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.
PART II -------
Item 5.
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, 1995 and June 30, 1994, respectively.
As of September 20, 1995, the approximate number of registered unitholders of the Partnership's Units was 66,056.
Item 6
Item 6 - Selected Financial Data - --------------------------------
Boston Celtics Limited Partnership and subsidiaries consolidated - (000's omitted, except for per unit data)
Item 6 - Selected Financial Data (Continued) - --------------------------------------------
Boston Celtics Limited Partnership and subsidiaries consolidated - (000's omitted, except for per unit data)
Item 7.
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, 1995 was $5,517,000 or $0.84 per unit on revenues of $52,325,000 and Consolidated Net Income was $16,156,000 or $2.43 per unit compared with Consolidated Income from Continuing Operations of $7,337,000 or $1.11 per unit on revenues of $44,583,000 and Consolidated Net Income of $23,766,000 or $3.61 per unit during the year ended June 30, 1994.
The Partnership reported Consolidated Income from Continuing Operations for the three months ended June 30, 1995 of $4,403,000 or $0.67 per unit on revenues of $9,404,000 and Consolidated Net Income of $7,602,000 or $1.15 per unit compared with Consolidated Income from Continuing Operations of $42,000 or $0.01 per unit on revenues of $8,491,000 and Consolidated Net Income of $3,858,000 or $0.58 per unit for the three months ended June 30, 1994.
The previously reported agreement 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 (estimated to be $40,000,000, net of related income taxes of $20,000,000) will be included in income from discontinued operations in July 1995 when realized.
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 year ended June 30, 1994 includes net insurance proceeds ($5,592,000) and net losses from marketable securities ($3,596,000).
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 July 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.
Results of Operations
The following discussion compares results of continuing operations of the Partnership and its subsidiaries for the year ended June 30, 1995 compared with the year ended June 30, 1994 and for the year ended June 30, 1994 compared with the year ended June 30, 1993.
Revenues from regular season ticket sales increased by $1,798,000 or 9% in fiscal 1995 compared to 1994 and by less than 1% in fiscal 1994 compared to 1993. The increase in 1995 resulted primarily from an increase in ticket prices. Ticket prices were not increased in the year ended June 30, 1994.
Regular season television and radio rights fees revenues increased by $1,788,000 or 9% in fiscal 1995 compared to 1994 and decreased by $2,693,000 or 12% in fiscal 1994 compared to 1993. The increase in fiscal 1995 compared to 1994 is primarily the result of increases in the NBA's national broadcasting contracts. The decrease in fiscal 1994 compared to fiscal 1993 is primarily the result of reductions in revenues from local television broadcast rights fees.
Other, principally promotional advertising revenues increased by $2,242,000 or 43% in fiscal 1995 compared to 1994 and by $1,579,000 or 44% in fiscal 1994 compared to 1993. The increases in fiscal 1995 and 1994 are principally due to increased revenues from promotional activities ($1,721,000 in 1995 and $535,000 in 1994) and increased proceeds received from NBA properties from the licensing of novelty type products ($554,000 in 1995 and $1,053,000 in 1994).
The Boston Celtics played two home playoff games in fiscal 1995 which resulted in $1,913,481 of revenue. There were no playoff games played by the Boston Celtics in the 1993-94 season, accordingly, there were no playoff revenues or expenses in fiscal 1994. 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 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). Team expenses decreased by $2,274,000 or 9% in fiscal 1994 compared to fiscal 1993 primarily as a result of decreases in player compensation ($1,487,000). In addition, costs were reduced in fiscal year 1994 compared with 1993 as a result of a reduction in air travel costs ($450,000) and termination of the funding requirement for the NBA Pre-Pension player plan ($375,000) in fiscal 1994.
Game expenses, primarily arena rental payments and the NBA assessment on gate receipts, 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. Game expenses decreased by $207,000 or 7% in fiscal 1994 compared to fiscal 1993 primarily from reductions in exhibition game expenses ($134,000).
