ITEM 1. BUSINESS.
Silver Screen Partners III, L.P. ("Silver Screen III") was organized in September 1986. A public offering of units of assigned limited partnership interests was completed in January 1987, which raised $300 million. After payment of offering costs and fees, approximately $270 million was available for investment in films (the "Partnership Contribution").
Silver Screen III entered into a Joint Venture agreement (the "Joint Venture Agreement") with The Walt Disney Company ("Disney") for the purpose of financing (in whole or in part), producing and exploiting all feature length theatrical motion pictures selected for production by Disney from the time Disney began to utilize Silver Screen III funds until all such funds had been committed (the "Joint Venture Films"). Buena Vista Pictures Distribution, Inc. (formerly Buena Vista Distribution, Inc.) ("BV"), a wholly-owned subsidiary of Disney, has been licensed to distribute all Joint Venture Films in all media and in all territories throughout the world. BV has paid the expenses in connection with the worldwide distribution of each Joint Venture Film. The Partnership Contribution has been fully committed.
The business of Silver Screen III is managed by Silver Screen Management, Inc., a Delaware corporation which is a general partner of Silver Screen III (the "Managing General Partner"). Silver Screen III participates through Disney-Silver Screen III Joint Venture (the "Joint Venture") in the production, ownership and exploitation of the Joint Venture Films and in the distribution and marketing of the Joint Venture Films in all primary and ancillary markets. The Managing General Partner is responsible for the preparation of reports and tax information to be provided to the Limited Partners.
Silver Screen III committed to fund nineteen films, all of which have been completed and released with total budgets amounting to approximately $266,000,000, of which substantially all had been expended as of December 31, 1993. Accordingly, the Partnership Contribution has been fully committed and Silver Screen III will not finance or purchase any additional motion pictures. These films are: "Benji the Hunted," released June 17, 1987; "Adventures in Babysitting," released July 1, 1987; "Can't Buy Me Love," released August 14, 1987; "Hello Again," released November 6, 1987; "Three Men and a Baby," released November 25, 1987; "Good Morning Vietnam," released December 23, 1987; "Shoot to Kill" released February 12, 1988; "D.O.A.," released March 18, 1988; "Return to Snowy River, Part II," released April 15, 1988; "Big Business," released June
10, 1988; "Who Framed Roger Rabbit," released June 22, 1988; "Cocktail," released July 29, 1988; "The Rescue," released August 5, 1988; "Heartbreak Hotel," released September 30, 1988; "Ernest Saves Christmas," released November 11, 1988; "Oliver and Company," released November 18, 1988; "Honey, I Shrunk the Kids," released June 23, 1989 and "Cheetah and Friends," released August 18, 1989. "Stakeout," which was financed approximately 25% by Silver Screen III and 75% by Silver Screen II, L.P. (a separate limited partnership with the same Managing General Partner formed to finance previous Disney films), was released August 5, 1987.
Buyout - ------
Silver Screen III has entered into a Letter Agreement (the "Buyout Agreement") with Disney dated September 11, 1995 providing for the sale to Disney of all of Silver Screen III's interest in the Joint Venture. The Buyout Agreement provides for the payment of the purchase price of $125,000,000 in cash (subject to certain adjustments with respect to revenues received by Silver Screen III from the exploitation of the film "Oliver and Co."). Closing is scheduled to occur on September 30, 1997 subject to satisfaction of certain customary conditions. In addition to the purchase price, the Buyout Agreement provides that BV will continue to account for and make payments to the Joint Venture as required by the Distribution Agreement (as defined below) for all revenues received by BV through August 31, 1997. The Buyout Agreement has been filed as an exhibit to Silver Screen III's quarterly report on Form 10-Q dated September 30, 1995 and the terms thereof are incorporated herein by reference.
