-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CUGlXiC6Og+swDw5U6rWj7LA0mPyXOjtkcycSw9MJR4TUfDsySvBBtxf5v4qfoke 1f6z+oiGpaZoLsE1L3FECQ== 0000912057-97-028046.txt : 19970815 0000912057-97-028046.hdr.sgml : 19970815 ACCESSION NUMBER: 0000912057-97-028046 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: VDI MEDIA CENTRAL INDEX KEY: 0001014733 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE & VIDEO TAPE PRODUCTION [7812] IRS NUMBER: 954272619 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-21917 FILM NUMBER: 97663207 BUSINESS ADDRESS: STREET 1: 6920 SUNSET BOULEVARD CITY: HOLLYWOOD STATE: CA ZIP: 90028 BUSINESS PHONE: 2139575500 MAIL ADDRESS: STREET 1: 6920 SUNSET BLVD CITY: HOLLYWOOD STATE: CA ZIP: 90028 10-Q 1 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997 Commission File Number 0-21917 _________________ VDI MEDIA (Exact name of registrant as specified in its charter) California 95-4272619 (State of or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 6920 Sunset Boulevard, 90028 Hollywood, California (Zip Code) (Address of principal executive offices) Registrant's telephone number, including area code (213) 957-5500 Securities registered pursuant to Section 12(b) of the Act None. Securities registered pursuant to Section 12(g) of the Act Common Stock, no par value. _____________ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] As of August 13, 1997, there were 9,580,000 shares of Common Stock outstanding. PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS VDI MEDIA CONSOLIDATED BALANCE SHEET ASSETS
DECEMBER 31, JUNE 30, 1996 1997 ------------ ------------ (UNAUDITED) Current assets: Cash............................................................... $ 564,000 $ 10,747,000 Accounts receivable, net of allowances for doubtful accounts of $460,000 and $665,000, respectively................... 4,537,000 5,999,000 Amounts receivable from officer.................................... 1,214,000 Amounts receivable from employees.................................. 224,000 5,000 Inventories........................................................ 144,000 155,000 Prepaid expenses and other current assets.......................... 2,000 662,000 ----------- ------------ Total current assets............................................ 6,685,000 17,568,000 Property and equipment, net........................................ 3,520,000 5,448,000 Deferred offering costs............................................ 876,000 Goodwill, net (Note 2)............................................. 2,240,000 Other assets, net.................................................. 97,000 98,000 ----------- ------------ Total assets.................................................... 11,178,000 $ 25,354,000 ----------- ------------ ----------- ------------ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable................................................... $ 2,394,000 $ 2,276,000 Accrued expenses................................................... 1,606,000 1,794,000 Current portion of notes payable................................... 728,000 14,000 Current portion of capital lease obligations....................... 32,000 814,000 Deferred tax liability (Note 3).................................... 185,000 ----------- ------------ Total current liabilities....................................... 4,760,000 5,083,000 ----------- ------------ Notes payable, less current portion................................ 1,102,000 ----------- ------------ Capital lease obligations, less current portion.................... 75,000 855,000 ----------- ------------ Shareholders' equity: Preferred stock; no par value; 5,000,000 authorized; none outstanding ................................................. Common stock; no par value; 50,000,000 authorized; 9,580,000 shares issued and outstanding........................... 1,015,000 19,056,000 Retained earnings.................................................. 4,226,000 360,000 ----------- ------------ Total shareholders' equity...................................... 5,241,000 19,416,000 ----------- ------------ $11,178,000 $25,354,000 ----------- ------------ ----------- ------------
See accompanying notes to consolidated financial statements 2 VDI MEDIA CONSOLIDATED STATEMENT OF INCOME (Unaudited)
