-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DfTJk/ynsejPU5BGv3/ZL20KUu6JT5gMsxHUpPcKW/c5PBZCMMqCmkQ6p5rpVN5b wtHgRejN8Yz4gFgpLHialA== 0001003559-96-000013.txt : 19960401 0001003559-96-000013.hdr.sgml : 19960401 ACCESSION NUMBER: 0001003559-96-000013 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960329 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SILVER SCREEN PARTNERS L P CENTRAL INDEX KEY: 0000715082 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE & VIDEO TAPE PRODUCTION [7812] IRS NUMBER: 133163899 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-11949 FILM NUMBER: 96540535 BUSINESS ADDRESS: STREET 1: 936 BROADWAY CITY: NEW YORK STATE: NY ZIP: 10010 BUSINESS PHONE: 2129957600 MAIL ADDRESS: STREET 1: 936 BROADWAY CITY: NEW YORK STATE: NY ZIP: 10010 10-K 1 10K-SILVER SCREEN PARTNERS, FILE NO. 0-11949 FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 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 0-11949 SILVER SCREEN PARTNERS, L.P. (a Delaware Limited Partnership) (Exact name of registrant as specified in its Certificate and Agreement of Limited Partnership) Delaware 13-3163899 - ------------------------------- ---------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Chelsea Piers - Pier 62, Ste. 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 filing requirements for the past 90 days. YES X NO ----- ----- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] PART I ITEM 1. BUSINESS. Silver Screen Partners, L.P. ("Silver Screen") was organized in June 1983 to provide full financing for, own and exploit feature-length theatrical motion pictures. A public offering of units of limited partnership interests was completed in June 1983, which raised $82.8 million. After payment of offering costs and fees, approximately $74 million was available for investment in films (the "Partnership Contribution"). Silver Screen financed seven films, all of which have been completed and released in most media. As of December 31, 1995, total budgets amounted to approximately $73,800,000, of which substantially all has been expended. Accordingly, the Partnership Contribution has been fully committed and Silver Screen will not finance or purchase any additional motion pictures. The seven Silver Screen films (the "Films") are: "Flashpoint," released on August 31, 1984; "Heaven Help Us," released on February 8, 1985; "Volunteers," released on August 16, 1985; "Sweet Dreams," released on October 2, 1985; "Head Office," released on January 3, 1986; "The Hitcher," released on February 21, 1986; and "Odd Jobs," released on March 7, 1986. The business of Silver Screen is managed by Silver Screen Management, Inc., a Delaware corporation which is a general partner of Silver Screen (the "Managing General Partner"). The Managing General Partner supervises Silver Screen's investment in each film, monitors the flow of revenues and is responsible for the preparation of reports and tax information to be provided to the Limited Partners. HBO License Agreement - --------------------- Silver Screen pre-licensed certain television rights in all of its films to HBO Pictures, Inc. ("HBO"), a wholly-owned subsidiary of Home Box Office, Inc., which in turn is a wholly-owned subsidiary of Time Warner Inc., for a price determined by a formula designed to assure Silver Screen a return of not less than 100% of its investment in each completed film, on a film-by-film basis. The License Agreement (the "License Agreement") dated as of April 29, 1983 between Silver Screen and HBO granted to HBO (i) all U.S. pay and syndicated television rights, (ii) all Canadian pay, network and syndicated television rights, and (iii) worldwide English language pay television rights, including cable, satellite and microwave rights. Silver Screen has retained U.S. broadcast network rights, subject to the right of HBO to receive 25% of the network license fee and under certain circumstances to acquire the ownership of such rights. Such network rights have not been licensed. The Managing General Partner does not believe that there is a market for these rights. 2 The license fee payable by HBO to Silver Screen is equal to 50% of the ("Film Cost") of each film, as defined in the License Agreement. Pursuant to the License Agreement, if Silver Screen's revenues from a particular film, excluding the license fee, do not equal or exceed 50% of the Film Cost, HBO will pay Silver Screen a Revenue Shortfall Payment equal to the amount by which the Film Cost exceeds the aggregate of the license fee, performance bonus payments and other revenues received by Silver Screen in respect of such film. Home Box Office, Inc. has guaranteed the payment obligations of its subsidiary to Silver Screen under the License Agreement. All license fees have been received. Other Distribution - ------------------ The Managing General Partner oversees and directs the marketing and distribution of those rights in Silver Screen films not licensed to HBO under the License Agreement. Silver Screen has entered into two agreements with respect to the theatrical distribution of motion pictures in the United States and overseas. Silver Screen's theatrical film distribution agreement with Tri-Star Pictures ("Tri-Star") provided for the license by Silver Screen to Tri-Star of the right to distribute Silver Screen's films theatrically and non-theatrically in the United States and Canada. All of Silver Screen's films have been so released. Substantially all revenues anticipated from Tri-Star's distribution agreement have been received. Silver Screen has also entered into a film distribution agreement with