Joint Venture Agreement - -----------------------
Each Joint Venture Film was produced in accordance with the Joint Venture Agreement. Under the Joint Venture Agreement, Silver Screen III contributed to the Joint Venture all amounts included in the Partnership Contribution. Disney contributed all motion picture projects developed and selected for production by Disney until the Partnership Contribution was fully committed. Disney also furnished production services for all the Joint Venture Films, and furnished or obtained all financing not furnished by Silver Screen III.
Some of the Joint Venture Films were acquired by the Joint Venture in completed form (the "Acquired Films"). As provided in the Joint Venture Agreement, the allocation of revenues from Acquired Films are the same as for Joint Venture Films, except in instances where alternative arrangements have been entered into as permitted by the Joint Venture Agreement. In addition, the Joint Venture Agreement provides that special terms be applicable to "Who Framed Roger Rabbit."
Contributions by Silver Screen III to the Joint Venture were made on a film-by-film basis and were based upon budgeted production cost (the "Budgeted Film Cost") of all Joint Venture Films produced by the Joint Venture and upon the acquisition cost (the "Acquisition Cost") of all Acquired Films. The Partnership Contribution was committed to the Joint Venture, film-by-film, in the order that each Joint Venture Film commenced principal photography by the Joint Venture, in an amount equal to 100% of the Budgeted Film Cost (or, in the case of an Acquired Film, the Acquisition Cost) of each such Joint Venture Film until such time as the entire Partnership Contribution was so committed. Silver Screen III was not obligated to commit funds with respect to any one Joint Venture Film (other than "Roger Rabbit") in excess of $20,000,000 in the case of any Disney animated film or Touchstone Joint Venture Film, or in excess of $15,000,000, in the case of any Disney non-animated Joint Venture Film.
Disney was solely responsible for the development of motion picture projects for contribution to the Joint Venture, the production by the Joint Venture of each Joint Venture Film and the delivery by the Joint Venture of each such Joint Venture Film to BV in full compliance with the terms and conditions of the Distribution Agreement between the Joint Venture and BV (the "Distribution Agreement"). Disney's production responsibilities included all services customarily performed by a major studio. Disney was responsible for any cost overruns and acted in effect as completion guarantor.
The Budgeted Film Cost of each Joint Venture Film consists of all costs customarily included as direct production costs in the motion picture industry, including overhead of 17-1/2%. The Budgeted Film Cost also includes all fixed deferments, bonuses and participations in gross receipts payable before the Joint Venture has recouped its investment in that Joint Venture Film, fixed deferments and bonuses payable at or out of first net profits and an additional development fee to Disney in the amount of $500,000. The budget of each Joint Venture Film was approved in writing by both parties prior to the commencement of principal photography. Disney was empowered to grant participations in the profits of any Joint Venture Film to third parties on behalf of the Joint Venture up to an amount no greater in the aggregate than 55% of 100% of the net profits of any non-animated Joint Venture Film and 50% of 100% of the net profits of any animated Joint Venture Film.
If the average production cost per film for all Joint Venture Films was less than $13,500,000, Silver Screen III would be required by the Joint Venture Agreement to pay Disney an Underbudget Bonus equal to the difference between $13,500,000 and the average production cost, up to a maximum of $500,000 per Joint Venture Film, multiplied by the total number of Joint Venture Films. If the average production cost was greater than $13,500,000, Disney would be required to pay Silver Screen III an Overbudget Penalty equal to the difference between the average production cost and $13,500,000, up to a maximum of $500,000 per Joint Venture Film, multiplied by the total number of Joint Venture Films. In December, 1988, an Underbudget Bonus of approximately $6,024,000 was paid to Disney which increased the Budgeted Film Cost (or Acquisition Cost) of all Joint Venture Films. Upon revision, an additional Underbudget Bonus of $528,585 was paid in August 1990. Production Cost excluded certain items included in Budgeted Film Cost. No further Underbudget bonuses or Overbudget penalties are expected to be paid.
