-----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, R8vk9ATbSjYe8/BdumZ0BBDziLZUwudMWEE3axBMDE9o4pRkVmpHGSTvp18XSRuV Y5G6Q7mdjoFY3OEUiLUkjA== 0000912057-96-014649.txt : 19960716 0000912057-96-014649.hdr.sgml : 19960716 ACCESSION NUMBER: 0000912057-96-014649 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960531 FILED AS OF DATE: 19960715 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITEL VIDEO INC/DE CENTRAL INDEX KEY: 0000740103 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ALLIED TO MOTION PICTURE PRODUCTION [7819] IRS NUMBER: 231713238 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08654 FILM NUMBER: 96594938 BUSINESS ADDRESS: STREET 1: 555 WEST 57TH STREET STREET 2: 12TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2125819411 MAIL ADDRESS: STREET 1: 555 WEST 57TH STREET STREET 2: 12FLOOR CITY: NEW YORK STATE: NY ZIP: 10019 10-Q 1 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended MAY 31, 1996 ------------ OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to ____________________ Commission file number 1-8654 ------ Unitel Video, Inc. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 23-1713238 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 555 West 57th Street - New York, New York 10019 - -------------------------------------------------------------------------------- (Address of principal executive offices) (212) 265-3600 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) 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 twelve months and (2) has been subject to such requirements for the past 90 days. . . . . . . . . . . Yes . X . No . . . . . . . . . . . . APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 2,666,265 Common shares outstanding as of July 15, 1996 (Number of shares) (Date) UNITEL VIDEO, INC. FORM 10-Q QUARTER ENDED MAY 31, 1996 Page INDEX Number Part I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets May 31, 1996 (Unaudited) and August 31, 1995 3-4 Consolidated Statements of Operations May 31, 1996 (Unaudited) and May 31, 1995 (Unaudited) 5 Consolidated Statements of Cash Flows May 31, 1996 (Unaudited) and May 31, 1995 (Unaudited) 6-7 Notes to Consolidated Financial Statements (Unaudited) 8-11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12-14 Part II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 15 UNITEL VIDEO, INC. FORM 10-Q QUARTER ENDED MAY 31, 1996 Part 1. FINANCIAL INFORMATION ITEM 1. Financial Statements CONDENSED CONSOLIDATED BALANCE SHEETS May 31, 1996 August 31, 1995 ------------ --------------- (Unaudited) (Note) ASSETS Current Assets: Cash $ 207,000 $ 161,000 Accounts receivable, less allowance for doubtful accounts of $687,000 and $ 686,000 9,409,000 12,700,000 Other receivables 308,000 362,000 Prepaid income taxes 451,000 567,000 Prepaid expenses 725,000 1,340,000 Net assets held for sale 1,758,000 -- Deferred tax asset 760,000 760,000 ------------ ----------- Total current assets 13,618,000 15,890,000 Property and equipment - at cost Land, buildings and improvements 19,446,000 13,541,000 Video equipment 98,188,000 78,145,000 Automobiles 50,000 50,000 Furniture and fixtures 3,275,000 2,736,000 ------------ ----------- 120,959,000 94,472,000 Less accumulated depreciation 71,117,000 59,981,000 ------------ ----------- 49,842,000 34,491,000 Net assets held for sale -- 19,270,000 Deferred tax asset 1,824,000 1,745,000 Goodwill 1,893,000 1,997,000 Other assets 1,318,000 793,000 ------------ ----------- $ 68,495,000 $74,186,000 ------------ ----------- ------------ ----------- Note: The balance sheet at August 31, 1995 has been taken from the audited consolidated financial statements at that date. See notes to consolidated financial statements. 3 UNITEL VIDEO, INC. FORM 10-Q CONSOLIDATED BALANCE SHEETS (Continued) May 31, 1996 August 31, 1995 ------------ --------------- (Unaudited) (Note) LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 4,095,000 $ 7,339,000 Accrued expenses 1,590,000 1,620,000 Payroll, benefits and related taxes 2,215,000 2,931,000 Current maturities of long-term debt 8,688,000 5,492,000 Current maturities of subordinated debt 417,000 104,000 Current maturities of ESOP loan 181,000 186,000 Current maturities of capital lease obligations 1,817,000 1,685,000 ------------ ----------- Total current liabilities 19,003,000 19,357,000 Deferred rent 407,000 864,000 Long-term debt, less current maturities 19,158,000 19,936,000 Subordinated debt, less current maturities 2,833,000 3,146,000 ESOP