1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended Commission file number
June 30, 1996 19324
- ------------------------------------ ---------------------------------
Boston Celtics Limited Partnership
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 04-2936516
- ------------------------------------ ---------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
151 Merrimac Street, Boston, Massachusetts 02114
- ------------------------------------------ ---------------------------------
(Address of principal executive offices) (Zip Code)
(617) 523-6050
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each Exchange
Title of each class on which registered
- --------------------------------- -----------------------
Units Representing Assignments of New York Stock Exchange
Beneficial Ownership of Limited Boston Stock Exchange
Partnership Interests
Securities registered pursuant to Section 12(g) of the Act:
None
- --------------------------------------------------------------------------------
(Title of Class)
2
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 [ ]
BOSTON CELTICS LIMITED PARTNERSHIP
1996 FORM 10-K ANNUAL REPORT
INDEX
PART I
Page
----
Items 1. Business and Properties............................................ 1
and 2.
Item 3. Legal Proceedings.................................................. 10
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters............................................................ 11
Item 6. Selected Financial Data............................................ 12
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.............................................. 16
Item 8. Financial Statements and Supplementary Data........................ 20
PART III
Item 10. Directors and Executive Officers of the Registrant................. 21
Item 11. Executive Compensation............................................. 27
Item 12. Security Ownership of Beneficial Owners and Management............. 32
Item 13. Certain Relationships and Related Transactions..................... 34
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K... 35
Signatures ................................................................... 72
3
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 ____.
The aggregate market value of the 2,800,993 Units held by non-affiliates of the
Registrant as of September 20, 1996 was approximately $60,221,000, based on the
closing price of the Units on the New York Stock Exchange on that date of $21.50
per Unit. For the purpose of this calculation, the two stockholders of the
General Partner of the Partnership, who are also directors and officers of the
General Partner and directors and officers of the General Partner and
Unitholders of the Partnership, are treated as affiliates. No other officers,
directors, employees or Unitholders are treated as affiliates for this purposes.
As of September 20, 1996, there were 5,876,164 Units outstanding.
PART I
Items 1 and 2. Business and Properties
- ---------------------------------------
General
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"), a wholly-owned
subsidiary of BCLP, owns Celtics Capital Corporation ("CCC") (which holds
investments) and through Celtics Investments Incorporated ("CII"), a wholly
owned subsidiary, and itself owns a 99% limited partnership interest in Boston
Celtics Communications Limited Partnership ("BCCLP") which owned a 99% limited
partnership interest in Boston Celtics Broadcasting Limited Partnership
("BCBLP") until its sale on July 7, 1995 (BCBLP owned and operated Television
Station WFXT - Channel 25 ("WFXT")of Boston, Massachusetts) and owned and
operated Radio Station WEEI - 590 AM of Boston, Massachusetts until its sale on
June 30, 1994. The General Partner of BCLP is Celtics, Inc. ("CI"); the General
Partner of CLP is Boston Celtics Corporation ("BCC"); 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 Paul Gaston,
Paul Dupee, Don Gaston (father of Paul Gaston) and an affiliate. The interest of
Alan Cohen in Celtics, Inc. was acquired by Walcott Partners L.P., an affiliate
of the Gaston family, and his interests in Boston Celtics Corporation and
Celtics Communications, Inc. were acquired by Paul E. Gaston on August 30, 1995.
See Note O of Notes to Consolidated Financial Statements for a description of
these redemptions.
The previously reported agreement between BCLP and Fox Television, Inc.
("FTS") pursuant to which FTS acquired BCBLP was closed on July 7, 1995 when FTS
exercised its option for the acquisition of a 26% interest in BCBLP, converted
$10,000,000 of convertible debt for an additional 25% interest in BCBLP and
purchased the remaining 49% interest in BCBLP for $80,000,000 cash.
4
Basketball Operations
The Partnership, through CLP, owns and operates the Boston Celtics
professional basketball team the "Boston Celtics" of the National Basketball
Association (the "NBA").
The following table shows the performance of the Boston Celtics during
the past 15 basketball seasons:
Regular Regular Season
Season Place of Finish
Season Record in Division Play-Off Results
- -------- ------- --------------- ------------------------------------------
1995-96 33-49 Fifth --
1994-95 35-47 Third Lost in First Round of Conference Playoffs
1993-94 32-50 Fifth --
1992-93 48-34 Second Lost in First Round of Conference Playoffs
1991-92 51-31 First Lost in Conference Semifinals
1990-91 56-26 First Lost in Conference Semifinals
1989-90 52-30 Second Lost in First Round of Conference Playoffs
1988-89 42-40 Third Lost in First Round of Conference Playoffs
1987-88 57-25 First Lost in Conference Finals
1986-87 59-23 First Lost in Championship Finals
1985-86 67-15 First NBA Champions
1984-85 63-19 First Lost in Championship Finals
1983-84 62-20 First NBA Champions
1982-83 56-26 Second Lost in Conference Semifinals
1981-82 63-19 First Lost in Conference Finals
Sources of Revenues. The Boston Celtics derive their revenues
principally from the sale of tickets to home games and the licensing of
television, cable network and radio rights. The following table shows the
contribution to revenues of the basketball operations from these sources and
from miscellaneous other sources for each of the last three fiscal years:
5
Contribution to Revenues
(in thousands)
- -----------------------------------------------------------------------------------
Year Ended Television, Cable and Other Total
June 30, Ticket Sales Radio and Sources Revenues
- ---------- --------------------- --------------------- ------- --------
Regular Regular
Season(1) Playoffs Season(2) Playoffs
--------- -------- --------- --------
1996 $35,249 -- $22,072 -- $7,459 $64,780
1995 22,037 $1,518 20,956 $395 7,419 52,325
1994 20,239 -- 19,168 -- 5,176 44,583
<FN>
- -------------------
<F1> Includes proceeds from exhibition games.
<F2> Includes the Boston Celtics' share of revenues under the NBA national
television contracts.
</FN>
Ticket Sales. The Boston Celtics play an equal number of home games and
away games during the 82-game NBA regular season. In addition, the Boston
Celtics play eight exhibition games prior to the commencement of the regular
season. Under the NBA Constitution and By-laws, the Boston Celtics receive all
revenues from the sale of tickets to regular season home games (subject to the
NBA gate assessment) and no revenue from the sale of tickets to regular season
away games. Generally, the Boston Celtics retain all revenues from the sale of
tickets to home exhibition games played in Boston and Hartford (less appearance
fees paid to the visiting team), and generally receive appearance fees for
exhibition games played elsewhere.
Effective with the 1995-1996 season, all Boston Celtics regular season
home games are played in the FleetCenter, a new arena located adjacent to the
Boston Garden. The seating capacity of the FleetCenter is approximately 19,300
as compared to a seating capacity of 14,890 at the Boston Celtics prior home
arena, the Boston Garden. The policy of the Boston Celtics has been, during the
last several years, to limit the number of season tickets so that some tickets
are available on a per game basis. During the 1995-1996 season approximately
15,000 season tickets were sold. During the previous five seasons in the Boston
Garden, the Boston Celtics sold an average of 12,700 season tickets.
6
Television, Cable and Radio Broadcasting. The Partnership and the NBA
license the television and radio broadcast rights to Celtics basketball games.
The NBA, as agent for its members, licenses the national and international
broadcast of the games under agreements with NBC Sports, a division of the
National Broadcasting Company, (the "NBC agreement"), Turner Network Television,
Inc., an affiliate of Turner Broadcasting, (the "TNT agreement"). Each of the
NBA member teams shares equally in these license fees. In addition, the
Partnership licenses the local over the air rights to broadcast away games under
an agreement with Gillett Communications of Boston, Inc. (subsequently assigned
to New World Communications), licensee of Television Station WSBK - Channel 38
(the "WSBK agreement") and licenses the cable rights to broadcast home games to
Sportschannel New England Limited Partnership (the "Sportschannel agreement").
The Partnership licenses the rights to broadcast all games on radio under an
agreement with American Radio Systems, Inc., licensee of Radio Station WEEI -
850AM (the "ARS agreement"). The NBC agreement, the TNT and the WSBK agreements
extend through the 1997-98 season. The Sportschannel agreement extends through
the 1998-99 season, with a right to an additional extension by Sportschannel
through the 2000-01 season. The ARS agreement extends through the 1999-2000
season.
Generally, these agreements provide for the broadcast of a specified
number of games (pre-season, regular season and playoff games) at specified
rights fees, which in some cases increase over the term of the contract and in
some cases provide for revenue sharing, per game. The national agreements
provide that the licensee identify the games which it wishes to broadcast and
the local rights agreements provide for the pre-emption of games broadcast under
the national license agreements.
The agreement with NBC Sports accounted for approximately 10%
($6,552,000) of the Partnerships total revenues for the year ended June 30,
1996. No other agreement accounted for as much as 10%, respectively, of the
Partnerships total revenues for the year ended June 30, 1996.
Other Sources. Other sources of revenues for the basketball operations
include promotional and novelty revenues including royalties from NBA
Properties, Inc. NBA Properties, Inc. ("NBA Properties") is a corporation
organized in 1967 to which each NBA member has assigned the exclusive rights to
the merchandising of its team name, insignia and other similar properties to the
extent such rights were not previously assigned to others prior to the formation
of NBA Properties. NBA Properties pays royalties to each NBA team in
consideration of the receipt of such rights. This assignment is subject to the
Boston Celtics' right to use their insignia and symbols in connection with the
promotion of the team in their home territory and retail sales in their home
arena. NBA Properties licenses other companies to manufacture and sell official
NBA items such as sneakers, basketballs, warm-up jackets and sweatshirts, as
well as certain non-sports items.
Basketball Team
Players. In general, the rules of the NBA permit each team to maintain
an active roster of 12 basketball players during each regular season and up to
20 players in the off-season. The By-laws of the NBA require each member team to
enter into a uniform player contract with each of its players. The following
table sets forth certain information concerning the players under contract with
the Boston Celtics as of September 20, 1996:
7
Last
Years Season
in Under
Name Position NBA Contract
- ---------------- -------------- ----- --------
Dana Barros Guard 7 2000-01
Frank Brickowski Forward/Center 12 1996-97
Dee Brown Guard 6 1999-00
Todd Day Guard/Forward 4 1996-97
Nate Driggers Guard -- 1996-97
Pervis Ellison Center 7 1999-00
Rick Fox Forward 5 1999-00
Alton Lister Forward/Center 15 1996-97
Greg Minor Forward 2 2003-04
Julius Nwosu Forward/Center 1 1996-97
Dino Radja Forward 4 1999-00
Antoine Walker Forward -- 1998-99
David Wesley Guard 3 1996-97
Eric Williams Forward 1 1997-98
Coaches. The head coach of the Boston Celtics, M.L. Carr, was appointed
to that position following the 1994-95 season. Mr. Carr has also been the
Executive Vice President of Basketball Operations of the Boston Celtics since
June 1994 and a player from 1979-1985. Mr. Carr is under contract with the
Boston Celtics through the end of the 1998-99 season.
Dennis Johnson is an assistant coach of the Boston Celtics. Mr.
Johnson was a scout for the Boston Celtics during the 1992-93 season and played
for the Boston Celtics for the last 7 years of a 14 year NBA career. Mr. Johnson
is under contract through the end of the 1997-98 season.
K. C. Jones is also an assistant coach of the Boston Celtics. Prior to
his appointment to this position in 1996, Mr. Jones most recently served as an
assistant coach of the Detroit Pistons, an NBA team, for the 1994-95 season, and
as an assistant coach and head coach of the Seattle SuperSonics, an NBA team,
for the 1989-1992 seasons. Previously, Mr. Jones was associated with the Boston
Celtics as the head coach from 1983 to 1988, assistant coach from 1978 - 1983,
and as a player for the team from 1958 - 1967. Mr. Jones is under contract with
the Boston Celtics through the end of the 1997-98 season.
John Kuester is also an assistant coach of the Boston Celtics. Mr.
Kuester was the video coordinator/scout for the Boston Celtics for five seasons
(1990 - 1995). Mr. Kuester is under contract with the Boston Celtics through the
end of the 1996-97 season.
Under its contracts with its head coach (including former head coach,
Chris Ford) and assistant coaches, the Boston Celtics had total compensation
expense totaling $2,088,000 during the 1995-96 season. During the 1996-97
season, the Boston Celtics are required to make salary payments to its coaches
totaling $1,560,000.
8
Collective Bargaining Agreement A collective bargaining agreement (the
"Collective Bargaining Agreement") to be in effect through June 30, 2001 was
ratified by the NBA and the National Basketball Players' Association ("NBPA") on
September 15, 1995 and executed by the parties on July 11, 1996. The previous
Collective Bargaining Agreement expired on June 23, 1994. The Collective
Bargaining Agreement provides for maximum and minimum total team salaries to be
paid to players. Both maximum and minimum team salaries are determined based on
estimates prior to the start of each season. The maximum team salary (the
"Salary Cap") for each team for a particular season, subject to certain
exceptions, is the greater of a predetermined dollar amount or 48.04% of the
projected Basketball-Related Income (as defined in the Collective Bargaining
Agreement) of all NBA teams, divided by the number of NBA teams (excluding the
expansion teams located in Toronto and Vancouver for the 1996-97 season only).
There are various exceptions to the Salary Cap limitations, including
exceptions relating to a team's re-signing its own veteran free agent players,
replacing injured players, and signing rookies up to 120% of the rookie salary
scale amount. These exceptions permit teams to have aggregate player
compensation exceeding the specified Salary Cap. For example, subject to certain
limitations, a team could re-sign its veteran free agents at any salary, and
could sign a new player to replace an injured player at a salary equal to up to
the lesser of 50% of the salary of such injured player or 108% of the average
player salary for the prior season, even if such new salaries caused the team to
exceed the Salary Cap. The salary cap for the 1996-97 season has been set at
$24.3 million and as of September 20, 1996, the Boston Celtics' total team
compensation is above the salary cap.
The minimum team salary is designed to result in payments by NBA teams
of total player salaries and benefits for a given season aggregating at least
75% of the Salary Cap each season. There is also a provision for minimum
individual player salaries.
Since the adoption of the Salary Cap limitations under a predecessor
collective bargaining agreement, there have been various disputes among NBA
members and between the NBA and its members and the Players' Association
relating to the interpretation and application of the limitations in specific
situations. Such disputes are resolved by an arbitrator or by a court-appointed
special master whose decision is subject to judicial review.
The Collective Bargaining Agreement also governs the rights of veteran
free agents, certain aspects of uniform player contracts, player pension and
other benefits, the NBA draft of college players and other matters affecting the
players.
Basketball Facilities
Effective with the start of the 1995-96 basketball season, the Boston
Celtics played all of their home games at the FleetCenter (the "FleetCenter") in
Boston, Massachusetts. On April 4, 1990, the Boston Celtics entered into a
License/Lease Agreement and an Office Lease Agreement (collectively, the "Lease
Agreement") with New Boston Garden Corp ("NBGC"). The Lease Agreement was
amended in certain respects and restated as of April 14, 1993. NBGC, which is
unaffiliated with the Boston Celtics, developed the new building and sports
entertainment facility which has a seating capacity of approximately 19,300
spectators to replace the Boston Garden. The FleetCenter, which is located on a
site adjacent to the Boston Garden, was opened on September 30, 1995.
9
Under the terms of the Lease Agreement, NBGC has granted to the Boston
Celtics a license to use the basketball facilities at the FleetCenter and
provides to the Celtics approximately 10,000 square feet of office space. NBGC
is responsible for maintaining the FleetCenter and providing administrative
personnel such as ushers, ticket takers, police and security personnel,
announcers, scorers and statisticians. At the Boston Celtics' request, NBGC is
responsible for making all box office ticket sales and remitting the proceeds to
the Boston Celtics. In general, NBGC receives only premium fee revenues
generated from preferred seating and executive boxes in the FleetCenter. Under
the terms of the Lease Agreement, the Boston Celtics do not share in revenue
from food and beverage concessions at the FleetCenter, but may sell programs at
each game subject to the payment of a commission to NBGC's concessionaires and
NBGC is also licensed by the Boston Celtics to sell merchandise bearing the
Boston Celtics' name, trademark and/or logo, subject to prior approval by, and
payment of a commission to, the Boston Celtics.