The revenue formula under the Joint Venture Agreement is designed to assure that Silver Screen III will receive Joint Venture distributions equal to not less than 100% of the Partnership Contribution applied toward the Joint Venture Films on a film-by-film basis before Disney recoups cost overruns or receives any share of profits. All revenues of the Joint Venture are derived exclusively from the revenues allocated to the Joint Venture pursuant to the Distribution Agreement during the term thereof. Revenues received by the Joint Venture in respect of Joint Venture Films will be allocated between the parties as follows:
---100% to Silver Screen III and Disney in proportion to their respective actual investments in the Budgeted Film Cost of each Joint Venture Film until they have recovered the amount of the Budgeted Film Cost actually expended or the Acquisition Cost of such Film;
---thereafter, 100% to Disney until Disney has recouped any cost overruns; and
---thereafter, after payment of applicable participations, 75% to Silver Screen III and 25% to Disney; provided that in the event that Silver Screen III has committed to less than the full amount of the Budgeted Film Cost or Acquisition Cost of a Film as permitted by the Joint Venture Agreement, the percentage of revenues allocable to Silver Screen III with respect to such Film will be equal to 75% of the percentage of such Budgeted Film Cost or Acquisition Cost committed by Silver Screen III, with the remainder allocated to Disney.
In addition, certain other payments in respect of "Revenue Shortfalls" were payable to the Joint Venture. The Revenue Shortfall for each Joint Venture Film was the difference, if any, between the Budgeted Film Cost actually expended and the sum of all revenues actually received by the Joint Venture from BV as of a settlement date (the "Settlement Date") occurring not later than five years after the U.S. theatrical release of such Joint Venture Film. On the Settlement Date of each Joint Venture Film, BV was obligated to pay to the Joint Venture an amount equal to the Revenue Shortfall (the "Revenue Shortfall Payment"), if any, provided, that in no event would the Revenue Shortfall Payment be greater than the revenues retained by BV with respect to such Joint Venture Film from all markets, subject to adjustment in certain cases. Silver Screen III received no Revenue Shortfall Payments during the years ended December 31, 1995 and 1996 and received $1.4 million during the year ended December 31, 1994. All required Revenue Shortfall Payments have been received by Silver Screen III.
Distribution Agreement - ----------------------
Pursuant to the Distribution Agreement, BV will distribute the Joint Venture Films for a term ending September 30, 1997, in all media throughout the world.
BV (either directly or through third-party licensees or affiliated companies) is obligated to release and distribute each of the Joint Venture Films delivered to it in accordance with and subject to customary and reasonable business practices in the motion picture industry in all media throughout the world, including theatrical, non-theatrical, television, cable television, home video, syndication, music, print publication, merchandising and new technologies.
BV has paid and will pay all costs incurred in connection with the promotion, marketing and distribution of each Joint Venture Film. In connection with the U.S. theatrical release of each Joint Venture Film, BV has committed to expend certain minimum amounts. The Distribution Agreement provides that BV is entitled to customary distribution fees, which vary in each medium, and that the Joint Venture is entitled to an escalating percentage of the gross proceeds generated by theatrical distribution of each Joint Venture Film.
Competition - -----------
Silver Screen III is in competition with other institutions which provide financing for films, some of which have substantially greater financial and personnel resources than the Managing General Partner and Silver Screen III. These institutions include the major film studios and television networks. There is substantial competition in the industry for a limited number of producers, directors, actors and properties which are able to attract major distribution in all media and all markets throughout the world.
There is intense competition within the industry for exhibition time at theaters and for the attention of the movie-going public. Competition for distribution in other media is as intense as the competition for theatrical distribution.
Employees - ---------
Silver Screen III has no employees. Silver Screen III's business is administered by the staff of the Managing General Partner.
ITEM 2.

ITEM 2. PROPERTIES.
Silver Screen III neither owns nor leases any physical properties. The Managing General Partner leases offices in New York, New York.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS.
Silver Screen III knows of no legal proceedings of a material nature to which it is a party or of which any of its properties is the subject.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted to a vote of security holders during the quarter ended December 31, 1996.