THORN EMI Screen Entertainment Ltd. The distribution rights were subsequently purchased by unaffiliated distributors. The agreement provided for certain minimum guarantees to be paid to Silver Screen within three months after the first foreign release of each film, all of which have been paid. All revenues anticipated from THORN EMI Screen Entertainment Ltd.'s distribution agreement have been received. Silver Screen has also entered into an agreement with HBO Video, Inc. ("HBOV"), a wholly-owned subsidiary of Home Box Office, Inc., pursuant to which HBOV has manufactured and distributed home video software of all the Silver Screen films in the United States and Canada. The agreement provided for a minimum guarantee (calculated as a percentage of the final film cost) to be paid to Silver Screen with respect to each film, all of which have been paid. The guarantee is a non-refundable advance against a royalty for each film calculated on the basis of the gross revenues received by HBOV in respect of such film. Substantially all revenues anticipated to be received from HBOV have been received. 3 Competition - ----------- Silver Screen is in competition with other institutions which provide financing for films, some of which have substantially greater financial and personnel resources than the Managing General Partner and Silver Screen. These institutions include the major film studios and television networks. There is also intense competition within the industry for exhibition time at theaters. Competition for distribution in other media is as intense as the competition for theatrical distribution. Employees - --------- Silver Screen has no employees. Silver Screen is administered by the staff of the Managing General Partner. ITEM 2. PROPERTIES. Silver Screen neither owns nor leases any physical properties. The Managing General Partner leases offices in New York, New York. ITEM 3. LEGAL PROCEEDINGS. Silver Screen is currently contesting an Unincorporated Business Tax obligation for Silver Screen's fiscal years 1983 to 1986 asserted by the City of New York in the principal amount of approximately $676,000 plus accrued interest. (See Note 4 to Financial Statements and Liquidity and Capital Resources). Other than as set forth above, Silver Screen knows of no legal proceedings of a material nature to which it is a party or of which any of its properties is the subject. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. No matter was submitted to a vote of security holders during the quarter ended December 31, 1995. PART II ITEM 5. MARKET FOR THE REGISTRANT'S UNITS OF LIMITED PARTNERSHIP INTEREST AND RELATED SECURITY HOLDER MATTERS. As of January 31, 1996, there were 12,975 Limited Partners of record holding an aggregate of 165,639 limited partnership units of Silver Screen (the "Units"). The Units are not traded securities in any established trading market. 4 The Certificate and Agreement of Limited Partnership of the Partnership (the "Certificate") provides for quarterly distributions to Limited Partners out of receipts from operations, net of certain expenses and reserves. No distributions were made to the Limited Partners in 1995 and 1994 because revenues generated were insufficient to warrant a distribution. 5 ITEM 6. SELECTED FINANCIAL DATA
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended December 31, December 31, December 31, December 31, December 31, December 31, 1995 1994 1993 1992 1991 1990 ------------ ------------- ------------ ---------- ---------- ----------- Revenues: Film ..................... $ 7,534 $ 16,681 $ 188,388 $ 73,931 $ 284,454 $ 9,470,207 Revenues Interest ................. 181,544 132,803 101,626 130,944 572,877 809,556 income ----------- ----------- ----------- ----------- ----------- ----------- 189,078 149,484 290,014 204,875 857,331 10,279,763 Costs and Expenses: General and administrative expenses ................. 145,536 182,559 175,970 191,164 204,284 533,568 ----------- ----------- ----------- ----------- ----------- ----------- Net income (loss) before tax ............... 43,542 (33,075) 114,044 13,711 653,047 9,746,195 Unincorporated business ................. 746,000 -- -- -- -- -- tax ----------- ----------- ----------- ----------- ----------- ----------- Net income ............... ($ 702,458) ($ 33,075) $ 114,044 $ 13,711 $ 653,047 $ 2,547,955 (loss) =========== =========== =========== =========== =========== =========== Net income (loss) per $500 limited partnership unit (based on 165,639 Units .................... ($ 4.20) ($ 0.20) $ 0.68 $ 0.08 $ 3.90 $ 15.23 outstanding) =========== =========== =========== =========== =========== =========== Cash distribution per $500 limited partnership .............. $ 0.00 $ 0.00 $ 0.00 $ 11.50 $ 131.70 $ 66.00 unit =========== =========== =========== =========== =========== =========== Total .................... $ 3,122,546 $ 3,077,147 $ 3,149,860 $ 3,006,650 $ 5,098,912 $28,326,305 assets =========== =========== =========== =========== =========== ===========
