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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1995 Commission File No. 19324
Boston Celtics Limited Partnership
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(Exact name of registrant as specified in its charter)
Delaware 04-2936516
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
151 Merrimac Street, Boston, MA 02114
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(Address of principal executive offices) (Zip code)
(617) 523-6050
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(Registrant's telephone number including area code)
Indicate by checkmark whether the registrant (1) has filed 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 [ ]
The number of Units outstanding as of September 30, 1995 was 5,641,278 of
Limited Partnership Interest.
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Part I - Financial Information
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BOSTON CELTICS LIMITED PARTNERSHIP AND SUBSIDIARIES
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Item 1 - Financial Statements
Boston Celtics Limited Partnership (the "Boston Celtics", "BCLP" or the
"Partnership") a Delaware Limited Partnership, through Celtics Limited
Partnership ("CLP"), its 99% owned limited partnership, owns and operates
the Boston Celtics professional basketball team of the National Basketball
Association, and through BCCLP Holding Corporation ("Holdings") and Celtics
Investments Incorporated ("CII"), wholly-owned subsidiaries of BCLP and
Holdings' wholly-owned subsidiary Celtics Capital Corporation ("CCC") (which
holds investments) and Holdings' 99% owned limited partnership Boston
Celtics Communications Limited Partnership ("BCCLP") which owned and
operated Radio Station WEEI - 590 AM until its sale on June 30, 1994 and its
99% general partnership interest in Boston Celtics Broadcasting Limited
Partnership ("BCBLP") which owned and operated Television Station WFXT -
Channel 25 ("WFXT") of Boston, Massachusetts until its sale on July 7, 1995.
The General Partner of BCLP is Celtics, Inc. ("CI"); the General Partner of
CLP is Boston Celtics Corporation ("BCC"); and the General Partner of BCCLP
is Celtics Communications, Inc. ("CCI"). The General Partners of BCLP, CLP
and BCCLP are Delaware corporations whose sole stockholders are Don Gaston,
Paula Gaston, Paul Dupee, Paul Gaston (son of Don Gaston and Paula Gaston)
and an affiliate. The consolidated financial statements include the accounts
of the Partnership, Holdings, CCC, CII and their subsidiary partnerships.
All intercompany transactions are eliminated in consolidation.
The accompanying unaudited interim consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial statements and with instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) necessary for a
fair presentation have been included therein. Operating results for interim
periods are not indicative of the results that may be expected for the full
year. For further information, refer to the consolidated financial
statements and footnotes thereto included in the annual report on Form 10-K
of Boston Celtics Limited Partnerships and Subsidiaries for the year ended
June 30, 1995.
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BOSTON CELTICS LIMITED PARTNERSHIP
and Subsidiaries
Consolidated Balance Sheets
September 30, June 30,
1995 1995 (1)
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ASSETS (Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 23,717,734 $ 22,692,586
Marketable securities 36,233,309 45,132,667
Other short term investments 78,773,392 67,558,465
Accounts receivable (less allowance for doubtful
accounts - $10,000 in September and in June) 1,689,309 3,213,175
Note receivable 4,444,444 4,444,444
Deferred game costs 2,616,407
Prepaid expenses 259,655 402,954
Other current assets and deferred charges 5,200,000
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TOTAL CURRENT ASSETS 147,734,250 148,644,291
PROPERTY AND EQUIPMENT, net of depreciation of
$421,420 in September and $385,575 in June 1,019,911 846,418
NATIONAL BASKETBALL ASSOCIATION FRANCHISE, net of
amortization of $1,889,440 in September and
$1,850,880 in June 4,280,141 4,318,701
OTHER INTANGIBLE ASSETS, net of amortization of
$28,774 in September and $26,158 in June 922,195 924,376
NET ASSETS OF OPERATIONS TO BE DISCONTINUED 26,303,044
OTHER ASSETS 3,216,944 3,028,318
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$157,173,441 $184,065,148
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LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 15,714,620 $ 11,927,676
Distribution payable 9,697,083
Deferred game revenues 24,610,372 6,645,562
Ticket refunds payable 120,908 120,908
Federal and state income taxes payable 3,513,158 5,163,158
Long-term debt - current portion 14,365,096
Notes payable to bank 80,000,000
Deferred compensation - current portion 5,209,891 4,927,999
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TOTAL CURRENT LIABILITIES 63,534,045 118,482,386
DEFERRED REVENUES - noncurrent portion 1,440,612 1,440,612
DEFERRED FEDERAL AND STATE INCOME TAXES 21,000,000 6,000,000
LONG-TERM DEBT - noncurrent portion 50,000,000 50,000,000
DEFERRED COMPENSATION - noncurrent portion 12,452,882 14,850,057
OTHER NON-CURRENT LIABILITIES 4,877,187 4,023,750
MINORITY INTEREST IN BCBLP 4,988,790
PARTNERS' CAPITAL (DEFICIT)
Boston Celtics Limited Partnership -
General Partner 194,615 (160,255)
Limited Partners 3,135,377 (15,690,191)
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3,329,992 (15,850,446)
Celtics Limited Partnership - General Partner (128,970) (105,194)
Boston Celtics Communications Limited Partnership
- General Partner 667,693 96,791
Boston Celtics Broadcasting Limited Partnership
- Limited Partner 138,402
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TOTAL PARTNERS' CAPITAL (DEFICIT) 3,868,715 (15,720,447)
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$157,173,441 $184,065,148
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<FN>
<F1> Restated to classify assets and liabilities of Boston Celtics
Broadcasting Limited Partnership as net assets of operations to be
discontinued.