PART II
ITEM 5.

ITEM 5. MARKET FOR THE REGISTRANT'S UNITS OF LIMITED PARTNERSHIP INTEREST AND RELATED SECURITY HOLDER MATTERS.
As of February 14, 1997, there were 42,233 Limited Partners of record holding an aggregate of 600,000 limited partnership units of Silver Screen III (the "Units"). The Units are not traded securities in any established trading market.
The Partnership Agreement provides for quarterly distributions to Limited Partners out of receipts from operations, net of certain expenses and reserves. See the material set forth under "Item 11. Executive Compensation." Two distributions were made to the Limited Partners in 1996 which aggregated $3,750,000. The distributions per Unit were as follows: January 26 - $3.25 and July 26 - $3.00. Two distributions were made to the Limited Partners in 1995 which aggregated $3,480,000. The distributions per Unit were as follows: January 27 - $2.30 and October 23 - $3.50.
During 1996, certain groups not affiliated with Silver Screen III or the Managing General Partner made limited tender offers to acquire Units directly from Limited Partners. Silver Screen III has advised Limited Partners that the per Unit prices offered in such tender offers appears to be less than the amount per Unit expected to be distributed to Limited Partners upon the termination of Silver Screen III (expected to be by the end of 1997) and therefore Silver Screen III does not recommend that Limited Partners accept such offers.
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA
See notes to financial statements
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Results of Operations - ---------------------
The following is an analysis of the results of operations of Silver Screen III for the years ended 1996, 1995 and 1994.
Silver Screen III is a partnership and therefore generally not subject to U.S. federal taxes. No provision has been made for federal income taxes with respect to Silver Screen III's income since income or loss of Silver Screen III is required to be reported by the respective partners on their income tax returns.
Year Ended December 31, 1996 Compared to Year Ended December 31, 1995 - ---------------------------------------------------------------------
Net income for the year ended December 31, 1996 was approximately $5,885,000 compared to approximately $3,759,000 for the year ended December 31, 1995. Revenue for the year ended December 31, 1996 consisted of income from the Joint Venture of approximately $7,221,000, a $2,705,000 increase from the prior year. Film revenues continue to fluctuate since most of the films in which the Partnership has an interest have been released in the theatrical, home video and pay cable markets and are now making their way through the remaining television markets around the world. Income from the Joint Venture for 1996 was principally derived from "Oliver and Company," and lesser amounts from "Honey, I Shrunk the Kids," "Benji the Hunted" and other films in the portfolio.
Interest income generated by temporary investments of cash which is distributed to partners for the year ended December 31, 1996 was approximately $136,000 compared to $257,000 for the prior annual period. Interest rates ranged from 4.8% to 5.79% in 1996 while those for 1995 ranged from 5% to 6.02%. The decrease in interest rates resulted in a decrease in interest income of approximately $121,000 from 1995 to 1996. General and administrative expenses were approximately $681,000 for the year ended December 31, 1996, a $333,000 decrease from the prior year due to costs associated with preparation for negotiation of the sale of the Partnership's interest in the Joint Venture.
On September 30, 1996 Silver Screen III received an assessment from New York City regarding unincorporated business tax covering all periods from inception through December 31, 1995 of $878,000 (including interest). This liability was paid on the date of assessment. The Unincorporated Business Tax Expense reflects the excess of this payment over an amount previously established as a contingency reserve plus a provision for 1996.
Year Ended December 31, 1995 Compared to Year Ended December 31, 1994 - ---------------------------------------------------------------------
Net income for the year ended December 31, 1995 was approximately $3,759,000 compared to approximately $2,874,000 for the year ended December 31, 1994. Income for the year ended December 31, 1995 consisted of income from the Joint Venture of approximately $4,516,000, a $1,071,000 increase from the prior annual period. Film revenues increased in 1995 due to certain films still making their way through the remaining television markets around the world. Income from the Joint Venture for 1995 was principally derived from "Cocktail, " "Oliver and Company," "Shoot to Kill," and "Adventures in Babysitting."