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 1994. The playoff expense for fiscal 1993 was $609,000 related to the two home playoff games played in that season.
General and administrative expenses increased $2,781,698 or 25% in fiscal 1995 compared to 1994 and $4,729,000 or 72% in fiscal 1994 compared to 1993. The increase in fiscal 1995 is primarily attributable to increased option expense ($2,324,000) and increased administrative salaries ($584,000). The increase in fiscal 1994 was primarily attributable to increased management fees ($1,276,000), incentive bonuses and stock option expense ($3,150,000), and increased salaries as a result of additional staffing ($1,817,000). Additionally, 1994 expenses do not include charges similar to the merger costs ($1,282,000) included in fiscal 1993.
Selling and promotional expenses increased $1,296,000 or 93% in fiscal 1995 compared to 1994 and increased $243,000 or 21% in fiscal 1994 compared to 1993. 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). The increase in fiscal 1994 compared with 1993 was primarily attributable to increased promotional costs of the basketball operation.
Total depreciation and amortization increased $3,000 or 4% in fiscal 1995 compared to 1994 and $12,000 or 18% in fiscal 1994 compared to 1993. The increases in 1995 and 1994 are primarily attributable to additional depreciation related to additions to property and equipment at the basketball operation.
Interest expense increased $5,061,000 or 126% in fiscal 1995 compared to 1994 and $2,246,000 or 127% in fiscal 1994 compared to 1993. The increase in fiscal 1995 and 1994 is primarily attributable to increased borrowings ($4,658,000 in 1995 and $2,246,000 in 1994). In addition, the 1995 increase included the effect of an increase in interest rates ($359,000).
The Partnership had interest income of $6,508,000 and $2,347,000 in fiscal 1995 and 1994, respectively. Interest income increased $4,160,000 or 177% in fiscal 1995 compared to 1994 and $1,563,000 or 199% in fiscal 1994 compared to 1993. 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, 1995 the Partnership had approximately $39,563,000 of cash and cash equivalents, $45,133,000 of marketable securities and $67,558,000 of other short-term investments. In addition to these amounts, sources of funds available to the Partnership include funds generated by operations, capital contributions from partners and proceeds of $79,200,000 from the sale of BCBLP to FTS, Inc. on July 7, 1995. These resources will be used to repay commercial bank borrowings and notes related to redeemed partnership units (see Note Q of Notes to Consolidated Financial Statements) and for general partnership purposes, working capital needs or for possible acquisitions. The Partnership is not engaged in any negotiations relating to and has not made any commitments in connection with any such possible acquisitions.
During the year ended June 30, 1995, a cash distribution of $1.50 per Unit was paid to the Unitholders of BCLP and an additional distribution of $1.50 per unit was declared on June 26, 1995 to unitholders of record on June 30, 1995 payable July 21, 1995. 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, 1996.
Item 8.
Item 8. Financial Statements and Supplementary Data - ------------------------------------------------------
See Item 14.
PART III --------
Item 10.
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"). Don F. Gaston, Paul E. Gaston 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 and BCBLP is Celtics Communications, Inc. (the "General Partner of the Broadcast Operations"). Paul E. Gaston, Don F. Gaston (Paul Gaston's father), and Paul R. Dupee, Jr. are the sole stockholders of the General Partner of the Broadcast Operations. The Broadcast Operations' activities are 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 Q of Notes to Consolidated Financial Statements for a description of these redemptions.
Management fee obligations of $2,333,974, $2,873,942, and $1,481,444 applicable to Celtics, Inc., general partner of the Partnership, 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, 1995, 1994, and 1993, 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. receives management fees from BCCLP and BCBLP based on a percentage of sales. The rates of these fees were 1% through December 31, 1992 and 2% thereafter.
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.
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 and the Communications Group Subsidiary Partnerships, his 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.
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 1995. 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.
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 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 its 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.
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.