See notes to consolidated financial statements.
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BOSTON CELTICS LIMITED PARTNERSHIP
and Subsidiaries
Consolidated Statements of Income (Loss)
Unaudited
Three Months Ended
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September 30, September 30,
1995 1994
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Costs and expenses:
General and administrative $ 2,906,050 $ 2,792,580
Selling and promotional 335,522 400,989
Depreciation 34,940 40,202
Amortization of NBA franchise and other
intangible assets 41,176 41,176
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(3,317,688) (3,274,947)
Interest expense, including for the three month
periods $228,712 in 1995 and $291,798 in 1994
related to deferred compensation obligations (1,371,810) (1,031,631)
Interest income 2,069,759 650,673
Net realized gains (losses) from marketable
securities 161,596 (137,841)
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Loss from continuing operations before income
taxes (2,458,143) (3,793,746)
Provision for (benefit from) income taxes 550,000 (66,444)
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Loss from continuing operations (3,008,143) (3,727,302)
Discontinued operations:
Income (loss) from discontinued operations
(less applicable income taxes of $30,000
in 1995 and $1,366,444 in 1994) 52,806 1,611,710
Gain from disposal of discontinued operations
(less applicable income taxes of $17,970,000
in 1995) 39,160,907
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Net income (loss) 36,205,570 (2,115,592)
Net income applicable to interests of General
Partners 904,483 9,520
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Net income (loss) applicable to interests of
Limited Partners $35,301,087 ($2,125,112)
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Per unit:
Primary:
Loss from continuing operations ($0.49) ($0.57)
Net income (loss) $5.75 ($0.33)
Average units outstanding throughout the
period 6,135,915 6,399,722
Fully diluted:
Loss from continuing operations ($0.49) ($0.57)
Net income (loss) $5.59 ($0.33)
Fully diluted units outstanding throughout
the period 6,316,481 6,399,722
See notes to consolidated financial statements.
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BOSTON CELTICS LIMITED PARTNERSHIP
and Subsidiaries
Consolidated Statements of Cash Flows
Unaudited
For the Three Months Ended
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September 30, September 30,
1995 1994(1)
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CASH FLOWS FROM OPERATING ACTIVITIES
Receipts:
Basketball regular season receipts:
Ticket sales $17,797,994 $15,092,402
Television and radio broadcast rights fees 240,980 1,268,870
Other, principally promotional advertising 1,076,033 502,729
Basketball playoff receipts 304,450
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19,419,457 16,864,001
Costs and expenses:
Basketball regular season expenditures:
Team expenses 4,347,150 8,294,701
Game expenses 45,534
Basketball playoff expenses 23,215
General and administrative expenses 4,670,092 3,951,707
Selling and promotional expenses 482,704 360,623
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9,568,695 12,607,031
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9,850,762 4,256,970
Interest expense (774,187) (490,667)
Interest income 2,541,668 512,655
Ticket refunds paid (1,456)
Payment of deferred compensation (2,330,752) (836,635)
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NET CASH FLOWS FROM CONTINUING OPERATIONS 9,287,491 3,440,867
NET CASH FLOWS FROM DISCONTINUED OPERATIONS 41,590 4,951,172
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NET CASH FLOWS FROM OPERATING ACTIVITIES 9,329,081 8,392,039
CASH FLOWS (USED BY) FROM INVESTING ACTIVITIES
Purchases of:
Marketable securities (6,936,688) (13,971,818)
Short term investments (37,100,000) (42,000,000)
Proceeds from sales of:
Marketable securities 15,745,555 338,195
Short term investments 25,500,000
Proceeds from the sale of BCBLP 79,200,000
Cash portion of net assets of Boston Celtics
Broadcasting Limited Partnership sold (1,602,071)
Capital expenditures (398,397) (256,359)
Other receipts (expenditures) 5,903 (837,316)
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NET CASH (USED BY) FROM INVESTING ACTIVITIES 74,414,302 (56,727,298)
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NET CASH FLOWS (USED BY) FROM OPERATING AND
INVESTING ACTIVITIES 83,743,383 (48,335,259)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank borrowings 85,000,000
Payment of bank borrowings (80,000,000)