Interest income generated by the investment in temporary investments of revenues pending distribution to partners for the year ended December 31, 1995 was approximately $257,000 compared to $255,000 for the prior annual period. The weighted average daily interest rate increased in 1995 to 5.771% from 4.194% in 1994 and the average funds available for investment decreased, resulting in a $2,000 increase in interest. General and administrative expenses were approximately $1,014,000 for the year ended December 31, 1995, a $188,000 increase from the prior annual period. The increase is attributable to an increase in reporting to partners expenses of $30,000 and to costs associated with preparations for negotiation of the sale of the Partnership's interest in the Joint Venture, which amounted to approximately $384,000. This cost was offset by a reduction of approximately $55,000 in payroll related expenses, $26,000 in audit fees, $138,000 in interest on overhead fees payable and $7,000 in miscellaneous expenses. Expenses from the sale of partnership's interest in the Joint Venture are considered to benefit each of the three partnerships: Silver Screen Partners II, L.P., Silver Screen Partners III, L.P. and Silver Screen Partners IV, L.P. (collectively and together with the Partnership, the "Silver Screen Partnerships"), and have been allocated among the Silver Screen Partnerships pro rata to the total original Limited Partner capital contributions to each of the Silver Screen Partnerships.
Investment in Joint Venture - ---------------------------
The investment in the Joint Venture was accounted for using the equity method of accounting. Under the equity method, the investment was initially recorded at cost, and was thereafter increased by additional investment, adjusted by Silver Screen III's share of the Joint Venture's results of
operations and reduced by distributions received from the Joint Venture. The Joint Ventures' fiscal year ends September 30, while Silver Screen III's fiscal year ends December 31. The investment in the Joint Venture on January 1, 1996 totaled $2,862,545.
Silver Screen III entered into the Buyout Agreement with Disney dated September 11, 1995 providing for the sale to Disney of all of Silver Screen III's interest in the Joint Venture. The Buyout Agreement provides for the payment of the purchase price of $125,000,000 in cash (subject to certain adjustment with respect to revenue received by Silver Screen III from the exploitation of the film "Oliver & Co.") Closing is scheduled to occur on September 30, 1997 subject to satisfaction of certain customary conditions. In addition to the purchase price, the Buyout Agreement that Buena Vista Pictures Distribution, Inc. ("BV") will continue to account for and make payments to the Joint Venture, as required by the Distribution agreement for all revenues received by BV through August 31, 1997.
As a result of the Buyout Agreement, Silver Screen III is using the cost method of accounting starting January 1, 1996. Under the cost method, distributions received are recognized as income and investments will be reduced in proportion that actual cash received bears to ultimate revenues expected.
Liquidity and Capital Resources - -------------------------------
Inasmuch as the funding obligations of Silver Screen III with respect to the financing of the Joint Venture Films have been fully complied with or reserved against, Silver Screen III has no material commitments for capital expenditures and does not intend to enter into any such commitments. Receipts from temporary investments and from the Joint Venture, less reserves established as determined by the Managing General Partner, are the sources of liquidity for Silver Screen III. Silver Screen III has no material requirements for liquidity other than its general and administrative expenses and quarterly distributions to holders of Units of limited partnership interests. Such sources are considered adequate for such needs.
The Managing General Partner expects that Silver Screen III will continue to receive distributions from the Joint Venture until Silver Screen III sells its interest in the Joint Venture on September 30, 1997. However, revenues in a particular quarter may not be sufficient to justify making a cash distribution and therefore, future cash distributions may fluctuate and there may be quarters where no distributions will be paid.
Closing under the Buyout Agreement with Disney is scheduled to occur on September 30, 1997. Silver Screen III currently expects to dissolve by the end of 1997 upon disposition of its remaining assets and distribution of cash to the partners.
ITEM 8.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See the financial statements referenced in Item 14 of this annual report.
