-----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, TMAzDea1LQNhjK/5WnYXJQDLjB7C9Gv7bdSUFjEafSdvJCvd+PWHbNntZzdTlO+h WBRJZmxLyqmA2dIFXJSWoA== 0001047469-99-003599.txt : 19990208 0001047469-99-003599.hdr.sgml : 19990208 ACCESSION NUMBER: 0001047469-99-003599 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19981117 ITEM INFORMATION: FILED AS OF DATE: 19990205 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: 8-K/A SEC ACT: SEC FILE NUMBER: 000-21917 FILM NUMBER: 99522955 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 8-K/A 1 FORM 8-K/A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K/A AMENDMENT NO. 2 CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) NOVEMBER 17, 1998 VDI MEDIA (Exact Name of Registrant as Specified in its Charter) CALIFORNIA 0-21917 95-4272619 (State or Other Jurisdiction (Commission (I.R.S. Employer of Incorporation) File Number) Identification No.) 6920 SUNSET BOULEVARD HOLLYWOOD, CALIFORNIA 90028 (Address of Principal Executive Offices) (Zip Code) (323) 957-5500 Registrant's telephone number, including area code The undersigned registrant (the "Registrant") hereby amends the following items of its Current Report on Form 8-K dated November 17, 1998 (the "Report") as follows: ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS The Registrant amends the information set forth in Item 7(b) of the Report and restates such item in its entirety as set forth below. Item 7(b) Pro Forma Financial Information The following unaudited pro forma financial statements give effect to the acquisition of DUBS Incorporated (Dubs). The unaudited pro forma combined balance sheet presents the combined financial position of VDI Media and Dubs at September 30, 1998 as if VDI Media had acquired Dubs on that date. Such pro forma information is based upon the unaudited historical balance sheet data of VDI Media and the audited balance sheet data of Dubs on September 30, 1998. The unaudited pro forma combined statements of operations for the nine months ended September 30, 1998 and for the year ended December 31, 1997, reflect adjustments as if the transaction had occurred on January 1, 1997. The acquisition is being accounted for as a purchase. The unaudited pro forma combined financial statements reflect VDI Media's allocation of the purchase price of approximately $6.9 million (plus the assumption of trade payables and long-term debt) to the assets and remaining liabilities assumed. The final allocation of purchase price may vary as additional information is obtained, and differ from that used in the unaudited pro forma combined financial statements. The unaudited pro forma combined financial statements should be read in conjunction with the separate historical financial information and related notes of Dubs, appearing in Item 7 (a) of this current report on Form 8-K and the historical financial statements, related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" of the Company for the year ended December 31, 1997, and the nine months ended September 30, 1998, previously filed with the Securities and Exchange Commission (SEC). The pro forma information is not necessarily indicative of the results that would have been reported had the acquisition actually occurred on the dates specified, nor is it necessarily indicative of the future results of the combined companies. PRO FORMA COMBINED BALANCE SHEET The following unaudited pro forma combined balance sheet presents the combined financial position of VDI Media and Dubs as of September 30, 1998. Such unaudited pro forma information is based on the combined historical balance sheets of VDI Media and Dubs as of September 30, 1998, giving effect to the pro forma adjustments described in the accompanying Notes to the Pro Forma Combined Financial Statements.