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 arbritage 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 arbritage securities trading group. Since 1991 he has been Chief Executive Officer and President of Saicor Ltd., an investment banking firm 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. Gavitt became Vice Chairman of the Basketball Subsidiary Partnership on September 21, 1994. He was Senior Executive Vice President and Chief Operating Officer of the Boston Celtics basketball operations from June 1990 to September 1994. Prior to that time, he was Commissioner of the Big East Conference, a collegiate sports conference, since its inception in 1979. Mr. Gavitt is a past president of USA Basketball.
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.
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.
Mr. Walsh has been President of the Boston Celtics broadcast operations since it acquired Television Station WFXT - Channel 25 and Radio Station WEEI - 590 AM in May 1990. From September 1989 to May 1990, he was General Manager of WFXT, Inc., the prior owner of the television station. From 1983 until August 1989, Mr. Walsh was the President and General Manager of WLVI-TV, Channel 56 in Boston.
Item 11.
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.
Summary Compensation Table --------------------------
Aggregated Option Exercises and Option Values ---------------------------------------------
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, incentive bonuses amounted to $828,000 and $749,000, respectively, each.
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 totalling $250,000 per year for his lifetime. In fiscal 1995, Mr. Auerbach received a bonus payment of $100,000. Upon 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. (ML) 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 Vice-Chairman of 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, 1995 at a salary of $375,000 in fiscal 1996, rising to $425,000 in fiscal 1998.
Item 12.
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.
Unless otherwise indicated, all parties have both exclusive voting and investing power.
PART IV -------
Item 14.
Item 14. Financial Statements and Exhibits
(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)
(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)
(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)
(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)
(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)
(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)
(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)
(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)
(1) 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).
(2) 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.
(3) 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.
(4) 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.
(5) 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.
(6) 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).
(7) 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.
(8) 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.
(9) 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.
(10) 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.
(11) 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).
(12) 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.
(13) 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).
(14) 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).
(15) 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).
(16) 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).
(17) 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).
(18) Incorporated by reference to the exhibits filed with the report on Form 10-Q filed with the Securities and Exchange Commission on Feburary 14, 1995 (File No. 0-19324).
(19) 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).
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, 1995
BOSTON CELTICS LIMITED PARTNERSHIP
BOSTON, MASSACHUSETTS
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:
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, and therefore have been omitted.
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, 1995, and 1994, and the related consolidated statements of income, changes in partners' capital (deficit) and cash flows for each of the three years in the period ended June 30, 1995. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the 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, 1995 and 1994, and the consolidated results of their operations and their cash flows for each of the three years in the period ended June 30, 1995, in conformity with generally accepted accounting principles.
As discussed in Note B to the consolidated financial statements, in 1995, the Partnership changed its method of accounting for certain investments in debt and equity securities.
/s/ Ernst & Young LLP
Boston, Massachusetts September 22, 1995
BOSTON CELTICS LIMITED PARTNERSHIP and Subsidiaries Consolidated Balance Sheets
See notes to consolidated financial statements.
BOSTON CELTICS LIMITED PARTNERSHIP and Subsidiaries Consolidated Statements of Income
See notes to consolidated financial statements.
BOSTON CELTICS LIMITED PARTNERSHIP and Subsidiaries Consolidated Statements of Changes in Partners' Capital (Deficit)
See notes to consolidated financial statements.
BOSTON CELTICS LIMITED PARTNERSHIP and Subsidiaries Consolidated Statements of Changes in Partners' Capital (Deficit) (Continued)
See notes to consolidated financial statements.
BOSTON CELTICS LIMITED PARTNERSHIP and Subsidiaries Consolidated Statements of Cash Flows
BOSTON CELTICS LIMITED PARTNERSHIP and Subsidiaries Consolidated Statements of Cash Flows (Continued)
See notes to consolidated financial statements.