Purchase of Boston Celtics Limited Partnership units (1,941,450)
Cash distributions:
To Fox Television Stations, Inc. from Boston Celtics
Broadcasting Limited Partnership (7,797,244)
To limited partners of Boston Celtics Limited
Partnership (9,697,083)
To General Partners (152,887)
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NET CASH FLOWS (USED BY) FROM FINANCING
ACTIVITIES (99,588,664) 85,000,000
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NET INCREASE (DECREASE) IN CASH (15,845,281) 36,664,741
Cash and cash equivalents at beginning of period 39,563,015 38,093,082
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $23,717,734 $74,757,823
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Non-cash investing and financing activities:
Conversion of convertible subordinated note payable
for 25% interest in Boston Celtics Broadcasting
Limited Partnership $10,000,000
Notes payable for acquisition of Boston Celtics
Limited Partnership units $14,365,096
Net non-cash assets of Boston Celtics Broadcasting
Limited Partnership sold $ 9,517,608
<FN>
<F1> Restated to classify cash flows from operating activities of Boston
Celtics Broadcasting Limited Partnership as net cash flows from
discontinued operations.
See notes to consolidated financial statements.
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Notes to Consolidated Financial Statements
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BOSTON CELTICS LIMITED PARTNERSHIP AND SUBSIDIARIES
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Note 1 - Sale of Boston Celtics Broadcasting Limited Partnership
(Television Station WFXT)
The previously reported agreement between Boston Celtics Limited
Partnership ("BCLP" or "Partnership") and Fox Television, Inc. ("FTS")
pursuant to which FTS acquired BCBLP was closed on July 7, 1995. For
financial reporting purposes, aggregate gains from the sale of BCBLP and
from the sale to FTS in 1994 of an option to purchase 25% of BCBLP of
$50,700,000 (net of provision for income taxes of $21,100,000) has been
included in gains from disposition of discontinued operations. Of these
amounts, $39,200,000 (net of provision for income taxes of $18,000,000) was
included in income during the three months ended September 30, 1995 and the
remainder, together with a gain on the sale of Radio Station WEEI, was
included in income in the year ended June 30, 1994.
Note 2 - Redemption of Partnership Interest
On August 30, 1995 the Partnership redeemed an aggregate of 758,444
units representing assignments of beneficial ownership of limited
partnership interest in BCLP. The redeemed units were beneficially owned by
a principal unitholder and his family. The principal unitholder received
two notes from BCLP in exchange for 668,144 units acquired by BCLP from him.
The two notes have an aggregate initial face amount of $14,365,096 equal to
$21.50 per unit for each unit acquired. The two notes which are due and
payable on July 1, 2000 (unless prepaid earlier pursuant to mandatory
prepayment provisions contained therein) also provide that the amounts to be
paid to such unitholder pursuant to the terms of the notes will be increased
by specified amounts on each July 1 during the term. If he holds the two
notes until July 1, 2000 he will be entitled to receive aggregate payments
(excluding interest) in the amount of $20,044,320 equal to $30.00 per unit
for each unit acquired from him. Because of the mandatory prepayment
provisions of these agreements, the outstanding balance of these notes has
been included in Long-term Debt - Current Portion on the balance sheet.
Each of the notes bear interest payable quarterly at the rate of 7.76% per
annum. Under the terms of the redemption the principal unitholder's family
members were paid $1,941,450 equal to $21.50 in cash for each of the 90,300
units acquired from them.
Note 3 - Options to Acquire Units of Partnership Interest
Net income was charged $853,000 and $413,000 during the three months
ended September 30, 1995 and 1994, respectively, in respect of options to
acquire units of partnership interest issued in the year ended June 30,
1994. No options were issued, exercised or vested during the three months
ended September 30, 1995.
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Note 4 - Interim Accounting for Regular Season Basketball Revenues and Costs
Revenues and costs applicable to the regular season are recognized in
income proportionately over the 82 games played in the regular season. The
excess of revenue received or costs incurred over amounts recognized in
income are included in Deferred Game Costs or Deferred Game Revenues on the
Balance Sheet.