The Lease Agreement provides that it commenced on the day that the
FleetCenter was substantially completed and operational and extends for 10 full
basketball seasons (from the 1995-96 season to the 2004-2005 season). NBGC may,
at its option, extend the term of the Lease Agreement for five additional
basketball seasons (the "Extended Term"), provided NBGC notifies the Boston
Celtics during a specified period following the fifth anniversary of the
commencement of the term of the Lease Agreement of its intention to exercise its
option and subject to the NBGC making certain payments, based on its revenues,
to the Boston Celtics during the Extended Term.
Prior to the 1995-96 season, the Boston Celtics played most of their
home games in the Boston Garden (the "Boston Garden"), a 14,890 seating capacity
indoor sports arena located in downtown Boston. The Boston Garden was also owned
by NBGC, and was made available to the Boston Celtics under a License and Lease
Agreement which ended at the conclusion of the 1994-95 season.
During the years ended June 30, 1995, and 1994, the Boston Celtics made
annual arena rental payments aggregating approximately $1,206,000 and
$1,203,000, respectively, for use of the Boston Garden and the Hartford Civic
Center for exhibition, regular season and playoff home games (1995).
The Boston Celtics also lease approximately 16,000 square feet of space
at 151 Merrimac Street, Boston, Massachusetts. This facility houses the Boston
Celtics administrative offices. The term of this lease extends through December
2005, with an option to extend for one five year renewal period. Under the
provisions of the Arena Lease Agreement with NBGC, the Boston Celtics are
reimbursed for the cost of 10,000 square feet of office space during the 10 year
term of the Arena Lease Agreement.
Competition
The Boston Celtics are the only professional basketball team in the
Boston area. However, the Boston Celtics compete for spectator interest with all
forms of professional and amateur sports conducted in and near Boston. During
parts of the basketball season the Boston Celtics experience competition from
professional hockey (the Boston Bruins), professional football (the New England
Patriots), and professional baseball (the Boston Red Sox). In addition, the
colleges and universities in the Boston area, as well as public and private
schools, offer a full schedule of athletic events throughout the year. The
Boston Celtics also compete for attendance with the wide range of other
entertainment and recreational activities available in New England.
10
The Boston Celtics also compete with other United States and foreign
basketball teams, professional and otherwise, for available players.
Insurance
The Boston Celtics maintain accidental death and dismemberment,
disability and life insurance policies on most of its key players. These
disability policies cover injuries which result in permanent and total
disability, as well as temporary disability on injuries which cause less severe
damage, but loss of player services for more than half a playing season. These
policies would generally reimburse the Partnership for a substantial percentage
of the payments which it would be required to make to such player under his
contract. The waiting period for reimbursement under most temporary disability
policies is 41 games. This Key Man Disability Insurance Plan is maintained by
the NBA through a Master Policy Program, and underwritten by a leading national
insurance company.
The Boston Celtics participate in a workers' compensation policy and a
high limit comprehensive general liability and umbrella policy maintained by the
NBA. Included under that plan is protection for team sports participant's
liability covering claims which may result from, among other things, certain
injuries which may be incurred during player contests or exhibitions sponsored
by the Team.
The NBA has established a Disaster Plan which permits a team suffering
an air or similar disaster to draft players from the other NBA teams subject to
specified procedures. The NBA maintains an insurance policy that provides
compensation to the team suffering the disaster, as well as those teams whose
players are selected in such special draft.
Broadcast Operations
As described under Items 1 and 2 Business and Properties - General, FTS
acquired BCBLP on July 7, 1995. Accordingly, all of the Broadcast operations of
the Partnership have been disposed of and the Communications line of business
has been designated a Discontinued Operation. Accordingly, the Financial
Statements have been restated to account for such operations as Discontinued
Operations for all periods presented.
Employees
In addition to the players and coaches, see "Basketball Operations --
Basketball Team," as of September 20, 1996, the Boston Celtics have 47 full-time
employees engaged in operating, marketing, advertising and administrative
activities.
Item 3. Legal Proceedings
- --------------------------
As a member of the NBA, the Partnership is a defendant along with the
other members in various lawsuits incidental to the NBA's basketball operations.
The Partnership will generally be liable, jointly and severally, with all other
members of the NBA for the costs of defending such lawsuits and any liabilities
of the NBA which might result from such lawsuits.
11
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
- ------------------------------------------------------------------------------
The Partnership's Units are listed on the New York Stock Exchange and
traded under the symbol "BOS". The following table sets forth, for the periods,
indicated, the high and low sales prices per Unit on the New York Stock Exchange
and cash distributions per Unit to Unitholders for the years ended June 30, 1996
and June 30, 1995, respectively.
Year Ended June 30, 1996
------------------------------------
Sales Price Cash
------------------- Distribution
Period High Low Declared
- ---------------- -------- ------- ------------
First Quarter $27 $20 1/8
Second Quarter 28 3/8 22 7/8
Third Quarter 24 1/8 21 3/8
Fourth Quarter 25 1/8 21 5/8 $1.50
------------
$1.50
============
Year Ended June 30, 1995
------------------------------------
Sales Price Cash
------------------- Distribution
Period High Low Declared
- ---------------- -------- ------- ------------
First Quarter $21 7/8 $19 3/4
Second Quarter 24 1/8 20 3/8 $1.50
Third Quarter 21 7/8 20 3/4
Fourth Quarter 21 1/2 19 3/4 $1.50
------------
$3.00
============
As of September 20, 1996, the approximate number of registered
unitholders of the Partnership's Units was 66,510.
12
Part II
Item 6. Selected Financial Data
- --------------------------------
Boston Celtics Limited Partnership and subsidiaries consolidated - (000's
omitted, except for per unit data)
Year Ended June 30
-----------------------------------
1996 1995 1994
-------- -------- --------
Revenues $64,780 $52,325 $44,583
Costs and expenses 48,830 51,810 38,178
Interest income (expense), net 1,788 (2,567) (1,665)
Net revenue from league expansion 7,114
Net proceeds from life insurance 5,592
Net realized and unrealized gains (losses) from
marketable securities (101) 110 (3,595)
----------------------------------
Income from continuing operations before income taxes 17,637 5,172 6,737
Provision for (benefit from) income taxes 1,850 (345) (600)
----------------------------------
Income from continuing operations 15,787 5,517 7,337
Income (loss) from discontinued operations 83 10,639 2,145
Gain on disposal of discontinued operations 38,331 14,284
---------------------------------
Net income $54,201 $16,156 $23,766
=================================
Income from continuing operations applicable to
Limited Partners $15,437 $ 5,396 $ 7,124
Net income applicable to Limited Partners $52,910 $15,545 $23,126
Per unit:
Income from continuing operations per unit $2.59 $0.84 $1.11
Net income per unit $8.89 $2.43 $3.61
Distributions Declared to BCLP unitholders: $1.50 $3.00 $1.25
Cash distributions to Boston Celtics Communications
Limited Partners (the purchase price of BCCLP units)
13
Balance Sheet Data:
June 30
------------------------------------
1996 1995 (1) 1994 (1)
-------- -------- --------
Current assets $135,903 $186,101 $ 79,492
Current liabilities 40,289 126,010 23,289
Total assets 145,233 210,655 102,933
Program broadcast rights payable - noncurrent portion 9,062 8,566
Deferred revenues-noncurrent portion 700 1,440
Deferred federal and state income taxes - noncurrent
portion 20,100 6,000 2,900
Long-term debt - noncurrent portion 50,000 60,000 60,000
Deferred compensation - noncurrent portion 11,750 14,850 18,248
Other noncurrent liabilities 5,875 4,024 850
Minority interest in Boston Celtics Broadcasting Limited
Partnership 4,989 1,909
Partners' capital (deficit) 16,520 (15,720) (12,829)
<FN>
- -------------------
<F1> Balance sheet captions at June 30, 1995, 1994, 1993, and 1992 include
amounts pertaining to discontinued operations. Total assets as shown in the
table above include assets from discontinued operations of $52,893 in 1995,
$39,855 in 1994, $36,524 in 1993 and $43,422 in 1992. Long-term
obligations, which include program broadcast rights payable - noncurrent
portion and long-term debt - noncurrent portion as shown in the table
above, include amounts pertaining to discontinued operations of $19,062 in
1995, $18,566 in 1994, $22,994 in 1993 and $36,493 in 1992.
</FN>
14
Boston Celtics Limited Partnership and subsidiaries consolidated -
(000's omitted, except for per unit data)
Year Ended June 30
--------------------
1993 1992
------- -------
Revenues $47,559 $45,652
Costs and expenses 36,278 37,797
Interest income (expense), net (982) (135)
Net revenue from league expansion
Net proceeds from life insurance
Net realized and unrealized gains (losses) from
marketable securities 79
--------------------
Income from continuing operations before income taxes 10,378 7,720
Provision for (benefit from) income taxes
--------------------
Income from continuing operations 10,378 7,720
Income (loss) from discontinued operations (5,150) (6,642)
Gain on disposal of discontinued operations
--------------------
Net income $ 5,228 $ 1,078
====================
Income from continuing operations applicable to
Limited Partners $10,214 $ 7,643
Net income applicable to Limited Partners $ 5,157 $ 1,149
Per unit:
Income from continuing operations per unit $1.59 $1.19
Net income per unit $0.80 $0.18
Distributions to BCLP unitholders: $1.25 $2.25
Cash distributions to Boston Celtics Communications
Limited Partners (the purchase price of BCCLP units) $2.40
15
Balance Sheet Data:
June 30
----------------------
1993 (1) 1992 (1)
-------- --------
Current assets $50,976 $29,819
Current liabilities 18,809 21,722
Total assets 73,347 56,058
Program broadcast rights payable - noncurrent portion 3,434 5,683
Deferred revenues-noncurrent portion
Deferred federal and state income taxes - noncurrent
portion
Long-term debt - noncurrent portion 69,560 30,810
Deferred compensation - noncurrent portion 9,760 8,828
Other noncurrent liabilities
Minority interest in Boston Celtics Broadcasting Limited
Partnership Partners capital (deficit) (28,126) (10,985)
<FN>
- -------------------
<F1> Balance sheet captions at June 30, 1995, 1994, 1993, and 1992 include
amounts pertaining to discontinued operations. Total assets as shown in the
table above include assets from discontinued operations of $52,893 in 1995,
$39,855 in 1994, $36,524 in 1993 and $43,422 in 1992. Long-term
obligations, which include program broadcast rights payable - noncurrent
portion and long-term debt - noncurrent portion as shown in the table
above, include amounts pertaining to discontinued operations of $19,062 in
1995, $18,566 in 1994, $22,994 in 1993 and $36,493 in 1992.
</FN>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
- --------------------------------------------------------------------------------
General
Consolidated Income from Continuing Operations of Boston Celtics
Limited Partnership and its Subsidiaries for the year ended June 30, 1996 was
$15,787,000 or $2.59 per unit on revenues of $64,780,000 and Consolidated Net
Income was $54,201,000 or $8.89 per unit compared with Consolidated Income from
Continuing Operations of $5,517,000 or $0.84 per unit on revenues of $52,325,000
and Consolidated Net Income of $16,156,000 or $2.43 per unit during the year
ended June 30, 1995.
The Partnership reported a Consolidated Loss from Continuing Operations
and a Consolidated Net Loss for the three months ended June 30, 1996 of $767,000
or $0.13 per unit on revenues of $9,103,000 compared with Consolidated Income
from Continuing Operations of $4,403,000 or $0.67 per unit on revenues of
$9,404,000 and a Consolidated Net Income of $7,602,000 or $1.15 per unit for the
three months ended June 30, 1995.
16
The previously reported transaction between the Partnership and Fox
Television, Inc. (FTS) pursuant to which FTS acquired Boston Celtics
Broadcasting Limited Partnership (BCBLP), which owned and operated television
station WFXT, was closed on July 7, 1995. Accordingly, the income statement has
been restated for all periods presented to report the results of operations of
television station WFXT and radio station WEEI, sold on June 30, 1994, as
discontinued operations. Gains from the sale to FTS of an option to acquire a
26% interest in BCBLP ($14,640,000) and the sale of radio station WEEI
($2,794,000) are included in discontinued operations in 1994, net of applicable
income taxes ($3,150,000). The remaining gain from the sale of BCBLP to FTS
($56,101,000, net of related income taxes of $17,770,000) was included in income
from discontinued operations in July 1995 when realized.
Income from continuing operations for the year ended June 30, 1996
includes increased revenues from ticket sales ($13,213,000) as a result of the
increased seating capacity of the FleetCenter arena which opened for the 1995-96
basketball season. Income from continuing operations for the year ended June 30,
1995 includes league expansion revenue ($7,114,000), increased player
compensation ($8,965,000) and increased net interest expense ($1,000,000).
Income from continuing operations for the three months ended June 30,
1995 includes $7,114,000 in non-recurring income from league expansion and
$1,217,000 in non-recurring playoff net income. Excluding these items,
continuing operations for the three months ended June 30, 1995 would have
resulted in a loss of $3,928,000 as compared to a loss from continuing
operations of $767,000 for the three months ended June 30, 1996. The reduction
in the loss is primarily the result of increased revenues from ticket sales
($1,687,000) as a result of the increased seating capacity of the FleetCenter
arena which opened for the 1995-96 basketball season.
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 expense is
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.
The operations and financial results of the Boston Celtics are
seasonal. On a cash flow basis, the Boston Celtics receive a substantial portion
of their receipts from the advance sale of season tickets during the months of
June through October, prior to the commencement of the NBA regular season. Cash
receipts from playoff ticket sales are received in March of any year for which
the team qualifies for league playoffs. Most of the Boston Celtics' operating
expenses are incurred and paid during the regular season, which extends from
early November through late April.
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 its playoff revenue, if any, in the fourth quarter.
17
Results of Operations
The following discussion compares results of continuing operations of
the Partnership and its subsidiaries for the year ended June 30, 1996 compared
with the year ended June 30, 1995 and for the year ended June 30, 1995 compared
with the year ended June 30, 1994.
Revenues from regular season ticket sales increased by $13,213,000 or
60% in fiscal 1996 compared to 1995 and by $1,798,000 or 9% in fiscal 1995
compared to 1994. The increase in 1996 resulted primarily from the move to the
FleetCenter arena which has an increased seating capacity of approximately 4,400
seats as compared to the Boston Garden.
The increase in 1995 resulted primarily from an increase in ticket prices.
Regular season television and radio rights fees revenues increased by
$1,116,000 or 5% in fiscal 1996 compared to 1995 and $1,788,000 or 9% in fiscal
1995 compared to 1994. The increases are primarily the result of increases in
the NBA's national broadcasting contracts.
Other, principally promotional advertising revenues was flat in fiscal
1996 as compared to 1995 and increased by $2,242,000 or 43% in fiscal 1995
compared to 1994. The increase in fiscal 1995 is principally due to increased
revenues from promotional activities ($1,721,000) and increased proceeds
received from NBA properties from the licensing of novelty type products
($554,000).
There were no playoff games played by the Boston Celtics in the 1995-96
season, accordingly, there were no playoff revenues or expenses in fiscal 1996.
The Boston Celtics played two home playoff games in fiscal 1995 which resulted
in $1,913,000 of revenue. Playoff revenues vary from year to year depending on
the number of home games played and the availability of such games for local
television broadcast, and playoff expenses vary depending on the number of games
played.