See notes to financial statements 6 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Results of Operations - --------------------- The following is an analysis of the results of operations of Silver Screen for the years ended 1995, 1994 and 1993. Silver Screen is a partnership and therefore generally not subject to U.S. federal taxes. No provision has been made for federal income taxes with respect to Silver Screen's income since income or loss of Silver Screen is required to be reported by the respective partners on their income tax returns. Year Ended December 31, 1995 Compared to Year Ended December 31, 1994. - ---------------------------------------------------------------------- Net loss for the year ended December 31, 1995 was approximately $702,000 compared to net loss of approximately $33,000 for the year ended December 31, 1994. Revenues for the year ended December 31, 1995 consisted of film revenues of approximately $8,000 compared to $17,000 for the year ended December 31, 1994. Film revenues continue to be infrequent and unpredictable. Interest income generated by liquid investments for the year ended December 31, 1995 was approximately $182,000 compared to $133,000 in interest income for the prior year. Interest income increased approximately $49,000 as a result of higher interest rates in 1995. Interest rates for 1995 ranged from 5.67% to 6.04%, while those for 1994 ranged from 3.07% to 5.75%. General and administrative expenses decreased approximately $37,000 from 1994 to 1995, consisting primarily of a reduction of $16,000 in costs related to reporting to the limited partners and of approximately $20,000 of payroll related expenses. During 1995 the Partnership added $746,000 to the contingency, a reserve for unincorporated business tax, resulting in a net loss after taxes of approximately $702,000. Year Ended December 31, 1994 Compared to Year Ended December 31, 1993 - --------------------------------------------------------------------- Net loss for the year ended December 31, 1994 was approximately $33,000 compared to net income of approximately $114,000 for the year ended December 31, 1993. Revenues for the year ended December 31, 1994 consisted of film revenues of approximately $17,000 compared to $188,000 for the year ended December 31, 1993. Film revenues continued to be infrequent and unpredictable. The increase in film revenues in 1993 consisted primarily of sequel rights to "The Hitcher" in the amount of $165,000. 7 Interest income generated by liquid investments for the year ended December 31, 1994 was approximately $133,000 compared to $102,000 for the year ended December 31, 1993. Interest income increased by approximately $31,000 as a result of higher interest rates in 1994. Interest rates for 1994 ranged from 3.07% to 5.75%, while those for 1993 ranged from 3.00% to 3.08%. General and administrative expenses increased by approximately $7,000. This increase is due to approximately $20,000 of legal expenses incurred in connection with the tax dispute (see Note 4 to the financial statements), while the other expenses decreased by approximately $13,000 as a whole. Liquidity and Capital Resources - ------------------------------- As of December 31, 1995, the General Partners' capital account reflects a deficit of $728,727. In view of Silver Screen's limited requirements for liquidity, short and long term evaluations do not anticipate any effect of current capital account balances on Silver Screen's cash flows. Inasmuch as the funding obligations of Silver Screen with respect to the financing of the Films have been fully complied with or reserved against, Silver Screen has no significant commitments for capital expenditures and does not intend to enter into any such commitments. Receipts from liquid investments and the licensing of the Films, less reserves established as determined by the Managing General Partner, are the sources of liquidity for Silver Screen. Silver Screen has no material requirements for liquidity in excess of reserves for the contingency referred to in Note 4 to the financial statements (see following paragraphs) and the general and administrative expenses and quarterly distributions to holders of Units of limited partnership interests. Such sources are considered adequate for such needs. Silver Screen received assessments from the New York City Department of Finance for unincorporated business tax of $414,801 covering the period from June 8, 1983 (inception) through December 31, 1985 and $261,086 covering the period from January 1, 1986 through December 31, 1990. Further, it is anticipated that additional assessments, approximating $70,000, will be issued for the years subsequent to December 31, 1990. All assessments are subject to interest at a rate which has fluctuated over the years from 6% to 12% and is currently at 9%. An additional reserve of $200,000 was set aside in previous years and is included in the contingency on the balance sheet. As a result of a hearing held with the New York City Department of Finance, a determination was rendered to Silver Screen which upholds the assessment of $414,801 covering the period from June 8, 1983 through December 31, 1985. On March 1, 1995 Silver Screen, through counsel, denied liability to the unincorporated business tax and appealed the determination to the Commissioners of the Tax Appeals Tribunal, also a New York City administrative body. 8 Silver Screen intends to vigorously contest the determination. There can be no assurance that Silver Screen will prevail in its position. By the end of 1993, the U.S. home video rights to the Partnership's films reverted back to the Partnership. The Partnership plans to sell these rights, along with any other residual rights to the Films, and distribute any net revenues received from such sale to the investors. However, Silver Screen does not expect these revenues to be significant, and no distributions are anticipated. Silver Screen has received all payments from HBO and has recovered at least its full investment in each of its seven Films. All Film revenues (including license fees) are substantially earned. Unless the sale of U.S. home video rights to the Films generate significant revenues, it is unlikely that the Films will generate significant revenues and therefore no cash distributions were made during 1995. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. See the financial statements referenced in Item 14 of this annual report. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. Silver Screen is a limited partnership managed by the Managing General Partner and has no officers or directors. The Managing General Partner also serves as managing general partner of Silver Screen Partners II, L.P. and Silver Screen Partners III, L.P., limited partnerships formed to finance, own and exploit feature-length motion pictures pursuant to joint venture agreements with Walt Disney Productions ("Disney"). The officers and directors of the Managing General Partner are also officers and directors of Silver Screen Management Services, Inc. ("SSMS"), which serves as managing general partner of Silver Screen Partners IV, L.P., a limited partnership formed to finance, own and exploit feature-length motion pictures pursuant to a joint venture agreement with Disney shortly after the organization of SSMS in 1987. Neither the Limited Partners nor any general partner of Silver Screen other than the Managing General Partner has the power to participate in the management of, have any control over the business of or act for, sign for or bind Silver Screen. 9 Roland W. Betts, 49, is the President, Treasurer, a Director, principal shareholder and founder of the Managing General Partner. Mr. Betts is also the President, Treasurer, a Director and principal shareholder of SSMS. He is the Individual General Partner of Silver Screen Partners, L.P., Silver Screen Partners II, L.P., Silver Screen Partners III, L.P. and Silver Screen Partners IV, L.P. Mr. Betts has been President and a Director of International Film Investors, Inc. ("IFI"), which is the Managing General Partner of International Film Investors, L.P., since 1982 and has been an officer since 1980. Mr. Betts is also the individual General Partner of that Partnership. Mr. Betts is also the largest shareholder of the Texas Rangers Baseball Club; and the Chairman and largest shareholder of Chelsea Piers Management, Inc. which is the general partner of Chelsea Piers, L.P., a limited partnership formed to develop and operate a major public recreation and entertainment complex at the Chelsea Piers in New York City. Prior to joining IFI in 1980, Mr. Betts was engaged in the practice of law as an attorney in the Entertainment Department of the law firm of Paul, Weiss, Rifkind, Wharton & Garrison in New York. In addition to Mr. Betts, the executive officers and directors of the Managing General Partner are as follows: Name Positions Held ---- -------------- Paul Bagley Chairman of the Board, Director Tom A. Bernstein Executive Vice President, Secretary, Director John A. Tommasini Director William Turchyn, Jr. Director Paul Bagley, 53, is the President and CEO of Laidlaw Holdings, Inc. He is also a founding principal of Stone Pine Capital, an investment banking group which owns a controlling interest in Laidlaw. For more than twenty years prior to October 1988, Mr. Bagley was engaged in investment banking activities with Shearson Lehman Hutton Inc. and its predecessor E.F. Hutton, including Executive Vice President, Director, Managing Director, Head of Direct Investment Origination and Manager of Corporate Finance. Mr. Bagley controls Fiduciary Capital, a U.S. registered investment advisor which provides mezzanine debt and equity capital to corporations. He is also Chairman and CEO of American National Security, which provides security services to commercial and residential customers. Mr. Bagley serves as Chairman of the Board of Directors of Silver Screen Management, Inc. and International Film Investors, Inc., which manage film portfolios with aggregate assets of $1.0 billion. Mr. Bagley is also a Director of Logan Machinery Corporation a manufacturer of all-terrain vehicles, 10 and EurekaBank, a Federal Savings Bank. He is also a director of America First Financial Corporation, listed on NASDAQ. Mr. Bagley graduated from the University of California at Berkeley in 1965 with a B.S. in Business and Economics and from Harvard Business School in 1968 with an M.B.A. in Finance. Tom A. Bernstein, 43, has been Executive Vice President of the Managing General Partner since June 1983 and Secretary, a Director and a principal shareholder since March 1985. He has also been Executive Vice President, Secretary, a Director and a principal shareholder of SSMS since its organization. Mr. Bernstein is also President and Treasurer of Chelsea Piers Management, Inc. which is the general partner of the Chelsea Piers, L.P.; and a limited partner in the Texas Rangers Baseball Club. Prior to June 1983, Mr. Bernstein was engaged in the practice of law as an attorney in the Entertainment Department of the law firm of Paul, Weiss, Rifkind, Wharton & Garrison in New York. John A. Tommasini, 51, the President of Laidlaw Equities, Inc., a NASD registered broker dealer, has been a Director of the Managing General Partner since 1985 and a Director of SSMS since its organization. He was Senior Vice President of Shearson Lehman Hutton from January 1988 until March 30, 1990. He was associated with E.F. Hutton & Company from 1972 until 1988 and served as First Vice President from January 1985 to January 1988. He is also an Officer and a Director of American National Security, Inc. William Turchyn, Jr., 50, has been a Director of the Managing General Partner and SSMS since their respective organizations. He was Executive Vice President of Shearson from January 