UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X Quarterly Report Under Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Quarter Ended June 30, 1996
OR
___ Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the transition period from __________to__________
Commission File Number 0-17469
CINEMA PLUS, L.P.
(Exact name of registrant as specified in its certificate of
Limited Partnership)
Delaware 13-3437795
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1100 Avenue of the Americas, New York, New York 10036
(Address of principal executive offices) (Zip Code)
(212) 512-1000
(Registrant's telephone number, including area code)
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 (or for such
shorter period
that the registrant was required to file such reports),
and (2) has been
subject to such filing requirements for the past 90
days.
Yes X No____
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
INDEX
PAGE
Balance Sheets at June 30, 1996 and December 31,
1995......................3
Statements of Operations for the Three and Six Months Ended
June 30, 1996 and
1995........................................................
............4
Statements of Cash Flows for the Six Months Ended
June 30, 1996 and
1995........................................................
............5
Notes to Financial
Statements..................................................
..............6
CINEMA PLUS, L.P
(A Delaware Limited Partnership)
BALANCE SHEETS
Unaudited
(000's Omitted)
Unaudited
June December
30, 31,
1 1
996 995
ASSETS
Cash and Cash Equivalents $ $
987 192
Short-Term Investments 2,323 2,306
Receivable from HBO (Note 2) 1,425 1,334
Assured Return of Film
Investment Payment
Receivable (Note 4) 21,275 21,355
Motion Picture Production
Costs, net of
accumulated amortization of
$98,020 and
$97,780, respectively
448 751
Total $ $
Assets 26,458 25,938
LIABILITIES AND PARTNERS'
CAPITAL
Liabilities:
Accrued Expenses and Accounts $ $
Payable 191 205
Payable to General Partners 735 718
(Note 5)
Deferred Revenue 0 177
Payable to HBO (Notes 3 & 4)
4,684 4,600
Total $ $
Liabilities 5,610 5,700
Partners' Capital (Note 7):
General Partners $ $
(167) (173)
Limited Partners
21,015 20,411
Total $ $
Partners' Capital 20,848 20,238
Total
Liabilities and Partners'
$ $
Capital 26,458 25,938
See accompanying notes to the financial statements.
CINEMA PLUS, L.P.
(A Delaware Limited Partnership)
STATEMENTS OF OPERATIONS
Unaudited
(000's Omitted, except net income per unit)
For
the Three Months For the Six Months
Ended June 30, Ended June 30,
1996 1995 1996 1995
Net Revenue from Motion
Pictures
(Note 7) $ $ $ $
1,073 171 1,235 437
Expenses:
Motion Picture 96 107 240 290
Production Costs
Professional and
Other Fees 87 97 156 176
183 204 396 466
Income (Loss) from
Operations 890 (33) 839 (29)
Assured Return of Film
Investment
Payment (Note 4) 288 448 (80) 844
HBO Interest Recoupment (53) (124) (130) (208)
(Note 4)
Interest Expense (Notes (42) (69) (85) (146)
3 & 6)
Interest Income
31 29 66 57
Net Income $ $ $ $
1,114 251 610 518
Net Income Attributable
to
General Partners $ $ $ $
11 2 6 5
Net Income Attributable
to Limited
Partners $ $ $ $
1,103 249 604 513
Net Income Per Unit of
Limited
Partnership Interest
(43,286 units) $ $ $ $
25.48 5.75 13.95 11.85
See accompanying notes to the financial statements.
CINEMA PLUS, L.P.
(A Delaware Limited Partnership)
STATEMENTS OF CASH FLOWS
Unaudited
(000's Omitted)
For the Six Months Ended June 30,
1996 1995
Operating Activities:
Net Income $ $
610 518
Adjustments to Reconcile Net
Income to
Net Cash Provided by Operating
Activities:
(Increase) Decrease in (91) 977
Receivable from HBO
Decrease (Increase) in
Assured Return of Film
Investment Payment 80 (844)
Receivable
Decrease in Motion Picture 63 98
Production Costs
Amortization of Motion
Picture Production
Costs 240 290
Decrease in Accrued Expenses
and Accounts
Payable (14) (94)
Increase in Payable to 17 28
General Partners
(Decrease) Increase in
Deferred Revenue (177) 16
Net Cash Provided by
Operating Activities 728 989
Investing Activities:
Purchase of Short-Term (2,278) (3,346)
Investments
Redemption of Short-Term
Investments 2,261 3,105
Net Cash Used by
Investing Activities (17) (241)
Financing Activities:
Increase (Decrease) in Payable to
HBO 84 (904)
Net Cash Provided (Used)
by Financing
Activities
84 (904)
Increase (Decrease) In Cash and
Cash
Equivalents 795 (156)
Cash and Cash Equivalents at
beginning of year 192 359
Cash and Cash Equivalents at end $ $
of period 987 203
See accompanying notes to the financial statements.