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED JUNE 30, JUNE 30, -------------------------- --------------------------- 1996 1997 1996 1997 ----------- ---------- ------------ ----------- Revenues............................................ $ 5,471,000 $8,811,000 $ 11,308,000 $17,298,000 Cost of goods sold.................................. 3,446,000 5,345,000 7,093,000 10,417,000 ----------- ---------- ------------ ----------- Gross profit........................................ 2,025,000 3,466,000 4,215,000 6,881,000 Selling, general and administrative expense......... 1,306,000 2,084,000 2,724,000 4,236,000 ----------- ---------- ------------ ----------- Operating income.................................... 719,000 1,382,000 1,491,000 2,645,000 Interest expense.................................... 85,000 46,000 155,000 165,000 Interest income..................................... 5,000 99,000 10,000 151,000 ----------- ---------- ------------ ----------- Income before income taxes.......................... 639,000 1,435,000 1,346,000 2,631,000 Provision for income taxes.......................... 11,000 566,000 23,000 757,000 Establishment of deferred tax liability (Note 3).... 185,000 ----------- ---------- ------------ ----------- Net income.......................................... $ 628,000 $ 869,000 $ 1,323,000 $ 1,689,000 ----------- ---------- ------------ ----------- ----------- ---------- ------------ ----------- Net income per share................................ $ 0.09 $ 0.20 ---------- ----------- ---------- ----------- Weighted average number of shares................... 9,580,000 8,551,333 ---------- ----------- ---------- -----------
See accompanying notes to consolidated financial statements 3 VDI MEDIA CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
FOR THE SIX MONTHS ENDED JUNE 30, -------------------------- 1996 1997 ----------- ----------- Cash flows from operating activities: Net income ....................................................... $ 1,323,000 $ 1,689,000 Adjustment to reconcile net income to net cash provided by operating activities Depreciation and amortization..................................... 889,000 1,599,000 Increase in deferred taxes........................................ 185,000 Provision for doubtful accounts................................... 51,000 65,000 Changes in assets and liabilities net of effects from purchase of Woodholly Productions: Decrease in accounts receivable................................... 103,000 65,000 (Increase) decrease in other receivables.......................... (1,348,000) 209,000 Decrease (increase) in inventories................................ 25,000 (11,000) Decrease (increase) in prepaid expenses and other current assets.. 49,000 (599,000) Decrease in other assets.......................................... 1,000 (Increase) decrease in deferred offering costs.................... (236,000) 876,000 Decrease in accounts payable...................................... (13,000) (607,000) Decrease in accrued expenses...................................... (128,000) (106,000) ----------- ----------- Net cash provided by operating activities........................... 716,000 3,365,000 ----------- ----------- Cash used in investing activities Capital expenditures.............................................. (723,000) (329,000) Payment for purchase of Woodholly, net of cash acquired........... (4,278,000) ----------- ----------- Net cash used in investing activities............................... (723,000) (4,607,000) Cash flows from financing activities: Distributions to shareholders..................................... (501,000) (5,555,000) Change in revolving credit agreement.............................. 1,010,000 Proceeds from sale of common stock................................ 18,041,000 Repayment of notes payable........................................ (399,000) (1,816,000) Repayment of amounts receivable from officer...................... 1,225,000 Repayment of subordinated notes payable to related parties........ (255,000) Repayment of capital lease obligations............................ (54,000) (470,000) ----------- ----------- Net cash (used in) provided by financing activities................. (199,000) 11,425,000 Net (decrease) increase in cash..................................... (206,000) 10,183,000 Cash at beginning of period......................................... 415,000 564,000 ----------- ----------- Cash at end of period............................................... $ 209,000 $10,747,000 ----------- ----------- ----------- ----------- Supplemental disclosure of cash flows information: Cash paid for: Interest.......................................................... $ 168,000 $ 165,000 ----------- ----------- ----------- ----------- Income tax........................................................ $ 68,000 $ 1,316,000 ----------- ----------- ----------- -----------
See accompanying notes to financial statements 4 VDI MEDIA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 1997 NOTE 1 -- THE COMPANY VDI MEDIA (the "Company") is a provider of high quality value-added video distribution and duplication services including distribution of national television spot advertising, trailers and electronic press kits. The Company's services consist of (i) the physical and electronic delivery of broadcast quality advertising, including spots, trailers, electronic press kits and infomercials, and syndicated television programming to television stations, cable television and other end-users nationwide and (ii) a broad range of video services, including the duplication of video in all formats, element storage, standards conversions, closed captioning