1988 until April 1989. He was associated with E.F. Hutton & Company Inc. from 1970 until 1988, was named First Vice President in 1982 and served as Senior Vice President from 1983 until January 1988. Mr. Turchyn is presently Senior Managing Director of the Private Client Group at Furman Selz Capital Management. ITEM 11. EXECUTIVE COMPENSATION. The following table sets forth the fees, income, distributions and the amounts payable to the General Partners of Silver Screen and their affiliates in connection with the management of Silver Screen. The executive officers and directors of the Managing General Partner serve without direct compensation from Silver Screen. Except as set forth below, the General Partners and their affiliates will receive no remuneration of any type whatsoever from Silver Screen in connection with the administration of Silver Screen's affairs. 11 CASH COMPENSATION TABLE1 - -------------------------------------------------------------------------------- (A) (B) (C) - -------------------------------------------------------------------------------- Name of Entity Capacities in which Cash compensation served Silver Screen Managing General Overhead fee calculated at Management, Inc. Partner four percent of the Budgeted Film Cost of each Film. Pursuant to the Partnership Agreement, the overhead fee was paid in full on January 4, 1988. In addition, until the holders of Units have received cash distributions sufficient to reduce their Adjusted Capital Contributions to zero, the Managing General Partner will be allocated 0.9% of the profits, losses and Disbursable Cash; thereafter, the Managing General Partner will receive 14.9% of such items. During 1995, no cash was distributed from Disbursable Cash to The Managing General Partner. Roland W. Betts Individual General Mr. Betts is allocated 0.1% of Partner the profits, losses and Disbursable Cash. Mr. Betts received no cash therefrom in 1995. - ---------- 1 See definitions below. 12 Definitions Used in Cash Compensation Table - ------------------------------------------- Initial Capital Contribution .......... $500 per Unit Adjusted Capital Contribution .......... With respect to each Unit, the Initial Capital Contribution reduced by all cash distributions thereon, and increased, at the beginning of each calendar year, by an amount equal to 10% per annum of the balance of the outstanding Initial Capital Contribution as so adjusted from time to time during the preceding year. The Adjusted Capital Contributions differ from the limited partners' capital accounts for tax and accounting purposes. Disbursable Cash ...... Receipts from operations, after deducting cash used to pay operating expenses (including expenses reimbursable to the Managing General Partner), debt service and amounts used for the creation or restoration of reserves, but without deduction for depreciation or amortization of film investments. Receipts from operations include all items of income, whether ordinary or extraordinary, including sale of Copyright Proceeds, but excluding Production Co-Financing Proceeds (as defined below) used to pay production costs of films. Production Co-Financing Proceeds .............. Proceeds from the sale of an equity interest in a film to a third-party investor, not including the sale of the copyright. Sale of Copyright Proceeds .............. Proceeds from the sale of the copyright to a third-party investor. Budgeted Film Cost..... The estimated cost of a film, including contingency reserves and completion bond fees. For the purpose of calculating compensation, a 20% reserve will be assumed; this amount may differ from contingency reserves permitted in production contracts. 13 The Partnership Agreement provides that all Silver Screen expenses, including, among other things, legal, auditing and accounting expenses, and the expenses of preparing and distributing reports to the Limited Partners, will be billed to and paid by Silver Screen. Subject to restrictions contained in the Partnership Agreement, the Managing General Partner has been reimbursed for certain administrative services. In addition, the Managing General Partner has been reimbursed for expenses incurred in connection with the organization of Silver Screen and the public offering of the Units. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. Neither of the General Partners own any Units. J. Paul Bagley, of 142 Hodge Road, Princeton, New Jersey, 09540, Chairman of the Board and a Director of the Managing General Partner, beneficially owns 100 Units. Other than Mr. Bagley, no officer or Director of the Managing General Partner beneficially owns any equity securities of Silver Screen. To the knowledge of Silver Screen, no unitholder beneficially owns more than 5% of the Units of Silver Screen. Roland W. Betts and Tom A. Bernstein are controlling shareholders of the Managing General Partner. 2,000,000 shares of the 3,750,000 issued and outstanding shares of Common Stock of the Managing General Partner are owned by Roland W. Betts and 1,250,000 shares are owned by Tom A. Bernstein. An additional 500,000 shares have been issued to International Film Investors, L.P. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. See Items 10, 11 and 12 hereof. 