1
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 March 31, 1996 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 March 31, 1996 was 5,641,278 of Limited
Partnership Interest.
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Part I - Financial Information
Item I - Financial Statements
BOSTON CELTICS LIMITED PARTNERSHIP
and Subsidiaries
Consolidated Balance Sheets
March 31, June 30,
1996 1995 (1)
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ASSETS (Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 13,023,292 $ 22,692,586
Marketable securities 47,419,252 45,132,667
Other short term investments 77,775,000 67,558,465
Accounts receivable (less allowance for doubtful
accounts $10,000 in March and in June) 1,336,306 3,213,175
Note receivable 4,444,444
Deferred game costs 436,502
Prepaid expenses 277,205 402,954
Other current assets and deferred charges 5,200,000
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TOTAL CURRENT ASSETS 140,267,557 148,644,291
PROPERTY AND EQUIPMENT, net of depreciation 1,176,572 846,418
of $516,073 in March and $385,575 in June
NATIONAL BASKETBALL ASSOCIATION FRANCHISE, net of 4,203,021 4,318,701
amortization of $1,966,560 in March and $1,850,880 in June
OTHER INTANGIBLE ASSETS net of amortization of 916,556 924,376
$34,005 in March and $26,158 in June
NET ASSETS OF OPERATIONS TO BE DISCONTINUED 26,303,044
OTHER ASSETS 1,730,533 3,028,318
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$ 148,294,239 $ 184,065,148
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LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 14,190,880 $ 11,927,676
Distribution payable 9,697,083
Deferred game revenues 3,508,737 6,645,562
Ticket refunds payable 120,908 120,908
Federal and state income taxes payable 39,325 5,163,158
Long-term debt - current portion 14,365,096
Notes payable to bank 80,000,000
Deferred compensation - current portion 4,959,852 4,927,999
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TOTAL CURRENT LIABILITIES 37,184,798 118,482,386
DEFERRED REVENUES - noncurrent portion 1,440,612 1,440,612
DEFERRED FEDERAL AND STATE INCOME TAXES 20,100,000 6,000,000
LONG-TERM DEBT - noncurrent portion 50,000,000 50,000,000
DEFERRED COMPENSATION - noncurrent portion 11,925,779 14,850,057
OTHER NON-CURRENT LIABILITIES 5,271,563 4,023,750
MINORITY INTEREST IN BCBLP 4,988,790
PARTNERS' CAPITAL (DEFICIT)
Boston Celtics Limited Partnership -
General Partner 377,717 (160,255)
Limited Partners 21,262,479 (15,690,191)
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21,640,196 (15,850,446)
Celtics Limited Partnership - General Partner 90,846 (105,194)
Boston Celtics Communications Limited Partnership
- General Partner 640,445 96,791
Boston Celtics Broadcasting Limited Partnership
- Limited Partner 138,402
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TOTAL PARTNERS' CAPITAL (DEFICIT) 22,371,487 (15,720,447)
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$ 148,294,239 $ 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.
</FN>
See notes to consolidated financial statements.