Team expenses decreased by $3,312,000 or 11% in fiscal 1996 compared to
fiscal 1995 primarily as a result of decreased player compensation ($3,311,000)
as a result of changes in team player personnel. Team expenses increased by
$8,735,000 or 39% in fiscal 1995 compared to fiscal 1994 primarily as a result
of increased player compensation ($8,965,000).
Game expenses, primarily arena rental payments and the NBA assessment
on gate receipts, decreased by $274,000 in fiscal 1996 compared to 1995
primarily as a result of the elimination of arena rental expense (a reduction of
$1,146,000 from fiscal 1995) partially offset by an increase in NBA assessments
due to the increased ticket revenues ($635,000). Game expenses increased by
$119,000 or 4% in fiscal 1995 compared to 1994 primarily as a result of
increased NBA assessments ($111,000) due to the increase in ticket revenues in
fiscal 1995.
Basketball playoff expense was $696,000 in fiscal 1995, primarily
expenses related to the two home games played. There were no playoff games
played in fiscal 1996 or 1994.
18
General and administrative expenses increased $967,000 or 7% in fiscal
1996 compared to 1995 and $2,782,000 or 25% in fiscal 1995 compared to 1994. The
increase in fiscal 1996 is primarily attributable to increased professional,
consulting and legal expenses ($1,076,000), increased administrative salaries
($1,184,000) and increased management fees ($219,000) partially offset by
reduced expense related to certain options to acquire units of partnership
interest($1,322,000). The increase in fiscal 1995 is primarily attributable to
increased expense related to certain options to acquire units of partnership
interest($2,324,000) and increased administrative salaries ($584,000).
Selling and promotional expenses increased $281,000 or 10% in fiscal
1996 compared to 1995 and $1,296,000 or 93% in fiscal 1995 compared to 1994. The
increase in 1996 compared to 1995 is primarily attributable to increased net
sponsorship costs. The increase in fiscal 1995 compared to 1994 is primarily
attributable to increased promotional and sponsorship costs ($740,000) and
increased salary costs ($476,000).
Total depreciation increased $55,000 or 63% in fiscal 1996 compared to
1995 and $3,000 or 4% in fiscal 1995 compared to 1994. The increases in 1996 and
1995 are primarily attributable to additional depreciation related to additions
to property and equipment and leasehold improvements in leased office space and
at the FleetCenter.
Interest expense decreased $2,687,000 or 30% in fiscal 1996 compared to
1995 and increased $5,061,000 or 126% in fiscal 1995 compared to 1994. The
decrease in 1996 is a result of the payment of an $85,000,000 borrowing in July
1995 (reduction of $4,562,000) partially offset by the interest expense on the
notes issued on the redemption of partnership units ($2,009,000). The increase
in fiscal 1995 was primarily attributable to increased borrowings ($4,658,000 in
1995). In addition, the 1995 increase included the effect of an increase in
interest rates ($359,000).
The Partnership had interest income of $8,175,000 and $6,508,000 in
fiscal 1996 and 1995, respectively. Interest income increased $1,667,000 or 26%
in fiscal 1996 compared to 1995 and $4,160,000 or 177% in fiscal 1995 compared
to 1994. The increases are attributable to interest earned on the short-term
investment of larger amounts of available funds.
Liquidity and Capital Resources
At June 30, 1996 the Partnership had approximately $5,982,000 of cash
and cash equivalents, $46,764,000 of marketable securities and $78,723,000 of
other short-term investments. In addition to these amounts, sources of funds
available to the Partnership include funds generated by operations and capital
contributions from partners. These resources will be used to repay commercial
bank borrowings and notes related to redeemed partnership units (see Note O of
notes to consolidated financial statements) and for general partnership
purposes, working capital needs or for possible investments and/or acquisitions.
The management of the General Partner from time to time reviews and evaluates
investment and acquisition opportunities on behalf of the Partnership and
investments and/or acquisitions may be made or consummated by the General
Partner, on behalf of the Partnership, at such times and upon such prices and
other terms as the General Partner deems to be in the best interests of the
Partnership and all of its Unitholders.
19
During the year ended June 30, 1996, a cash distribution of $1.50 per
Unit was paid to the Unitholders of BCLP. Future distributions will be
determined by the General Partner based among other things on available
resources and the needs of the Partnership. 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 June 30, 1997.
Item 8. Financial Statements and Supplementary Data
- ----------------------------------------------------
See Item 14.
PART III
Item 10. Directors and Executive Officers of the Registrant
- -----------------------------------------------------------
General Partner
The General Partner of the Partnership is Celtics, Inc., a Delaware
corporation organized in 1986 (the "General Partner") which is wholly owned by
Walcott Partners, L.P., a Gaston family partnership, and Paul R. Dupee, Jr. The
Partnership's activities are managed and controlled by the General Partner.
The General Partner of CLP is Boston Celtics Corporation (the
"Basketball General Partner"). Paul E. Gaston, Don F. Gaston (Paul Gaston's
father) and Paul R. Dupee, Jr. are the sole stockholders of the Basketball
General Partner. CLP's activities are managed and controlled by the Basketball
General Partner.
The General Partner of BCCLP is Celtics Communications, Inc. (the
"General Partner of the Broadcast Operations"). Paul E. Gaston, Don F. Gaston
and Paul R. Dupee, Jr. are the sole stockholders of the General Partner of the
Broadcast Operations. Prior to their sale, the Broadcast Operations' activities
were managed and controlled by the General Partner of the Broadcast Operations.
The interest of Alan Cohen in Celtics, Inc. was acquired by Walcott
Partners L.P. and his interests in Boston Celtics Corporation and Celtics
Communications, Inc. were acquired by Paul E. Gaston on August 30, 1995. See
Note O of Notes to Consolidated Financial Statements for a description of these
redemptions.
Management fee obligations of $1,565,000, $2,334,000 and $2,873,942
applicable to Boston Celtics Corporation, general partner of CLP, and Celtics
Communications, Inc., general partner of BCCLP and BCBLP were charged to
operations during the years ended June 30, 1996, 1995, and 1994, respectively.
Boston Celtics Corporation receives a management fee of $750,000 per annum
subject to annual increases based on annual cash flows from basketball
operations after June 30, 1989. Celtics Communications, Inc. received management
fees from BCCLP (as a result of revenues generated by Radio Station WEEI
AM-590)and BCBLP based on 2% percent of sales until these operations were sold
in the years ended June 30, 1994 and 1996.
20
In accordance with the partnerships' partnership agreements, each item
of income, gain, loss and deduction is allocated and distributions are made to
the partners and Unitholders in accordance with their respective percentage
interests (excluding earnings of subsidiary corporate entities which are taxed
directly).
Directors and Executive Officers
The following table sets forth, for each of the directors and
executive officers of the General Partner, and certain officers of the
Basketball Subsidiary Partnership, his or her principal occupation, age and
business experience during the past five years. All of the directors and
officers are U.S. citizens and the business address of each is c/o Boston
Celtics Limited Partnership, 151 Merrimac Street, Boston, Massachusetts 02114.
Name Age Position
- ----------------------- --- ----------------------------------------------
Paul E. Gaston 39 Chairman of the Board
Paul R. Dupee, Jr. 53 Vice-Chairman of the Board
Stephen C. Schram 39 Director and President
Thomas M. Bartlett, Jr. 70 Executive V.P., Chief Financial Officer,
Treasurer and Director (Retired effective
June 30, 1996)
Richard G. Pond 36 Executive Vice President, Chief Financial
Officer, Treasurer, Controller and Secretary
Don F. Gaston 62 Director
Paula B. Gaston 62 Director
John H.M. Leithead 39 Director
John B. Marsh, III 39 Director
Arnold "Red" Auerbach 79 President of the Basketball Subsidiary
Partnership
Michael L. "ML" Carr 44 Executive Vice President of Basketball
Operations of the the Basketball Subsidiary
Partnership
Jan Volk 49 Executive Vice President and General Manager
of the Basketball Subsidiary Partnership
Stuart Layne 42 Executive Vice President of Marketing and
Sales of the Basketball Subsidiary Partnership
The General Partner has an Audit Committee composed of Mr. Leithead
and Mr. Marsh, independent directors and Mr. Paul Gaston. The independent
directors will be reimbursed for their expenses, and will receive directors'
fees equal to $1,000 per month and $2,500 per meeting attended with respect to
their services as directors of the General Partner. Messrs. Leithead and Marsh
received $14,500 each in directors' fees in fiscal 1996. Directors are named by
the stockholders of the general partner and serve until their successors are
named. The General Partner's officers are appointed by, and serve at the
discretion of, the Board of Directors.
21
Mr. Paul E. Gaston succeeded his father, Don F. Gaston, as Chairman of
the Board of the CLP General Partner in September 1993. He became Chairman of
the Board of the General Partner of the Partnership in December 1992 and had
been a Director since September 1992. Upon its formation in November 1992, he
became Managing Director of Walcott Partners Limited Partnership, a Gaston
family partnership whose investments include limited partnership interests in
the Partnership and shares in Celtics, Inc., the General Partner of the
Partnership. From inception in 1990 to June 1992 he was Co-chairman and since
June 1992 has been Chairman of the Board of Directors of Celtics Communications,
Inc., the general partner of Boston Celtics Communications Limited Partnership.
Mr. Paul E. Gaston is the son of Don F. and Paula B. Gaston.
Mr. Dupee became Vice-Chairman of the Board of Directors of Boston
Celtics Incorporated in September 1983 and has served as a Director of the BCCLP
General Partner since its inception in 1990. Mr. Dupee was Chairman of the Board
of London Investment Trust, PLC, a large international futures and options
brokering and clearinghouse from 1987 to January 1988. Mr. Dupee was President
of Providence Capitol, Ltd. from 1982 until its liquidation in December 1986.
Prior thereto, he was associated with Gulf & Western Industries, Inc., most
recently as a Vice President and President of its Providence Capitol Division.
Since 1986, Mr. Dupee has been a private investor.
Mr. Schram was named President and became a Director of the General
Partner of the Partnership in December 1992. He became President and Director of
the BCCLP General Partner in August 1992. From 1984 to 1991, Mr. Schram was a
Vice President of the Fixed Income Securities Division of Morgan Stanley & Co.
Mr. Bartlett was named Executive Vice President and became a Director
of the General Partner of the Partnership in December 1992. He has been a
financial consultant, primarily to BCLP and to the Principal BCLP Holders, since
January 1986 and has served as a Director of BCCLP General Partner since it
inception in 1990. From October 1972 to December 1985, he was associated with
Gulf & Western Industries, Inc., a diversified manufacturing, services and
entertainment company, most recently as a Vice President. Prior to October 1972,
he was a senior audit manager with the international accounting firm of Price
Waterhouse. Effective June 30, 1996, Mr. Bartlett retired from his positions as
Executive Vice President, Chief Financial Officer, Treasurer and Director.
Mr. Pond was named Vice President, Controller and Secretary of the
General Partner of the Partnership in December 1992. He has been employed by
BCLP since July 1992. From July 1981 to June 1992, he was with the international
accounting firm of Ernst & Young, most recently as a senior audit manager.
Effective July 1, 1996, with the retirement of Mr. Bartlett, Mr. Pond assumed
his responsibilities as Executive Vice President, Chief Financial Officer,
Treasurer and Secretary.
22
Mr. Don F. Gaston has served as a Director of the General Partner's of
BCLP and CLP since his resignation as Chairman of the Board of BCLP in December
1992 and CLP in September 1993. He was succeeded in each of these positions by
his son, Paul E. Gaston. He became Chairman of the Board of Directors of Boston
Celtics Incorporated in September 1983 when he, together with Messrs. Cohen and
Dupee, acquired the Boston Celtics Franchise. He has served as a Director of the
BCCLP General Partner since its inception in 1990. Mr. Gaston was Chairman of
the Board of Providence Capitol, Ltd. from July 1982 until its liquidation in
December 1986. From 1962 to June 1982, he was associated with Gulf & Western
Industries, Inc. in various capacities, including Executive Vice President,
director and member of the Executive Committee. Mr. Gaston is the husband and
father respectively, of Paula B. Gaston and Paul E. Gaston.
Mrs. Paula B. Gaston became a Director of the General Partner of BCLP
in September 1992 and a Director of the General Partner of CLP in October 1992.
She is a private investor and is the wife of Mr. Don F. Gaston and the mother of
Paul E. Gaston.
Mr. Leithead became a Director of the BCLP General Partner in October
1992. Mr. Leithead worked for International Business Machines Corporation as an
executive in the National Marketing Division from 1979 to 1985. From 1985 to
1993, he was an executive of R.R. Donnelley & Sons Company. Since September 1993
he has been employed as an executive at Arandell Schmidt.
Mr. Marsh became a director in September 1992. From 1985 to 1988 Mr.
Marsh was a Vice President in the international arbitrage department of Merrill
Lynch Pierce Fenner and Smith. From 1988 to 1991 he was a Vice President at
Duetsche Bank Capital Corporation where he headed an international arbitrage
securities trading group. From 1991 to 1995, he was Chief Executive Officer and
President of Saicor Ltd., an investment banking firm specializing in emerging
markets. Currently, Mr. Marsh is a Director of Trading and Sales with ABSA
Securities, Inc., where he is an investment banker specializing in emerging
markets.
Mr. Auerbach has been President of the Boston Celtics basketball
operations since 1981. From 1950 to 1966, Mr. Auerbach was head coach of the
Boston Celtics and, during that period, the Boston Celtics won the NBA
championship 11 times. Mr. Auerbach was General Manager of Boston Celtics
Incorporated, or its predecessors, from 1966 to 1983. Mr. Auerbach has been
inducted into the Basketball Hall of Fame.
Mr. Carr was named Executive Vice President of Basketball Operations
of the Basketball subsidiary Partnership on June 16, 1994 and coach of the
Boston Celtics in June 1995. Since 1987 he has owned and operated various
businesses. In 1992 he was named Executive Director of Community Affairs for the
Boston Celtics. Mr. Carr played professional basketball from 1973 to 1985. From
1979 through 1985 he played for the Boston Celtics.
Mr. Volk has been associated with the Boston Celtics basketball
operations since 1971 and has been Executive Vice President and General Manager
since 1984. He was Assistant General Manager from 1981 to 1984 and General
Counsel from 1974 to 1984. From 1971 to 1974, Mr. Volk was Director of Sales.
23
Mr. Layne has been with the Boston Celtics basketball operations since
March 1994. He was named Executive Vice President of Marketing and Sales in May
1995. From March 1994 to May 1995 Mr. Layne was Vice President of Planning and
Special Events. Prior to joining the Boston Celtics, Mr. Layne was with the
Seattle Mariners professional baseball team as its Vice President of Marketing
for four years, and he previously worked in broadcasting with CBS and Emmis
Broadcasting for eleven years.
Section 16(a) Beneficial Ownership Reporting Compliance
- -------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations promulgated thereunder, require executive
officers and directors of CI, the general partner of BCLP, to file reports
pertaining to their beneficial ownership of the Units of BCLP with the
Securities and Exchange Commission and the New York Stock Exchange when they are
first elected, and to report (with certain exceptions) subsequent changes in
their beneficial ownership of Units. In February 1994, each of the three (3)
minor children of Paul E. Gaston, Chairman of the Board of CI, acquired 1,000
Units each (for an aggregate of 3,000 Units) of BCLP. In addition, in April of
1996, Mr. Gaston, his wife, and each of his three (3) minor children acquired
1,000 Units each (for an aggregate of 5,000 Units) of BCLP. Mr. Gaston filed
late two (2) Form 4s reporting the aforementioned acquisitions of the Units of
BCLP. In each case, the failure to make any filings required on Form 4 on a
timely basis was inadvertent.
Item 11. Executive Compensation
- --------------------------------
The following Summary Compensation Table sets forth the compensation
of each of the Chief Executive Officer and the four most highly compensated
executive officers of the Partnership whose annual salary and bonus, if any,
exceeded $100,000 for services in all capacities to the Partnership during the
last three fiscal years.
