-----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, VAiwIWBWLytdrE0n2QvRZMWkaOlR7b3bm9+oDomFNWJrUZaWszUKndEOQO0aagkA A9+R99NL2l3CdWNFGMF+xg== 0000904454-99-000002.txt : 19990111 0000904454-99-000002.hdr.sgml : 19990111 ACCESSION NUMBER: 0000904454-99-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981130 FILED AS OF DATE: 19990108 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KING WORLD PRODUCTIONS INC CENTRAL INDEX KEY: 0000756764 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE & VIDEO TAPE DISTRIBUTION [7822] IRS NUMBER: 132565808 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09244 FILM NUMBER: 99502526 BUSINESS ADDRESS: STREET 1: 1700 BROADWAY CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2123154000 10-Q 1 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended November 30, 1998 [ ] 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 1-9244 KING WORLD PRODUCTIONS, INC. (Exact name of registrant as specified in its charter) Delaware 13-2565808 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 12400 Wilshire Boulevard Suite 1200 Los Angeles, California 90025 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 310-826-1108 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 Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, $.01 par value, 71,505,931 shares outstanding as of January 4, 1999. KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS (Dollars in thousands) November 30, August 31, 1998 1998 ---- ---- (Unaudited) CURRENT ASSETS: Cash and cash equivalents (Note 2)........ $ 558,729 $ 188,778 Short-term investments .................. 23,801 88,016 Accounts receivable (net of allowance for doubtful accounts of $3,301 at November 30, 1998 and August 31, 1998, respectively)................... 91,894 75,423 Producer advances and deferred costs...... 113,827 99,965 Other current assets...................... 722 1,146 ---------- --------- Total current assets............. 788,973 453,328 ---------- --------- LONG-TERM INVESTMENTS, at cost, which approximates market value....... 105,048 470,715 ---------- -------- FIXED ASSETS, at cost......................... 33,380 31,353 Less - accumulated depreciation and amortization.......................... (14,306) (13,613) --------- --------- 19,074 17,740 --------- --------- PRODUCER ADVANCES AND OTHER ASSETS (Note 2)... 109,227 81,815 ---------- --------- $1,022,322 $1,023,598 ========== ========== The accompanying Notes to Consolidated Financial Statements are an integral part of these balance sheets. 2 KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (continued) LIABILITIES AND STOCKHOLDERS' EQUITY (Dollars in thousands) November 30, August 31, 1998 1998 ---- ---- (Unaudited) CURRENT LIABILITIES: Accounts payable and accrued liabilities..................... $ 13,765 $ 15,913 Payable to producers and others............. 55,169 96,118 Income taxes payable........................ 50,354 30,356 ---------- ---------- Total current liabilities....... 119,288 142,387 ---------- ---------- STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value; 5,000,000 shares authorized, none issued............................. -- -- Common stock, $.01 par value; 150,000,000 shares authorized, 88,850,325 shares and 88,650,301 shares issued at November 30, 1998 and August 31, 1998, respectively...................... 889 887 Paid-in capital............................. 142,802 138,219 Retained earnings........................... 1,179,003 1,137,238 Treasury stock, at cost; 17,282,194 and 16,284,794 shares at November 30, 1998 and August 31, 1998, respectively......... (419,660) (395,133) ---------- ---------- 903,034 881,211 ---------- ---------- $1,022,322 $1,023,598 ========== ========== The accompanying Notes to Consolidated Financial Statements are an integral part of these balance sheets. 3 KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended November 30 ------------------ 1998 1997 ---- ---- (Dollars in thousands except per share data) REVENUES............................. $194,267 $172,926 -------- -------- EXPENSES: Producers' fees, programming and other direct operating costs..... 118,533 107,235 Selling, general and administrative expenses.......... 23,689 20,041 -------- -------- 142,222 127,276 -------- -------- Income from operations........... 52,045 45,650 INVESTMENT INCOME.................... 12,448 6,894 -------- -------- Income before provision for income taxes............... 64,493 52,544 PROVISION FOR INCOME TAXES........... 22,728 18,175 -------- -------- Net income....................... $ 41,765 $ 34,369 ======== ======== BASIC EARNINGS PER SHARE............. $ .58 $ .47 ======== ======== DILUTED EARNINGS PER SHARE........... $ .56 $ .45 ======== ======== The accompanying Notes to Consolidated Financial Statements are an integral part of these balance sheets. 