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, 1998
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, 1998
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, 1998 and December 31, 1997.
Statements of Operations -- For the Three and Six Months ended June
30, 1998 and 1997.
Statements of Partners' Equity -- For the Six Months ended June 30,
1998 and the Year ended December 31, 1997.
Statements of Cash Flows -- For the Six Months ended June 30, 1998 and
1997.
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, 1998 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, 1998 were
approximately $7,105,000 and $3,121,000 respectively, as compared with
approximately $5,940,000 and $953,000 respectively, for the comparable periods
in 1997. Revenues for the first six months and second quarter of 1998 consisted
of income from the Joint Venture of approximately $6,959,000 and $3,040,000,
respectively, and interest income of approximately $147,000 and $81,000,
respectively, while those for the comparable periods in 1997 consisted of income
from the Joint Venture of approximately $5,802,000 and $899,000, respectively,
and interest income of approximately $137,000 and $55,000, respectively. All of
the films in which the Partnership has an interest have been released in the
theatrical, home video and pay cable markets. Income from the Joint Venture
increased by approximately $1,157,000. Interest rates applicable to the
Partnership's temporary investments for the first six months of 1998 ranged from
5.1% to 5.63%, while those for the comparable period in 1997 ranged from 4.9% to
5.57%. The increase in funds available for investment resulted in an increase in
interest income of approximately $10,000.
2
<PAGE>
Expenses for the six months ended June 30, 1998 were approximately $389,000
as compared with approximately $262,000 for the comparable period in 1997. The
expenses increased by $127,000. The increase is attributable to payroll related
costs of $40,000, costs relating to reporting to limited partners of $16,000,
and higher costs in general.
The Partnership generated net income of approximately $6,716,000 for the
six months ended June 30, 1998, as compared with net income of approximately
$5,677,000 for the comparable period in 1997. The increase of approximately
$1,039,000 in net income is primarily the result of an increase in film revenues
offset by an increase in expenses as stated above.
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 June 30, 1998, the Partnership made cash
distributions of $5,333,333 to the Partners. Although all of the Joint Venture
Films have been released, the Partnership anticipates that future revenues will
be solely derived from the sale of its interest in the Joint Venture (see
Investment in Joint Venture, below) and no additional revenues are expected
until then. The final distribution is expected to occur on or before December
31, 1998.
Investment in Joint Venture
---------------------------
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") would 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. This provision was fulfilled.
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 Six Months Three Months Six Months
Ended Ended Ended Ended
June 30, 1998 June 30, 1998 June 30, 1997 June 30, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Income from Joint Venture $ 3,039,865 $ 6,958,791 $ 898,552 $ 5,802,307
Interest income ......... 80,745 146,671 54,529 137,194
------------- ------------- ------------- -------------
$ 3,120,610 $ 7,105,462 $ 953,081 $ 5,939,501
Costs and Expenses:
General and
administrative
expenses ............... 181,387 389,320 90,670 262,047
------------- ------------- ------------- -------------
Net income ................ $ 2,939,223 $ 6,716,142 $ 862,411 $ 5,677,454
============= ============= ============= =============
Net income per $500
limited partnership
unit (based on 800,000
Units outstanding) ...... $ 3.31 $ 7.56 $ 0.97 $ 6.39
============= ============= ============= =============
Cash distribution
per $500 limited
partnership unit ........ $ 6.00 $ 11.50 $ 8.75 $ 8.75
============= ============= ============= =============
June 30, 1998 June 30, 1998
------------- -------------
Total assets .............. $ 73,805,409 $ 74,354,405
============= =============
</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 -- 1998 Second Quarter Report
(b) The Partnership did not file any reports on Form 8-K during
the quarter ended June 30, 1998.
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: August 13, 1998 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
Second
Quarter
Report
June 30, 1998
C 1998 Silver Screen Management Services, Inc.
F-1
<PAGE>
Dear Limited Partner:
The 1998 second quarter cash distribution totals $4 million, bringing total
distributions since the Partnership's inception in 1988 to $604 million.
Second quarter revenue was generated principally from the theatrical
re-release of "The Little Mermaid" and from the sale of merchandise related to
the film. "White Fang" contributed Partnership revenue from the foreign free
television market as well as from the U.S. syndicated television market. In
addition, "Beaches" produced revenue this quarter from the foreign free and pay
television markets. Partnership revenue in the future will be generated from the
Disney buyout of the Silver Screen IV-Disney Joint Venture.
Between now and the dissolution of the Partnership, current expectations
are that, after the current distribution and expenses, Silver Screen Partners IV
will distribute approximately $300 to $305 per unit to investors. 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 on or
before December 31, 1998. These figures and dates represent our best estimates
as of today. Please note that due to the expected dissolution, requests to
transfer Partnership units as a result of secondary sales will not be accepted
after August 15, 1998.