24
Summary Compensation Table
Annual Compensation Long Term Compensation Awards
----------------------- -----------------------------
Fiscal Restricted
Year Ended Stock Options/SARs
Name and Principal Position June 30, Salary ($) Bonus ($) Awards ($) (Units)
- --------------------------------------- ---------- ---------- --------- ---------- ------------
Paul E. Gaston 1996 400,000 * * --
Chief Executive Officer and Chairman 1995 400,000 828,112 -- --
of the Board 1994 400,000 1,149,000 -- 250,000
Stephen C. Schram 1996 400,000 3,658,363 * -- --
Director and President 1995 400,000 828,112 -- --
1994 400,000 1,149,000 -- 250,000
Thomas M. Bartlett, Jr. 1996 300,000 150,000 -- --
Executive Vice President, Chief 1995 300,000 150,000 -- --
Financial Officer, and Treasurer 1994 250,000 125,000 -- 30,000
Arnold "Red" Auerbach 1996 250,000 100,000 -- --
President of the Basketball Subsidiary 1995 250,000 100,000 -- --
Partnership 1994 250,000 -- -- --
M.L. Carr 1996 1,000,000 -- -- --
Executive Vice President of Basketball 1995 500,000 -- -- --
Operations 1994 40,000 -- -- --
Jan Volk 1996 371,000 -- -- --
Executive Vice-President and General 1995 346,000 -- -- --
Manager 1994 321,000 -- -- --
<FN>
- -------------------
<F1> * On June 28, 1996, the annual incentive payment arrangements between BCLP
and Messrs. Gaston and Schram were modified to permit each of them to elect
to acquire Units of BCLP which contain certain significant restrictions as
to vesting and transferability (hereinafter the "Restricted Units") in lieu
of cash payment. Mr. Gaston elected to receive Restricted Units in lieu of
the $3,658,363 cash incentive compensation payment to which he was
entitled. Mr. Gaston did not receive a cash bonus for the year ended June
30, 1996. Mr. Schram elected to receive his payment in cash. Based upon a
written report received from an independent employee benefits consultant
regarding the appropriate discount to be applied, the Audit Committee of
the Board of Directors of CI awarded 234,886 Restricted Units to Mr.
Gaston. Mr. Gaston, who is a member of the Audit Committee, was recused
from and did not participate in any of the Audit Committee's deliberations
pertaining to this matter.
25
Aggregated Option Exercises and Option Values
Paul E. Gaston Stephen C. Schram Thomas M. Bartlett, Jr.
-------------- ----------------- -----------------------
Shares acquired on exercise (num)
none none none
Number of unexercised options at year end (num) (1):
Exercisable 200,000 200,000 30,000
Unexercisable 50,000 50,000 none
Value of unexercised in the money options at year
end ($) (2):
Exercisable 2,350,000 2,350,000 352,500
Unexercisable 587,500 587,500 none
<FN>
- -------------------
<F1> Options for 500,000 units become exercisable in installments as follows:
</FN>
Aggregate Amount of
Period Option Exercisable
- --------------------------------- -------------------
June 30, 1994 - June 29, 1995 1%
June 30, 1995 - June 29, 1996 60%
June 30, 1996 - June 29, 1997 80%
June 30, 1997 - December 31, 2003 100%
Options for the remaining 30,000 units became exercisable June 30, 1995.
<FN>
- -------------------
<F2> Represents the difference between the market price on June 30, 1996 and the
exercise price on that date.
</FN>
26
Employment and Consulting Agreements
The Partnership
In August 1993, the Board of Directors of the General Partner of BCLP
approved compensation arrangements and incentive plans for Paul E. Gaston,
Chairman of the Board and Stephen C. Schram, President, respectively, of the
Partnership. Mr. Gaston and Mr. Schram shall each be employed on an at will
basis, with compensation at the rate of $400,000 per annum. The incentive plan,
which is subject to annual review, provides that each of Mr. Gaston and Mr.
Schram shall receive annual incentive payments, commencing with the fiscal year
ending June 30, 1994, of 5% of the amount by which Consolidated Net Income
before taxes on income of BCLP for the related fiscal year exceeds $8,000,000,
payable not later than 10 days after the issuance of audited financial
statements of BCLP. During the years ended June 30, 1995 and 1994, annual
incentive compensation payments in the amounts of $828,000 and $749,000,
respectively, were made to Messrs. Gaston and Schram. As previously noted in the
asterisk (*) footnote to the Summary Compensation Table supra, for the year
ended June 30, 1996, Mr. Gaston did not receive a cash incentive compensation
payment, but rather elected to receive an aggregate award of 234,866 Restricted
Units of BCLP. Mr. Schram elected to receive his $3,658,363 incentive
compensation payment for the year ended June 30, 1996 in cash.
Under an agreement dated July 1, 1996, Thomas M. Bartlett, Jr. agreed
to serve as a consultant to BCLP from July 1, 1996 through June 30, 2001. In
return for Mr. Bartlett's services, he will receive an annual retainer of
$200,000 payable in equal quarterly installments commencing July 1, 1996.
The Basketball Operations
Under an agreement dated as of March 13, 1981, as amended, Red
Auerbach has been retained to serve as a consultant to the Boston Celtics for
the remainder of his life. For such services, Mr. Auerbach will receive
compensation totaling $250,000 per year for his lifetime. In fiscal 1996 and
1995, Mr. Auerbach received bonus payments of $100,000. In the event of Mr.
Auerbach's death, his wife shall be entitled to receive for the balance of her
life monthly payments equal to those that would have otherwise been paid to Mr.
Auerbach. Mr. Auerbach shall advise the Boston Celtics with respect to, among
other things, the team's selections in the NBA college draft, evaluation of
college and professional players and the performance of the team and the players
for as long as he is physically able to perform such services.
Under an agreement dated June 19, 1995, Michael L. (M. L.) Carr agreed
to serve as Coach of the Boston Celtics and Executive Vice President of
Basketball Operations of the Basketball Subsidiary through June 30, 1999 at an
annual salary of $1,000,000.
Under an agreement dated June 1, 1990, as amended September 21, 1994,
David R. Gavitt agreed to serve as a consultant to the Basketball Subsidiary
through May 31, 1998. In return for Mr. Gavitt's services, he will receive an
annual salary at the rate of $300,000 through June 1997, $200,000 through June
1998, $100,000 through June 2000 and $50,000 through June 2001.
Under the terms of an agreement effective as of July 1, 1995, Mr. Volk
agreed to serve as General Manager of the Boston Celtics basketball operations
through June 30, 1998 at a salary of $375,000 in fiscal 1996, rising to $425,000
in fiscal 1998.
27
Under the terms of an agreement dated August 30, 1995, Alan Cohen
agreed to serve as a consultant for the Basketball Subsidiary through August 30,
1998 at an annual retainer fee of $260,000.
Item 12. Security Ownership of Certain Beneficial Owners and Management
- -----------------------------------------------------------------------
The following table sets forth certain information regarding the
Partnership's Units beneficially owned on September 20, 1995 by (i) each person
who is known by the Partnership to beneficially own more than five percent (5%)
of the outstanding Units, by (ii) each director of the General Partner, by (iii)
each executive named in the Summary Compensation Table and by (iv) all directors
and officers of the General Partner as a group. All information with respect to
beneficial ownership has been furnished by the respective Unitholders to the
Partnership.
Percent of
5% Unitholders, Number Outstanding
Directors and Officers of Units Units (1)
- --------------------------------- ------------ -----------
Don F. Gaston and Paula B. Gaston 723,885(2) 12.2%
33 East 63rd Street
New York, New York 10021
Paul R. Dupee, Jr. 780,000(4) 13.4
10 Wilton Row
London, England
Paul E. Gaston 1,762,886(3) 29.4
33 East 63rd Street
New York, New York 10021
Stephen C. Schram 200,900(5) 3.3
33 East 63rd Street
New York, New York 10022
Thomas M. Bartlett, Jr. 30,000(5) --
151 Merrimac Street
Boston, Massachusetts 02114
Arnold "Red" Auerbach 5,000 --
151 Merrimac Street
Boston, Massachusetts 02114
Jan Volk 2,500 --
151 Merrimac Street
Boston, Massachusetts 02114
David R. Murphey, III 493,200 8.3
Murphey Capital, Inc.
P.O. Box 18065
Tampa, Florida 33681-8065
28
All directors and officers as a
group (9 persons) 3,075,171 52.8
<FN>
- -------------------
<F1> Percent of Outstanding Units for a particular Unitholder will be greater
than such Unitholder's percentage interest in the Partnership, due to the
1% interest in the Partnership held by the General Partner.
<F2> Includes 320,000 Units held by Brookwood Investments Limited Partnership, a
partnership owned by Don F. and Paula B. Gaston of which Don F. Gaston is
the General Partner.
<F3> Includes 1,320,000 Units held by Walcott Partners L. P., a Gaston family
partnership, 200,000 units issuable upon exercise of options which are
currently exercisable or become exercisable within a 60 day period after
September 20, 1996 and 234,886 restricted units issued June 28, 1996. The
General Partner of Walcott Partners L. P. is Draycott, Inc. wholly owned by
Paul E. Gaston who is the only officer and director. For the purpose of
this table, Mr. Paul E. Gaston is deemed to be the beneficial owner of
these Units.
<F4> Includes 320,000 Units held by Westbury Partners L. P., a partnership in
which Paul R. Dupee Jr. is the 99% General Partner.
<F5> Represents units issuable upon exercise of options which are currently
exercisable or become exercisable within a 60 day period after September
20, 1996.
</FN>
Unless otherwise indicated, all parties have both exclusive voting and
investing power.
Item 13. Certain Relationships and Related Transactions
- -------------------------------------------------------
In 1996, the Partnership reimbursed a subsidiary of Walcott Partners
Limited Partnership ("Walcott") $240,896 for the business use since 1994 of an
aircraft based on standard charter rates for comparable aircraft. Walcott is a
Gaston family partnership. Paul E. Gaston is the Managing Director of Walcott.
The reimbursement was reviewed and approved by the Audit Committee of the Board
of Directors of CI, which is the general partner of BCLP. Paul E. Gaston, who is
a member of the Audit Committee, was recused from and did not participate in any
of the Audit Committee's deliberations pertaining to this matter.
29
PART IV
Item 14. Exhibits, and Reports on Form 8-K
- ------------------------------------------
(a) The following documents are filed as part of this report:
1. Financial Statements:
The financial statements listed in the accompanying List of Financial
Statements and Financial Statement Schedules are filed as part of this
report.
2. Exhibits:
The Exhibits listed below are filed as part of this report.
(3) (a) -- Certificate of Limited Partnership of Boston
Celtics Limited Partnership, as amended(1)
(b) -- Agreement of Limited Partnership of Boston Celtics
Limited Partnership(1)
(c) -- Certificate of Incorporation of Celtics, Inc.(1)
(d) -- By-laws of Celtics, Inc.(1)
(e) -- First Amendment to Amended and Restated Agreement
of Limited Partnership(7)
(4) (a) -- Form of Certificate of Limited Partnership
Interest(1)
(b) -- Form of Unit Certificate(1)
(c) -- Form of Eligibility Certification(1)
(10) (a) -- Form of Transfer Agent Agreement by and among
Boston Celtics Limited Partnership, The First
National Bank of Boston, N.A., Celtics, Inc.
and BC ALP, Inc.(1)
(b) -- Joint Venture Agreement by and among NBA member
organizations(1)
(c) -- Constitution and By-laws of the National Basketball
Association(1)
(d) -- Agreement dated December 20, 1985 between CBS Sports,
a division of CBS, Inc., and the NBA (confidential
treatment previously granted)(1)
30
(e) -- Agreement dated June 18, 1984, as amended on April 9,
1986, between Turner Broadcasting System, Inc. and
the NBA (confidential treatment previously granted)(1)
(f) -- Amendment dated January 19, 1988 to Agreement dated
June 18, 1984, as amended on April 9, 1986, between
Turner Broadcasting System Inc. and the NBA
(confidential treatment previously granted)(2)
(g) -- Telecast Rights Agreement, dated April 3, 1984, among
Boston Celtics Incorporated, Gannett Massachusetts
Broadcasting, Inc. and Gannett Co., Inc. (confidential
treatment previously granted)(1)
(h) -- Agreement, dated as of October 1, 1987, between
Sportschannel New England Limited Partnership and
Boston Celtics Limited Partnership (confidential
treatment previously granted)(2)
(i) -- Radio Broadcasting Rights Agreement dated October 27,
1986, between Boston Celtics Incorporated, Helen
Broadcasting Partnership Limited Partnership and Papa
Gino's of America, Inc. (confidential treatment
previously granted)(1)
(j) -- License and Lease Agreement, dated July 1, 1983,
between New Boston Garden Corporation and Boston
Celtics Incorporated (confidential treatment
previously granted)(1)
(k) -- Amendment to License and Lease Agreement dated July 1,
1983 between New Boston Garden Corporation and Boston
Celtics Incorporated(3)
(l) -- Promotional Agreement, dated as of July 1987, between
Boston Celtics Limited Partnership and The Hartford
Civic Center and Coliseum Authority (confidential
treatment previously granted)(2)
(m) -- Agreement, dated May 13, 1981, as amended, between
Arnold Auerbach and Boston Celtics Incorporated(1)
(n) -- Agreement, dated December 8, 1983, as amended, between
Jan Volk and Boston Celtics Incorporated(1)
(o) -- Form of Revolving Credit Agreement, dated as of
November 24, 1986, between Boston Celtics Limited
Partnership and the First National Bank of Boston(1)
(p) -- Collective bargaining agreement, dated as of November 1,
1988, between the NBA and the National Basketball
Players Association(4)
(q) -- Asset Purchase Agreement among Boston Celtics Broadcasting
Limited Partnership, Celtics Communications, Inc. and WFXT,
Inc. dated as of November 21, 1989, including exhibits
thereto, as amended(5)
31
(r) -- Asset Purchase Agreement by and among Boston Celtics
Acquisitions Limited Partnership, Celtics Communications,
Inc., The Helen Broadcasting Company Limited Partnership
and The Helen Broadcasting Corp. dated as of October 30,
1989, including exhibits thereto and letter agreement
dated May 11, 1990(5)
(s) -- Facility One Revolving Credit Note made by Boston Celtics
Acquisitions Limited Partnership and Boston Celtics
Limited Partnership in favor of Shawmut Bank, N.A.
dated May 11, 1990(5)
(t) -- Facility Two Revolving Credit Note made by Boston Celtics
Acquisitions Limited Partnership and Boston Celtics
Limited Partnership in favor of Shawmut Bank, N.A.
