-----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, BadVFQnhglsJnZh4D16i6rajwqPBnWE+bsPFWH/x5gaC4WFYmEfBDAt8ulB5Mhuo lNZmyj2HXlw0IQeKNZqkqg== 0000800458-95-000028.txt : 19951121 0000800458-95-000028.hdr.sgml : 19951121 ACCESSION NUMBER: 0000800458-95-000028 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950831 ITEM INFORMATION: Other events FILED AS OF DATE: 19951114 DATE AS OF CHANGE: 19951117 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: RENTRAK CORP CENTRAL INDEX KEY: 0000800458 STANDARD INDUSTRIAL CLASSIFICATION: 6794 IRS NUMBER: 930780536 STATE OF INCORPORATION: OR FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-15159 FILM NUMBER: 95593349 BUSINESS ADDRESS: STREET 1: 7227 NE 55TH AVENUE CITY: PORTLAND STATE: OR ZIP: 97218 BUSINESS PHONE: 5032847581 MAIL ADDRESS: STREET 1: 7227 NE 55TH AVENUE CITY: PORTLAND STATE: OR ZIP: 97218 FORMER COMPANY: FORMER CONFORMED NAME: NATIONAL VIDEO INC DATE OF NAME CHANGE: 19881004 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) August 31, 1995 Rentrak Corporation (Exact Name of Registrant as Specified in its Charter) Oregon D-15159 93-0780536 (State or Other (Commission File (I.R.S. Employer Jurisdiction of Number) Identification No.) Incorporation) 7227 N.E. 55th Avenue, Portland, Oregon 97218 (Address of Principal Executive (Zip Code) Offices) (503) 284-7581 (Registrant's Telephone Number, Including Area Code) N/A (Former Name or Former Address, if Changed Since Last Report) Index to Exhibits appears at page 2. Item 7. Financial Statements and Exhibits In form 8-K's dated August 25, 1995 and August 31, 1995, the Company reported its acquisition of certain assets constituting the retail video business of Supercenter Entertainment Corporation ("SEC") pursuant to an Asset Purchase Agreement by and among the Company, SEC and Jack Silverman, the principal shareholder of SEC. A copy of the Agreement was previously filed as Exhibit 1 to the Company's Form 8-K dated August 25, 1995. The following historical and pro forma financial statements are included in this Form 8-K in connection with such acquisition. (a) Financial Statements for Businesses Acquired Audited Financial Statements 1) Audited Balance Sheets as of December 31, 1994 and 1993 2) Audited Statements of Operations for years ended December 31, 1994 and 1993 3) Notes to Financial Statements Unaudited Financial Statements 1) Unaudited Balance Sheet as of June 30, 1995 2) Unaudited Statement of Operations for the six month period ended June 30, 1995 (b) Pro Forma Financial Information 1) Unaudited Pro Forma Statements of Operations for the six month period ended September 30, 1995 2) Unaudited Pro Forma Statements of Operations for the year ended March 31, 1995 3) Notes to Pro Forma Financial Statement SIGNATURE 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 hereunto duly authorized. November 14, 1995 RENTRAK CORPORATION /s/ F. Kim Cox By: Name: F. Kim Cox Title: Executive Vice President and Secretary EX-1 2 SUPERCENTER ENTERTAINMENT CORPORATION - RETAIL DIVISION Financial Statements As Of December 31, 1994 And 1993 Together With Report Of Independent Accountants REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Supercenter Entertainment Corporation - Retail Division: We have audited the accompanying balance sheets of Supercenter Entertainment Corporation - Retail Division as of December 31, 1994 and 1993, and the related statements of operations for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Supercenter Entertainment Corporation - Retail Division as of December 31, 1994 and 1993, and the results of its operations for the years then ended, in conformity with generally accepted accounting principles. Dallas, Texas, October 16, 1995 SUPERCENTER ENTERTAINMENT CORPORATION - RETAIL DIVISION BALANCE SHEETS--DECEMBER 31, 1994 AND 1993
ASSETS 1994 1993 CURRENT ASSETS: Cash $ 151,431 $ 43,260 Receivables 7,667 - Merchandise inventories 322,686 34,434 Other current assets 83,081 8,856 Total current assets 564,865 86,550 RENTAL INVENTORIES, net 1,410,230 292,994 PROPERTY AND EQUIPMENT, net 1,555,294 151,289 OTHER ASSETS 15,391 - Total assets $ 3,545,780 $ 530,833 LIABILITIES AND EQUITY CURRENT LIABILITIES: Accounts payable $ 947,061 $117,745 Accrued expenses 321,256 14,535 Total current liabilities 1,268,317 132,280 COMMITMENTS EQUITY 2,277,463 398,553 Total liabilities and equity $ 3,545,780 $ 530,833 The accompanying notes are an integral part of these financial statements. SUPERCENTER ENTERTAINMENT CORPORATION - RETAIL DIVISION STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993 1994 1993 REVENUES: Rental revenue, net $ 2,954,640 $ 539,764 Product sales 498,281 211,382 3,452,921 751,146 OPERATING COSTS AND EXPENSES: Cost of product sales 1,535,853 329,010 Selling and administrative 4,176,476 847,853 OPERATING LOSS (2,259,408) (425,717) INTEREST EXPENSE 3,766 32 LOSS BEFORE INCOME TAXES (2,263,174) (425,749) PROVISION FOR INCOME TAXES - - NET LOSS $(2,263,174) $ (425,749) The accompanying notes are an integral part of these financial statements.