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Management's Discussion and Analysis of Financial
Condition and Results of Operations
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BOSTON CELTICS LIMITED PARTNERSHIP AND SUBSIDIARIES
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General
The Partnership had consolidated net income of $36,206,000 or $5.75
per unit ($5.59 per unit fully diluted) and a consolidated net loss from
continuing operations of $3,008,000 or $.49 per unit in the three months
ended September 30, 1995 compared with a consolidated net loss of $2,115,000
or $.33 per unit and a consolidated net loss from continuing operations of
$3,727,000 or $.57 per unit in the three months ended September 30, 1994.
The Partnership had consolidated cash flows from operating activities of
$9,329,000 in the three months ended September 30, 1995 compared with
consolidated cash flows from operating activities of $8,392,000 in the three
months ended September 30, 1994.
The Boston Celtics derive revenues principally from the sale of
tickets to home games and the licensing of television, cable network and
radio rights. A large portion of the Boston Celtics' annual revenues and
operating expenses are determinable at the commencement of each basketball
season based on season ticket sales and the Boston Celtics' multi-year
contracts with its players and broadcast organizations.
For financial reporting purposes the Boston Celtics recognize revenues
and expenses on a game-by-game basis. Because the NBA regular season begins
in November, the first quarter which ends on September 30th will generally
include limited or no revenue and will reflect a loss attributable to
general and administrative expenses incurred in the quarter. Based on the
present NBA game schedule, the Partnership will generally recognize
approximately one-third of its annual regular season revenue in the second
quarter, approximately one-half of such revenue in the third quarter and the
remainder in the fourth quarter, and it will recognize all of its playoff
revenue in the fourth quarter.
Results of Operations
The following discussion compares results of operations of the
Partnership and its subsidiaries for the three months ended September 30,
1995 compared with the three months ended September 30, 1994.
The Boston Celtics recognize revenues and direct expenses for the
basketball operations ratably over the regular season games played. Since
the NBA regular season begins in November, the Boston Celtics realize only
costs attributable to general and administrative and selling and promotional
expenses during the first quarter of each year. All revenues and team and
game expenses have been deferred during the quarter ended September 30.
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General and administrative expenses increased $113,000 or 4% in the
three month period ended September 30, 1995 compared to the comparable
period in 1994. The increase in 1995 was primarily attributable to an
increase in option expense ($441,000) partially offset by a decrease in
administrative salaries ($163,000) and a reduction in professional expenses
($152,000).
Selling and promotional expenses decreased $65,000 or 16% in the three
month period ended September 30, 1995 compared to the comparable period in
1994. The decrease in 1995 was primarily attributable to a reduction in
season ticket costs ($56,000).
Interest expense increased $340,000 or 33% in the three months ended
September 30, 1995 compared to the same period in 1994 primarily as a result
of interest on the notes payable related to the purchase of BCLP units
($186,000) and the effect of an increase in interest rates on bank borrowing
($122,000).
Interest income increased $1,419,000 or 218% in the three month period
ended September 30, 1995 compared to the same period in 1994. The earnings
are attributable to the interest earned on the short-term investment of
larger amounts of available funds.
Liquidity and Capital Resources
At September 30, 1995 the Partnership had approximately $24,000,000 of
available cash, $36,000,000 of marketable securities and $79,000,000 of
other short term investments. In addition to these amounts, sources of
funds for the partnerships include funds generated by operations and capital
contributions from partners. These resources will be used to repay
commercial bank borrowings and long term debt related to redeemed
partnership units and for general partnership purposes, working capital
needs or for possible acquisitions. The Partnership is not engaged in any
negotiations relating to and has not made any commitments in connection with
any such possible acquisitions. Management believes that its cash, cash
equivalents and marketable securities together with cash from operations
will provide adequate cash for the Partnership and its subsidiaries to meet
their cash requirements through September 30, 1996.
During the quarter ended September 30, 1995, a cash distribution of
$1.50 per unit was paid to unitholders of Boston Celtics Limited Partnership
on July 21, 1995 (declared June 26, 1994 to unitholders of record on June
30, 1995). Future distributions will be determined by the General Partner
based among other things on available resources and the needs of the
Partnership.
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Part II - Other Information
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BOSTON CELTICS LIMITED PARTNERSHIP AND SUBSIDIARIES
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ITEM 6 - Exhibits and Reports on Form 8-K
Exhibits -
None.
Reports on Form 8-K -
None.
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of
1934, as amended, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
BOSTON CELTICS LIMITED PARTNERSHIP
(Registrant)
By: Celtics, Inc., its General Partner
Dated: November 13, 1995 By: /s Thomas M. Bartlett, Jr.
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Thomas M. Bartlett, Jr.
Executive Vice President
and Chief Financial Officer
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