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, 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.)
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 September 30,
1997 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, 1997 and
December 31, 1996.
Statement of Operations -- For the Three and
Nine Months ended September 30, 1997 and
1996.
Statements of Partners' Equity -- For the
Nine Months ended September 30, 1997 and the
Year ended December 31, 1996.
Statements of Cash Flows -- For the Nine
Months ended September 30, 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 and
nine months ended September 30, 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 nine months and quarter ended September 30, 1997 were
approximately $9,891,000 and $3,951,000 respectively, as compared with
approximately $78,573,000 and $25,240,000, respectively, for the comparable
periods in 1996. Revenues for the first nine months and third quarter of 1997
consisted of income from the Joint Venture of approximately $9,700,000 and
$3,897,000 and interest income of approximately $191,000 and $54,000, while
those for the comparable periods in 1996 consisted of income from the Joint
Venture of approximately $76,425,000 and $24,446,000 and interest income of
approximately $2,148,000 and $795,000. 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 in the
first quarter of 1997. Accordingly, income from the Joint Venture decreased by
approximately $66,725,000. Interest rates applicable to the Partnership's
temporary investments for the first nine months of 1997 ranged from 4.8% to
5.57%, 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 $1,957,000.
2
<PAGE>
Expenses for the nine months ended September 30, 1997 were approximately
$387,000 as compared with approximately $2,477,000 for the comparable period in
1996. Interest on overhead fees payable (at 10% per annum) decreased by
approximately $1,689,000 in 1997, due to the fact that the overhead fee has been
drawn down in total by the Managing General Partner. The overall reduction of
expenses in all expense categories and the reduction of extraordinary expenses
relating to preparations for the negotiation of the sale of the Partnership's
interest in the Joint Venture were instrumental in the reduction of expenses.
The Partnership generated net income before taxes of approximately
$9,504,000 for the nine months ended September 30, 1997, as compared with net
income before taxes of approximately $76,096,000 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 had
recorded $995,100 in unincorporated business taxes resulting in a net income of
approximately $75,101,000 in 1996. No additional unincorporated business taxes
were reserved for in 1997 since the accrual from 1996 is adequate.
The Partnership made 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.
3
<PAGE>
During the quarter ended September 30, 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 re-release of "The Little Mermaid" and 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 in each of such quarters.
Investment in Joint Venture
---------------------------
Until January 1, 1996, 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 with respect to the
Joint Venture Films 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 the 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
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.
<TABLE>
<CAPTION>
SILVER SCREEN PARTNERS IV, L.P.
--------------------------------
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
Sept. 30, 1997 Sept. 30, 1997 Sept. 30, 1996 Sept. 30, 1996
-------------- --------------- -------------- --------------
<S> <C> <C> <C> <C>
Revenues:
Income from Joint Venture
Interest income ......... $ 3,897,282 $ 9,699,589 $24,445,771 $76,425,463
54,000 191,194 794,533 2,147,965
----------- ----------- ----------- -----------
$ 3,951,282 $ 9,890,783 $24,240,304 $78,573,428
Costs and Expenses:
General and
administrative
expenses ............... 125,108 387,155 780,405 2,477,084
----------- ----------- ----------- -----------
Income before taxes ..... 3,826,174 9,503,628 24,459,899 76,096,344
Unincorporated
business tax ........... - - 995,100 995,100
----------- ----------- ----------- -----------
Net income ................ $ 3,826,174 $ 9,503,628 $23,464,799 $75,101,244
=========== =========== =========== ===========
Net income per a
$500 limited partnership
unit (based on 800,000
Units outstanding) ...... $ 4.30 $ 10.69 $ 26.40 $ 90.30
=========== =========== =========== ===========
Cash distribution
per $500 limited
partnership unit ........ $ - $ 8.75 $ 15.00 $ 97.00
=========== =========== =========== ===========
Sept. 30, 1997 Sept. 30, 1996
-------------- --------------
Total assets .............. $ 78,207,691 $129,373,174
============= =============
</TABLE>
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 Third Quarter Report
(b) The Partnership did not file any reports on Form 8-K during
the quarter ended September 30, 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: November __, 1997 By: /s/ Roland W. Betts
--------------------------------
Roland W. Betts, President
7
<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
SILVER SCREEN IV
Third
Quarter
Report
September 30, 1997
(C) 1997 Silver Screen Management Services, Inc.
F-1
<PAGE>
D E A R L I M I T E D P A R T N E R:
The 1997 third quarter cash distribution totals $5.2 million, bringing
total distributions since the Partnership's inception in 1988 to approximately
$590 million.
The majority of Partnership revenue this quarter was generated from sales
of merchandise related to "The Little Mermaid" and "Beauty and the Beast."
Another animated film, "The Rescuers Down Under," contributed revenue from the
foreign home video market. Quarterly revenue was also generated by "Pretty
Woman" from the United States syndicated television market.
Future Partnership is expected to be generated from the theatrical
re-release of "The Little Mermaid" (scheduled for this Christmas), and the
Disney buyout of the Silver Screen IV-Disney Joint Venture.
Between now and the dissolution of the Partnership, current expectations
are that Silver Screen Partners IV will distribute approximately $286 to $316
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, if you are not
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.