SUPERCENTER ENTERTAINMENT CORPORATION - RETAIL DIVISION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1994 AND 1993 1. GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: General The accompanying financial statements relate to the accounts of the retail division (retail video centers located in K-Mart and Wal-Mart) of Supercenter Entertainment Corporation (the "Retail Division"). Supercenter Entertainment Corporation (the "Company") was incorporated in December 1991 and operated under the name CEVAXS U.S. Corporation through August 1994, at which time the name was changed to Supercenter Entertainment Corporation. From December 1991 through October 1992, the Company's sole operation was in wholesale video services to the supermarket industry. Beginning in October 1992, the Company expanded its operation to include Company-owned retail video centers located in stores owned by Wal-Mart Stores, Inc. In early 1994, the Company expanded its host retailer relationships to include K-Mart Corporation. At December 31, 1994 and 1993, the Retail Division had 56 and 7 locations, respectively. Revenue Recognition Revenues are recognized at the time of rental or sale of video cassettes. Merchandise Inventories Merchandise inventories consist of prerecorded video cassettes and games and are stated at the lower of cost or market; cost is determined on the first-in, first-out method. Rental Inventories Rental inventories are stated at the lower of amortized cost or market and consist of prerecorded video cassettes classified as new release, catalog stock, and video games. New release video cassettes are amortized over ten months using a declining percentage basis to a $6 salvage value. Catalog stock video cassettes are amortized over 36 months on a straight-line basis to a $6 salvage value. Video games are amortized over 24 months on a straight-line basis to an $8 salvage value. Property and Equipment Property and equipment is stated at cost. Depreciation is calculated using the straight-line method based on the estimated useful lives of the assets. Leasehold improvements are amortized on a straight-line method over the shorter of the estimated useful lives or the respective lease terms. The estimated useful lives are as follows: Furniture and fixtures 5 years Computer equipment 3 years Leasehold improvements 3 years Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be reversed or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. 2. RENTAL INVENTORIES: Rental inventories at December 31, 1994 and 1993, consisted of the following:
1994 1993 New release video cassettes $1,036,162 $211,334 Catalog stock video cassettes 578,796 82,054 Video games 503,490 44,493 2,118,448 337,881 Less- Accumulated amortization (708,218) (44,887) $ 1,410,230 $ 292,994
The Company maintained a centralized warehouse to process inventory for all of the Company's operations, including the Retail Division. Included in the above rental inventory amounts for 1994 is $68,538 of rental inventory which was located in the Company's warehouse at year-end and allocated to the Retail Division based upon the pro rata portion of inventory subsequently shipped to the Retail Division. At December 31, 1993, no inventory in the Company's warehouse was allocated to the Retail Division due to the amount being insignificant. 3. PROPERTY AND EQUIPMENT: Property and equipment at December 31, 1994 and 1993, consisted of the following:
1994 1993 Furniture and fixtures $ 976,618 $122,861 Computer equipment 619,323 89,020 Leasehold improvements 240,264 - 1,836,205 211,881 Less- Accumulated depreciation and amortization (280,911) (60,592) $ 1,555,294 $ 151,289
4. INCOME TAXES: The Company and the Retail Division have had cumulative losses since inception. Also, as discussed further in Note 9, the assets of the Retail Division have been sold subsequent to year-end. All differences between the financial statement carrying amount and the tax basis in these assets prior to the sale are eliminated at the time of the sale. Due to the above and the lack of earnings history for the Retail Division, no current or deferred taxes have been reflected in the accompanying financial statements. 5. EQUITY: Equity represents the sole shareholder's net investment in the Retail Division. The following table reflects the activity in the equity account for the two years ended December 31, 1994: Equity, December 31, 1992 $ 313,521 Owner investments 1,272,469 Transfers to owner (761,688) Losses (425,749) Equity, December 31, 1993 398,553 Owner investments 7,479,167 Transfers to owner (3,337,083) Losses (2,263,174) Equity, December 31, 1994 $ 2,277,463