Notes to Consolidated Financial Statements - ----------------------------------------------------------------------------- Boston Celtics Limited Partnership And Subsidiaries
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") and Celtics Investments Incorporated ("CII"), wholly-owned subsidiaries of BCLP and Holdings' wholly-owned subsidiary Celtics Capital Corporation ("CCC") (which holds investments) and Holdings' 99% owned limited partnership Boston Celtics Communications Limited Partnership ("BCCLP") and its 99% owned limited partnership Boston Celtics Broadcasting Limited Partnership ("BCBLP") which owns and operates Television Station WFXT - Channel 25 ("WFXT") and until its sale on June 30, 1994 owned and operated Radio Station WEEI - 590 AM both of Boston, Massachusetts. 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"); and the General Partner of BCBLP is BCCLP. The General Partners of BCLP, CLP and BCCLP are Delaware corporations whose sole stockholders are Don Gaston, Paul Dupee, Paul Gaston (son of Don Gaston) and an affiliate. Alan Cohen's interest in the general partners was acquired by Paul Gaston and an affiliate on August 30, 1995 (see Note Q - Redemption of Partnership Interest Subsequent to Year End). The consolidated financial statements include the accounts of the Partnership, Holdings, CCC, CII and their subsidiary partnerships. All intercompany transactions are eliminated in consolidation.
The 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 (acquired 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 $80,000,000 cash. 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 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 ($14,284,000 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 (Estimated to be $40,000,000 net of related income taxes of $20,000,000) will be included in income when realized in July 1995.
Assets and liabilities of discontinued operations included in the balance sheet at June 30, 1995 were:
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 $51,897,000, $38,295,000 and $33,188000 for the years ended June 30, 1995, 1994 and 1993, respectively.
Note B - Significant Accounting Policies
Cash Equivalents and Marketable Securities: 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.
Concentrations of Credit Risk: Financial instruments which potentially subject the Partnership to concentration of credit risk consist principally of cash equivalents, marketable securities and accounts receivable. The Partnership places its cash equivalents and marketable securities with highly rated financial institutions and United States government entities. Concentrations of credit risk with respect to accounts receivable are limited due to the large number of customers comprising the Partnership's customer base and their dispersion across many different industries and geographic areas and to the shortness of payment terms.
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 value reported in the Consolidated Balance Sheet for financial instruments approximates their fair values.
Franchise, Network Affiliation and Other Intangible Assets: These assets, consisting principally of the National Basketball Association franchise, the value assigned to the Fox network affiliation agreement and other intangible assets are being amortized primarily on a straight-line basis over 40 years.
Program Broadcast Rights: Program broadcast rights for films and tapes are recorded as assets, at cost, together with the related liability when licenses are executed and the program is available for its first showing. The asset is amortized on a straight-line method generally based on the usage of the product or the term of the license. The current portion of these rights represents the estimated amount to be amortized during the next year. The liability to licensors is classified as current or noncurrent based on the payment terms of the license agreements.
Property and Equipment: Property and equipment acquired in the purchase of the television station is stated at the amounts based on fair value which was allocated to these assets at the time of acquisition. Other property and equipment is stated at cost. Building and leasehold improvements are depreciated over the remaining lives of the leases. Other property and equipment is being depreciated over estimated useful lives of from five to fifteen years using straight line or accelerated methods of depreciation as appropriate.
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.
Television and Radio Operations: Revenues, principally advertising sold to sponsors for commercials during program broadcasting, including Boston Celtics basketball games, are recognized when the commercials are broadcast. Operating expenses, principally broadcast production related costs, are expensed as incurred.
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 N). 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 at June 30, 1995, which are classified as available for sale securities:
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, 1995.
The gross realized gains on available-for-sale securities totaled $76,140 and $63,328, for U. S. corporate securities and U. S. government securities respectively, and the gross realized losses totaled $29,214 for U. S. government securities. The net adjustment to unrealized holding gains on available-for-sale securities included as a separate component of Partners' Capital (Deficit) totaled $511,354 in 1995.
The amortized cost and estimated fair value of available-for-sale securities at June 30, 1995, 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.