Our Third Quarter Report will be mailed 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., 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)
June 30, 1998 Dec. 31, 1997
------------- -------------
ASSETS
Current assets:
Cash ....................................... $ 40,673 $ 132,879
Temporary investments (at cost, plus accrued
interest, which approximates market) ..... 5,576,983 7,180,956
----------- -----------
Total current assets ....................... 5,617,656 7,313,835
Investment in Joint Venture ................ 68,187,753 70,121,760
----------- -----------
$73,805,409 $77,435,595
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Due to managing general partner ............ $ 37,747 $ 35,696
Accrued unincorporated business tax ........ -- 126,157
----------- -----------
Total liabilities .......................... 37,747 161,853
----------- -----------
Partners' equity:
General partners ........................... -- --
Limited partners ........................... 73,767,662 77,273,742
----------- -----------
Total partners' equity ..................... 73,767,662 77,273,742
----------- -----------
$73,805,409 $77,435,595
=========== ===========
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)
<TABLE>
<CAPTION>
Three Months Six Months Three Months Six Months
Ended Ended Ended Ended
June 30, 1998 June 30, 1998 June 30, 1997 June 30, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
REVENUES:
Income from Joint Venture ................. $3,039,865 $6,958,791 $ 898,552 $5,802,307
Interest income ........................... 80,745 146,671 54,529 137,194
---------- ---------- ---------- ----------
3,120,610 7,105,462 953,081 5,939,501
COSTS AND EXPENSES:
General and administrative expenses ....... 181,387 389,320 90,670 262,047
---------- ---------- ---------- ----------
Net income ................................ $2,939,223 $6,716,142 $ 862,411 $5,677,454
========== ========== ========== ==========
NET INCOME ALLOCATED TO:
General partners .......................... $ 293,922 $ 671,614 $ 86,241 $ 567,745
Limited partners .......................... 2,645,301 6,044,528 776,170 5,109,709
---------- ---------- ---------- ----------
$2,939,223 $6,716,142 $ 862,411 $5,677,454
========== ========== ========== ==========
Net income per a $500 limited partnership
unit (based on 800,000 units outstanding) $ 3.31 $ 7.56 $ 0.97 $ 6.39
========== ========== ========== ==========
</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)
Year Ended December 31, 1997
and Six Months Ended June 30, 1998
==========================================
General Limited
Partners Partners Total
----------- ----------- -----------
Balance, January 1, 1997 ........... $ -- $ 76,323,648 $ 76,323,648
Net income, 1997 ................... 1,450,565 13,055,085 14,505,650
Distributions, 1997 ................ (1,355,556) (12,200,000) (13,555,556)
Allocation under Treasury Regulation
Section 1.704-1(b) .............. (95,009) 95,009 --
------------ ------------ ------------
Balance, December 31, 1997 ......... -- 77,273,742 77,273,742
NET INCOME, SIX MONTHS 1998 ........ 671,614 6,044,528 6,716,142
DISTRIBUTIONS DURING SIX MONTHS 1998 (1,022,222) (9,200,000) (10,222,222)
ALLOCATION UNDER TREASURY REGULATION
SECTION 1.704-1(B) .............. 350,608 (350,608) --
------------ ------------ ------------
$ -- $ 73,767,662 $ 73,767,662
============ ============ ============
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)
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
June 30, 1998 June 30, 1997
---------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ............................................. $ 6,716,142 $ 5,677,454
Adjustments to reconcile net income to net
cash provided by operating activities:
Decrease in accrued interest receivable .............. 5,186 156,509
Charge on overhead fee payable ....................... -- 13,244
Net change in operating assets and liabilities:
Decrease in accrued unincorporated business tax ...... (126,157) (27,262)
Increase (decrease) in due to managing general partner 2,051 (36)
------------ ------------
Net cash provided by operating activities .............. 6,597,222 5,819,909
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease in investment in Joint Venture ................ 1,934,007 1,612,595
Sale of temporary investments, net ..................... 1,598,787 23,943,769
------------ ------------
Net cash provided by investing activities .............. 3,532,794 25,556,364
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners .............................. (10,222,222) (7,777,778)
Decrease in overhead fee payable ....................... -- (23,852,664)
------------ ------------
Net cash used in financing activities .................. (10,222,222) (31,630,442)
------------ ------------
Net decrease in cash ................................... (92,206) (254,169)
Cash, beginning of year ................................ 132,879 314,835
------------ ------------
Cash at end of six months .............................. $ 40,673 $ 60,666
============ ============
</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
to the actual cash received bears to ultimate revenues expected.
F-6
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED BALANCE SHEET AS OF JUNE 30, 1998, AND THE STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 1998, 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-31-1998
<PERIOD-END> Jun-30-1998
<CASH> 41
<SECURITIES> 5,577
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,618
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 73,805
<CURRENT-LIABILITIES> 38
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 73,767
<TOTAL-LIABILITY-AND-EQUITY> 73,805
<SALES> 6,959
<TOTAL-REVENUES> 7,105
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 389
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 6,716
<INCOME-TAX> 0
<INCOME-CONTINUING> 6,716
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,716
<EPS-PRIMARY> 7.56
<EPS-DILUTED> 0
</TABLE>