dated May 11, 1990(6)
(u) -- Revolving Credit Note made by Boston Celtics Broadcasting
Limited Partnership and Boston Celtics Limited Partnership
in favor of Shawmut Bank, N.A. dated May 11, 1990(6)
(v) -- Accommodation Fee Agreement between Boston Celtics
Limited Partnership, Boston Celtics Acquisitions Limited
Partnership, Celtics Holdings Corp. and Boston Celtics
Communications Limited Partnership dated as of
May 11, 1990(6)
(w) -- Accommodation Fee Agreement between Boston Celtics
Limited Partnership, Boston Celtics Broadcasting
Limited Partnership, Celtics Sub Corp. and Boston
Celtics Communications Limited Partnership dated as
of May 11, 1990(6)
(x) -- Revolving Credit and Term Loan Agreement among
Boston Celtics Broadcasting Limited Partnership,
Celtics Sub Corp., Boston Celtics Communications
Limited Partnership, Boston Celtics Limited Partnership
and Shawmut Bank, N.A. dated as of May 11, 1990(6)
(y) -- Revolving Credit and Term Loan Agreement among Boston
Celtics Acquisitions Limited Partnership, Celtics
Holdings Corp., Boston Celtics Communications Limited
Partnership, Boston Celtics Limited Partnership and
Shawmut Bank, N.A. dated as of May 11, 1990(6)
(z) -- Agreement dated November 29, 1989 by and between the
National Basketball Association and Turner Network
Television, Inc. (confidential treatment previously
granted)(7)
(aa) -- NBA/NBC Network Television Agreement dated November 9,
1989 by and between the National Basketball Association
and NBC Sports, a division of National Broadcasting
Company, Inc. (confidential treatment previously
granted)(7)
32
(bb) -- License/Lease Agreement dated April 4, 1990 between
Boston Celtics Limited Partnership and New Boston
Garden Corporation (confidential treatment previously
granted)(7)
(cc) -- Office Lease Agreement dated April 4, 1990 between
Boston Celtics Limited Partnership and New Boston
Garden Corporation (confidential treatment previously
granted)(7)
(dd) -- Letter Agreement dated June 1, 1990 between Boston
Celtics Limited Partnership and David R. Gavitt
(confidential treatment previously granted)(7)
(ee) -- Television Broadcasting Rights Agreement between
Boston Celtics Limited Partnership and Boston Celtics
Broadcasting Limited Partnership dated as of
July 27, 1990(7)
(ff) -- Extended, Amended and Restated Radio Broadcasting
Rights Agreement among Boston Celtics Limited Partnership
and Boston Celtics Acquisitions Limited Partnership dated
May 11, 1990(7)
(gg) -- Letter Agreement dated April 4, 1990 between the Boston
Celtics Limited Partnership and New Boston Garden
Corporation (confidential treatment requested)(7)
(hh) -- Letter Agreement regarding Demand Promissory Note made
by Boston Celtics Broadcasting Limited Partnership to
Shawmut Bank, N.A. dated February 8, 1991(8)
(ii) -- Demand Promissory Note made by Boston Celtics Broadcasting
Limited Partnership and Boston Celtics Limited Partnership,
dated as of February 11, 1991(8)
(jj) -- Agreement dated October 23, 1990 by and among Boston
Celtics Broadcasting Limited Partnership, Celtics Sub
Corp., Boston Celtics Communications Limited Partnership
and Boston Celtics Limited Partnership regarding the
effectiveness of the Stage II Television Loan Agreement(9)
(kk) -- Revolving Credit and Term Loan Agreement dated as of
November 1, 1990 by and among Boston Celtics Broadcasting
Limited Partnership, Boston Celtics Communications Limited
Partnership, Boston Celtics Limited Partnership and Shawmut
Bank, N.A.(9)
(ll) -- Revolving Credit Note dated November 1, 1990 made by Boston
Celtics Broadcasting Limited Partnership and Boston Celtics
Limited Partnership in favor of Shawmut Bank, N.A.(9)
(mm) -- Security Agreement dated November 1, 1990 by and between
Boston Celtics Broadcasting Limited Partnership and
Shawmut Bank, N.A.(9)
33
(nn) -- Guaranty dated November 1, 1990 executed by Boston Celtics
Communications Limited Partnership in favor of Shawmut
Bank, N.A.(9)
(oo) -- Agreement dated October 23, 1990 by and among Boston
Celtics Acquisitions Limited Partnership, Celtics
Holdings Corp., Boston Celtics Communications Limited
Partnership, Boston Celtics Limited Partnership and
Shawmut Bank, N.A. regarding the effectiveness of the
Stage II Radio Loan Agreement(9)
(pp) -- Revolving Credit and Term Loan Agreement dated
November 1, 1990 by and among Boston Celtics
Communications Limited Partnership, Boston Celtics
Limited Partnership and Shawmut Bank, N.A.(9)
(qq) -- Facility One Revolving Credit Note dated November 1,
1990 made by Boston Celtics Communications Limited
Partnership and Boston Celtics Limited Partnership
in favor of Shawmut Bank, N.A.(9)
(rr) -- Facility Two Revolving Credit Note dated November 1,
1990 made by Boston Celtics Communications Limited
Partnership and Boston Celtics Limited Partnership
in favor of Shawmut Bank, N.A.(9)
(ss) -- Security Agreement dated November 1, 1990 by and
between Boston Celtics Communications Limited
Partnership and Shawmut Bank, N.A.(9)
(tt) -- Amendment No. 1 to revolving Credit and Term Loan
Agreement (Radio) (Stage Two) among Boston Celtics
Communications Limited Partnership, Boston Celtics
Limited Partnership and Shawmut Bank, N.A. dated as
of April 10, 1991(9)
(uu) -- Stage Two - Radio Facility One (Amended) Revolving
Credit Note made by Boston Celtics Communications
Limited Partnership and Boston Celtics Limited
Partnership in favor of Shawmut Bank, N.A. dated
April 10, 1991(9)
(vv) -- Stage Two - Radio Facility Two (Amended) Revolving
Credit Note made by Boston Celtics Communications
Limited Partnership and Boston Celtics Limited
Partnership in favor of Shawmut Bank, N.A. dated
April 10, 1991(9)
(ww) -- Letter Agreement Relating to Security Agreement
between Boston Celtics Communications Limited
Partnership and Shawmut Bank, N.A. dated
April 10, 1991(9)
34
(xx) -- Amendment No. 1 to revolving Credit and Term Loan
Agreement (Television) (Stage Two) among Boston
Celtics Broadcasting Limited Partnership, Boston
Celtics Communications Limited Partnership, Boston
Celtics Limited Partnership and Shawmut Bank, N.A.
dated as of April 10, 1991(9)
(yy) -- Stage Two - Television (Amended) Revolving Credit
Note made by Boston Celtics Broadcasting Limited
Partnership and Boston Celtics Limited Partnership
in favor of Shawmut Bank, N.A. Dated April 10,1991(9)
(zz) -- Letter Agreement Relating to the Communications Limited
Partnership Guaranty between Boston Celtics Communications
Limited Partnership and Shawmut Bank, N.A. dated
April 10, 1991(9)
(aaa) -- Letter Agreement Relating to Security Agreement between
Boston Celtics Broadcasting Limited Partnership and
Shawmut Bank, N.A. dated April 10, 1991(9)
(bbb) -- Intercreditor Agreement among Boston Celtics Broadcasting
Limited Partnership, WFXT, Inc. and Shawmut Bank, N.A.
dated as of April 10, 1991(9)
(ccc) -- Ten-Year Convertible Subordinated Note made by Boston
Celtics Broadcasting Limited Partnership in favor of
WFXT, Inc. dated April 10, 1991(9)
(ddd) -- Letter Agreement Regarding Amendments No. 1 and 2 to
Revolving Credit and Term Loan Agreements between Boston
Celtics Communications Limited Partnership and Shawmut
Bank, N.A. dated April 10, 1991(9)
(eee) -- Amendment No. 2 to revolving Credit and Term Loan
Agreement (Radio) (Stage Two) among Boston Celtics
Communications Limited Partnership, Boston Celtics
Limited Partnership and Shawmut Bank, N.A. dated as
of April 10, 1991(9)
(fff) -- Agreement Regarding Deferral of Radio Broadcast Rights
Payments among Boston Celtics Communications Limited
Partnership, Boston Celtics Limited Partnership and
Shawmut Bank, N.A. dated as of April 10, 1991(9)
(ggg) -- Agreement No. 2 to revolving Credit and Term Loan
Agreement (Television) (Stage Two) among Boston Celtics
Broadcasting Limited Partnership, Boston Celtics
Communications Limited Partnership, Boston Celtics
Limited Partnership and Shawmut Bank, N.A. dated as
of April 10, 1991(9)
(hhh) -- Agreement Regarding Deferral of Television Broadcast
Rights Payments among Boston Celtics Broadcasting
limited Partnership, Boston Celtics Limited Partnership
and Shawmut Bank, N.A. dated as of April 10, 1991(9)
35
(iii) -- Modification Agreement Regarding Interest Rates among
Boston Celtics Broadcasting Limited Partnership, Boston
Celtics Communications Limited Partnership, Boston Celtics
Limited Partnership and Shawmut Bank, N.A. dated as of
April 10, 1991(9)
(jjj) -- Letter of Waiver and Amendment Regarding Various Loan
Agreements among Shawmut Bank, N.A., Boston Celtics
Limited Partnership, Boston Celtics Broadcasting Limited
Partnership and Boston Celtics Communications Limited
Partnership dated March 27, 1992.(10)
(kkk) -- Three year extension, dated July 6, 1992, of agreement
dated December 8, 1983, as amended, between Jan Volk
and Boston Celtics Incorporated.
(lll) -- Credit Agreement among Celtics Limited Partnership
("CLP"), Boston Celtics Limited Partnership ("BCLP")
and Shawmut Bank, N.A. ("Shawmut"), dated as of
January 21, 1993.(11)
(mmm) -- Revolving Credit Note from CLP to Shawmut, dated
as of January 21, 1993.(11)
(nnn) -- Security Agreement between CLP and Shawmut, dated
as of January 21, 1993.(11)
(ooo) -- Merger Agreement dated as of December 8, 1992 by
and among Boston Celtics Limited Partnership,
BCCLP Holding Corporation, BCCLP Acquisition Limited
Partnership and Boston Celtics Communications Limited
Partnership.(12)
(ppp) -- Second Amended and Restated Agreement of Limited
Partnership of Boston Celtics Communications Limited
Partnership dated May 6, 1993.(13)
(qqq) -- Agreement dated October 1, 1993, between Boston Celtics
Limited Partnership and Fox Television Stations, Inc.
("FTS") that provides that, subject to certain conditions,
a subsidiary of FTS would purchase an option to acquire
ownership interests in BCBLP which, together with existing
rights, could eventually result in FTS becoming the sole
owner of WFXT.(13)
(rrr) -- Financing Agreement dated October 29, 1993 by and among
Boston Celtics Communications Limited Partnership Holding
Corporation and Shawmut Bank, N.A.(14)
(sss) -- Promissory Note dated October 29, 1993 executed by BCCLP
Holding Corporation in favor of Shawmut Bank, N.A.(14)
(ttt) -- Unit Option Agreement dated December 31, 1993 by and
between Boston Celtics Limited Partnership and
Paul E. Gaston.(15)
36
(uuu) -- Unit Option Agreement dated December 31, 1993 by and
between Boston Celtics Limited Partnership and
Stephen C. Schram.(15)
(vvv) -- Unit Option Agreement dated December 31, 1993 by and
between Boston Celtics Limited Partnership and
Thomas M. Bartlett, Jr.(15)
(www) -- Financing Agreement dated September 15, 1994 between
Boston Celtics Communications Limited Partnership and
Shawmut Bank, N.A.(16)
(xxx) -- Promissory Note dated September 15, 1994 executed by
Boston Celtics Communications Limited Partnership and
Shawmut Bank, N.A.(16)
(yyy) -- Credit Agreement dated October 31, 1994 by and among
BCCLP and Shawmut Bank, N.A.(17)
(zzz) -- Assignment and Security Agreement dated October 31,
1994 by and between BCCLP and Shawmut Bank, N.A.(17)
(aaaa) -- Commercial Promissory Note between BCCLP and Shawmut
Bank, N.A.(17)
(bbbb) -- Support Agreement between BCLP and Shawmut
Bank, N.A.(17)
(cccc) -- Second Amendment To Agreement To Purchase Partnership
Interests by and among BCBLP and CCI and FTS dated
November 29, 1994.(18)
(dddd) -- Unit Redemption Agreement dated August 30, 1995 between
Boston Celtics Limited Partnership and Alan N. Cohen.(19)
(eeee) -- Unit Redemption Agreement dated August 30, 1995 between
Boston Celtics Limited Partnership and Gordon Cohen.(19)
(ffff) -- Unit Redemption Agreement dated August 30, 1995 between
Boston Celtics Limited Partnership and
Laurie Cohen-Fenster.(19)
(gggg) -- Promissory Note dated August 1, 1995 by BCLP to
Alan N. Cohen.(19)
(hhhh) -- Promissory Note dated August 1, 1995 by BCLP to
Alan N. Cohen.(19)
(iiii) -- Consulting Agreement dated August 30, 1995 between
Celtics Limited Partnership and Alan N. Cohen.(19)
(jjjj) -- Press Release dated August 30, 1995.(19)
(kkkk) -- Restricted Unit Agreement dated June 28, 1996
between Boston Celtics Limited Partnership and
Paul E. Gaston.
37
(llll) -- Letter from Paul Gaston electing to accept all
incentive compensation for 1996 in restricted units.
(mmmm) -- Consulting agreement dated July 1, 1996 between
Boston Celtics Limited Partnership and
Thomas M. Bartlett Jr.
(11) Statement Re: Computation of Earnings Per Unit
for the years ending June 30, 1996, 1995 and 1994
<FN>
- -------------------
<F1> Incorporated by reference from the exhibits filed with the Partnership's
registration statement on Form S-1 filed under the Securities Act of 1933
(File No. 33-9796).
<F2> Incorporated by reference from exhibits filed with the Partnership's report
on Form 10-K filed with the Securities and Exchange Commission for the year
ended June 30, 1987.
<F3> Incorporated by reference from exhibits filed with the Partnerships' report
on Form 10-K filed with the Securities and Exchange Commission for the year
ended June 30, 1988.
<F4> Incorporated by reference from exhibits filed with the Partnership's report
on Form 10-K filed with the Securities and Exchange Commission for the year
ended June 30, 1989.
<F5> Incorporated by reference from the exhibits filed with the Partnership's
Current Report on Form 8-K filed with the Securities and Exchange
Commission on May 24, 1990.
<F6> Incorporated by reference from the exhibits filed with the Registration
Statement on Form S-1 of Boston Celtics Communications Limited Partnership
and the Partnership filed under the Securities Act of 1933 (File No.
33-34768).
<F7> Incorporated by reference from the exhibits filed with the Report on Form
10-K of the Registrant filed with the Securities and Exchange Commission
for the year ended June 30, 1990.
<F8> Incorporated by reference from the exhibits filed with the Report on Form
10-K of Boston Celtics Communications Limited Partnership filed with the
Securities and Exchange Commission for the year ended December 31, 1990.
<F9> Incorporated by reference from the exhibits filed with Boston Celtics
Communications Limited Partnership's report on Form 8 filed with the
Securities and Exchange Commission on April 15, 1991.
<F10> Incorporated by reference to the exhibits filed with Boston Celtics
Communications Limited Partnership report on Form 10-K filed with the
Securities and Exchange Commission on April 15, 1992.
<F11> Incorporated by reference to the exhibits filed with the report on Form 8-K
filed with the Securities and Exchange Commission on January 22, 1993 (File
No. 0-19324).
38
<F12> Incorporated by reference to the exhibits filed with the Boston Celtics
Communications Limited Partnership report on Schedule 13E-3 filed with the
Securities and Exchange Commission on December 9, 1992.
(b) Reports on Form 8-K filed in the fourth quarter of 1993: Form 8-K
dated May 14, 1993.
(c) Exhibits - The response to this portion of Item 14 is filed as a
part of this report.
(d) Financial Statement Schedules - The response to this portion of
Item 14 is filed as part of this report.
<F13> Incorporated by reference to the exhibits filed with the report on Form
10-K/A Amendment No. 1 filed with the Securities and Exchange Commission on
October 20, 1993 (File No. 0-19324).
<F14> Incorporated by reference to the exhibits filed with the report on Form
10-Q filed with the Securities and Exchange Commission on November 15, 1993
(File No. 0-19324).
<F15> Incorporated by reference to the exhibits filed with the report on Form
10-Q filed with the Securities and Exchange Commission on February 14, 1994
(File No. 0-19324).
<F16> Incorporated by reference to the exhibits filed with the report on Form
10-K filed with the Securities and Exchange Commission on September 28,
1994 (File No. 0-19324).