14 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (a)1. Financial Statements -------------------------- The following financial statements of Silver Screen Partners, L.P. (a Limited Partnership) are included pursuant to Item 8 hereof: Page ---- Independent auditors' reports ..................... F-3 Balance sheets as of December 31, 1995 and 1994 ..................................... F-4 Statement of operations for the years ended December 31, 1995, 1994 and 1993 ......... F-5 Statement of partners' equity for the years ended December 31, 1995, 1994 and 1993 ... F-6 Statement of cash flows for the years ended December 31, 1995, 1994 and 1993 ......... F-7 Notes to Financial Statements...................... F-8-9 (a)2. Financial Statement Schedules ----------------------------------- No schedules are listed because they are not applicable or the required information is shown in the financial statements or notes thereto. (a)3. Exhibits -------------- 4 Certificate and Agreement of Limited Partnership2 10(a) License Agreement dated as of April 19, 1983 between Silver Screen and HBO Film Licensing, Inc.3 10(b) Memorandum of Agreement dated November 2, 1983 by and between Silver Screen and Tri-Star Pictures.4 10(c) Memorandum of Agreement dated November 2, 1983 by and between Silver Screen and Thorn EMI Films Ltd.5 15 (b) Reports on Form 8-K ----------------------- No reports on Form 8-K have been filed by Silver Screen during the last quarter of the period covered by this annual report. - ---------- 2 Incorporated by reference to exhibits filed with Silver Screen's Registration Statement on Form S-1, Registration No. 2-81740. 3 See footnote two. 4 Incorporated by reference to exhibits filed with Silver Screen's Annual Report on Form 10-K for the fiscal year ended December 31, 1983, File No. 0-11949. 5 See footnote four. 16 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. SILVER SCREEN PARTNERS, L.P. (a Delaware Limited Partnership) By SILVER SCREEN MANAGEMENT, INC. Managing General Partner Dated: March 28, 1996 By /s/ Roland W. Betts ------------------------------ Roland W. Betts, President/Treasurer Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Dated: March 28, 1996 By /s/ Roland W. Betts ------------------------------ Roland W. Betts, General Partner SILVER SCREEN MANAGEMENT, INC. Managing General Partner Dated: March 28, 1996 By /s/ Roland W. Betts ------------------------------ Roland W. Betts, President/Treasurer Dated: March 38, 1996 By /s/ Roland W. Betts ------------------------------ Roland W. Betts, General Partner Dated: March 28, 1996 By /s/ Paul Bagley * ------------------------------- Paul Bagley Director, Silver Screen Management, Inc. Dated: March 28, 1996 By /s/ Tom A. Bernstein * ------------------------------- Tom A. Bernstein Director, Silver Screen Management, Inc. 19 Dated: March 28, 1996 By /s/ John A. Tommasini * ------------------------------- John A. Tommasini Director, Silver Screen Management, Inc. Dated: March 28, 1996 By /s/ William Turchyn, Jr. * ------------------------------ William Turchyn, Jr. Director, Silver Screen Management, Inc. - ---------- * By Roland W. Betts, Attorney-in-Fact 20 EX-13 2 ANNUAL REPORT TO LIMITED PARTNERS Silver Screen Partners Annual Report .....1995..... F-1 To Our Limited Partners - -------------------------------------------------------------------------------- Silver Screen Partners has received all payments from Home Box Office and has recovered at least its full investment in each of its seven films. Cumulative Partnership distributions total $88 million. Two issues must be resolved before the Partnership can dissolve. First, we plan to sell the U.S. home video rights and any other residual rights to our films. However, we do not expect these revenues to be significant. Until the rights are sold, it is unlikely that the films will generate additional revenue; therefore, no cash distributions are planned. Second, the New York City tax issue, discussed in Note 4 to the financial statements, must be resolved. We will continue to operate Silver Screen Partners until these issues are settled. We will keep you informed of any updates regarding these matters. Tax information for preparing your 1995 income tax returns will be mailed under separate cover by March 15. In the meantime, our Investor Relations Department is available to assist you with any questions you may have. Sincerely, Roland W. Betts President January 24, 1996 F-2 FINANCIAL STATEMENTS Report of Independent Auditors To the Partners Silver Screen Partners, L.P. We have audited the accompanying balance sheets of Silver Screen Partners, L.P. (a limited partnership) as of December 31, 1995 and 1994, and the related statements of operations, partners' equity, and cash flows for each of the three years in the period ended December 31, 1995. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Silver Screen Partners, L.P. (a limited partnership) at December 31, 1995 and 1994, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1995 in conformity with generally accepted accounting principles. Ernst & Young LLP New York, New York January 24, 1996 F-3 BALANCE SHEETS December 31, 1995 and 1994 1995 1994 ----------- ----------- ASSETS Current assets: Cash ........................................... $ 28,031 $ 42,974 Temporary investments (at cost, plus accrued interest, which approximates market) (Note 3) .............................. 3,094,515 3,034,173 ----------- ----------- $ 3,122,546 $ 3,077,147 ----------- ----------- LIABILITIES AND PARTNERS' EQUITY Current liabilities: Due to managing general partner ................ $ 6,969 $ 12,435 ----------- ----------- Total current liabilities ...................... 6,969 12,435 Contingency liability (Note 4) ................. 946,000 200,000 Other liabilities ............................... 1,032,723 1,025,400 ----------- ----------- Total liabilities .............................. 1,985,692 1,237,835 ----------- ----------- Partners' equity: General partners ............................... (728,727) (721,702) Limited partners ............................... 1,865,581 2,561,014 ----------- ----------- Total partners' equity ......................... 1,136,854 1,839,312 ----------- ----------- $ 3,122,546 $ 3,077,147 ----------- ----------- See notes to financial statements. F-4 STATEMENTS OF OPERATIONS