4
BOSTON CELTICS LIMITED PARTNERSHIP
and Subsidiaries
Consolidated Statements of Income (Loss)
Unaudited
Nine Months Ended Three Months Ended
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March 31, March 31, March 31, March 31,
1996 1995 1996 1995
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Revenues:
Basketball regular season -
Ticket sales $ 30,233,000 $ 18,708,000 $ 18,563,000 $ 11,330,000
Television and radio broadcast rights fees 18,551,000 17,469,000 11,366,000 10,580,000
Other, principally promotional advertising 6,893,000 6,744,000 4,133,000 4,084,000
------------ ------------ ------------ ------------
55,677,000 42,921,000 34,062,000 25,994,000
------------ ------------ ------------ ------------
Costs and expenses:
Basketball regular season -
Team 25,035,000 26,643,000 16,492,000 16,136,000
Game 2,025,000 2,124,000 1,238,000 1,286,000
General and administrative 10,669,094 10,078,754 4,568,821 3,560,126
Selling and promotional 2,150,549 1,669,571 1,030,763 507,865
Depreciation 135,496 74,382 60,471 24,795
Amortization of NBA franchise and other
intangible assets 123,527 153,433 41,175 71,081
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40,138,666 40,743,140 23,431,230 21,585,867
------------ ------------ ------------ ------------
15,538,334 2,177,860 10,630,770 4,408,133
Interest expense, including for the nine month
periods $751,031 in 1996 and $867,401 in 1995
related to deferred compensation obligations (4,056,778) (6,517,671) (1,335,670) (2,688,691)
Interest income 6,243,343 4,472,101 2,071,667 1,935,359
Net realized and unrealized gains (losses) on
disposition of assets and investments 179,023 50,096 (3,483) 476,969
------------ ------------ ------------ ------------
Income (Loss) from continuing operations before
income taxes 17,903,922 182,386 11,363,284 4,131,770
Provision for income taxes 1,350,000 452,159 450,000 330,927
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Income (Loss) from continuing operations 16,553,922 (269,773) 10,913,284 3,800,843
Discontinued operations:
Income from discontinued operations (less
applicable income taxes of 30,000 in 1996
and $4,697,841 in 1995) 82,806 8,823,661 2,217,516
Gain from disposal of discontinued operations
(less applicable income taxes of $17,770,000 in 1996) 38,330,907
------------ ------------ ------------ ------------
Net income 54,967,635 8,553,888 10,913,284 6,018,359
Net income applicable to interests of General Partners 1,282,746 370,970 236,714 175,027
------------ ------------ ------------ ------------
Net income applicable to interests of Limited Partners $ 53,684,889 $ 8,182,918 $ 10,676,570 $ 5,843,332
============ ============ ============ ============
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Per unit:
Primary:
Income (Loss) from continuing operations $ 2.72 $ (0.04) $ 1.84 $ 0.58
Net income $ 8.99 $ 1.28 $ 1.84 $ 0.91
Average units outstanding throughout the period 5,970,396 6,399,722 5,804,917 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 Nine Months Ended
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March 31, March 31,
1996 1995 (1)
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CASH FLOWS FROM OPERATING ACTIVITIES
Receipts:
Basketball regular season receipts:
Ticket sales $ 27,643,129 $ 22,012,356
Television and radio broadcast rights fees 13,696,098 13,877,667
Other, principally promotional advertising 6,112,470 5,193,812
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47,451,697 41,083,835
Costs and expenses:
Basketball regular season expenditures:
Team expenses 20,429,492 20,238,088
Game expenses 2,271,221 2,460,071
General and administrative expenses 11,238,412 10,607,388
Selling and promotional expenses 1,920,418 1,647,582
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35,859,543 34,953,129
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11,592,154 6,130,706
Interest income 7,406,523 2,793,704
Interest expense (2,740,984) (2,811,645)
Ticket refunds paid (3,914)
Proceeds from league expansion 4,490,673
Payment of income taxes (4,972,199) (3,748,587)
Payment of deferred compensation (4,149,350) (2,500,185)
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NET CASH FLOWS FROM CONTINUING OPERATIONS 11,626,817 (139,921)
NET CASH FLOWS FROM DISCONTINUED OPERATIONS (2,935,980) 18,122,836
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NET CASH FLOWS FROM OPERATING ACTIVITIES 8,690,837 17,982,915
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CASH FLOWS (USED BY) FROM INVESTING ACTIVITIES
Purchases of:
Marketable securities (42,696,996) (33,689,849)
Short term investments (40,025,000) (143,000,000)
Proceeds from sales of:
Marketable securities 40,388,248 13,330,695
Short term investments 28,250,000 71,000,000
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 (787,633) (499,014)
Other receipts (expenditures) 1,631,556 (1,030,346)
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NET CASH (USED BY) FROM INVESTING ACTIVITIES 64,358,104 (93,888,514)
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NET CASH FLOWS (USED BY) FROM OPERATING
AND INVESTING ACTIVITIES 73,048,941 (75,905,599)
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BOSTON CELTICS LIMITED PARTNERSHIP
and Subsidiaries
Consolidated Statements of Cash Flows (Continued)
Unaudited
For the Nine Months Ended
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March 31, March 31,
1996 1995 (1)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank borrowings 85,000,000
Payment of bank borrowings (80,000,000) (5,000,000)
Purchase of Boston Celtics Limited Partnership
units (1,941,450)
Purchase of interest in Boston Celtics
Communications Limited Partnership from
Celtics Communications Inc. (792,000)
Cash distributions:
To Fox Television Stations, Inc. from Boston
Celtics Broadcasting Limited Partnership (7,797,244) (3,774,000)
To limited partners of Boston Celtics Limited (9,632,083) (9,632,083)
Partnership
To General Partners (217,887) (139,000)
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NET CASH FLOWS (USED BY) FROM FINANCING
ACTIVITIES (99,588,664) 65,662,917
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NET INCREASE (DECREASE) IN CASH (26,539,723) (10,242,682)
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 $ 13,023,292 $ 27,850,400
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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.