ITEM 9.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Silver Screen III is a limited partnership managed by the Managing General Partner and has no officers or directors. The Managing General Partner also serves as managing general partner of Silver Screen Partners, L.P. and Silver Screen Partners II, L.P., limited partnerships formed to finance, own and exploit feature-length motion pictures pursuant to a license agreement with a subsidiary of Home Box Office, Inc. and pursuant to joint venture agreements with Disney, respectively. The officers and directors of the Managing General Partner are also officers and directors of Silver Screen Management Services, Inc. ("SSMS"), which serves as managing general partner of Silver Screen Partners IV, L.P. a limited partnership formed to finance, own and exploit feature-length motion pictures pursuant to a joint venture agreement with Disney shortly after the organization of SSMS in 1987. Neither the Limited Partners nor any general partner of Silver Screen III other than the Managing General Partner has the power to participate in the management of, have any control over the business of or act for, sign for or bind Silver Screen III.
Roland W. Betts, 50, is the President, Treasurer, a Director, principal shareholder and founder of the Managing General Partner. Mr. Betts is also the President, Treasurer, a Director and principal shareholder of SSMS. He is the Individual General Partner of Silver Screen Partners, L.P., Silver Screen Partners II, L.P., Silver Screen Partners III, L.P. and Silver Screen Partners IV, L.P. Mr. Betts has been President and a Director of International Film
Investors, Inc. ("IFI"), which is the Managing General Partner of International Film Investors, L.P., since 1982 and has been an officer since 1980. Mr. Betts is also the Individual General Partner of that Partnership. Mr. Betts is also the lead owner of the Texas Rangers Baseball Club; and the Chairman and largest shareholder of the Chelsea Piers Management, Inc. which is the general partner of the Chelsea Piers, L.P., a limited partnership which developed and operates a major public recreation and entertainment complex at the Chelsea Piers in New York City. Prior to joining IFI in 1980, Mr. Betts was engaged in the practice of law as an attorney in the Entertainment Department of the law firm of Paul, Weiss, Rifkind, Wharton & Garrison in New York.
In addition to Mr. Betts, the executive officers and directors of the Managing General Partner are as follows:
Name Positions Held - ---- --------------
Paul Bagley Chairman of the Board, Director Tom A. Bernstein Executive Vice President, Secretary, Director John A. Tommasini Director William Turchyn, Jr. Director
Paul Bagley, 54, is the founding partner of Stone Pine Capital LLC (1994), and is Chairman of FCM Fiduciary Capital Managers, LLC (1989 to date), the advisor to mezzanine and private equity funds. For more than twenty years prior to 1988, Mr. Bagley was engaged in investment banking activities with Shearson Lehman Hutton Inc. and its predecessor, E.F. Hutton & Company Inc. Mr. Bagley serves as Chairman of the Board of Directors of Silver Screen Management, Inc. and International Film Investors, Inc., which manage film portfolios with aggregate assets of $1.0 billion. Mr.Bagley has served on the boards of a number of public and private companies. Currently he is on the boards of America First Financial Fund, Fiduciary Capital, EurekaBank, Hollis-Eden Pharmaceuticals, Lithium Technology, Consolidated Capital, Logan Machinery Corp. and Pacific Consumer Funding. Mr. Bagley graduated from the University of California at Berkeley in 1965 with a B.S. in Business and Economics and from Harvard Business School in 1968 with an M.B.A. in Finance.
Tom A. Bernstein, 44, has been Executive Vice President of the Managing General Partner since June 1983 and Secretary, a Director and a principal shareholder since March 1985. He has also been Executive Vice President, Secretary, a Director and a principal shareholder of SSMS since its
organization. Mr. Bernstein is also President and Treasurer of Chelsea Piers Management, Inc. which is the general partner of Chelsea Piers, L.P.; and a limited partner of the Texas Rangers Baseball Club. Prior to June 1983, Mr. Bernstein was engaged in the practice of law as an attorney in the Entertainment Department of the law firm of Paul, Weiss, Rifkind, Wharton & Garrison in New York.