Years ended December 31, 1995, 1994 and 1993 1995 1994 1993 ---------- ---------- --------- Revenues: Film revenues ................................ $ 7,534 $ 16,681 $ 188,388 Interest income .............................. 181,544 132,803 101,626 ---------- ---------- --------- 189,078 149,484 290,014 Costs and expenses: General and administrative expenses .......... 145,536 182,559 175,970 ---------- ---------- --------- Net income (loss) before taxes ............... 43,542 (33,075) 114,044 Unincorporated business tax (Note 4) ......... 746,000 -- -- ---------- ---------- --------- Net (loss) income ............................ $(702,458) $ (33,075) $ 114,044 ---------- ---------- --------- Net (loss) income allocated to: General partners ............................. $ (7,025) $ (331) $ 1,140 Limited partners ............................. (695,433) (32,744) 112,904 ---------- ---------- --------- $(702,458) $ (33,075) $ 114,044 ---------- ---------- --------- Net income (loss) per $500 limited partnership unit (based on 165,639 units outstanding) ... $ (4.20) $ (0.20) $ 0.68 ---------- ---------- --------- Cash distribution per $500 limited partnership $ $ $ unit ......................................... ---------- ---------- ---------
See notes to financial statements. F-5 STATEMENTS OF PARTNERS' EQUITY
General Limited Years ended December 31, 1995, 1994 and 1993 Partners Partners Total ----------- ----------- ----------- Partners' equity (deficiency), January 1, 1993 ............. $ (722,511) $ 2,480,854 $ 1,758,343 Net income, 1993 ........................................... 1,140 112,904 114,044 Distributions, 1993 ........................................ -- -- -- ----------- ----------- ----------- Partners' equity (deficiency), December 31, 1993 ........... (721,371) 2,593,758 1,872,387 Net loss, 1994 ............................................. (331) (32,744) (33,075) Distributions, 1994 ........................................ -- -- -- ----------- ----------- ----------- Partners' equity (deficiency), December 31, 1994 ........... (721,702) 2,561,014 1,839,312 Net loss, 1995 ............................................. (7,025) (695,433) (702,458) Distributions, 1995 ........................................ -- -- -- ----------- ----------- ----------- Partners' equity (deficiency), December 31, 1995 ........... $ (728,727) $ 1,865,581 $ 1,136,854
See notes to financial statements. F-6 STATEMENTS OF CASH FLOWS
Years ended December 31, 1995, 1994 and 1993 ..... 1995 1994 1993 --------- --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) ................................ $(702,458) $ (33,075) $ 114,044 --------- --------- --------- Adjustments to reconcile net income to net cash provided by operating activities: Net change in operating assets and liabilities: Decrease (increase) in accrued interest receivable 9,398 (14,973) 259 (Decrease) increase in due to managing general partner ......................................... (5,466) (572) 462 Increase in contingency liability ................ 746,000 -- -- (Decrease) increase in other liabilities ......... 7,323 (39,066) 28,704 --------- --------- --------- Net cash provided by (used in) operating activities ...................................... 54,797 (87,686) 143,469 --------- --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: (Purchases) sales of temporary investments ....... (69,740) 129,057 (141,866) --------- --------- --------- Net cash (used in) provided by investing activities ...................................... (69,740) 129,057 (141,866) --------- --------- --------- Net (decrease) increase in cash .................. (14,943) 41,371 1,603 Cash, beginning of year .......................... 42,974 1,603 -- --------- --------- --------- Cash, end of year ................................ $ 28,031 $ 42,974 $ 1,603 --------- --------- ---------
See notes to financial statements. F-7 NOTES TO FINANCIAL STATEMENTS 1. ORGANIZATION Silver Screen Partners, L.P., ("the Partnership"), formed on June 8, 1983, is a Delaware limited partnership which finances, owns and exploits feature-length theatrical motion pictures. A total of 165,639 units were sold in 1983 for an aggregate of $82,819,500. Silver Screen Management, Inc., a Delaware corporation, is the managing general partner ("MGP") of the Partnership and has exclusive responsibility for the management of the business and the affairs of the Partnership. Roland W. Betts, the President and a principal shareholder of the MGP, is the individual general partner of the Partnership. The Partnership Agreement provides that all Partnership profits, losses and distributable cash ("Proceeds") are distributed 99% to the limited partners and 1% to the general partners until the Partnership has satisfied certain tests, as defined. The Proceeds to the limited partners are allocated pro rata according to the capital accounts of the respective limited partners. 