
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 81,339
<CURRENT-LIABILITIES> 200
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 81,139
<TOTAL-LIABILITY-AND-EQUITY> 81,339
<SALES> 4,904
<TOTAL-REVENUES> 4,986
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 171
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,815
<INCOME-TAX> 0
<INCOME-CONTINUING> 4,815
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,815
<EPS-PRIMARY> 5.42
<EPS-DILUTED> 0
</TABLE>