and transcription services, and video encoding for air play verification purposes. The Company also provides its customers value-added post production and editing services. The Company is headquartered in Hollywood, California and has additional facilities in West Los Angeles and Culver City, California and Tulsa, Oklahoma. In the first quarter of 1997, the Company completed the sale of 3,120,000 common shares, no par value ("Common Stock"), in an initial public offering (the "Offering"). Prior to the Offering, the Company had elected S Corporation status for federal and state income tax purposes. As a result of the Offering, the S Corporation status terminated. Thereafter, the Company has paid federal and state income taxes as a C Corporation. The termination of the Company's S Corporation status resulted in the establishment of a net deferred tax liability calculated at normal federal and state income rates, causing a one-time non-cash charge of $185,000 against earnings for additional income tax expense in the quarter ended March 31, 1997. In May 1996, the Company effected a 333-for-1 common stock split and increased the number of authorized shares to 50,000,000 shares of common stock. All share amounts in the accompanying financial statements have been retroactively restated to reflect this split. The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles and the Securities and Exchange Commission's rules and regulations for reporting interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 1997 are not necessarily indicative of the results that may be expected for the year ending December 31, 1997. These financial statements should be read in conjunction with the financial statements and related notes contained in the Company's Form 10-K for the year ended December 31, 1996. NOTE 2--WOODHOLLY ACQUISITION On January 1, 1997, the Company acquired all of the assets of Woodholly Productions ("Woodholly Productions"). Woodholly Productions provides full service duplication, distribution, video content storage and ancillary services to major motion picture studios, advertising agencies and independent production companies for both domestic and international use. As consideration, the Company will pay the partners of Woodholly Productions a maximum of $9 million, of which $4 million is to be paid in installments commencing in January 1997. The remaining balance is subject to earn-out provisions which are predicated upon Woodholly Productions attaining certain operating income goals, as set forth in the purchase agreement, in each quarter through December 31, 2001. The Company has accounted for this acquisition as a purchase. Goodwill arising from this transaction is being amortized over twenty years. The contingent purchase price, to the extent earned, will be recorded as an increase to goodwill. 5 The accompanying consolidated financial statements include the accounts of Woodholly Productions and the Company. All material intercompany transactions and balances have been eliminated. The consolidated statement of income includes Woodholly Productions' results of operations from the effective date of the acquisition. NOTE 3 -- S CORPORATION DISTRIBUTION In connection with the termination of its S Corporation status (see Note 1), the Company distributed $5.6 million of the net proceeds of the Offering ("S Corp Distribution") to its three shareholders in respect of previously taxed and undistributed earnings of the Company. A final distribution of approximately $0.3 million is expected to be made in August 1997. NOTE 4 -- SUBSEQUENT EVENT On July 31, 1997, the Company agreed to acquire all of the outstanding shares of Multi-Media Services, Inc. a duplication and distribution company specializing in commercial advertisers and major ad agencies. The Company paid a purchase price of $7 million. In addition, the agreement calls for earn-out payments of up to $2 million (exclusive of interest) in the event Multi-Media meets specified financial goals. The Company expects to account for this transaction as a purchase. The contingent purchase price, to the extent earned, will be recorded as an increase in goodwill and will be amortized over the remaining life of such intangible asset. 6 VDI MEDIA MANAGEMENT'S DISCUSSION AND ANALYSIS - (CONTINUED) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS In connection with the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995, the Company, in its Annual Report on Form 10-K for the year ended December 31, 1996, outlined cautionary statements identifying important factors that could cause the Company's actual results to differ materially from those projected in forward-looking statements made by, or on behalf of, the Company. Such forward-looking statements, as made within this Quarterly Report on Form 10-Q, should be considered in conjunction with the information included in the Company's Annual Report on Form 10-K for the year ended December 31, 1996 and the risk factors set forth in the Company's