loan, less current maturities 15,000 152,000 Long-term leases, less current maturities 6,067,000 7,064,000 Accrued retirement 1,264,000 1,141,000 Stockholders' equity: Common stock, par value $.01 per share Authorized 5,000,000 shares Issued 3,532,554 and 3,491,454 shares respectively, and outstanding 2,666,265 and 2,625,165 shares respectively 26,000 26,000 Additional paid-in capital 27,561,000 27,351,000 Retained earnings 385,000 3,532,000 Common stock held in treasury, at cost (866,289 shares) (7,974,000) (7,974,000) ------------ ----------- 19,998,000 22,935,000 Unearned employee benefit expense (250,000) (409,000) ------------ ----------- Total stockholders' equity 19,748,000 22,526,000 ------------ ----------- $68,495,000 $74,186,000 ------------ ----------- ------------ ----------- Note: The balance sheet at August 31, 1995 has been taken from the audited consolidated financial statements at that date. See notes to consolidated financial statements. 4 UNITEL VIDEO, INC. FORM 10-Q CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended May 31, Nine Months Ended May 31, -------------------------- ------------------------- 1996 1995 1996 1995 ---- ---- ---- ---- Sales $19,281,000 $20,831,000 $62,750,000 $62,645,000 Cost of sales: Production costs 13,910,000 14,797,000 44,897,000 43,829,000 Depreciation 2,205,000 2,689,000 5,711,000 7,363,000 ----------- ----------- ----------- ----------- 16,115,000 17,486,000 50,608,000 51,192,000 ----------- ----------- ----------- ----------- Gross profit 3,166,000 3,345,000 12,142,000 11,453,000 Operating expenses: Selling 496,000 711,000 1,832,000 2,196,000 General and administrative 2,429,000 2,490,000 7,416,000 6,747,000 Interest 984,000 974,000 2,755,000 2,431,000 Restructuring charge (Note 5) 1,246,000 400,000 1,246,000 400,000 Impairment charge 261,000 -- 2,000,000 -- ----------- ----------- ----------- ----------- 5,416,000 4,575,000 15,249,000 11,774,000 ----------- ----------- ----------- ----------- Earnings (loss) from operations (2,250,000) (1,230,000) (3,107,000) (321,000) Other income (loss) (37,000) -- (37,000) 14,000 ----------- ----------- ----------- ----------- Earnings (loss) before income taxes (2,287,000) (1,230,000) (3,144,000) (307,000) Income taxes 3,000 (432,000) 3,000 2,000 ----------- ----------- ----------- ----------- Net earnings (loss) $(2,290,000) $ (798,000) $(3,147,000) $ (309,000) ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Net earnings (loss) per common share $ (.88) $ (.31) $ (1.21) $ (.12) ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Weighted average of common and common equivalent shares outstanding 2,611,000 2,591,000 2,591,000 2,579,000 ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
See notes to consolidated financial statements. 5 UNITEL VIDEO, INC. FORM 10-Q CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended ----------------- May 31, 1996 May 31, 1995 ------------ ------------ Cash Flows From Operating Activities: Net loss $(3,147,000) $ (309,000) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 5,728,000 7,655,000 Net gain on disposal of assets (17,000) (292,000) Recognition of deferred gain -- (117,000) Amortization of deferred financing costs 174,000 297,000 Deferred financing costs (585,000) -- Deferred rent (457,000) (121,000) Accrued retirement expense 123,000 129,000 Deferred income taxes -- 52,000 Impairment charge 2,000,000 -- Decrease (Increase) in: Accounts receivable 3,290,000 (2,732,000) Allowance for doubtful accounts 1,000 176,000 Other receivables 54,000 30,000 Prepaid expenses 615,000 596,000 Prepaid taxes 116,000 (242,000) Other assets (118,000) (277,000) Deferred tax asset (79,000) -- Increase (Decrease) in: Accounts payable (3,244,000) (1,679,000) Accrued expenses (30,000) 757,000 Payroll and related taxes (716,000) 287,000 ----------- ----------- Total adjustments 6,855,000 4,519,000 ----------- ----------- Net cash provided by operating activities 3,708,000 4,210,000 Cash Flows From Investing Activities: Capital expenditures (6,340,000) (3,340,000) Acquisition of GC & Co. assets -- (1,300,000) Proceeds from disposal of assets 898,000 314,000 ----------- ----------- Net cash used in investing activities (5,442,000) (4,326,000) (Continued) 6 UNITEL VIDEO, INC. FORM 10-Q CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) Nine Months Ended ----------------- May 31, 1996 May 31, 1995 ------------ ------------ Cash Flows From Financing Activities: Proceeds from long-term financing $24,503,000 $3,497,000 Proceeds from issuance of common stock 223,000 52,000 Repayment of loan to ESOP (142,000) (125,000) Repayment of note to Banta -- (500,000) Principal repayments (22,950,000) (3,161,000) Release of ESOP quarterly shares 146,000 133,000 ----------- ---------- Net cash provided (used) by financing activities 1,780,000 (104,000) ----------- ---------- Net Increase (Decrease) in Cash 46,000 (220,000) Cash Beginning of Year 161,000 1,293,000 ----------- ---------- Cash End of Nine Months $ 207,000 $1,073,000 ----------- ---------- ----------- ---------- Schedule of income taxes and interest paid: Income Taxes Paid $ 77,000 $ 157,000 Interest Paid 2,237,000 2,417,000 ----------- ---------- $ 2,314,000 $2,574,000 ----------- ---------- ----------- ---------- Supplemental schedule of non cash investing and financing activities: Detail of acquisition of GC & Co.: Fair value of assets acquired $ 6,750,000 Subordinated note to seller (750,000) Capital lease obligation (4,700,000) ----------- Net cash paid for acquisition $ 1,300,000 ----------- ----------- See notes to consolidated financial statements. 7 UNITEL VIDEO, INC. FORM 10-Q NINE MONTHS ENDED MAY 31, 1996 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. CONSOLIDATED FINANCIAL STATEMENTS The condensed consolidated balance sheet as of May 31, 1996, the consolidated statements of operations for the nine months and quarters ended May 31, 1996 and 1995, and the consolidated statements of cash flows for the nine months then ended have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at May 31, 1996 and for all periods presented have been made. Certain information and footnote disclosure normally included in the financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto in the Company's August 31, 1995 Form 10-K filed with the Securities and Exchange Commission. The results of operations for the nine months ended May 31, 1996 are not necessarily indicative of the operating results for the full year. 2. STOCKHOLDERS' EQUITY During the nine months ended May 31, 1996, stockholders' equity decreased due to: Net loss $(3,147,000) Reduction in unearned employee benefit expense 159,000 Reduction in additional paid in capital resulting from the allocation of ESOP shares (13,000) Purchase of stock under the Unitel Video Inc. Employee Stock Purchase Plan 49,000 Exercise of employee stock options 174,000 ----------- Total decrease in stockholders' equity $(2,778,000) ----------- ----------- 3. PER SHARE DATA Per share data for the quarter and nine months ended May 31, 1996 and 1995 is based on the weighted average number of common shares outstanding. In the quarter and nine months ended May 31, 1996, unreleased Employee Stock Ownership Plan shares are not considered outstanding for earnings per share calculations. (See Note 4). 8 4. 401(k) EMPLOYEE SAVINGS AND STOCK OWNERSHIP PLAN The Company sponsors a 401(k) savings and stock ownership plan (the "Plan") which requires the Company to match employee contributions to the 401(k) portion of the Plan in shares of the Company's Common Stock up to the maximum amount set forth in the Plan. Effective September 1, 1994, the Company has adopted the provisions of Statement of Position 93-6, "Employer's Accounting for Employee Stock Ownership Plans" ("SOP 93-6"). In 1987, to purchase 115,849 shares of the Company's stock, the Plan obtained financing from a bank amounting to $1,250,000. In 1991 the Plan purchased 25,810 shares of the Company's stock financed by a $229,193 loan from the Company. The Plan is funded by the Company as required to provide the Plan with the funds necessary to meet its debt service requirements. The loan obligations of the Plan are considered unearned employee benefit expense and are recorded as a separate reduction of the Company's shareholders' equity. The bank financing is guaranteed by the Company. The Plan's shares are released and allocated to participant accounts based upon Company contributions and certain payments made to reduce the Plan debt. The Company reports compensation expense based on the dollar value of the 401(k) match expense. The Plan's compensation expense was $147,018 and $49,006 for the nine months and quarter ended May 31, 1996, respectively. A summary of the Plan's shares as of May 31, 1996 is as follows: Allocated shares 75,095 Shares released for allocation 20,519 Unreleased shares 41,654 -------- 137,268 -------- -------- Fair value of unreleased shares at May 31, 1996 $249,924 -------- -------- Prior to adoption of SOP 93-6, the unreleased shares were considered outstanding for the earnings per share computation. Accordingly, for the nine months ended May 31, 1996, 41,654 shares were no longer considered outstanding. The effect of adopting SOP 93-6 was not material on the net loss, and resulted in a decrease of approximately 1% on the net loss per share for the nine months and quarter ended May 31, 1996. 