SEPTEMBER 30, 1998 ------------------------------------------------------------------------ DUBS COMBINED VDI MEDIA INCORPORATED ADJUSTMENTS PRO FORMA ----------------- ----------------- -------------- ------------- ASSETS Current assets: Cash and cash equivalents $ 2,261,000 $ 101,000 $ - $ 2,362,000 Accounts receivable, net 14,871,000 2,603,000 17,474,000 Inventories 558,000 362,000 920,000 Deferred income taxes 508,000 508,000 Prepaid expenses and other current assets 429,000 237,000 666,000 ---------------- --------------- ------------- ------------- Total current assets 18,627,000 3,303,000 - 21,930,000 Property and equipment, net 14,211,000 2,263,000 16,474,000 Other assets 339,000 339,000 Goodwill and other intangibles, net 18,480,000 140,000 6,824,000 (A) 25,444,000 ---------------- --------------- ------------- ------------- $51,657,000 $ 5,706,000 $ 6,824,000 $64,187,000 ---------------- --------------- ------------- ------------- ---------------- --------------- ------------- ------------- LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable $ 3,629,000 $ 1,265,000 $ - $ 4,894,000 Accrued expenses 1,461,000 804,000 2,265,000 Borrowings under revolving credit agreement 17,964,000 1,180,000 (1,180,000) (B) 17,964,000 Current portion of notes payable 25,000 1,040,000 (1,040,000) (B) 25,000 Current portion of capitalized lease obligations 678,000 24,000 702,000 ---------------- --------------- ------------- ------------- Total current liabilities 23,757,000 4,313,000 (2,220,000) 25,850,000 ---------------- --------------- ------------- ------------- Deferred income taxes 103,000 - 103,000 Notes payable, less current portion - 1,867,000 8,570,000 (A),(B) 10,437,000 Capital lease obligations, less current portion 279,000 - 279,000 Shareholders' equity (deficit): Preferred stock - Common stock 20,608,000 - - 20,608,000 Additional paid-in capital - 750,000 (750,000) (A) - Retained earnings (deficit) 6,910,000 (1,224,000) 1,224,000 (A) 6,910,000 ---------------- --------------- ------------- ------------- Total shareholders' equity (deficit) 27,518,000 (474,000) 474,000 27,518,000 ---------------- --------------- ------------- ------------- $51,657,000 $ 5,706,000 $ 6,824,000 $64,187,000 ---------------- --------------- ------------- ------------- ---------------- --------------- ------------- -------------
See accompanying Notes to Pro Forma Combined Financial Statements PRO FORMA COMBINED STATEMENT OF OPERATIONS The following unaudited pro forma combined statement of operations presents the combined results of operations of VDI Media and Dubs for the year ended December 31, 1997 by combining the historical statements of operations for VDI Media and Dubs for the period, giving effect to the pro forma adjustments described in the accompanying Notes to the Pro Forma Combined Financial Statements.
YEAR ENDED DECEMBER 31, 1997 -------------------------------------------------------------------- DUBS COMBINED VDI MEDIA INCORPORATED ADJUSTMENT PRO FORMA ------------ -------------- ------------ ------------- Revenues $40,772,000 $ 17,094,000 $ - $57,866,000 Cost of goods sold 24,898,000 13,535,000 - 38,433,000 ----------- ------------ --------- ----------- Gross Profit 15,874,000 3,559,000 - 19,433,000 Selling, general, and administrative expense 9,253,000 4,198,000 296,000 (C) 13,747,000 ----------- ------------ --------- ----------- Operating income (loss) 6,621,000 (639,000) (296,000) 5,686,000 Interest expense 294,000 497,000 280,000 (D) 1,071,000 Interest income 226,000 30,000 256,000 ----------- ------------ --------- ----------- Income (loss) before income taxes 6,553,000 (1,106,000) (576,000) 4,871,000 Provision (benefit) for income taxes 2,572,000 3,000 (624,000) (E) 1,951,000 ----------- ------------ --------- ----------- Net income (loss) $ 3,981,000 $ (1,109,000) $ 48,000 $ 2,920,000 ----------- ------------ --------- ----------- ----------- ------------ --------- ----------- Earnings per share: Basic: Net income per share $ 0.44 $ 0.32 Weighted average number of shares 9,122,575 9,122,575 Diluted: Net income per share $ 0.43 $ 0.32 Weighted average number of shares including the dilutive effect of stock options 9,207,940 9,207,940
See accompanying Notes to Pro Forma Combined Financial Statements PRO FORMA COMBINED STATEMENT OF OPERATIONS The following unaudited pro forma combined statement of operations presents the combined results of operations of VDI Media and Dubs for the nine months ended September 30, 1998 by combining the historical statements of operations for VDI Media and Dubs for the period, giving effect to the pro forma adjustments described in the accompanying Notes to the Pro Forma Combined Financial Statements.