prospectus as filed with the Securities and Exchange Commission on February 19, 1997. SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996 REVENUES. Revenues increased by $6.0 million or 53.0% to $17.3 million for the six month period ended June 30, 1997 compared to $11.3 million for the six month period ended June 30, 1996. The increase in revenue was due to increased volume resulting from (i) the availability of new services and capacity resulting from the acquisition of Woodholly Productions and (ii) substantially increased marketing of the Company's national distribution capabilities through the Tulsa Control Center. GROSS PROFIT. Gross profit increased $2.7 million or 66.3% to $6.9 million for the six month period ended June 30, 1997 compared to $4.2 million for the six month period ended June 30, 1996. As a percentage of revenues, gross profit increased from 37.3% to 39.8%. The increase in gross profit as a percentage of revenues was attributable to (i) a reduction in the cost of fiber optic and satellite costs which resulted from improved video trafficking logistics through the Tulsa Control Center and (ii) lower shipping expenses for the services provided by Woodholly Productions which are generally distributed to fewer locations. These amounts were offset by increased direct labor resulting from the Woodholly Productions acquisition. SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and administrative expense increased $1.5 million or 55.5% to $4.2 million for the six month period ended June 30, 1997 compared to $2.7 million for the six month period ended June 30, 1996. As a percentage of revenues, selling, general and administrative expense increased to 24.5% for the six month period ended June 30, 1997 compared to 24.1% for the six month period ended June 30, 1996. This increase is due to increased headcount in the Company's sales and marketing departments and, in addition, selling, general and administrative expense for the three months ended March 31, 1997 includes salaries paid to the former owners of Woodholly Productions; such amounts were formerly recorded as partnership distributions, and, as such, were not reflected in Woodholly Production's results of operations. OPERATING INCOME. Operating income increased $1.2 million or 77.4% to $2.6 million for the six month period ended June 30, 1997 compared to $1.5 million for the six month period ended June 30, 1996. INCOME TAXES. Prior to the Offering, the Company operated as an S Corporation. As such, the Company was not responsible for federal income taxes and provided for state income taxes at reduced rates. As a result of the Offering, the Company's S Corporation status has terminated. Accordingly, the Company will, in future periods, provide for all income taxes at higher statutory rates. These factors are estimated to result in an effective tax rate for periods subsequent to the Offering of approximately 40%. For the six month period ended June 30, 1997, the Company has recorded an additional one-time non-cash charge of $0.2 million for additional deferred taxes based upon an increase in the effective tax rate for the Company's S Corporation status (1.5%) to C Corporation status 7 VDI MEDIA MANAGEMENT'S DISCUSSION AND ANALYSIS - (CONTINUED) (40%) applied to the temporary differences between the financial reporting and tax basis of the Company's assets and liabilities. NET INCOME. Net income for the six month period ended June 30, 1997 increased $0.4 million or 27.7% to $1.7 million compared to $1.3 million in 1996. Such increase is not proportionate to the increase in operating income as the Company currently provides for income taxes at an effective rate of approximately 40%. In the prior comparable period the Company was taxed as an S Corporation and provided for income taxes at an effective rate of 1.5%. THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO THREE MONTHS ENDED JUNE 30, 1996 REVENUES. Revenues increased by $3.3 million or 61.0% to $8.8 million for the three month period ended June 30, 1997 compared to $5.5 million for the three month period ended June 30, 1996. The increase in revenue was due to increased volume resulting from (i) the availability of new services and capacity resulting from the acquisition of Woodholly Productions and (ii) substantially increased marketing of the Company's national distribution capabilities through the Tulsa Control Center. GROSS PROFIT. Gross profit increased $1.5 million or 71.2% to $3.5 million for the three month period ended June 30, 1997 compared to $2.0 million for the three month period ended June 30, 1996. As a percentage of revenues, gross profit increased from 37.0% to 39.3%. The increase in gross profit as a percentage of revenues was attributable to (i) reduction in the cost of fiber optic and satellite costs which resulted from improved video trafficking logistics through the Tulsa Control Center and (ii) lower shipping expenses for the services provided by Woodholly Productions which are