<F17> Incorporated by reference to the exhibits filed with the report on Form
10-Q filed with the Securities and Exchange Commission on November 14, 1994
(File No. 0-19324).
<F18> Incorporated by reference to the exhibits filed with the report on Form
10-Q filed with the Securities and Exchange Commission on February 14, 1995
(File No. 0-19324).
<F19> Incorporated by reference to the exhibits filed with the report on Form 8-K
filed with the Securities and Exchange Commission on August 31, 1995 (File
No. 0-19324).
</FN>
ANNUAL REPORT ON FORM 10-K
ITEM 8, ITEM 14(a)(1) and (2)(c) and (d)
LIST OF FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
CERTAIN EXHIBITS
YEAR ENDED JUNE 30, 1996
BOSTON CELTICS LIMITED PARTNERSHIP
BOSTON, MASSACHUSETTS
39
FORM 10-K -- ITEM 14(a)(1) and (2)
BOSTON CELTICS LIMITED PARTNERSHIP
LIST OF CONSOLIDATED FINANCIAL STATEMENTS
The following consolidated financial statements of Boston Celtics Limited
Partnership and subsidiaries are included in Item 8:
Consolidated Balance Sheets at June 30, 1996 and 1995.
Consolidated Statements of Income for each of the three years in the period
ended June 30, 1996.
Consolidated Statements of Partners' Capital (Deficit) for each of the three
years in the period ended June 30, 1996.
Consolidated Statements of Cash Flows for each of the three years in the period
ended June 30, 1996.
Notes to Consolidated Financial Statements.
All schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission have been omitted because
the required information has been disclosed in the footnotes to the Consolidated
Financial Statements, or are not required under the related instructions or are
inapplicable.
40
Report of Independent Auditors
To the General Partner
Boston Celtics Limited Partnership
We have audited the accompanying consolidated balance sheets of Boston Celtics
Limited Partnership and subsidiaries as of June 30, 1996 and 1995, and the
related consolidated statements of income, partners' capital (deficit) and cash
flows for each of the three years in the period ended June 30, 1996. 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Boston
Celtics Limited Partnership and subsidiaries at June 30, 1996 and 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended June 30, 1996, in conformity with generally
accepted accounting principles.
/s/ Ernst & Young LLP
---------------------------------------
Boston, Massachusetts
September 20, 1996
41
BOSTON CELTICS LIMITED PARTNERSHIP
and Subsidiaries
Consolidated Balance Sheets
June 30, 1996 June 30, 1995
------------- -------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 5,982,128 $ 39,563,015
Marketable securities 46,763,501 45,132,667
Other short term investments 78,723,365 67,558,465
Accounts receivable (less allowance for doubtful accounts $10,000
in 1996 and 1995) 3,777,729 3,213,175
Note receivable 4,444,444
Prepaid expenses 656,396 402,954
Other current assets 5,200,000
-------------------------------
TOTAL CURRENT ASSETS 135,903,119 165,514,720
PROPERTY AND EQUIPMENT, net of depreciation of $526,469 in 1996
and $385,575 in 1995 1,184,813 846,418
NATIONAL BASKETBALL ASSOCIATION FRANCHISE, net of amortization of
$2,005,120 in 1996 and $1,850,880 in 1995 4,164,461 4,318,701
OTHER INTANGIBLE ASSETS net of amortization of $36,621 in 1996 and
$26,158 in 1995 913,939 924,376
NET ASSETS OF DISCONTINUED OPERATIONS 9,432,615
OTHER ASSETS 3,067,140 3,028,318
-------------------------------
$ 145,233,472 $ 184,065,148
===============================
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 15,308,610 $ 11,927,676
Distribution payable 9,697,083
Deferred game revenues 4,629,704 6,645,562
Ticket refunds payable 111,711 120,908
Federal and state income taxes payable 539,325 5,163,158
Notes payable 15,353,949
Notes payable to bank 80,000,000
Deferred compensation - current portion 4,345,367 4,927,999
-------------------------------
TOTAL CURRENT LIABILITIES 40,288,666 118,482,386
42
DEFERRED REVENUES - noncurrent portion 699,871 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 11,749,666 14,850,057
OTHER NON-CURRENT LIABILITIES 5,875,000 4,023,750
MINORITY INTEREST IN BCBLP 4,988,790
PARTNERS' CAPITAL (DEFICIT)
Boston Celtics Limited Partnership -
General Partner 284,422 (160,255)
Limited Partners 15,688,456 (15,690,191)
-------------------------------
15,972,878 (15,850,446)
Celtics Limited Partnership - General Partner (92,988) (105,194)
Boston Celtics Communications Limited Partnership - General Partner 640,379 96,791
Boston Celtics Broadcasting Limited Partnership - Limited Partner 138,402
-------------------------------
TOTAL PARTNERS' CAPITAL (DEFICIT) 16,520,269 (15,720,447)
-------------------------------
$ 145,233,472 $ 184,065,148
===============================
See notes to consolidated financial statements.
43
BOSTON CELTICS LIMITED PARTNERSHIP
and Subsidiaries
Consolidated Statements of Income
For the Year Ended
----------------------------------------------
June 30, June 30, June 30,
1996 1995 1994
------------ ------------ ------------
Revenues:
Basketball regular season -
Ticket sales $ 35,249,625 $ 22,036,880 $ 20,238,531
Television and radio broadcast rights fees 22,071,992 20,956,405 19,168,268
Other, principally promotional advertising 7,458,651 7,418,487 5,176,618
Basketball playoffs 1,913,481
----------------------------------------------
64,780,268 52,325,253 44,583,417
----------------------------------------------
Costs and expenses:
Basketball regular season -
Team 27,891,264 31,203,697 22,468,500
Game 2,606,218 2,880,566 2,761,572
Basketball playoffs 696,583
General and administrative 15,053,333 14,085,982 11,304,284
Selling and promotional 2,973,488 2,692,208 1,395,798
Depreciation 140,894 86,347 82,878
Amortization of NBA franchise and other intangible assets 164,703 164,703 164,703
----------------------------------------------
48,829,900 51,810,086 38,177,735
----------------------------------------------
15,950,368 515,167 6,405,682
Interest expense, including $1,012,509 in 1996, $1,184,829
in 1995 and $1,084,943 in 1994 related to deferred
compensation obligations (6,387,598) (9,074,657) (4,013,276)
Interest income 8,175,184 6,507,902 2,347,691
Net revenue from league expansion 7,113,665
Net proceeds from life insurance 5,592,143
Net realized and unrealized gains (losses) on disposition
of assets and investments (101,138) 110,254 (3,595,647)
----------------------------------------------
Income from continuing operations before income taxes 17,636,816 5,172,331 6,736,593
Provision for (benefit from) income taxes 1,850,000 (345,000) (600,000)
----------------------------------------------
Income from continuing operations 15,786,816 5,517,331 7,336,593
Discontinued operations:
Income from discontinued operations (less applicable income taxes
of $30,000 in 1996, $7,095,000 in 1995 and $450,000 in 1994) 82,806 10,638,675 2,145,576
Gain from disposal of discontinued operations (less applicable
income taxes of $17,770,000 in 1996 and $3,150,000 in 1994)) 38,330,907 14,284,064
----------------------------------------------
Net income 54,200,529 16,156,006 23,766,233
Net income applicable to interests of General Partners 1,291,014 610,815 640,343
----------------------------------------------
Net income applicable to interests of Limited Partners $ 52,909,515 $ 15,545,191 $ 23,125,890
==============================================
44
Per unit:
Income from continuing operations $ 2.59 $ 0.84 $ 1.11
Net income $ 8.89 $ 2.43 $ 3.61
Distributions declared $ 1.50 $ 3.00 $ 1.25
Average units and unit equivalents outstanding throughout
the period 5,950,679 6,399,722 6,399,722
See notes to consolidated financial statements.
45
BOSTON CELTICS LIMITED PARTNERSHIP
and Subsidiaries
Consolidated Statements of Partners' Capital (Deficit)
Limited Partners
---------------------------------
Total Units Amount
------------- --------- ------------
BALANCE AT JUNE 30,1993 ($28,125,838) 6,399,722 ($27,668,695)
Net income for the year ended June 30, 1994 23,766,233 23,125,890
Distributions:
Cash by Boston Celtics Limited Partnership to
unitholders - $1.25 per unit (8,080,903) (7,999,653)
Cash by Celtics Limited Partnership to Boston
Celtics Corporation (General Partner's Share) (250,000)
Declared by Boston Celtics Communications Limited Partnership
to Celtics Communications, Inc. (General Partner's Share) (150,000)
26% of Celtics Communications, Inc.'s 1% interest in Boston
Celtics Broadcasting Limited Partnership transferred to
Minority Interest held by FTS Television, Inc. 11,008
------------------------------------------------------------
BALANCE AT JUNE 30, 1994 (12,829,500) 6,399,722 (12,542,458)
Net income for the year ended June 30, 1995 16,156,006 15,545,191
Distributions:
Boston Celtics Limited Partnership to unitholders
Cash - $1.50 per unit (9,697,083) (9,599,583)
Declared - $1.50 per unit (9,697,082) (9,599,582)
Cash by Boston Celtics Broadcasting Limited Partnership
to Celtics Communications, Inc. (General Partner's Share) (74,000)
Cash by Celtics Limited Partnership to Boston
Celtics Corporation (General Partner's Share) (165,000)
Purchase of 99% of General Partner's interest in
Boston Celtics Communications Limited Partnership 74,858
Unrealized gain on marketable securities 511,354 506,241
-----------------------------------------------------------
BALANCE AT JUNE 30, 1995 (15,720,447) 6,399,722 (15,690,191)
Net income for the year ended June 30, 1996 54,200,529 52,909,515
Distributions:
Cash by Boston Celtics Limited Partnership to
unitholders - $1.50 per unit (8,547,925) (8,461,917)
Cash by Boston Celtics Broadcasting Limited Partnership
to Celtics Communications, Inc. (General Partner's Share) (152,887)
Cash by Celtics Limited Partnership to Boston
Celtics Corporation (General Partner's Share) (200,000)
Sale of General Partner's interest in Boston
Celtics Broadcasting Limited Partnership 13,705
Purchase of Boston Celtics Limited Partnership
units for the treasury (16,306,546) (758,444) (16,306,546)
Issuance of Boston Celtics Limited Partnership
units from the treasury 3,658,363 234,886 3,658,363
Unrealized loss on marketable securities (424,523) (420,768)
===========================================================
BALANCE AT JUNE 30, 1996 $16,520,269 5,876,164 $15,688,456
===========================================================
46
BOSTON CELTICS LIMITED PARTNERSHIP
and Subsidiaries
Consolidated Statements of Partners' Capital (Deficit)(continued)
General Partners' Interests
------------------------------------------------------------
Boston Celtics Celtics Limited
Total Limited Partnership Partnership
---------- ------------------- ---------------
BALANCE AT JUNE 30,1993 ($457,143) ($279,732) $ 38,828
Net income for the year ended June 30, 1994 640,343 233,595 156,861
Distributions:
Cash by Boston Celtics Limited Partnership to
unitholders - $1.25 per unit (81,250) (81,250)
Cash by Celtics Limited Partnership to Boston
Celtics Corporation (General Partner's Share) (250,000) (250,000)
Declared by Boston Celtics Communications Limited Partnership
to Celtics Communications, Inc. (General Partner's Share) (150,000)
26% of Celtics Communications, Inc.'s 1% interest in Boston
Celtics Broadcasting Limited Partnership transferred to
Minority Interest held by FTS Television, Inc. 11,008
---------------------------------------------------------
BALANCE AT JUNE 30, 1994 (287,042) (127,387) (54,311)
Net income for the year ended June 30, 1995 610,815 157,019 114,117
Distributions:
Boston Celtics Limited Partnership to unitholders
Cash - $1.50 per unit (97,500) (97,500)
Declared - $1.50 per unit (97,500) (97,500)
Cash by Boston Celtics Broadcasting Limited Partnership
to Celtics Communications, Inc. (General Partner's Share) (74,000)
Cash by Celtics Limited Partnership to Boston
Celtics Corporation (General Partner's Share) (165,000) (165,000)
Purchase of 99% of General Partner's interest in
Boston Celtics Communications Limited Partnership 74,858
Unrealized gain on marketable securities 5,113 5,113
---------------------------------------------------------
BALANCE AT JUNE 30, 1995 (30,256) (160,255) (105,194)
Net income for the year ended June 30, 1996 1,291,014 534,440 212,206
Distributions:
Cash by Boston Celtics Limited Partnership to
unitholders - $1.50 per unit (86,008) (86,008)
Cash by Boston Celtics Broadcasting Limited Partnership
to Celtics Communications, Inc. (General Partner's Share) (152,887)
Cash by Celtics Limited Partnership to Boston Celtics
Corporation (General Partner's Share) (200,000) (200,000)
Sale of General Partner's interest in Boston
Celtics Broadcasting Limited Partnership 13,705
Purchase of Boston Celtics Limited Partnership
units for the treasury
Issuance of Boston Celtics Limited Partnership
units from the treasury
Unrealized loss on marketable securities (3,755) (3,755)
=========================================================
BALANCE AT JUNE 30, 1996 $831,813 $284,422 ($92,988)
=========================================================
47
BOSTON CELTICS LIMITED PARTNERSHIP
and Subsidiaries
Consolidated Statements of Partners' Capital (Deficit) (continued)
General Partners' Interests
---------------------------------------------
Boston Celtics Boston Celtics
Communications Broadcasting
Limited Partnership Limited Partnership
-------------------- -------------------
BALANCE AT JUNE 30, 1993 ($152,760) ($ 63,479)
Net income for the year ended June 30, 1994 180,074 69,813
Distributions:
Cash by Boston Celtics Limited Partnership to
unitholders - $1.25 per unit
Cash by Celtics Limited Partnership to Boston
Celtics Corporation (General Partner's Share)
Declared by Boston Celtics Communications Limited Partnership
to Celtics Communications, Inc. (General Partner's Share) (150,000)
26% of Celtics Communications, Inc.'s 1% interest in Boston
Celtics Broadcasting Limited Partnership transferred to
Minority Interest held by FTS Television, Inc. 11,008
----------------------------------
BALANCE AT JUNE 30, 1994 (122,686) 17,342
Net income for the year ended June 30, 1995 144,619 195,060
Distributions:
Boston Celtics Limited Partnership to unitholders
Cash - $1.50 per unit
Declared - $1.50 per unit
Cash by Boston Celtics Broadcasting Limited Partnership
to Celtics Communications, Inc. (General Partner's Share) (74,000)
Cash by Celtics Limited Partnership to Boston
Celtics Corporation (General Partner's Share)
Purchase of 99% of General Partner's interest in
Boston Celtics Communications Limited Partnership 74,858
Unrealized gain on marketable securities
----------------------------------
BALANCE AT JUNE 30, 1995 96,791 138,402
Net income for the year ended June 30, 1996 543,588 780
Distributions:
Cash by Boston Celtics Limited Partnership to
unitholders - $1.50 per unit
Cash by Boston Celtics Broadcasting Limited Partnership
to Celtics Communications, Inc. (General Partner's Share) (152,887)
Cash by Celtics Limited Partnership to Boston
Celtics Corporation (General Partner's Share)
Sale of General Partner's interest in Boston
Celtics Broadcasting Limited Partnership 13,705
Purchase of Boston Celtics Limited Partnership
units for the treasury
Issuance of Boston Celtics Limited Partnership
units from the treasury
Unrealized loss on marketable securities
==================================
BALANCE AT JUNE 30, 1996 $640,379 $ 0
==================================
48
See notes to consolidated financial statements.