NINE MONTHS ENDED SEPTEMBER 30, 1998 --------------------------------------------------------------------------- DUBS COMBINED VDI MEDIA INCORPORATED ADJUSTMENT PRO FORMA -------------- --------------- ---------------- --------------- Revenues $ 42,312,000 $ 12,070,000 $ - $ 54,382,000 Cost of goods sold 25,578,000 8,957,000 - 34,535,000 -------------- --------------- ------------ --------------- Gross Profit 16,734,000 3,113,000 - 19,847,000 Selling, general, and administrative expense 8,953,000 2,841,000 222,000 (C) 12,016,000 -------------- --------------- ------------ --------------- Operating income 7,781,000 272,000 (222,000) 7,831,000 Interest expense 583,000 336,000 210,000 (D) 1,129,000 Interest income 19,000 - 19,000 -------------- --------------- ------------ --------------- Income (loss) before income taxes 7,217,000 (64,000) (432,000) 6,721,000 Provision (benefit) for income taxes 2,959,000 1,000 (271,000) (E) 2,689,000 -------------- --------------- ------------ --------------- Net income (loss) $ 4,258,000 $ (65,000) $(161,000) $ 4,032,000 -------------- --------------- ------------ --------------- -------------- --------------- ------------ --------------- Earnings per share: Basic: Net income per share $ 0.44 $ 0.41 Weighted average number of shares 9,725,144 9,725,144 Diluted: Net income per share $ 0.43 $ 0.41 Weighted average number of shares including the dilutive effect of stock options 9,827,240 9,827,240
See accompanying Notes to Pro Forma Combined Financial Statements NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS The following significant adjustments were made to the historical balance sheets of VDI Media and Dubs at September 30, 1998 or historical statements of operations of VDI Media and Dubs, as applicable, to arrive at the pro forma combined balance sheets and pro forma combined statements of operations: (A) Pro forma adjustments have been made to (i) record estimated goodwill of $6,824,000 equal to the excess of the initial consideration over the fair market value assigned to specific assets and liabilities assumed, (ii) eliminate the shareholder deficit of Dubs and (iii) reflect the use of borrowings under the Company's term loan agreement to purchase Dubs. (B) A pro forma adjustment has been made to reflect the repayment of Dubs's long-term debt and line of credit at closing in accordance with the purchase agreement. (C) A pro forma adjustment has been made to selling, general and administrative expense to reflect the amortization over 20 years of the goodwill related to the acquisition of Dubs. (D) A pro forma adjustment has been made to interest expense to reflect the increase in debt related to the use of borrowings under VDI Media's term loan agreement to finance the purchase net of the decrease in interest expense due to the repayment of Dubs's long-term debt and line of credit. (E) A pro forma adjustment has been made to reflect the effective tax rate of the combined company. VDI Media estimates that it will save approximately $804,000 per year in rent, utilities and other facilities costs by combining its Hollywood facilities with the Dubs facility. VDI Media also estimates an annual savings of approximately $1,418,000 related to the salaries of DUBS employees terminated immediately prior to the acquisition. The related severance costs were paid by the sole shareholder of DUBS. In accordance with SEC rules, these estimated cost savings have not been reflected in the pro forma combined statements of operations presented above. 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: February 5, 1999 /s/ Donald R. Stine ------------------------------- Donald R. Stine Chief Financial Officer and Treasurer EX-23 2 EXHIBIT 23 Exhibit 23 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Prospectus constituting part of the Registration Statement on Form S-3 (No. 333-57549) of VDI Media of our report dated January 6, 1999 relating to the financial statements of DUBS, Incorporated, which appears in the Current Report on Form 8-K/A of VDI Media dated February 1, 1999. PricewaterhouseCoopers LLP Costa Mesa, California February 1, 1999 EX-23.1 3 EXHIBIT 23-1 Exhibit 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-46923) of VDI Media of our report dated January 6, 1999 relating to the financial statements of DUBS, Incorporated, which appears in the Current Report on Form 8-K/A of VDI Media dated February 1, 1999. PricewaterhouseCoopers LLP Costa Mesa, California February 1, 1999 -----END PRIVACY-ENHANCED MESSAGE-----