Note D - Property and Equipment
Property and equipment are summarized as follows:
Note E - Deferred Compensation
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:
Note F - Notes Payable
Notes payable are comprised of:
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 on the initial $30,000,000 is payable quarterly in arrears at an annual rate of 6.4% through December 31, 1995. Borrowings in excess of the initial $30,000,000, and all borrowings outstanding after December 31, 1995, bear interest at optional floating rates (7.375% and 4.875% at June 30, 1995 and 1994). Quarterly payments of interest only are payable in arrears through December 31, 1997. 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 and are the liability of CLP, the basketball subsidiary partnership.
The BCCLP balance represents the outstanding borrowings under an $85,000,000 financing agreement dated October 31, 1994 with the Partnership's commercial bank. The loan bears 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 ) and is due on September 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") is due in a single payment at May 11, 2000. The Fox Note bears 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 agreements relating to both the commercial bank borrowings and the convertible subordinated note payable include various provisions and covenants customary in lending arrangements of this type including limitations on distributions to unitholders. In addition, the agreements relating to the commercial bank borrowings include covenants requiring BCBLP to achieve certain minimum cash flows, and to restrict borrowings (other than purchase money obligations) to borrowings with the consent of the bank. At June 30, 1995 BCBLP was in compliance with these covenants. Aggregate maturities of notes payable at June 30, 1995 are as follows:
At June 30, 1995 and 1994, $237,639 and $394,479 were included in accounts payable and accrued expenses for accrued interest.
Interest charged to operations in connection with borrowings (including the BCBLP term loan with interest at optional floating rates (6.375% and 5.5% at June 30, 1994 and 1993) 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 $8,478,000, $4,387,000 and $3,106,000 in the years ended June 30, 1995, 1994 and 1993, respectively.
Note G - Related Party Transactions
Management fee obligations of $2,333,974, $2,873,942 and $1,481,444 applicable to Celtics, Inc., general partner of the Partnership, 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, 1995, 1994 and 1993, 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. Prior to a restructuring on January 21, 1993 pursuant to which BCLP contributed all of its basketball assets and business, subject to all of its liabilities (including its liabilities under the $50 million commercial bank loan agreement) such fee was paid to Celtics, Inc. general partner of BCLP. Celtics Communications, Inc. received management fees from BCCLP and BCBLP based on a percentage of sales. The rates of these fees were 1% through December 31, 1992 and 2% thereafter.
Note H - Program Broadcast Rights Obligations
The Partnership is committed to the following minimum payments for program broadcast rights obligations of BCBLP (see Note A - Basis of Presentation for a description of the disposition of BCBLP to FTS on July 7, 1995) for films and programs available for broadcast at June 30, 1995:
Note I - Commitments and Contingencies
The Partnership has employment agreements with officers, coaches and players of the basketball team (CLP) and an executive of BCCLP. Certain of the contracts provide for guaranteed payments which must be paid even if the employee is injured or terminated. Amounts required to be paid under such contracts in effect as of September 20, 1995, including option years and $4,175,000 included in accounts payable at June 30, 1995, but excluding amounts previously earned (see Note E - Deferred Compensation), are as follows:
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.
Unavailable program rights commitments - The Partnership is committed to the following payments for program broadcast rights obligations of BCBLP (see Note A - Basis of Presentation for a description of the disposition of BCBLP to FTS on July 7, 1995) for film and program rights not available for broadcast at June 30, 1995:
Lease commitments - The Partnership and its subsidiaries are committed under noncancelable, long-term leases substantially all of which are related to BCBLP (see Note A - - Basis of Presentation for a description of the disposition of BCBLP to FTS on July 7, 1995) for certain of their facilities and equipment. Rent expense charged to operations during the years ended June 30, 1995, 1994 and 1993 were $2,272,000, $2,746,000 and $2,670,000, respectively. Minimum annual payments, including renewable option periods, required by these leases are:
Note J - 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:
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 cancelled. 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, $3,174,000 and $850,000 in the years ended June 30, 1995 and June 30, 1994, respectively, is being charged to earnings ratably over the period from the date of grant until the date of exercise based on the exercise price of the optioned Units at the end of each quarter. The market price of Limited Units of BCLP on June 30, 1995 was $21.25.