4 KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended November 30, ------------------ 1998 1997 ---- ---- (Dollars in thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income............................. $ 41,765 $ 34,369 Items not affecting cash: Depreciation and amortization........ 693 415 Change in assets and liabilities: Accounts receivable.................. (16,471) (5,176) Producer advances and deferred costs..................... (38,278) (105,935) Accounts payable and accrued liabilities........................ (2,148) (2,524) Payable to producers and others...... (40,949) (16,785) Income taxes payable................. 19,998 12,981 Other, net........................... (2,572) (1,918) -------- -------- Net cash used in operating activities.......................... (37,962) (84,573) -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Sales (purchases) of investments.......... 429,882 (43,152) Additions to fixed assets................. (2,027) (2,241) ------- -------- Net cash provided by (used in) investing activities................. 427,855 (45,393) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock.... 4,585 4,342 Purchase of treasury stock................ (24,527) -- -------- -------- Net cash (used in) provided by financing activities.................... (19,942) 4,342 -------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS....................... 369,951 (125,624) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD.............................. 188,778 317,782 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD.............................. $558,729 $192,158 ======== ======== The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 5 KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (1) Summary of significant accounting policies Principles of consolidation - --------------------------- The accompanying consolidated financial statements include the accounts of King World Productions, Inc. ("King World") and its wholly-owned subsidiaries. All significant intercompany transactions have been eliminated. Unless the context suggests otherwise, the "Company", as used herein, means King World and its subsidiaries. All share and per share data presented in these consolidated financial statements have been adjusted to give effect to a two-for-one stock split, effected in the form of a 100% stock dividend, which was paid by the Company on February 17, 1998. The unaudited consolidated financial statements for the three months ended November 30, 1998 have been prepared in accor dance with the instructions to Form 10-Q and include, in the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results of operations for such period. They do not, however, include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. For further information, reference is made to the consolidated financial statements for the fiscal year ended August 31, 1998 and the footnotes related thereto included in the Company's Annual Report on Form 10-K from which the August 31, 1998 balances presented herein have been derived. The results of operations for the three months ended November 30, 1998 are not necessarily indicative of the results of operations for the full year. Revenue recognition - ------------------- License fees from first-run syndicated television properties are recognized at the commencement of the license period pursuant to noncancelable agreements and as each show is made available to the licensee via satellite transmission. Because transmission to the satellite takes place, on the average, no more than two to three days prior to the broadcast of the programming, revenues are recognized on or about the air date. The Company typically receives a portion of the fees derived from the licensing of syndicated television programming in the form of retained advertising time, which is sold to advertisers by King World Media Sales Inc., a 6 KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (1) Summary of significant accounting policies (continued) wholly-owned subsidiary of the Company. Such revenues are recognized at the same time as the cash portion of the license fees derived from such programming is recognized, in amounts adjusted for expected ratings. License fees for non-first-run syndicated properties are recognized at the gross contract amount (net of discount to present value for license periods greater than one year) at the commencement of the license period and when certain other conditions are satisfied. Principal properties - -------------------- The Company's principal properties are licenses to distribute The OPRAH WINFREY SHOW, WHEEL OF FORTUNE and JEOPARDY!. The Company co-produces and distributes Hollywood Squares, a first-run syndicated game show, and THE ROSEANNE SHOW, a first-run syndicated talk show. The Company also produces and distributes INSIDE EDITION, a first-run syndicated newsmagazine. The contribution of each program to the Company's total revenues was as follows: Three Months Ended November 30, --------------- 1998 1997 ---- ---- THE OPRAH WINFREY SHOW 38% 43% WHEEL OF FORTUNE 18% 21% JEOPARDY! 