5. IMPAIRMENT AND RESTRUCTURING CHARGES In March 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long- Lived Assets and for Long-Lived Assets to be Disposed Of" ("FASB Statement No. 121") which provides guidance on when to assess and how to measure impairment of long-lived assets, certain intangibles and goodwill related to those assets to be held and used, and for long-lived assets and certain identifiable intangibles to be disposed of. The Company adopted FASB Statement No. 121 as of August 31, 1995. 9 The Company has determined to focus its resources toward providing services to the entertainment and corporate communications areas, which represent the Company's strength. As part of this strategy, the Company decided to sell its Editel New York, Editel Chicago and Editel Los Angeles divisions, which specialize in the highly competitive commercial advertising portion of the video facilities industry. During the 1995 fiscal year, the three Editel divisions incurred a pretax loss of $3,682,000. As a result, the Company identified property, plant and equipment associated with these divisions, which after an impairment charge of $4,700,000 recorded as of August 31, 1995, had a carrying value of approximately $19,300,000 that it no longer needed for its current and future operations. During the fourth quarter of fiscal 1995, the Company committed to a plan to dispose of the Editel divisions and in the first quarter of fiscal 1996 began marketing these divisions to potential buyers. On February 22, 1996, the Company announced the closure of its Editel Chicago division and subsequently distributed the majority of that division's assets throughout the Company. The balance of the Editel Chicago division equipment was sold in an auction which was held in May 1996. In March 1996, the Company terminated the lease for its Editel Chicago division by making a lump sum payment to the landlord of $1,600,000. The restructuring charge of $1,246,000 recorded in the quarter ended May 31, 1996, reflects this payment less the reversal of $354,000 of accrued rent which would have been due under the terms of the lease. In May 1996, the Company reached an agreement in principle to sell the film-to-tape transfer business of its Editel New York division, which is the remaining operating department of this division, to a group of employees backed by a private investor. The Company has also distributed a portion of the Editel New York division assets throughout the Company and is currently seeking buyers for the division's remaining assets. Also in May 1996 after reevaluating the potential of Editel Los Angeles, the Company decided to retain and expand this division and, accordingly, discontinued seeking a buyer for this business. Since the Company intends to sell the remaining assets of Editel New York in less than one year, these assets are classified on the balance sheet as short- term. At May 31, 1996, the Company estimated the revised value of these assets to be approximately $1,758,000. Accordingly, the Company recorded an impairment charge of approximately $2,000,000 in the first nine months of fiscal 1996 relating to the assets at all three Editel divisions. The impairment charge recorded represents management's estimate of the decrease in value of these assets during the period such assets were held for sale based upon the depreciation method which the Company has used in the past and which management has found to be reasonable and appropriate. The Company intends to operate the film-to-tape transfer business of its Editel New York division until a sale or other disposition is consummated and to continue to monitor all assets held for sale on a quarterly basis since FASB Statement No. 121 requires that no further depreciation expense be taken with respect to assets held for sale. In May of 1995, the Company adopted a plan to downsize the operations of its Editel Chicago division and reorganize and reduce its corporate management which resulted in recording a restructuring charge of $400,000 for severance and early retirement expense. The $273,000 balance of the restructuring liability was paid out during the first six months of fiscal 1996. 