BOSTON CELTICS LIMITED PARTNERSHIP
and Subsidiaries
Consolidated Statements of Cash Flows
For the Year Ended
-----------------------------------------------------
June 30, 1996 June 30, 1995 June 30, 1994
------------- ------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts:
Basketball regular season receipts:
Ticket sales $ 31,323,249 $ 27,544,392 $ 19,946,664
Television and radio broadcast rights fees 19,908,800 20,344,641 20,139,546
Other, principally promotional advertising 8,424,038 6,382,803 4,688,551
Basketball playoff receipts 360,895 2,278,100 289,000
----------------------------------------------------
60,016,982 56,549,936 45,063,761
Costs and expenses:
Basketball regular season expenditures:
Team expenses 26,066,875 24,632,232 21,363,042
Game expenses 2,481,007 2,880,566 2,762,205
Basketball playoff expenses 719,799 475
General and administrative expenses 13,996,805 13,069,984 8,338,554
Selling and promotional expenses 1,333,238 2,544,114 1,400,122
----------------------------------------------------
43,877,925 43,846,695 33,864,398
----------------------------------------------------
16,139,057 12,703,241 11,199,363
Interest income 9,553,938 4,692,024 2,579,097
Interest expense (4,624,043) (8,044,898) (2,669,306)
Ticket refunds paid (504) (5,354) (1,837,619)
Proceeds from league expansion 4,490,673 4,814,814
Payment of income taxes (4,973,883) (3,751,320)
Insurance proceeds received 17,000,000
Payment of deferred compensation (5,226,095) (3,624,319) (3,504,319)
----------------------------------------------------
NET CASH FLOWS FROM CONTINUING OPERATIONS 15,359,143 6,784,188 22,767,216
NET CASH FLOWS (USED BY) FROM DISCONTINUED OPERATIONS (2,931,742) 23,981,166 2,916,965
----------------------------------------------------
NET CASH FLOWS FROM OPERATING ACTIVITIES 12,427,401 30,765,354 25,684,181
49
CASH FLOWS (USED BY) FROM INVESTING ACTIVITIES
Purchases of:
Marketable securities (55,272,268) (76,285,589) (66,542,982)
Short term investments (116,150,000) (143,000,000)
Proceeds from sales of:
Marketable securities 53,355,561 54,237,041 64,274,412
Short term investments 103,300,000 77,000,000
Proceeds from issuance of option for acquisition of 26%
ownership interest in BCBLP 14,850,000
Proceeds from sale of WEEI 4,000,000
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 (796,424) (769,431) (769,398)
Other receipts (expenditures) 293,503 (825,359) (560,276)
----------------------------------------------------
NET CASH (USED BY) FROM INVESTING ACTIVITIES 62,328,301 (89,643,338) 15,251,756
NET CASH FLOWS (USED BY) FROM OPERATING AND INVESTING
ACTIVITIES 74,755,702 (58,877,984) 40,935,937
50
BOSTON CELTICS LIMITED PARTNERSHIP
and Subsidiaries
Consolidated Statements of Cash Flows (Continued)
For the Year Ended
-----------------------------------------------------
June 30, 1996 June 30, 1995 June 30, 1994
------------- ------------- -------------
CASH FLOWS (USED BY) FROM FINANCING ACTIVITIES
Proceeds from bank borrowings 85,000,000 15,000,000
Payment of bank borrowings (80,000,000) (10,000,000) (19,560,000)
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 Partnership (18,061,500) (9,599,583) (7,999,652)
To General Partners (536,395) (486,500) (331,250)
----------------------------------------------------
NET CASH FLOWS (USED BY) FROM FINANCING ACTIVITIES (108,336,589) 60,347,917 (12,890,902)
----------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (33,580,887) 1,469,933 28,045,035
Cash and cash equivalents at beginning of period 39,563,015 38,093,082 10,048,047
----------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5,982,128 $ 39,563,015 $ 38,093,082
====================================================
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
See notes to consolidated financial statements.
51
Note A - Basis of Presentation
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"), a wholly owned
subsidiary of BCLP, owns Celtics Capital Corporation ("CCC") (which holds
investments) and through Celtics Investments Incorporated ("CII"), a
wholly-owned subsidiary of BCLP, and itself owns a 99% limited partnership
interest in Boston Celtics Communications Limited Partnership ("BCCLP") which
owned a 99% limited partnership interest in Boston Celtics Broadcasting Limited
Partnership ("BCBLP") until its sale on July 7, 1995 (BCBLP owned and operated
Television Station WFXT - Channel 25 ("WFXT") of Boston, Massachusetts) and
owned and operated Radio Station WEEI - 590 AM of Boston, Massachusetts until
its sale on June 30, 1994. 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 Paul Gaston, Paul Dupee, Don Gaston (father of Paul Gaston) and
an affiliate. The consolidated financial statements include the accounts of the
Partnership, CLP, Holdings, CCC, CII and their subsidiary partnerships. All
intercompany transactions are eliminated in consolidation.
The agreement, which was initially disclosed in the Partnership's 1994 financial
statements, between BCLP and Fox Television, Inc. ("FTS") pursuant to which FTS
acquired BCBLP was closed on July 7, 1995, when FTS exercised its option
(acquired in fiscal 1994 for $15,000,000) for the acquisition of a 26% interest
in BCBLP, converted $10,000,000 of convertible debt for an additional 25%
interest in BCBLP and purchased the remaining 49% interest in BCBLP for cash of
$80,000,000. Accordingly the consolidated financial statements for 1995 and 1994
have been restated to present the results of operations of Television Station
WFXT and Radio Station WEEI (sold June 30, 1994) as discontinued operations. For
financial reporting purposes, the excess of the proceeds from the issuance of
the option to FTS over the carrying value of the related 26% interest in BCLP
and the gain on the sale of Radio Station WEEI are reported as Gain From
Disposal of Discontinued Operations ($14,284,064 net of related income taxes of
$3,150,000) in 1994. The gain from the conversion of the convertible note and
sale of the remaining interest for cash ($38,330,907 net of related income taxes
of $17,770,000) is included in income in 1996. Net assets of discontinued
operations consisted of the following at June 30, 1995:
52
Current assets:
Accounts receivable $13,022,933
Program broadcast rights - current portion 7,301,340
Prepaid expenses 261,761
-----------
Total current assets 20,586,034
Property and equipment, net of depreciation of $3,261,633 1,657,936
Program broadcast rights - non-current portion 10,627,670
Other intangible assets, principally network affiliation agreement 3,150,450
-----------
36,022,090
-----------
Current liabilities:
Accounts payable and accrued expenses 1,479,045
Program broadcast rights payable - current portion 6,048,649
-----------
Total current liabilities 7,527,694
Program broadcast rights payable - noncurrent portion 9,061,781
Convertible subordinated note payable 10,000,000
-----------
Net assets of discontinued operations $ 9,432,615
-----------
Pursuant to terms of the agreement, as amended, $15,288,714 of available cash
(as defined) ($7,338,583 to BCCLP, $152,887 to CCI and $7,797,244 to FTS), was
distributed prior to the closing and the $10,000,000 convertible note was
converted to a 25% interest in BCBLP at the closing.
Revenues of discontinued operations were $534,000, $51,897,000, and $38,295,000
for the years ended June 30, 1996, 1995 and 1994, respectively.
Note B - Significant Accounting Policies
Cash Equivalents: Cash equivalents represent short-term investments with
maturities at date of purchase of three months or less. Marketable securities
represent investments with maturities greater than three months.
Estimates and Assumptions: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reported period. Actual results could differ from those estimates.
53
Concentration of Credit Risk: Financial instruments which potentially subject
the Partnership to credit risk consist principally of cash equivalents,
short-term investments, marketable securities and accounts receivable. The
Partnership places its cash equivalents, short-term investments and marketable
securities with highly rated financial institutions and United States government
entities with relatively short maturities. The risk with respect to accounts
receivable is limited due to the large number of customers comprising the
Partnership's customer base their dispersion across many different industries
and geographic areas and to the short payment terms. The Partnership performs
periodic credit evaluations of its customers' financial condition and generally
does not require collateral. Credit losses have been consistently within
management's expectations.
Marketable Securities and Other Short Term Investments: Effective July 1, 1994,
the Partnership adopted Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities" (FAS 115)
which established the accounting and reporting requirements for investments in
equity securities that have readily determinable fair values and for all
investments in debt securities. All affected investment securities must be
classified as securities to be held to maturity, for trading, or
available-for-sale.
Financial Instruments: Effective July 1, 1994, the Partnership adopted Statement
of Financial Accounting Standards No. 107, "Disclosures about Fair Value of
Financial Instruments". This Statement extends existing fair value disclosure
practices for some instruments by requiring all entities to disclose the fair
value of financial instruments, both assets and liabilities recognized and not
recognized in the balance sheet, for which it is practicable to estimate fair
value. The carrying values reported in the Consolidated Balance Sheet for
financial instruments approximate their fair values.
Franchise and Other Intangible Assets: These assets, consisting principally of
the National Basketball Association franchise and other intangible assets are
being amortized primarily on a straight-line basis over 40 years.
Property and Equipment: Property and equipment is stated at cost and is being
depreciated over estimated useful lives of from five to fifteen years using
straight line or accelerated methods of depreciation as appropriate. Building
and leasehold improvements are depreciated over the lesser of the remaining
lives of the leases or the assets.
Accounting for the Impairment of Long-Lived Assets: Effective July 1, 1995, the
Partnership adopted Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets to be Disposed Of" (FAS
121). The Statement requires impairment losses to be recognized for long-lived
assets used in operations when indicators of impairment are present and the
undiscounted cash flows are not sufficient to recover the assets' carrying
amount. The adoption of FAS 121 had no material impact on the Partnership's
financial position.
54
Basketball Operations: Revenues, principally ticket sales and television and
radio broadcasting fees generally are recorded as revenues at the time the game
to which such proceeds relate is played. Team expenses, principally player and
coaches salaries, related fringe benefits and insurance, and game and playoff
expenses, principally National Basketball Association attendance assessments,
arena rentals and travel, are recorded as expense on the same basis.
Accordingly, advance ticket sales and payments on television and radio
broadcasting contracts and payments for team and game expenses not earned or
incurred are recorded as deferred revenues and deferred expenses, respectively,
and amortized ratably as regular season games are played. General and
administrative and selling and promotional expenses are charged to operations as
incurred.
Stock Options: In October 1995, the Fiancial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (FAS 123). FAS 123 becomes effective for the Partnership for its
fiscal year ended June 30, 1997. The Partnership has not decided whether it will
apply the measurement principles contained in FAS 123 or continue to use the
measurement principles contained in the currently effective Accounting
Principles Board Opinion 25.
Income Taxes: No provision for income taxes is required by BCLP or, prior to
their merger into Holdings in May 1993, for BCCLP or BCBLP. Their income and
expenses have been or prior to the merger were taxable to or deductible to their
partners. CCC, Holdings, and CII, wholly-owned subsidiary corporations of BCLP,
are subject to income taxes and report their income tax provision, including
income (losses) of subsidiary partnerships BCCLP and BCBLP, using the liability
method in accordance with Financial Accounting Standards Board (the "Board")
Statement 109, Accounting for Income Taxes (see Note M). Under this method,
deferred tax assets and liabilities are determined based on differences between
financial reporting and tax bases of assets and liabilities and are measured
using tax rates and laws that will be in effect when the differences are
expected to reverse. Although BCLP is considering strategies for exemption,
under provisions of adopted legislation it may become taxable for income tax
purposes as if it were a corporation effective July 1, 1998.
Net Income Per Unit: Net income per Unit is based upon the weighted average
number of units outstanding each year plus any unit equivalents attributable to
options, if material.
Note C - Marketable Securities and Other Short Term Investments
The following is a summary of marketable securities which are classified as
available for sale securities:
55
Gross Gross Estimated
Unrealized Unrealized Fair
Cost Gains Losses Value
-------------------------------------------------------
June 30, 1996
-------------------------------------------------------
U. S. corporate securities $ 7,952,261 $ 630 ($ 63,625) $ 7,889,266
U. S. government securities 38,724,409 426,956 (277,130) 38,874,235
-------------------------------------------------------
$ 46,676,670 $427,586 ($340,755) $46,763,501
=======================================================
June 30, 1995
-------------------------------------------------------
U. S. corporate securities $ 6,709,160 $118,313 ($ 2,396) $ 6,825,077
U. S. government securities 37,912,153 403,349 (7,912) 38,307,590
-------------------------------------------------------
$ 44,621,313 $521,662 ($ 10,308) $45,132,667
=======================================================
The gross realized gains on available-for-sale securities totaled $131,697 in
1996 and $76,140 in 1995 and $78,770 in 1996 and $63,328 in 1995, for U. S.
corporate securities and U. S. government securities respectively, and the gross
realized losses totaled $310,150 in 1996 and $29,214 in 1995 for U. S.
government securities and $1,455 in 1996 for U. S. corporate securities. The net
adjustment to unrealized holding gains and losses on available-for-sale
securities included as a separate component of Partners' Capital (Deficit)
resulted in a loss of $424,523 in 1996 and a gain of $511,354 in 1995.
The amortized cost and estimated fair value of available-for-sale securities at
June 30, 1996, by contractual maturity, are shown below. Expected maturities
will differ from contractual maturities because the issuers of the securities
may have the right to prepay obligations without prepayment penalties.
Estimated Fair
Cost Value
------------ --------------
Due in one year or less $ 18,646,732 $ 19,052,705
Due after one year through three years 15,802,642 15,675,528
Due after three years 12,227,295 12,035,268
-------------------------------
$ 46,676,669 $ 46,763,501
================================
56
Other short term investments, which consist primarily of private placement notes
with a commercial bank with a maturity of under one year, are classified as
held-to-maturity and are carried at amortized cost, which approximates market
value. There were no unrealized gains or losses at June 30, 1996.
Note D - Property and Equipment
Property and equipment are summarized as follows:
June 30,
--------------------------
1996 1995
---------- ----------
Building and leasehold improvements $1,333,932 $1,058,956
Furniture and fixtures 377,350 173,037
---------------------------
1,711,282 1,231,993
Less accumulated depreciation 526,469 385,575
---------------------------
Net property and equipment $1,184,813 $ 846,418
===========================
Note E - Deferred Compensation and Other Compensation Arrangements
Certain player contracts provide for guaranteed compensation payments which are
deferred until a future date. Operations are charged amounts equal to the
present value of future guaranteed payments in the period in which the
compensation is earned. The present value of payments due under these agreements
is as follows:
Years ending June 30, 1997 $ 4,345,000
1998 1,719,000
1999 1,453,000
2000 1,228,000
2001 1,132,000
2002 and thereafter 6,218,000
-----------
$16,095,000
===========
57
On June 28, 1996, the annual incentive payment arrangements between BCLP and
Paul E. Gaston, Chairman of the Board of CI (which is the general partner of
BCLP), were modified to permit him to elect to acquire Units of BCLP which
contain certain significant restrictions as to vesting and transferability
(hereinafter the "Restricted Units") in lieu of a cash payment. Mr. Gaston
elected to receive Restricted Units in lieu of the $3,658,363 cash incentive
compensation payment to which he was entitled. Mr. Gaston did not receive a cash
bonus for the year ended June 30, 1996. Based on a written report received from
an independent employee benefits consultant regading the appropriate discount to
be applied, the Audit Committee of the Board of Directors of CI awarded 234,866
Restricted Units to Mr. Gaston. Mr. Gaston, who is a member of the Audit
Committee, was recused from and did not participate in any of the Audit
Committee's deliberations pertaining to this matter. The fair market value of
the Restricted Units awarded to Mr. Gaston will not be deductible for tax
purposes currently, however, they will be deductible in the taxable year in
which the restrictions pertaining to those Restricted Units expire.