John A. Tommasini, 52, the President of Laidlaw Equities, Inc., has been a Director of the Managing General Partner since 1985 and a Director of SSMS since its organization. He was Senior Vice President of Shearson Lehman Hutton from January 1988 until March 30, 1990. He was associated with E.F. Hutton & Company from 1972 until 1988 and served as First Vice President from January 1985 to January 1988. He is also an Officer and a Director of American National Security, Inc.
William Turchyn, Jr., 51, has been a Director of the Managing General Partner and SSMS since their respective organizations. He was Executive Vice President of Shearson from January 1988 until April 1989. He was associated with E.F. Hutton & Company, Inc. from 1970 until 1988, was named First Vice President in 1982 and served as Senior Vice President from 1983 until January 1988. Mr. Turchyn is presently Senior Managing Director of the Private Client Group at Furman Selz Capital Management.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION.
The following table sets forth the fees, income, distributions and the amounts payable to the General Partners of Silver Screen III and their affiliates in connection with the management of Silver Screen III. The executive officers and directors of the Managing General Partner serve without direct compensation from Silver Screen III. Except as set forth below, the General Partners and their affiliates will receive no remuneration of any type whatsoever from Silver Screen III in connection with the administration of Silver Screen III's affairs.
- -------------------------------------------------------------------------------- (A) (B) (C) - --------------------------------------------------------------------------------
Name of Entity Capacities in which Cash compensation served
Silver Screen Managing General Overhead fee calculated as four Management, Inc. Partner percent of the Budgeted Film Cost (excluding overhead) of each Joint Venture Film. Pursuant to the Partnership Agreement, the overhead was paid in full on December 2, 1994. In addition, until the holders of Units had received cash distributions sufficient to reduce their Adjusted Capital Contributions plus an amount equal to 8% of their Adjusted Capital Contributions per annum to zero, the Managing General Partner was allocated 0.9% of the profits, losses and Disbursable Cash; from that time forward until the holders of Units have received sufficient cash distributions to reduce their Adjusted Capital Contributions plus an amount equal to 15% of their Adjusted Capital Contributions per annum to zero, the Managing General Partner was allocated 9.9% of the profits, losses and Disbursable Cash; thereafter the Managing General Partner receives 19.9% of such items. $932,812 was distributed to the Managing General Partner from Disbursable Cash.
- ---------------------- 1 See definitions
Roland W. Betts Individual General Mr. Betts is allocated 0.1% of Partner the profits, losses and Disbursable Cash. Mr. Betts received $4,688 therefrom in 1996.
Definitions Used in Cash Compensation Table - -------------------------------------------
INITIAL CAPITAL CONTRIBUTION .......... $500 per Unit
ADJUSTED CAPITAL CONTRIBUTION .......... With respect to each Unit, the Initial Capital Contribution reduced by all cash distributions thereon. The Adjusted Capital Contribution may not, however, be less than zero. The Adjusted Capital Contributions differ from the Limited Partners' capital accounts for tax and accounting purposes.
Disbursable Cash ...... Receipts from operations, after deducting cash used to pay operating expenses (including expenses reimbursable to the Managing General Partner), debt service, and amounts used for the creation or restoration of reserves, but without deduction for depreciation or amortization of film investments. Receipts from operations include all items of income, whether ordinary or extraordinary.
BUDGETED FILM COST .... The estimated cost of a Joint Venture Film, including contingency reserves of 7-1/2% and overhead of 17-1/2%. The Budgeted Film Cost also includes all fixed deferments, bonuses and participations in gross receipts payable before the Joint Venture has recouped its investment in that Joint Venture Film, fixed deferments and bonuses payable at or out of first net profits and an additional development fee to Disney in the amount of $500,000.