16% 17% HOLLYWOOD SQUARES(1) 10% -- THE ROSEANNE SHOW(1) 7% -- INSIDE EDITION 6% 7% (1) HOLLYWOOD SQUARES and THE ROSEANNE SHOW premiered in September 1998. 7 KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (1) Summary of significant accounting policies (continued) The Company distributes THE OPRAH WINFREY SHOW pursuant to an agreement with Harpo, Inc., the producer of the series ("Harpo"). Under the terms of the Company's agreement in effect through August 1998 with Harpo, King World was engaged as the exclusive distributor of THE OPRAH WINFREY SHOW through the 1999-2000 broadcast season. Such agreement was amended in September 1998 to provide for Harpo and Ms. Winfrey to produce and host the show for the 2000-2001 and 2001-2002 broadcast seasons and to extend the engagement of King World as the exclusive distributor of the show for those seasons. The Company's agreements with Columbia TriStar Television provide that King World will be the exclusive distributor for WHEEL OF FORTUNE and JEOPARDY! so long as the Company has obtained sufficient broadcast commitments to cover such series' respective production and distribution costs and that the Company may not, unless otherwise agreed by Columbia TriStar Television, distribute other game shows for strip first-run syndication so long as the Company is distributing WHEEL OF FORTUNE or JEOPARDY!. In September 1997, the Company and Columbia TriStar Television announced their agreement to co-produce a new version of the game show Hollywood Squares, which is distributed by the Company in strip first-run syndication and premiered in September 1998. The Company has entered into an agreement with Full Moon & High Tide Productions, Inc., a company controlled by Roseanne, to co-produce THE ROSEANNE SHOW, an hour-long strip talk show hosted by Roseanne and distributed by the Company in first-run syndication. The series premiered in September 1998. Under the terms of the agreement, the Company will have the exclusive right to distribute the show through the 2003-2004 broadcast season. Producers' fees, programming and other direct operating costs - ------------------------------------------------------------- Producers' fees, programming and other direct operating costs primarily include the producers' share of both cash license fees from the sale of programming to television stations and revenues derived from the sale of retained advertising time to advertisers with respect to programming distributed 8 KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (1) Summary of significant accounting policies (continued) by the Company; participation fees payable by the Company to producers and talent; production and distribution costs for first-run syndicated programming; and the direct operating costs of King World Direct, the Company's wholly owned direct response marketing subsidiary. That portion of any recognized revenue that is to be paid to producers and owners of programming is accrued as such revenues are earned. The share of revenues payable by the Company to such producers and others is generally paid as cash license fees and revenues derived from the sale of retained advertising time are received from television stations and advertisers. Stockholders' equity - -------------------- Basic earnings per share has been computed using the weighted average shares of Common Stock outstanding of 71,609,000 and 73,366,000 for the three months ended November 30, 1998 and 1997, respectively. Diluted earnings per share, which includes the dilutive effect of the assumed exercise of vested and unvested stock options outstanding as of the end of each period reported, has been computed using the weighted average shares of Common Stock outstanding of 74,518,000 and 75,826,000 for the three months ended November 30, 1998 and 1997, respectively. In January 1998 the Company's Board of Directors declared a two-for-one stock split, effected in the form of a 100% stock dividend, which was paid on February 17, 1998 to stockholders of record on February 3, 1998. In connection with the stock split, the Company increased the number of authorized shares of Common Stock from 75 million to 150 million, which increase was approved by the stockholders of the Company in January 1998. The par value of the additional 36,738,470 shares of Common Stock issued in connection with the stock split was credited to common stock and a like amount charged to paid-in capital. All share and per share data presented in these consolidated financial statements have been adjusted for all periods presented to reflect the stock split. Comprehensive income - -------------------- In the first quarter of fiscal 1999 the Company adopted Statement of Financial Accounting Standards No. 130 ("SFAS 130"), Reporting Comprehensive 9 KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (1) Summary of significant accounting policies (continued) Income. SFAS 130 establishes new rules for the reporting and presentation of comprehensive income and its components. Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from nonowner sources. The components of comprehensive income include, but are not limited to, foreign currency translation adjustments and unrealized gains and losses on certain investment securities. The Company has no material items required to be reported in the presentation of comprehensive income. (2) Producer advances In September 1997, the Company made advances to Harpo in the aggregate amount of $130 million against Harpo's guaranteed share of gross revenues for the 1998-1999 and 1999-2000 broadcast seasons. As of November 30, 1998, approximately $36.4 million of the $65 million advance associated with the 1998-1999 broadcast season remained unrecouped. None of the $65 million advance related to the 1999-2000 broadcast season was recouped as of November 30, 1998. As part of the most recent amendment to its agreement with Harpo, the Company agreed to pay, within 30 days of contract signing, an advance to Harpo of $75 million against Harpo's guaranteed share of gross revenues for the 2000-2001 broadcast season. As of November 30, 1998, such advance had not yet (with the acquiescence of Harpo) been paid. However, given the Company's continuing unconditional obligation to pay such advance, this amount was reclassified from cash and cash equivalents to producer advances and other assets in the accompanying consolidated balance sheets. Also, the Company agreed to pay, in June 2000, an additional $75 million against Harpo's guaranteed share of gross revenues for the 2001-2002 broadcast season. Based on the license agreements in place for such broadcast seasons, the Company believes that revenues from the series will be sufficient to enable the Company to recoup such advances for such seasons. All of the advances paid to Harpo are refundable to the Company by Harpo and Ms. Winfrey if King World terminates its agreement with Harpo due to Harpo's failure to deliver episodes of THE OPRAH WINFREY SHOW. 10 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition --------------------------------------------- The discussion herein contains certain forward-looking statements covering the Company's objectives, planned or expected activities and anticipated financial performance. These forward-looking statements may generally be identified by words such as "expects", "anticipates", "believes", "plans", "should", "will" "may", "projects" (or variants of these words or phrases), or similar language indicating the expression of an opinion or view concerning the future with respect to the Company's financial position, results of operations, prospects or business. The Company's actual results may differ significantly from the results described in or suggested by such forward-looking statements. RESULTS OF OPERATIONS Comparison of Three Months Ended November 30, 1998 and 1997 Revenues - -------- Revenues for the three months ended November 30, 1998 increased by approximately 12% over revenues for the first three months of the prior fiscal year, primarily due to the introduction of HOLLYWOOD SQUARES, a first-run syndicated game show co-produced and distributed by the Company, and of THE ROSEANNE SHOW, a first-run syndicated talk show co-produced and distributed by the Company, each of which premiered in September 1998. The additional revenues generated by such programs were partially offset by the discontinuation of AMERICAN JOURNAL (which was cancelled following the 1997-1998 broadcast season) and, to a lesser extent, lower revenues from Inside Edition, a first-run syndicated newsmagazine produced and distributed by the Company. 11 The principal components of the Company's revenues are as follows: Three Months Ended November 30, ----------------- 1998 1997 ---- ---- THE OPRAH WINFREY SHOW 38% 43% WHEEL OF FORTUNE 18% 21% JEOPARDY! 16% 17% HOLLYWOOD SQUARES(1) 10% -- THE ROSEANNE SHOW (1) 7% -- INSIDE EDITION 6% 7% AMERICAN JOURNAL (2) -- 4% (1) HOLLYWOOD SQUARES and THE ROSEANNE SHOW premiered in September 1998. (2) The production of AMERICAN JOURNAL was discontinued after the 1997-1998 broadcast season. Producers' fees, programming and other direct operating costs - ------------------------------------------------------------- Producers' fees, programming and other direct operating costs increased by approximately 11% in the first three months of fiscal 1999 compared with the first three months of fiscal 1998 primarily as a result of the production and participation costs associated with HOLLYWOOD SQUARES and THE ROSEANNE SHOW, partially offset by a decrease in production costs due to the discontinuation of AMERICAN JOURNAL. Selling, general and administrative expenses. - --------------------------------------------- The Company has entered into employment agreements with its Chairman of the Board, its Vice Chairman and Chief Executive Officer and certain other executive officers. Such agreements provide, among other