CINEMA PLUS, L.P.
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Unaudited
1. Basis of Presentation
The accompanying unaudited financial statements have
been prepared in accordance with generally accepted
accounting principles for interim financial reporting. They
do not include all information and footnotes required by
generally accepted accounting principles for complete
financial statements. The information furnished includes
all adjustments of a normal recurring nature which are, in
the opinion of management, necessary to present fairly the
Partnership's financial position as of June 30, 1996 and the
results of its operations and changes in cash flows for the
periods ended June 30, 1996 and 1995. Results of operations
for the period ended June 30, 1996 are not necessarily
indicative of the results that may be expected for the
entire year.
2. Receivable from HBO
(a) Network Receivable from HBO
Pursuant to the HBO License Agreement, the Partnership
has granted domestic network television distribution rights
in the Films to HBO, and HBO has caused such rights to be
licensed to Warner Bros. HBO and Warner Bros. receive in
the aggregate a distribution fee of no more than 20% of the
gross proceeds received from the exploitation
of their network television distribution rights in each
Film. The remaining revenues, less distribution expenses
and guild residuals, are remitted to the Partnership.
During the six month period ended June 30, 1996, a second
network license between Warner Bros. and ABC was entered
into with respect to the Film "Ricochet." Accordingly,
during the six month period ended June 30, 1996, the
Partnership recognized net revenue of $882,000 with respect
to "Ricochet." As of June 30, 1996, $1,335,000 is recorded
as a network receivable from HBO with respect to the Film
"Ricochet."
(b) Foreign Receivable from HBO
As the HBO Commitment with respect to "Ricochet" has
been fully repaid, any additional foreign receipts for this
Film shall be remitted to the Partnership net of any guild
residuals, distribution fees and expenses. During the six
month period ended June 30, 1996, the Partnership received
$821,000 (including interest) from the foreign distribution
of the Film "Ricochet." As of June 30, 1996, there is no
foreign receivable from HBO.
(c) Net Domestic Video
During the six month period ended June 30, 1996, the
Partnership recognized revenue of $90,000 from net domestic
home video distribution of all of its Films. During the six
month period ended June 30, 1996, the Partnership received
$60,000 from the net domestic video distribution of all of
its Films. As of June 30, 1996, $90,000 is recorded as a
net domestic video receivable from HBO.
3. Payable to HBO
The payable to HBO at June 30, 1996 and December 31,
1995 (including accrued
interest) consists of the following amounts:
6/30/96 12/31/95
HBO Commitment $ $
370,000 404,000
Print and Advertising 216,000 228,000
Expenditures
HBO Interest Recoupment (See
Note 4) 4,098,000 3,968,000
Total $ $
4,684,000 4,600,000
(a) HBO Commitment
During the six month period ended June 30, 1996, an
aggregate of $56,000 (including interest) of the HBO
Commitments with respect to "Don't Tell Mom" and "Mom and
Dad Save the World" was repaid from net Foreign Distribution
Advances with respect to these Films. In addition, interest
was accrued in the amount of $85,000 for the six months
ended June 30, 1996. Based upon current revised estimates
of ultimate net foreign revenues as of June 30, 1996, it is
anticipated that HBO will be unable to recoup the HBO
Commitment in the amount of $2,519,000 with respect to "Mom
and Dad Save the World." As a result, the Partnership's
Payable to HBO has been reduced by $63,000 for "Mom and Dad
Save the World" during the six months ended June 30, 1996,
with a corresponding reduction to the capitalized Motion
Picture Production Costs of this Film.
(b) Print and Advertising Expenditures
During the six month period ended June 30, 1996, the
Partnership recognized $1,000 from the domestic theatrical
distribution of its Films, all of which has been applied to
the payable of print and advertising expenditures incurred
to date. During the six month period ended June 30, 1996,
the Partnership repaid to HBO a portion of the print and
advertising expenses incurred for the Film "Mom & Dad Save
the World" in the amount of $11,000 from the net domestic
video revenue received with respect to that Film.
4. Assured Return of Film Investment Payment and the HBO
Interest Recoupment
Based on the anticipated performance of each of the
four Films in release at June 30, 1996, it is expected that
HBO will be required to make an Assured Return of Film
Investment Payment ("ARFIP") with respect to each of these
Films. Accordingly, $21,275,000 (amount present valued) was
recorded by the Partnership as a receivable from HBO in the
accompanying financial statements as of June 30, 1996.