Note K - 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 from 3% to 15% of their compensation (as defined). Contributions to these plans range from 50% to 100% on the first 2.5% to 5% of compensation contributed by each participant. Contributions are fully vested after three to five years of service. Costs of the plans charged to operations amounted to $374,623, $219,819 and $226,360 during the years ended June 30, 1995, 1994 and 1993, respectively.
A subsidiary partnership participated in a multiemployer retirement plan covering certain union employees of the radio station. This subsidiary charged $78,746 and $128,698 to operations during the years ended June 30, 1994 and 1993, respectively, for its share of plan costs.
Note L - Cash Flows
Reconciliations of net income to net cash flows from operating activities are as follows:
The change in accounts receivable is after write-offs, net of recoveries, of $397,544, $6,376 and $131,903 in 1995, 1994 and 1993, respectively.
Note M - 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, 1994 is set forth below (000's omitted).
Note N - Income Taxes
No income tax provision was made for Holdings or its subsidiary partnerships BCCLP or BCBLP at June 30, 1993 because their taxable loss for the period from May 6 (date of merger) to June 30, 1993 was not material.
For financial reporting purposes a valuation reserve of $11 million was established to reduce the deferred tax assets (intangibles) acquired in the merger to the amount considered realizable on a more likely than not basis. Components of deferred tax liabilities and assets, all of which relate to Holdings or its subsidiary partnerships BCCLP and BCBLP are:
Income taxes applicable to the sale of BCBLP to FTS, Inc. ($5,200,000) other than taxes applicable to the recognition of gain from the sale of the option to FTS, Inc. (see Note A) are included in other current assets and deferred charges on the balance sheet at June 30, 1995 and are to be charged to income when the gain on the sale is recognized upon its realization on July 7, 1995.
At June 30, 1995 the tax basis of the net assets of BCLP and CLP exceeded their financial bases by approximately $49,200,000, consisting primarily of Deferred Compensation of $21,200,000 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 $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 ($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:
Note O - Accounts Payable and Accrued Expenses
The balances include accrued compensation of $8,331,000 and $1,768,000 at June 30, 1995 and 1994 and accrued management fees of $586,000 and $1,276,000 due to the general partners of the Partnership and its subsidiaries at June 30, 1995 and 1994.
Note P - Advertising
The Partnership charged $1,135,000, $1,534,000 and $1,025,000 to operations for advertising during the years ended June 30, 1995, 1994 and 1993, respectively, of which $464,000 and $639,000 were included in accounts payable and accrued expenses at June 30, 1995 and 1994, respectively.
Note Q - Redemption of Partnership Interest Subsequent to Year End
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 Alan Cohen and his son and daughter. Mr. Cohen was formerly an officer and director of the corporate general partners of the Partnership and its 99% owned limited partnerships BCCLP and BCBLP.
Under the terms of the redemption, Mr. Cohen's son and daughter were paid $1,941,450 equal to $21.50 in cash for each of the 90,300 units acquired from them.
Mr. Cohen received two notes from BCLP in exchange for the aggregate of 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 Mr. Cohen pursuant to the terms of the notes will be increased by specified amounts on each July 1 during their term. If Mr. Cohen 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 bears interest payable quarterly at the rate of 7.76% per annum.
The Partnership also announced that CLP has entered into a three year consulting agreement with Alan Cohen. The consulting agreement provides that Mr. Cohen is to be paid $260,000 per year in exchange for making himself available to provide consulting services to CLP. In addition, the interests of Mr. Cohen in the corporate general partners of the Partnership, CLP and BCCLP were acquired by Mr. Paul Gaston and an affilliate.
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 28, 1995 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.