generally distributed to fewer locations. SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and administrative expense increased $0.8 million or 59.6% to $2.1 million for the three month period ended June 30, 1997 compared to $1.3 million for the three month period ended June 30, 1996. As a percentage of revenues, selling, general and administrative expense decreased to 23.7% for the three month period ended June 30, 1997 compared to 23.9% for the three month period ended June 30, 1996. This decrease in selling, general and administrative expense as a percentage of revenues was primarily due to the spreading of fixed overhead expenses, in particular the fixed portion of administrative wages, over a higher revenue base in the three month period ended June 30, 1997 than to the comparable period in 1996. OPERATING INCOME. Operating income increased $0.7 million or 92.2% to $1.4 million for the three month period ended June 30, 1997 compared to $0.7 million for the three month period ended June 30, 1996. INCOME TAXES. Prior to the Offering, the Company operated as an S Corporation. As such, the Company was not responsible for federal income taxes and provided for state income taxes at reduced rates. As a result of the Offering, the Company's S Corporation status has terminated. Accordingly, the Company will, in future periods, provide for all income taxes at higher statutory rates. These factors are estimated to result in an effective tax rate for periods subsequent to the Offering of approximately 40%. NET INCOME. Net income for the three month period ended June 30, 1997 increased $0.2 million or 38.4% to $0.9 million compared to $0.6 million in 1996. Such increase is not proportionate to the increase in operating income as the Company currently provides for income taxes at an effective rate of approximately 40%. In the prior comparable period the Company was taxed as an S Corporation and provided for income taxes at an efffective rate of 1.5%. 8 VDI MEDIA MANAGEMENT'S DISCUSSION AND ANALYSIS - (CONTINUED) LIQUIDITY AND CAPITAL RESOURCES This discussion should be read in conjunction with the notes to the financial statements and the corresponding information more fully described in the Company's Form 10-K for the year ended December 31, 1996. Since its inception, the Company has financed its operations through internally generated cash flow, borrowings under lending agreements with financial institutions and, to a lesser degree, borrowings from related parties. On February 24, 1997 the Company completed the Offering of 2,800,000 shares of Common Stock, 200,000 of which were sold on behalf of a selling shareholder. The net proceeds of the Offering to the Company were approximately $15.9 million after deducting the underwriters' discount of approximately $1.3 million and offering expenses of approximately $1.1 million. Additionally, on March 25, 1997, the underwriters of the Offering exercised their over-allotment option for an additional 320,000 shares of Common Stock with net proceeds to the Company of approximately $2.1 million after deduction of the underwriters' discount of approximately $0.2 million. At June 30, 1997, the Company's cash and cash equivalents aggregated $10.7 million. The Company's operating activities provided cash of $3.4 million for the six months ended June 30, 1997 and $0.7 million for the six months ended June 30, 1996. The Company's investing activities used cash of $4.6 million for the six months ended June 30, 1997, including $4.3 million for the acquisition of Woodholly Productions and $0.3 million for the addition and replacement of capital equipment necessary to accommodate increased customer demands for the Company's services, as well as investments in management information systems. The Company's business is equipment intensive, requiring periodic expenditures of cash or the incurrence of additional debt to acquire additional videotape duplication equipment in order to increase capacity or replace existing equipment. The Company spent approximately $0.3 million of capital expenditures during the first six month of 1997 to upgrade and replace equipment, and for management information systems upgrades. The Company expects to spend approximately $1.0 million on capital expenditures during the third quarter of 1997 to upgrade and replace equipment and for management information systems upgrades. The Company's financing activities provided cash of $11.4 million in the first six months of fiscal 1997. Cash flows from financing activities during such six month period include the effect of the Offering and the subsequent exercise of the over allotment option, which raised net proceeds of approximately $18.0 million. Using the proceeds of the Offering, the Company repaid $1.8 million outstanding under its term loan with a bank. In addition, the Company paid the first two installments of the final S Corp Distribution to its shareholders. Such distribution represents previously taxed and undistributed earnings of the