10 6. STOCK BASED COMPENSATION The Company intends to continue to comply with the requirements of APB Opinion No. 25 for Stock based compensation recognition purposes. 11 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. LIQUIDITY AND CAPITAL RESOURCES The Company is committed to keeping pace with technological developments as well as taking advantage of new business opportunities in the video communications industry. Capital expenditures were $6,340,000 during the nine months ended May 31, 1996, and consisted of the purchase of production, post production and video equipment for use primarily in the Company's Mobile, Unitel Hollywood and Windsor divisions. Net cash provided by operating activities during the nine months ended May 31, 1996 was $3,708,000 and during the nine months ended May 31, 1995 was $4,210,000. Net cash provided by operating activities for the nine months ended May 31, 1996 was offset by $5,442,000 of cash used in investing activities, which consisted primarily of capital expenditures and was supplemented by net cash provided by financing activities of $1,780,000, resulting in a net increase in cash available of $46,000. In December 1995, the Company entered into a $26 million revolving credit and term loan agreement with a financial institution, consisting of a $15 million term loan facility and an $11 million revolving credit facility. The $15 million term loan portion of the facility is payable in 59 monthly principal payments of $89,000 through November 2000 and in payments of $3,750,000 at August 31, 1996, $3,750,000 at December 31, 1996 and $2,249,000 at December 2000. The revolving credit portion of the facility is due in full in December 2000. Additionally, In December 1995 the Company obtained from a bank a $4,000,000 mortgage on its property located on West 57th Street in New York City. The mortgage is payable in equal monthly installments of $22,000 through November 2002, with a final payment of $2,152,000 due on December 2002. The proceeds of the $15 million term loan, the $4 million mortgage and $2.5 million drawn by the Company under the revolving credit facility were used in December 1995 to refinance the term loan ($8,577,000) and revolving credit facility ($9,975,000) and to repay the City of New York Industrial Revenue Bond obligation ($265,000), all then outstanding to the Company's bank lenders. The remaining $2,683,000 was used for closing costs and for payment of prior capital expenditures. The terms of the Company's new revolving credit and term loan agreement provide that the lender receive a first lien on all property, equipment and accounts receivable that are not encumbered by another lender. At May 31, 1996, $4,712,000 was outstanding under the revolving portion of the facility. In May 1996, the Company announced that, due to increasing sales and profitability, it will retain and expand its Editel Los Angeles division. Additionally, the Company has reached an agreement in principle to sell its Editel New York film-to-tape transfer business and has merged Editel New York's editorial business into the Company's other New York divisions. These actions mark the completion of the restructuring announced in November 1995. 12 RESULTS OF OPERATIONS Sales were $19,281,000 and $20,831,000 for the quarters ended May 31, 1996 and 1995, respectively. Sales were $62,750,000, and $62,645,000 for the nine months ended May 31, 1996 and 1995, respectively. The increase in sales in the nine month period ending May 31, 1996 was due primarily to the addition of three mobile units to the Company's fleet of seven from the acquisition by the Company in February 1995 of the business and assets of GC & Co. (formerly Greene Crowe & Company) a Burbank California based supplier of "on-location" services for the videotaping and live telecasting of concerts, cultural and other events. The Company's net loss for the quarter ended May 31, 1996 was $2,290,000, compared to $798,000 for the comparable quarter of fiscal year 1995. The Company's net loss was $3,147,000 for the nine months ended May 31, 1996, compared with $309,000 for the same period of the prior fiscal year. The majority of the loss incurred in fiscal 1996 is attributable to costs related to the restructuring of the Editel New York division and the closure of the Editel Chicago division. Production costs, the main