The 1997 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 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)
<TABLE>
<CAPTION>
Sept. 30, 1997 Dec. 31, 1996
-------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash ....................................... $ 15,107 $ 314,835
Temporary investments (at cost, plus accrued
interest, which approximates market) ..... 6,676,420 25,794,708
------------ ------------
Total current assets ....................... 6,691,527 26,109,543
Investment in Joint Venture ................ 71,516,164 74,211,904
------------ ------------
$ 78,207,691 $100,321,447
============ ============
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Due to managing general partner ............ $ 32,036 $ 4,960
Accrued unincorporated business tax ........ 126,157 153,419
Overhead fees payable ...................... -- 23,839,420
------------ ------------
Total liabilities .......................... 158,193 23,997,799
------------ ------------
Partners' equity:
General partners ........................... -- --
Limited partners ........................... 78,049,498 76,323,648
------------ ------------
Total partners' equity ..................... 78,049,498 76,323,648
------------ ------------
$ 78,207,691 $100,321,447
============ ============
</TABLE>
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 ( U N A U D I T E D )
<TABLE>
<CAPTION>
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
Sept. 30, 1997 Sept. 30, 1997 Sept. 30, 1996 Sept. 30, 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
REVENUES:
Income from Joint Venture ............ $ 3,897,282 $ 9,699,589 $24,445,771 $76,425,463
Interest income ...................... 54,000 191,194 794,533 2,147,965
----------- ----------- ----------- -----------
3,951,282 9,890,783 25,240,304 78,573,428
COSTS AND EXPENSES:
General and administrative expenses .. 125,108 387,155 780,405 2,477,084
----------- ----------- ----------- -----------
Income before tax .................... 3,826,174 9,503,628 24,459,899 76,096,344
Unincorporated Business tax .......... -- -- 995,100 995,100
----------- ----------- ----------- -----------
Net income ........................... $ 3,826,174 $ 9,503,628 $23,464,799 $75,101,244
=========== =========== =========== ===========
NET INCOME ALLOCATED TO:
General partners ..................... $ 382,617 $ 950,363 $ 2,346,480 $ 2,862,844
Limited partners ..................... 3,443,557 8,553,265 21,118,319 72,238,400
----------- ----------- ----------- -----------
$ 3,826,174 $ 9,503,628 $23,464,799 $75,101,244
=========== =========== =========== ===========
Net income per a $500
limited partnership unit (based
on 800,000 units outstanding) ...... $ 4.30 $ 10.69 $ 26.40 $ 90.30
=========== =========== =========== ===========
</TABLE>
See notes to financial statements.
<TABLE>
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 ( U N A U D I T E D )
<CAPTION>
Year Ended December 31, 1996
and Nine Months Ended Sept. 30, 1997
========================================================
General Partners Limited 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, nine months 1997 ........... 950,363 8,553,265 9,503,628
Distributions during nine months 1997 .. (777,778) (7,000,000) (7,777,778)
Allocation under Treasury Regulation ...
Section 1.704-1(b) .................. (172,585) 172,585 --
------------- ------------- -------------
$ -- $ 78,049,498 $ 78,049,498
============= ============= =============
</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 ( U N A U D I T E D )
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended
Sept. 30, 1997 Sept. 30, 1996
---------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ............................................. $ 9,503,628 $ 75,101,244
Adjustments to reconcile net income to net
cash provided by operating activities:
Decrease (increase) in accrued interest receivable ... 129,506 (118,295)
Charge on overhead fee payable ....................... 13,244 1,702,621
Net change in operating assets and liabilities:
Decrease in accrued unincorporated business tax ...... (27,262) --
Decrease in other liabilities ........................ -- (100,000)
Increase (decrease) in due to managing general partner 27,076 (18,935)
------------ ------------
Net cash provided by operating activities .............. 9,646,192 76,566,635
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease in investment in Joint Venture ................ 2,695,740 21,240,397
Sale (purchase) of temporary investments, net .......... 18,988,782 (12,329,596)
------------ ------------
Net cash provided by investing activities ............. 21,684,522 8,910,801
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners .............................. (7,777,778) (81,818,181)
Decrease in overhead fee payable ....................... (23,852,664) (4,000,000)
------------ ------------
Net cash used in financing activities .................. (31,630,442) (85,818,181)
------------ ------------
Net decrease in cash ................................... (299,728) (340,745)
Cash, beginning of year ................................ 314,835 392,505
------------ ------------
Cash at end of nine months ............................. $ 15,107 $ 51,760
============ ============
</TABLE>
See notes to financial statements.
F-5
<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
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 expected.
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 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 nine months ended
September 30, 1997 is $13,244. Pursuant to the Partnership Agreement, the
overhead was paid on January 2, 1997.
F-6
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED BALANCE SHEET AS OF SEPTEMBER 30, 1997, AND THE STATEMENT OF
OPERATIONS FOR THE PERIOD ENDED SEPTEMBER 30, 1997, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-END> Sep-30-1997
<CASH> 15
<SECURITIES> 6,676
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,691
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 78,208
<CURRENT-LIABILITIES> 158
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 78,049
<TOTAL-LIABILITY-AND-EQUITY> 78,208
<SALES> 9,700
<TOTAL-REVENUES> 9,891
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 387
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 9,504
<INCOME-TAX> 0
<INCOME-CONTINUING> 9,504
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,504
<EPS-PRIMARY> 10.69
<EPS-DILUTED> 0
</TABLE>