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Income taxes: - ------------- No provision has been made for income taxes since the income or loss of the Partnership is required to be reported by the respective partners on their income tax returns. Accounting for motion picture film investments: - ----------------------------------------------- The Partnership capitalizes all film investment costs. Film revenues are recognized when earned as reported by each distributor. The income forecast depreciation method was used, whereby the costs were amortized based upon the revenues recorded in proportion to management's estimate of ultimate revenues to be earned. Substantially all film revenues were earned prior to December 31, 1991. The film investments aggregated approximately $73,000,000 and have been fully amortized. License fees: - ------------- Generally accepted accounting principles require recognizing license fees, at their present value, on the dates the films were available for broadcast provided certain conditions of sale have been met. The Partnership pre-licensed certain television rights (which became available one year after theatrical release) on all of its films to a subsidiary of Home Box Office, Inc. ("HBO") for a price determined by a formula designed to assure the Partnership a return of 100% of its investment in each completed film. As part of this arrangement, HBO agreed to pay a minimum license fee of 50% of the Partnership's investment in each film without regard to other film revenues earned. Amounts payable to the Partnership from HBO were payable five years after the United States theatrical release of each film, but not later than August 31, 1991. F-8 The Partnership entered into a theatrical film distribution agreement with Tri-Star Pictures ("Tri-Star"). The agreement, as amended, provided that the Partnership license to Tri-Star the right to distribute the Partnership's films theatrically and non-theatrically in the United States and Canada. Pursuant to its license agreement with Tri-Star, the Partnership was assured that certain minimum advertising and promotion costs would be expended by Tri-Star in the marketing of each of the Partnership's films. The agreement also provided that the Partnership was entitled to an escalating percentage of the gross proceeds generated by each picture. The Partnership also entered into a film distribution agreement in foreign territories with Thorn EMI Screen Entertainment Ltd. Essentially all revenues pursuant to these agreements have been received. 3. TEMPORARY INVESTMENTS Temporary investments consisted of the following: 1995 1994 ---------- ---------- Commercial paper $3,094,515 $3,034,173 ---------- ---------- All commercial paper is rated by Standard & Poor's A1 or A1+. 1995 commercial paper matured on January 11, 1996 and had an interest rate of 5.79%. 1994 commercial paper matured on January 12, 1995 and had an interest rate of 5.75%. 4. CONTINGENCY LIABILITY The Partnership's tax returns were audited by the City of New York and the Partnership received assessments for unincorporated business tax of $675,887 covering the period June 8, 1983 (inception) through December 31, 1990. It is anticipated that additional assessments approximating $70,000 will be issued for the years subsequent to December 31, 1990. All assessments are subject to interest at a rate which has fluctuated over the years from 6% to 12%. An additional reserve of $200,000 was included in the contingency liability on its balance sheet. As a result of a hearing held with the New York City Department of Finance, a determination was rendered to the Partnership which upholds the assessment of $414,801 covering the period June 8, 1983 through December 31, 1985. On March 1, 1995, the Partnership, through counsel, denied liability to the unincorporated business tax and appealed the determination to the Commissioners of the Tax Appeals Tribunal, also a New York City administrative body. While the Partnership is vigorously contesting the determination, there can be no assurance that it will prevail in its position. - -------------------------------------------------------------------------------- (unaudited) VALUE PER UNIT BASED ON ANNUAL APPRAISAL As of December 31, 1995, the appraised value per unit approximates the book value per unit. The book value per unit is $7. CASH DISTRIBUTIONS The Partnership made no cash distributions in 1995. Cumulative distributions through December 31, 1995 totalled $534 or 107% per unit. AVAILABILITY OF FORM 10-K A copy of the Partnership's Annual Report to the SEC on Form 10-K may be obtained without charge by writing to the Partnership, c/o Silver Screen Management, Inc., 936 Broadway, New York, N.Y. 10010. F-9 SILVER SCREEN MANAGEMENT (c)1996 Silver Screen Management, Inc. Design: Pentagram Officers: Directors: Roland W. Betts Paul Bagley President and Chief Executive Officer New York, New York Tom A. Bernstein Tom A. Bernstein Executive Vice President New York, New York Barbara Stubenrauch Roland W. Betts Senior Vice President New York, New York Richard S. Kasof John Tommasini First Vice President New York, New York Dana Thayer William Turchyn, Jr. First Vice President New York, New York Liz A. Brevetti Vice President Keith C. Champagne Vice President Evelyn Halley Vice President Stuart A. Sheinbaum Director of Investor Relations Conchetta S. Mayfield Director of Operations Paul Rindone Director of Operations F-10 Silver Screen Management, Inc. 936 Broadway New York, NY 10010 Bulk Rate U. S. Postage PAID Permit #9 Boston, MA F-11 EX-27 3 ARTICLE 5 FDS FOR FISCAL YEAR 10-K
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED BALANCE SHEET AS OF DECEMBER 31, 1995, AND THE STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 YEAR Dec-31-1995 Dec-31-1995 28 3,095 0 0 0 3,123 0 0 3,123 7 0 0 0 0 1,137 3,123 7 189 0 0 146 0 0 44 (746) (702) 0 0 0 (702) (4.20) 0
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