</FN>
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 - The unaudited consolidated financial statements include the accounts of
Boston Celtics Limited Partnership ("BCLP") and its 99% limited partnership
interests and wholly-owned subsidiaries which own and operate the Boston Celtics
professional basketball team of the National Basketball Association, hold
investments and owned and operated Radio Station WEEI - 590 AM until its sale on
June 30, 1994 and Television Station WFXT - Channel 25 of Boston, Massachusetts
until its sale on July 7, 1995. All intercompany transactions are eliminated in
consolidation.
Note 2 - The 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. Such financial statements
should be read in conjunction with the consolidated financial statements and
footnotes thereto of Boston Celtics Limited Partnership and Subsidiaries
included in the annual report on Form 10-K for the year ended June 30, 1995 and
the Forms 10-Q for the quarters ended September 30, 1995 and December 31, 1995.
Note 3 - 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 $54,968,000 or $8.99 per unit on
revenues of $55,677,000 in the nine months ended March 31, 1996 compared with
consolidated net income of $8,554,000 or $1.28 per unit on revenues of
$42,921,000 in the nine months ended March 31, 1995. The Partnership had
consolidated net income of $10,913,000 or $1.84 per unit on revenues of
$34,062,000 in the three months ended March 31, 1996 compared with consolidated
net income of $6,018,000 or $.91 per unit on revenues of $25,994,000 in the
three months ended March 31, 1995. The Partnership had consolidated cash flows
from operating activities of $8,691,000 in the nine months ended March 31, 1996
compared with consolidated cash flows from operating activities of $17,983,000
in the nine months ended March 31, 1995.
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 any playoff revenue in the fourth quarter.
Results of Operations
The following discussion compares results of continuing operations of the
Partnership and its subsidiaries for the nine month and three month periods
ended March 31, 1996 with the nine month and three month periods ended March 31,
1995.
The Boston Celtics recognize revenues and direct expenses for the basketball
operations ratably over the regular season games played.
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Income from continuing operations increased $16,824,000 in the nine month period
and $7,112,000 in the three month period ended March 31, 1996 compared with the
same periods in 1995. These increases are due primarily to increased ticket
revenues, resulting primarily from the move to the FleetCenter arena which has
an increased seating capacity of 4,200 seats as compared to the Boston Garden,
of $11,525,000 for the nine month period and $7,233,000 for the three month
period as compared to the same periods in 1995 and to decreased interest expense
of $2,461,000 in the nine months ended March 31, 1996 and $1,353,000 in the
three months ended March 31, 1996 as compared to the same periods in 1995. The
decrease in interest expense is primarily a result of the repayment of
$80,000,000 of bank borrowings, which had been outstanding since September 1994,
in July 1995 (resulting in reductions of $3,267,000 in the nine month period and
$1,573,000 in the three month period) partially offset by interest on the notes
payable related to the redemption of BCLP units (resulting in increases of
$742,000 in the nine month period and $275,000 in the three month period).
Liquidity and Capital Resources
At March 31, 1996 the Partnership had approximately $13,000,000 of available
cash, $47,000,000 of marketable securities and $78,000,000 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 March 31, 1997.
During the nine months ended March 31, 1996, a cash distribution of $1.50 per
unit was paid to unitholders of Boston Celtics Limited Partnership on July 21,
1995 (declared June 26, 1995 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 -
Exhibit (11) - Statement re: computation of earnings per unit.
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
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(Registrant)
By: Celtics, Inc., its General Partner
Dated: May 14, 1996 By: /s/ Thomas M. Bartlett, Jr.
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Thomas M. Bartlett, Jr.
Executive Vice President
and Chief Financial Officer