Company while an S Corporation. The final installment, which is currently estimated to be approximately $0.3 million, is expected to be paid on or before August 31, 1997. In January 1997 the Company acquired substantially all of the assets and assumed certain liabilities of Woodholly Productions (the "Woodholly Acquisition"). In connection with the Woodholly Acquisition the Company executed $4.0 million promissory notes. These promissory notes bore interest at 8% per annum and were repaid on February 28, 1997. The purchase price consists of an initial purchase price of $4.0 million plus an as yet undetermined contingent purchase price. The contingent purchase price is to be earned and paid based on the total operating income (as defined) resulting from the financial results of Woodholly Productions as a separate division of the Company. The contingent purchase price, in total, is limited to $5.0 million. The excess of the initial consideration over the fair value of the assets acquired and liabilities assumed of approximately 9 VDI MEDIA MANAGEMENT'S DISCUSSION AND ANALYSIS - (CONTINUED) $1.8 million has been allocated to goodwill. Goodwill associated with the transaction will be amortized over 20 years. The contingent purchase price, to the extent earned, will be treated as an increase in goodwill. The Woodholly Acquisition was accounted for by the Company under the purchase method of accounting. In connection with the purchase of a portion of the common stock owned by one of the Company's founders in April 1996, the Company borrowed an additional $1.2 million under its revolving credit agreement and loaned such amount to the Company's chief executive officer. This loan was repaid in April 1997. The Company had a $2.0 million revolving credit agreement with Union Bank (the "Revolving Credit Agreement"). The Revolving Credit Agreement expired on June 30, 1997. Management is in the process of negotiating a new facility at similar terms in the near future. In July 1995, the Company obtained a term loan in the original amount of approximately $2.8 million with a bank. Amounts outstanding under the term loan were repaid by the Company in February 1997 with a portion of the proceeds of the Offering. Management believes that cash generated from the Offering, ongoing operations, and its existing working capital will fund necessary capital expenditures and provide adequate working capital for at least the next twelve months. 10 VDI MEDIA MANAGEMENT'S DISCUSSION AND ANALYSIS - (CONTINUED) The Company, from time to time, considers the acquisition of businesses complementary to its current operations. Consummation of any such acquisition or other expansion of the business conducted by the Company may be subject to the Company securing additional financing. NEW ACCOUNTING STANDARDS In March 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings per Share" ("FAS 128") which will become effective in the fourth quarter of 1997, FAS 128 replaces the presentation of earnings per share reflected on the Statement of Income with a dual presentation of Basic Earnings per Share ("Basic EPS") and Diluted Earnings per Share ("Diluted EPS"). FAS 128 does not permit early application; however, it requires, when implemented in the fourth quarter of 1997, restatement of previously reported earnings per share for each income statement presented. The Company does not expect the adoption of FAS 128 to have a material impact on its financial condition or results of operations. In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("FAS 130") which will become effective in fiscal 1998. The Company does not expect the adoption of FAS 130 to have a material impact on its financial condition or results of operations. In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information" ("FAS 131") which will become effective in fiscal 1998. FAS 131 establishes standards for the way publicly-held companies report information about operating segments as well as disclosures about products and services, geographic areas and major customers. However, the Company does not expect the adoption of FAS 131 to have a material impact on its consolidated financial condition or results of operations. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit NO. DESCRIPTION ------- ----------- 27 Financial Data Schedule (b) Reports on Form 8-K None. 11 SIGNATURES Pursuant to the requirements 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. VDI MEDIA DATE: August 14, 1997 BY: /s/ DONALD R. STINE ------------------------------ Donald R. Stine Chief Financial Officer and Treasurer (duly authorized officer and principal financial officer) 12 EX-27 2 FDS
5 6-MOS DEC-31-1997 APR-01-1997 JUN-30-1997 1,349,000 9,398,000 6,664,000 (665,000) 155,000 17,568,000 17,352,000 (11,904,000) 25,354,000 6,083,000 0 0 0 0 0 25,354,000 17,298,000 17,298,000 10,417,000 10,417,000 4,236,000 0 185,000 2,631,000 942,000 1,689,000 0 0 0 1,689,000 0.20 0.20
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