With respect to any Film for which an ARFIP is made,
HBO will be thereafter entitled to receive from the
Partnership any additional revenues received by the
Partnership with respect to that Film until the entire
amount of such ARFIP has been recouped by HBO. If HBO has
not recouped this ARFIP for a Film by July 1999, the
Partnership will be required to pay to HBO at that time an
amount (the "HBO Interest Recoupment") equal to the lesser
of: (a) the sum of the unrecouped ARFIP and the non-standard
television residuals for such Film or (b) the Per Film
Interest (as defined below). "Per Film Interest" represents
the interest income earned on Partnership funds awaiting
investment in Films divided by the four Partnership Films.
Accordingly, an HBO Interest recoupment in the amount of
$4,098,000 (amount present valued) has been recorded by the
Partnership and included in the Payable to HBO in the
accompanying financial statements as of June 30, 1996.
5. Payable to General Partners
A portion of the Production and Overhead Fee is paid to
the General Partners in accordance with a set schedule.
Interest accrues on the balance at a rate equal to the
interest rate earned by the Partnership on the short-term
investment of its funds. Accordingly, as of June 30, 1996,
$735,000 is recorded as a Payable to General Partners in the
accompanying financial statements.
6. Supplemental Disclosure of Cash Flow Information
The Partnership paid $15,000 and $279,000 of interest
in the six months ended June 30, 1996 and 1995,
respectively.
7. Current Operations
The Partnership has financed four Films. All of these
Films have completed their domestic theatrical and initial
video releases and are being distributed in various
ancillary media. No other films will be financed by the
Partnership.
During the six months ended June 30, 1996, the
Partnership recognized net revenue in the amounts of $1,000,
$277,000, $882,000 and $90,000 with respect to the domestic
theatrical, foreign, network television and net domestic
video markets, respectively, of its Films. During the six
months ended June 30, 1996, the third party participation
expense for "Don't Tell Mom" was increased by $15,000
thereby decreasing the Partnership's net revenue for the
period.
For the purpose of computing net income per unit, the
income has been allocated 99% to the limited partners and 1%
to the Administrative General Partner.
8. Additional Information
Additional information, including the audited 1995
Financial Statements and the Summary of Significant
Accounting Policies, is included in the Partnership's Annual
Report on Form 10-K for the year ended December 31, 1995 on
file with the Securities and Exchange Commission.
9. Legal Proceedings
On August 14, 1995 a lawsuit styled as a class action was
filed by two holders of
Cinema Plus limited partnership units in the United States
District Court of the Western District of Pennsylvania
against HBO Film Management, Inc. and Entertainment Finance
Services, Inc., the general partners of Cinema Plus, Home
Box Office, Inc., and Kidder, Peabody & Co., Incorporated
and Smith Barney Inc., two of the underwriters of the
original sale of limited partnership units of Cinema Plus.
Cinema Plus has not been named as a defendant in the
lawsuit. The lawsuit alleges various violations of law by
the defendants in connection with the original sale of
limited partnership units of Cinema Plus and the subsequent
operation of Cinema Plus. The action was dismissed on March
4, 1996. On March 20, 1996 the plaintiffs filed a Notice of
Appeal in the Third Circuit Court of Appeals. The
defendants believe the lawsuit to be without merit and are
vigorously defending it. Oral argument before the Third
Circuit Court of Appeals is currently scheduled for October
3, 1996.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results
of Operations
a. Financial Condition
As of June 30, 1996, the Partnership held cash and cash
equivalents of $987,000 and short-term investments of
$2,323,000.
The Partnership invested in the production of four Films.
As of June 30, 1996, an aggregate of $98,468,000 (including
the HBO Commitments) had been incurred toward the production
and theatrical release of these Films.
Prior to the receipt of the ARFIP receivable, no
significant cash outlays are expected to be made by the
Partnership other than its operating expenses and the
satisfaction of the Partnership's payables to HBO (except
for the HBO Interest Recoupment). Subsequent to the receipt
of the ARFIP in 1998 and 1999, additional cash outlays are
expected to be made to HBO for payment of the HBO Interest
Recoupment, as well as to pay the Partnership's operating
expenses and to make distributions to partners. In the
event that the Partnership terminates or is dissolved prior
to the time that an Assured Return of Film Investment
Payment is to be made, provision will be made in accordance
with the limited partnership agreement for payment of such
Assured Return of Film Investment Payment at the time, and
to the limited partners to whom, it would otherwise become
due. Such provision may include the appointment of a
liquidating trustee to receive such payments and transmit
them to the former limited partners.
As of June 30, 1996, the Partnership's net payable to HBO
totaled $4,684,000. Of this amount, $4,098,000 relates to
the HBO Interest Recoupment which is not payable until one
month after the last ARFIP proceeds are received from HBO.