things, for performance-based bonuses, including bonuses payable upon the introduction of new shows and bonuses which vary depending on the Company's net income and Common Stock price during pre-established measurement periods. As a result, the Company's compensation expense will increase if the Company introduces a new series in syndication, if the Company's net income increases or if the Company's Common Stock price exceeds the specified levels during the applicable measurement periods. The Company has recognized the impact of certain of these bonuses in its operating results for the first quarter of fiscal 1999, which include all amounts payable in accordance with the terms of such employment agreements. Selling, general and administrative expenses for the first quarter of fiscal 1999 increased by approximately 18% from the comparable period of fiscal 1998 as a result of advertising and promotion costs incurred in connection with the introduction of HOLLYWOOD SQUARES and THE ROSEANNE SHOW, and certain performance-based bonuses incurred in connection with the launch of these shows as described above. Such increase was partially offset by lower marketing costs for AMERICAN JOURNAL. NET INCOME AND EARNINGS PER SHARE - --------------------------------- Due to the factors discussed above, the Company's operating income for the three months ended November 30, 1998 increased by approximately 14% compared to the corresponding period of the prior year. Net income increased by approximately $7.4 million, or 22%, for the three months ended November 30, 1998 in comparison to the three months ended November 30, 1997, reflecting the increase in operating income and the realization of nonrecurring capital gains on the sale of various investment securities, partially offset by a slightly higher effective tax rate for the first three months of fiscal 1999 as compared to the same period of fiscal 1998. Basic earnings per share increased by 23% from $.47 per share in the first three months of fiscal 1998 to $.58 per share in the first three months of the current fiscal year as a result of the increase in net income and a decrease in the number of shares outstanding resulting from the Company's ongoing stock repurchase program. Diluted earnings per share increased by 24% from $.45 per share in the first three months of the prior year to $.56 in the first three months of fiscal 1999 due to the same factors that resulted in the increase in basic earnings per share. Absent the nonrecurring capital gains, basic and diluted earnings per share would have been $.55 and $.53, respectively, in the first three months of fiscal 1999. Due to the success of the shows distributed by the Company and in order to mitigate the influence of some of the factors referred to above, the Company has been obtaining multi-year licenses and license renewals from television stations for its principal distribution properties, extending as far into the future as the 2004-2005 broadcast season. In general, these licenses and renewals have been at rates as favorable or more favorable to the Company than the rates applicable to the 1998-1999 broadcast season. All such licenses and renewals are contingent upon the continued production of the series by their respective producers through the broadcast seasons for which the licenses run. 12 The Company believes that the state of readiness with regard to the year 2000 compliance of its various information systems is adequate. Also, the Company is communicating with its significant customers and vendors to understand their year 2000 issues and, to date, no significant customers or vendors have informed the Company that a material year 2000 issue, that will affect the Company, exists. The Company believes that the impact of inflation on its operations has not been significant. LIQUIDITY AND CAPITAL RESOURCES The Company requires capital resources to fund development, production and promotion costs of independently produced programming, including, in some instances, advances to producers and talent, to produce its own programs and to acquire distribution rights to new programming. In acquiring distribution rights from independent producers, King World has tried to avoid making significant capital commitments to such producers until it has obtained broadcast commitments from a substantial number of television stations. As a result of this strategy and the success of its existing syndication properties, to date, King World has funded substantially all programming acquisition, development, production and promotion costs and advances from its operations. The distribution of television programming is highly competitive and the Company may be obliged to offer, among other things, guarantees and cash advances to acquire, renew or extend distribution rights. Under the terms of the Company's agreement in effect through August 1998 with Harpo, Inc. ("Harpo"), the producer of THE OPRAH WINFREY SHOW, the Company was engaged as