Note F - Notes Payable
Notes payable are comprised of:
June 30,
-----------------------------
1996 1995
----------- -----------
Commercial bank borrowings -
CLP $50,000,000 $ 50,000,000
BCCLP 80,000,000
Convertible subordinated note payable 10,000,000
------------------------------
50,000,000 140,000,000
Less amount included in current liabilities 0 80,000,000
------------------------------
$50,000,000 $ 60,000,000
==============================
The CLP balance represents the outstanding borrowings under a $50,000,000 loan
with its commercial bank. The loan agreement as amended permits borrowings of up
to $50,000,000 through December 31, 1997, with the available amount declining
thereafter by $1,250,000 per quarter. The term of the loan extends through
December 31, 2002. Interest is payable quarterly in arrears at a fixed annual
rate of 6.35% from October 4, 1995 through December 31, 2002. Prior to October
4, 1995, the initial $30,000,000 borrowing bore interest at a fixed rate of 6.4%
and borrowings in excess of the initial $30,000,000 bore interest at optional
floating rates (7.375% and 4.875% at June 30, 1995 and 1994). Effective January
1, 1998, the agreement related to the loan requires quarterly payments of
principal in the amount necessary to reduce the outstanding principal balance to
equal the declining available borrowings, if necessary, together with interest.
The borrowings under the bank loan are secured by all of the assets of and are
the liability of CLP, the basketball subsidiary partnership.
58
The BCCLP balance represented the outstanding borrowings under an $85,000,000
financing agreement dated October 31, 1994 with the Partnership's commercial
bank. The loan bore interest at a floating rate plus one percent (6.25% at June
30, 1995 and a weighted average interest rate of 6.85% from September 15, 1994
to June 30, 1995 ). The balance of the loan was repaid on July 7, 1995
concurrent with the sale of the remaining partnership interests in BCBLP to FTS.
The principal of the Convertible Subordinated Note Payable (the "Fox Note") was
due in a single payment at May 11, 2000. The Fox Note bore interest at the rate
of 10% per year payable semi-annually in arrears. The Convertible Subordinated
Note Payable was converted into a 25% interest in BCBLP on July 7, 1995 (see
Note A).
The agreement relating to the commercial bank borrowing includes various
provisions and covenants customary in lending arrangements of this type
including limitations on distributions to unitholders. Aggregate maturities of
notes payable at June 30, 1996 are as follows:
Years ending June 30, 1997 $ 0
1998 2,500,000
1999 5,000,000
2000 5,000,000
2001 5,000,000
2002 and thereafter 32,500,000
Interest charged to operations in connection with borrowings (including a BCBLP
term loan with interest at optional floating rates (6.375% at June 30, 1994)
from a commercial bank which was repaid during fiscal year 1995 and a
$15,000,000 short-term loan with interest at 4% from the commercial bank
borrowed and repaid during fiscal year 1994) were $3,366,000, $8,478,000, and
$4,387,000 ($3,366,000, $7,890,000 and $2,872,000 from continuing operations) in
the years ended June 30, 1996, 1995 and 1994, respectively.
Note G - Related Party Transactions
Management fee obligations of $1,565,000, $2,334,000 and $2,874,000 ($1,555,000,
$1,336,000 and $2,140,000 from continuing operations) applicable to Boston
Celtics Corporation, general partner of CLP, and Celtics Communications, Inc.,
general partner of BCCLP and BCBLP were charged to operations during the years
ended June 30, 1996, 1995 and 1994, respectively. Boston Celtics Corporation
receives a management fee of $750,000 per annum subject to annual increases
based on annual cash flows from basketball operations after June 30, 1989.
Celtics Communications, Inc. received management fees from BCCLP and BCBLP
(prior to its sale on July 7, 1995) based on a percentage of sales. The rates of
these fees were 1% through December 31, 1992 and 2% thereafter.
Note H - Commitments and Contingencies
The Partnership has employment agreements with officers, coaches and players of
the basketball team (CLP). Certain of the contracts provide for guaranteed
payments which must be paid even if the employee is injured or terminated. The
basketball team players are covered by the terms of a collective bargaining
agreement which expires on June 30, 2001. Amounts required to be paid under such
contracts in effect as of September 20, 1996, including option years and
$5,227,000 included in accrued expenses at June 30, 1996, but excluding amounts
previously earned (see Note E - Deferred Compensation), are as follows:
59
Years ending June 30, 1997 $ 28,757,000
1998 23,977,000
1999 22,985,000
2000 20,618,000
2001 7,190,000
BCLP maintains disability and life insurance policies on most of its key
players. The level of insurance coverage maintained is based on BCLP's
determination of the insurance proceeds which would be required to meet its
guaranteed obligations in the event of permanent or total disability of its key
players.
Lease commitments -
The Partnership and its subsidiaries are committed under noncancelable,
long-term leases, substantially all of which are related to CLP, for certain of
its facilities and equipment. Rent expense charged to operations during the
years ended June 30, 1996, 1995 and 1994 were $282,000, $2,272,000, and
$2,746,000 ($282,000, $1,667,000 and $1,507,000 from continuing operations),
respectively. Minimum annual payments, including renewable option periods,
required by these leases are:
Years ending June 30, 1997 $ 315,000
1998 290,000
1999 304,000
2000 319,000
2001 334,000
2002 and thereafter 1,711,000
Note I - Options to Acquire Units of Partnership Interest
On December 31, 1993 the Partnership granted options to three employees to
acquire 530,000 Limited Partnership Units of BCLP (Units) at the price of $16.25
per Unit less all cash distributions per Unit made by the Partnership from July
31, 1993 to the date of exercise. Options for 500,000 of such Units become
exercisable in installments as follows:
Aggregate Amount of
Period Option Exercisable
---------------------------------- -------------------
June 30, 1994 - June 29, 1995 1%
June 30, 1995 - June 29, 1996 60%
June 30, 1996 - June 29, 1997 80%
June 30, 1997 - December 31, 2003 100%
60
Options for the remaining 30,000 Units became exercisable June 30, 1994. All of
the options expire 10 years from the date of grant. In addition to exercising
the right to purchase units pursuant to the options, a holder may exercise a
Unit Appreciation Right, entitling the holder to receive an amount equal to the
excess of the fair market value of a Unit, determined on the date of exercise
over the exercise price of the related option on the date the Unit Appreciation
Right was granted in which event options for an equivalent number of units will
be canceled. In the sole discretion of the General Partner of BCLP payments of
amounts payable pursuant to Unit Appreciation Rights may be made solely in
Units, solely in cash, or in a combination of cash and Units. The compensation
element of the options, $1,851,000, $3,174,000 and $850,000 in the years ended
June 30, 1996, 1995 and 1994, respectively, is being charged to earnings ratably
over the period from the date of grant until the date of exercise based on the
difference between the exercise and market price of the optioned Units at the
end of each quarter. The market price of Limited Units of BCLP on June 30, 1996
was $22.25.
Note J - Benefit Plans
Each of the Partnership's subsidiaries have defined contribution plans covering
substantially all employees who meet certain eligibility requirements.
Participants may make contributions to the plans up to 15% of their compensation
(as defined). Contributions to these plans are 100% on the first 7% of
compensation contributed by each participant. Contributions are fully vested
after three years of service. Costs of the plans charged to operations amounted
to $206,000, $375,000, and $220,000 ($206,000, $129,000 and $69,000 from
continuing operations) during the years ended June 30, 1996, 1995 and 1994,
respectively.
A subsidiary partnership, included in discontinued operations, participated in a
multiemployer retirement plan covering certain union employees of the radio
station. This subsidiary charged $79,000 to operations during the year ended
June 30, 1994 for its share of plan costs.
61
Note K - Cash Flows
Reconciliations of net income to net cash flows from operating activities are as
follows:
Year Ended June 30,
---------------------------------------------
1996 1995 1994
----------- ----------- -----------
Net income $54,200,529 $16,156,006 $23,766,233
Items not affecting cash flows from operating activities:
Depreciation 149,046 766,264 1,042,785
Amortization 166,211 343,695 1,166,765
Provision for doubtful accounts 185,193 75,954
Increase in note issued on redemption of Partnership
interest 988,853
Changes in -
Accrued interest receivable 1,445,311 (1,815,877) 43,651
Accounts receivable (378,126) (4,616,167) (1,764,151)
Notes receivable 4,444,444 (4,444,444)
Accounts payable and accrued expenses (3,534,684) 10,972,665 4,553,349
Ticket refunds payable (9,197) (5,354) (932,383)
Deferred compensation (3,683,023) (1,751,374) 9,803,180
Deferred revenues (2,756,599) 8,086,174
Net realized and unrealized gains on disposition
of assets and investments 101,138 (110,254) (13,734,953)
Minority interest in earnings of BCBLP 27,391 6,853,486 1,710,079
Gain on sale of BCBLP (38,330,907)
Other (402,986) 145,341 (46,328)
---------------------------------------------
Net cash flows from operating activities $ 12,427,401 $30,765,354 $25,684,181
=============================================
The change in accounts receivable is after write-offs, net of recoveries, of
$397,544 and $6,376 in 1995 and 1994, respectively.
Note L - Quarterly Results (Unaudited)
A summary of operating results, net income per unit based on the average units
outstanding throughout each year calculated for financial statement purposes
only, and cash distributions for the quarterly periods in the two years ended
June 30, 1996 is set forth below (000's omitted):
62
Quarter Ended
------------------------------------------------------
September 30, December 31, March 31, June 30,
1995 1995 1996 1996 Total
------------- ------------ --------- -------- -------
Year Ended June 30, 1996 -
Revenues $ 0 $ 21,615 $34,062 $9,103 $64,780
Income (loss) from continuing operations (3,008) 8,649 10,913 (767) 15,787
Net income (loss) 36,205 7,849 10,913 (767) 54,200
Net income (loss) applicable to Limited Partners 35,301 7,707 10,677 (776) 52,909
Per Unit:
Income (loss) from continuing operations
applicable to Limited Partners ($.49) $1.46 $1.84 ($.13) $2.59
Net income (loss) applicable to Limited Partners $5.75 $1.33 $1.84 ($.13) $8.89
Distributions declared to BCLP unitholders: $1.50 $1.50
Quarter Ended
------------------------------------------------------
September 30, December 31, March 30, June 30,
1994 1994 1995 1995 Total
------------- ---------- --------- -------- -------
Year Ended June 30, 1995 -
Revenues $ 0 $ 16,927 $25,994 $9,404 $52,325
Income (loss) from continuing operations (3,727) (64) 4,905 4,403 5,517
Net income (loss) (2,115) 4,651 6,018 7,602 16,156
Net income (loss) applicable to Limited Partners (2,125) 4,465 5,843 7,362 15,545
Per Unit:
Income (loss) from continuing operations
applicable to Limited Partners ($.57) ($.01) $.75 $.67 $.84
Net income (loss) applicable to Limited Partners ($.33) $.70 $.91 $1.15 $2.43
Distributions declared to BCLP unitholders: $1.50 $1.50 $1.50
Note M - Income Taxes
For financial reporting purposes a valuation allowance of $7.9 million was
established in 1994 to reduce the deferred tax assets (principally related to
intangibles) acquired in the merger to the amount considered realizable on a
more likely than not basis. The allowance was eliminated in 1995 as a result of
the closing of the agreement between BCLP and Fox Television, Inc. (see Note A -
Basis of Presentation). Taxes related to the agreement have been provided as a
component of income from discontinued operations. Components of deferred tax
liabilities and assets, all of which relate to Holdings or its subsidiary
partnerships BCCLP and BCBLP are at June 30:
63
1996 1995 1994
----------- ----------- -----------
Deferred tax liabilities:
Deposit related to issuance of option to acquire 26%
partnership interest in BCBLP (tax over financial
basis) $ 0 $ 6,000,000 $ 6,000,000
Financial basis in excess of tax basis of assets
related to restructuring of ownership of BCCLP 20,100,000 11,000,000
-------------------------------------------
Total deferred tax liabilities 20,100,000 17,000,000 6,000,000
Deferred tax assets:
Intangibles arising from acquisition of BCBLP in a
merger accounted for as a transaction between
entities under common control (tax over
financial basis) 0 11,000,000 11,000,000
Valuation allowance for deferred tax assets 0 0 (7,900,000)
-------------------------------------------
Net deferred tax assets 0 11,000,000 3,100,000
-------------------------------------------
Net deferred tax liability $ 20,100,000 $ 6,000,000 $ 2,900,000
===========================================
At June 30, 1996 deferred taxes of $20,100,000 represent the tax effected the
difference between the tax and financial statement basis of net assets of
Holdings and CII.
At June 30, 1996 the tax basis of the net assets of BCLP and CLP exceeded their
financial bases by approximately $48,860,000, consisting primarily of Deferred
Compensation of $17,200,000, other compensation of $3,660,000 and the National
Basketball Franchise of $28,000,000. A substantial part of the Deferred
Compensation will be paid prior to July 1, 1998, when BCLP may become subject to
federal income taxes. No deferred tax assets or liabilities have been provided
for these differences because BCLP and CLP are not subject to income taxes.
The provision for income taxes included in the consolidated statement of income
is comprised of state taxes currently payable of $800,000 and deferred of
$3,800,000 and federal taxes currently payable of $2,550,000 and deferred of
$12,500,000 for the year ended June 30, 1996, state taxes currently payable of
$1,750,000 and federal taxes currently payable of $5,000,000 for the year ended
June 30, 1995 and state taxes currently payable of $100,000 and deferred taxes,
principally federal of $2,900,000 for the year ended June 30, 1994.
A reconciliation of the statutory federal income tax rate applied to reported
pre-tax earnings of CII, CCC, Holdings, BCCLP and BCBLP ($60,252,000 in 1996
$23,400,000 in 1995 and $17,982,000 in 1994) before deduction of taxable
minority interest ($6,800,000 in 1995 and $1,700,000 in 1994) to the effective
tax rate of the provision is:
64
1996 1995 1994
------ ------ ------
Statutory federal income tax rate 34.0% 34.0% 34.0%
State income taxes, net of federal tax benefit 6.3 6.3 6.3
Benefit from elimination of valuation allowance on
deferred tax assets (20.7)
Income tax applicable to sale of BCBLP to
FTS, Inc. charged to discontinued operations
when the sale was realized (See Note A) (11.7)
Benefit from recognition of deferred tax assets
resulting from prior merger transaction (8.2)
Goodwill (2.8)
Other .5 .5 (0.1)
-----------------------------------------
Effective tax rate 32.6% 29.1% 16.7%
=========================================
Note N - Accounts Payable and Accrued Expenses
The balances include accrued compensation of $12,265,000 and $8,331,000 at June
30, 1996 and 1995 and accrued management fees of $805,000 and $586,000 due to
the general partners of the Partnership and its subsidiaries at June 30, 1996
and 1995.
Note O - 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 from him. 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 their term. If he holds the two notes until July 1, 2000 he would 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. Each of
the notes bear interest payable quarterly at the rate of 7.76% per annum.
Interest of $2,008,909 was charged to operations in 1996 related to the notes.
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.
65
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.
BOSTON CELTICS LIMITED PARTNERSHIP
By: Celtics, Inc., General Partner
Date: September 27, 1996 By: /s/ Stephen C. Schram
--------------------------
Stephen C. Schram
Director and President
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.
Signature Title* Date
- ---------------------------- ---------------------------------- -------------------
/s/ Paul E. Gaston Chairman of the Board and Director September 27, 1996
----------------------
Paul E. Gaston
/s/ Don F. Gaston Director September 27, 1996
----------------------
Don F. Gaston
/s/ Vice Chairman of the Board and
---------------------- Director
Paul R. Dupee, Jr.
/s/ Paula B. Gaston Director September 27, 1996
----------------------
Paula B. Gaston
/s/ John H.M. Leithead Director September 27, 1996
----------------------
John H.M. Leithead
/s/ John B. Marsh, III Director September 27, 1996
----------------------
John B. Marsh, III
66
/s/ Richard G. Pond Executive Vice President, Chief September 27, 1996
---------------------- Financial Officer and Chief
Richard G. Pond Accounting Officer
<FN>
- -------------------
<F1> * Title indicates position with General Partner.
</FN>