Based on current estimates of ultimate net revenues, it is
anticipated that the remainder of the payable to HBO at June
30, 1996 will be substantially repaid to HBO within the next
two years.
Since the Partnership is not anticipating significant
future revenues (other than those used to repay HBO) until
the Assured Return of Film Investment Payments are received
from HBO in 1998 and 1999, the Partnership's future
operating expenses are expected to be met from current cash
and short-term investments. Management believes that the
cash and short-term investments held at June 30, 1996 are
sufficient to meet its liquidity needs without the need to
obtain external financing from a third party or its General
Partners. Cash distributions will be made only as
significant cash becomes available from the exploitation of
the Films in excess of the payables due to HBO or as the
Assured Return of Film Investment Payments are received from
HBO.
b. Results of Operations
For the three month period ended June 30, 1996, the
Partnership recorded net revenue of $1,073,000 due primarily
to the performance of its Films in the network television
and foreign markets offset by amortization of related Motion
Picture Production Costs of $96,000. Amortization of Motion
Picture Production Costs was relatively low in comparison to
revenues due to the fact that a majority of the costs
related to network revenue had been amortized in prior
periods. For the three months ended June 30, 1996, the
Partnership recorded an increase in the Assured Return of
Film Investment Payment of $288,000 primarily due to the
decrease in the discount period. The Partnership recorded
HBO Interest Recoupment expense of $53,000 due primarily to
the decrease in the discount period.
For the three month period ended June 30, 1995, the
Partnership recorded net revenue of $171,000 due primarily
to the performance of its Films in the foreign markets
offset by amortization of related Motion Picture Production
Costs of $107,000. For the three months ended June 30,
1995, the Partnership recorded an increase in the Assured
Return of Film Investment Payment of $448,000 due primarily
to the decrease in the discount period. The Partnership
recorded HBO Interest Recoupment expense of $124,000 due
primarily to the decrease in the discount period.
For the six month period ended June 30, 1996, the
Partnership recorded net revenue of $1,235,000 due primarily
to the performance of its Films in the network television
and foreign markets offset by amortization of related
Motion Picture Production Costs of $240,000. For the six
months ended June 30, 1996, the Partnership recorded a
decrease in the Assured Return of Film Investment Payment of
$80,000 primarily due to an increase in the ultimate net
revenue projections with respect to "Ricochet" offset, in
part, by the decrease in the discount period. The
Partnership recorded HBO Interest Recoupment expense of
$130,000 due primarily to the decrease in the discount
period.
For the six month period ended June 30, 1995, the
Partnership recorded net revenue of $437,000 due primarily
to the performance of its Films in the foreign markets
offset by amortization of related Motion Picture Production
Costs of $290,000. For the six months ended June 30, 1995,
the Partnership recorded an increase in the Assured Return
of Film Investment Payment of $844,000 primarily due to the
decrease in the discount period. The Partnership recorded
HBO Interest Recoupment expense of $208,000 due primarily to
the decrease in the discount period.
PART II-OTHER INFORMATION
Item 1. Legal Proceedings
On August 14, 1995 a lawsuit styled as a class action
was filed by two holders of
Cinema Plus limited partnership units in the United
States District Court of the Western District of
Pennsylvania against HBO Film Management, Inc. and
Entertainment Finance Services, Inc., the general
partners of Cinema Plus, Home Box Office, Inc., and
Kidder, Peabody & Co., Incorporated and Smith Barney
Inc., two of the underwriters of the original sale of
limited partnership units of Cinema Plus. Cinema Plus
has not been named as a defendant in the lawsuit. The
lawsuit alleges various violations of law by the
defendants in connection with the original sale of
limited partnership units of Cinema Plus and the
subsequent operation of Cinema Plus. The action was
dismissed on March 4, 1996. On March 20, 1996 the
plaintiffs filed a Notice of Appeal in the Third
Circuit Court of Appeals. The defendants believe the
lawsuit to be without merit and are vigorously
defending it. Oral argument before the Third Circuit
Court of Appeals is currently scheduled for October 3,
1996.
Item 2. Changes in Securities
None
Item 3.Defaults Upon Senior Securities
None
Item 4.Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6.Exhibits and Reports on Form 8-K
A). Exhibits
EXHIBIT
NUMBERDESCRIPTIONPAGE NUMBER
27 Financial Data Schedule
B). The Partnership did not file any reports on Form 8-
K during the quarter ended June
30, 1996.
SIGNATURES
Pursuant to the requirements of the Securities and
Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned
thereunto duly authorized.
CINEMA PLUS, L.P.
a Delaware Limited Partnership
By: Entertainment Finance
Services, Inc.,
as Administrative
General Partner
August 12, 1996 By: /s/ Bradley J. Wechsler
Date Bradley J. Wechsler
President