the exclusive distributor of THE OPRAH WINFREY SHOW through the 1999-2000 broadcast season. Such agreement was amended in September 1998 to provide for Harpo and Ms. Winfrey to produce and host the show for the 2000-2001 and 2001-2002 broadcast seasons and to extend the engagement of King World as the exclusive distributor of the show for those seasons. Under the amended agreement, King World will continue to receive distribution fees based on a percentage of the gross revenues generated by the show. Such distribution fees are significantly less than those applicable to seasons through the 1999-2000 broadcast season, and, as a result, the contribution of THE OPRAH WINFREY SHOW to King World's net profits and cash flow will decline. In September 1997, the Company made advances to Harpo in the aggregate amount of $130 million against Harpo's guaranteed share of gross revenues for 13 the 1998-1999 and 1999-2000 broadcast seasons. As of November 30, 1998, $36.4 million associated with the 1998-1999 broadcast season remained unrecouped. None of the $65 million related to the 1999-2000 broadcast season was recouped as of November 30, 1998. As part of the most recent amendment to its agreement with Harpo, the Company agreed to pay, within 30 days of contract signing, an advance to Harpo of $75 million against Harpo's guaranteed share of gross revenues for the 2000-2001 broadcast season. As of November 30, 1998, such advance had not yet (with the acquiescence of Harpo) been paid. However, given the Company's continuing unconditional obligation to pay such advance, this amount was reclassified from cash and cash equivalents to producer advances and other assets in the accompanying consolidated balance sheets. Also, the Company agreed to pay, in June 2000, an additional $75 million against Harpo's guaranteed share of gross revenues for the 2001-2002 broadcast season. Based on the license agreements in place for such broadcast seasons, the Company believes that revenues from the series will be sufficient to enable the Company to recoup the advances for such seasons. All of the advances paid to Harpo are refundable to the Company by Harpo and Ms. Winfrey if King World terminates its agreement with Harpo due to Harpo's failure to deliver episodes of The Oprah Winfrey Show. The Company has used its cash reserves to make acquisitions of and investments in broadcast and related properties in the entertainment field, to repurchase shares of its Common Stock and to fund the cost of development, production and promotion of new programming. The Company continues to evaluate opportunities in these areas, and may seek to raise capital in public or private securities markets to finance such activities if it considers it advantageous to do so. In April 1997, the Company announced that the Board of Directors had approved a program to repurchase up to 10,000,000 shares of its Common Stock from time to time in the open market and in privately negotiated transactions. Through January 4, 1999, 4,990,300 shares of Common Stock had been repurchased for aggregate consideration of approximately $115.5 million or approximately $23.14 per share (such amounts have been adjusted to reflect the two-for-one stock split). The Company intends to continue to repurchase shares of its Common Stock in the open market and in privately negotiated transactions if and when it deems it advantageous to do so. Purchases under the share repurchase program have been and will continue to be financed out of the Company's available cash and liquid investments. In January 1998 the Company's Board of Directors declared a two-for-one stock split, effected in the form of a 100% stock dividend, which was paid on February 17, 1998 to stockholders of record on February 3, 1998. In 14 connection with the stock split, the Company increased the number of authorized shares of Common Stock from 75 million to 150 million, which increase was approved by the stockholders of the Company in January 1998. The par value of the additional 36,738,470 shares of Common Stock issued in connection with the stock split was credited to Common Stock and a like amount charged to paid-in capital. All share and per share data presented in these consolidated financial statements have been adjusted for all periods presented to reflect the stock split. PART II - OTHER INFORMATION Item 5. Other Information ----------------- None. Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits: -------- None. (b) Reports on Form 8-K ------------------- On September 29, 1998, the Company filed a current report on Form 8-K announcing the renewal of THE OPRAH WINFREY SHOW for the 2000-2001 and 2001-2002 broadcast seasons. 15 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. KING WORLD PRODUCTIONS, INC. By: /s/ Steven A. LoCascio ---------------------- Steven A. LoCascio Senior Vice President and Chief Financial Officer and on behalf of the Registrant January 7, 1999 -----END PRIVACY-ENHANCED MESSAGE-----