component of cost of sales, consist primarily of direct labor, equipment maintenance expenses and occupancy costs. The Company's production costs, as a percentage of sales, were 72% for the quarter ended May 31, 1996, as compared to 71% for the quarter ended May 31, 1995 and were 72% and 70% for the first nine months of fiscal years 1996 and 1995, respectively. The increase in production costs for the quarter and nine months ended May 31, 1996 as compared with the same period in the prior year, is due primarily to severance costs associated with the closure of the Company's Editel Chicago division and restructuring of the Company's Editel New York division. Depreciation, as a percentage of sales, was 11% and 13% for the quarters ended May 31, 1996 and 1995, respectively, and 9% and 12% for the first nine months of the 1996 and 1995 fiscal years, respectively. The decrease in the quarter and nine months ended May 31, 1996 compared to the same periods in the prior year is due to the reclassification of the net property and equipment of the Editel divisions to net assets held for sale at August 31, 1995. The impairment charge recorded represents management's estimate of the decrease in value of these assets during the period such assets were held for sale in the third quarter and initial nine month period of fiscal 1996 based upon the method of depreciation which the Company has used in the past and which management has found to be reasonable and appropriate. The Editel Chicago division was closed in February 1996. The Company intends to operate the film-to-tape transfer business of its Editel New York division until a sale or other disposition is consummated and to continue to monitor all assets held for sale on a quarterly basis since FASB Statement No. 121 requires that no further depreciation expense be taken with respect to assets held for sale. Selling expenses for the quarters ended May 31, 1996 and 1995 were 2.6% and 3.4% of sales, respectively, and 2.9% and 3.5% for the nine months ended May 31, 1996 and 1995, respectively. The decrease in both the quarter and nine month periods ending May 31, 1996 as compared to the same periods in 1995 is primarily due to a decrease in the sales staff at the Editel Chicago and Editel New York divisions. 13 General and administrative expenses, as a percentage of sales, for the quarters ended May 31, 1996 and 1995 were 12.6% and 12%, respectively, and 11.8% and 10.8% for the nine months ended May 31, 1996 and 1995, respectively. The increases in both the quarter and nine month periods ending May 31, 1996 as compared to the same periods in 1995 is due primarily to severance pay at the Editel Chicago and Editel New York divisions. Interest expense, as a percentage of sales, for the quarters ended May 31, 1996 and 1995 was 5.1% and 4.7%, respectively, and 4.4% and 3.9% for the nine months ended May 31, 1996 and 1995. The increase in the quarter and nine months ended May 31, 1996 as compared to the same periods in fiscal 1995 was due primarily to the financing obtained in connection with the GC & Co. acquisition in February 1995. The Company did not accrue income taxes during the first nine months of 1996 due to the year to date loss and the unavailability of any net operating loss carryback. The Company's effective tax rate was 47% for the first nine months of fiscal 1995. The effective tax rate in 1995 exceeded the federal statutory rate of 34% due to state and local taxes. 14 Part II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits required to be filed by Item 601 of Regulation S-K. 1. Exhibit 27. Financial Data Schedule. (b) There were no reports filed on Form 8-K during the nine month period ended May 31, 1996. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this amendment to be signed on its behalf by the undersigned thereunto duly authorized. UNITEL VIDEO, INC. By: /s/ Barry Knepper ------------------- Barry Knepper Chief Executive Officer By: /s/ George Horowitz ------------------- George Horowitz Director of Finance Dated: July 15, 1996 15 EX-27 2 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNITEL VIDEO, INC.'S FORM 10Q FOR THE QUARTERLY PERIOD ENDED MAY 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1000 9-MOS AUG-31-1996 SEP-01-1995 MAY-31-1996 207 0 10,096 687 0 13,618 120,959 71,117 68,495 19,003 39,176 0 0 26 19,722 68,495 62,750 62,750 50,608 50,608 15,249 426 2,755 (3,144) 3 (3,147) 0 0 0 (3,147) (1.21) 0
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