The Partnership Agreement provides that all Silver Screen III expenses, including, among other things, legal, auditing and accounting expenses, and the expenses of preparing and distributing reports to the Limited Partners, will be billed to and paid by Silver Screen III. Subject to restrictions contained in the Partnership Agreement, the Managing General Partner has been reimbursed for certain administrative services. In addition, the Managing General Partner has been reimbursed for expenses incurred in connection with the organization of Silver Screen III and the public offering of the Units.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
No officer or Director of the Managing General Partner beneficially owns any equity securities of Silver Screen III. To the knowledge of Silver Screen III, no unitholder beneficially owns more than 5% of the Units of Silver Screen III.
Roland W. Betts and Tom A. Bernstein are controlling shareholders of the Managing General Partner. 2,000,000 shares of the 3,750,000 issued and outstanding shares of Common Stock of the Managing General Partner are owned by Roland W. Betts and 1,250,000 shares are owned by Tom A. Bernstein. An additional 500,000 shares have been issued to International Film Investors, L.P.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
See Items 10, 11 and 12 hereof.
PART IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a)1. Financial Statements
The following financial statements of Silver Screen Partners III, L.P. (a Limited Partnership) are included pursuant to Item 8 hereof: Page
Page ----
Independent auditors' reports .................
Balance sheets as of December 31, 1996 and 1995 .....................................
Statement of operations for the years ended December 31, 1996, 1995 and 1994 .........
Statement of partners' equity for the years ended December 31, 1996, 1995 and 1994....
Statement of cash flows for the years ended December 31, 1996, 1995 and 1994..........
Notes to Financial Statements.................. -12
(a)2. Financial Statement Schedules
No schedules are listed because they are not applicable or the required information is shown in the financial statements or notes thereto.
(a)3. Exhibits
4 Amended and Restated Agreement of Limited Partnership2
- -------------------
2 Incorporated by reference to Silver Screen III's Registration Statement on Form S-1, Registration No. 33-8059.
10(a) Joint Venture Agreement dated as of September 25, 1986 by and between Silver Screen III and the Walt Disney Company.3
10(b) Distribution Agreement dated as of September 25, 1986 by and between Disney -- Silver Screen III Joint Venture and BV Distribution Co., Inc.4
10(c) Letter Agreement dated September 11, 1995 by and between Silver Screen III and The Walt Disney Company.5
(b) Report on Form 8-K
No reports on Form 8-K have been filed by Silver Screen III during the last quarter of the period covered by this annual report.
- -------------------
3 Incorporated by reference to exhibits filed with Amendment No. 1 to Silver Screen III's Registration Statement on Form S-1, Registration No. 33-8059.
4 See footnote three.
5 Incorporated by reference as exhibit 10 filed with Form 10-Q, quarterly report dated September 30, 1995.
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.
SILVER SCREEN PARTNERS III, L.P. (a Delaware Limited Partnership)
By SILVER SCREEN MANAGEMENT, INC. Managing General Partner
Dated: March 31, 1997 By /s/ Roland W. Betts ------------------------------ Roland W. Betts, President/Treasurer
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.
Dated: March 31, 1997 By /s/ Roland W. Betts ------------------------------ Roland W. Betts
SILVER SCREEN MANAGEMENT, INC. Managing General Partner
Dated: March 31, 1997 By /s/ Roland W. Betts ------------------------------ Roland W. Betts, President/Treasurer
Dated: March 31, 1997 By /s/ Roland W. Betts * ------------------------------- Paul Bagley Director, Silver Screen Management, Inc.
Dated: March 31, 1997 By /s/ Roland W. Betts * ------------------------------- Tom A. Bernstein Director, Silver Screen Management, Inc.
Dated: March 31, 1997 By /s/ Roland W. Betts * ------------------------------- John A. Tommasini Director, Silver Screen Management, Inc.
Dated: March 31, 1997 By /s/ Roland W. Betts * ------------------------------ William Turchyn, Jr. Director, Silver Screen Management, Inc. - ---------- * By Roland W. Betts, Attorney-in-Fact