6. CORPORATE ALLOCATIONS: As discussed in Note 1, the accompanying financial statements relate to the Retail Division of the Company. The Retail Division shares common corporate functions/activities with the rest of the Company. The corporate costs primarily include general management, finance, data processing, logistics, and marketing. Corporate costs have been allocated to the Retail Division based upon the relation of Retail Division net revenues to total Company net revenues. Management believes this allocation method is reasonable and reflects the utilization of corporate costs. The allocation percentages and allocated costs for the Retail Division were 61% and $977,381 in 1994 and 18% and $179,487 in 1993. All allocated corporate costs are included in selling and administrative expenses in the accompanying financial statements. 7. RELATED-PARTY TRANSACTIONS: The sole shareholder of the Company funds the operations of the Company and is closely involved in the daily activities of the Company. The sole shareholder does not draw a salary for his services, and the accompanying balance sheet does not include any amounts owing to the sole shareholder. A substantial portion of the Retail Division's purchases and other transactions are made by the Company on behalf of the Retail Division. In August 1994, the sole shareholder of the Company sold his 100% ownership in a company which is one of the Retail Division's major vendors. Subsequent to the sale and until August 1995, the Company had a revenue sharing arrangement with this vendor whereby it leased video cassettes from the vendor for a six-month term for an up-front payment of up to $10 per unit. The video cassettes were rented by the Company to customers and the rental revenues generated were distributed evenly between the Company and the vendor. The Company had an option to purchase the video cassettes for $8 per unit at the conclusion of the lease term. Amounts due to this vendor and included in accounts payable at December 31, 1994 and 1993, are $370,710 and $19,703, respectively. 8. LEASES: The Company has several noncancelable operating leases, primarily for the rental of its retail video center locations. The leases are typically for an initial five-year term and one five-year renewal option exercisable by the Company, subject to the fulfillment of certain conditions. Future minimum lease payments under noncancelable operating leases for the Retail Division as of December 31, 1994, are as follows:
Year Ending December 31, 1995 $1,617,000 1996 1,655,000 1997 1,600,000 1998 1,496,000 1999 877,000 Total future minimum lease payments $7,245,000
Rent expense for the Retail Division was $793,910 and $135,290 for the years ended December 31, 1994 and 1993. 9. SUBSEQUENT EVENTS: On August 31, 1995, substantially all of the Retail Division's assets were purchased by Rentrak Corporation. The sole shareholder received 878,000 shares of Rentrak Corporation's common stock as consideration for the acquisition. SUPERCENTER ENTERTAINMENT CORPORATION - RETAIL DIVISION BALANCE SHEET--JUNE 30, 1995
(Unaudited) ASSETS CURRENT ASSETS: Cash $ 87,825 Receivables 12,709 Merchandise inventories 274,893 Other current assets 25,558 Total current assets 400,985 RENTAL INVENTORIES, net 1,847,994 PROPERTY AND EQUIPMENT, net 1,654,989 OTHER ASSETS - Total assets $ 3,903,968 LIABILITIES AND EQUITY CURRENT LIABILITIES: Accounts payable $1,366,910 Accrued expenses 490,723 Total current liabilities 1,857,633 COMMITMENTS EQUITY 2,046,335 Total liabilities and equity $ 3,903,968 SUPERCENTER ENTERTAINMENT CORPORATION - RETAIL DIVISION STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1995 (Unaudited) REVENUES: Rental revenue, net $ 3,247,070 Product sales 625,869 3,872,939 OPERATING COSTS AND EXPENSES: Cost of product sales 2,293,437 Selling and administrative 3,865,424 OPERATING LOSS (2,285,922) INTEREST EXPENSE 14,539 LOSS BEFORE INCOME TAXES (2,300,461) PROVISION FOR INCOME TAXES - NET LOSS $(2,300,461)
RENTRAK CORPORATION NOTES TO PRO FORMA STATEMENTS OF OPERATIONS SEPTEMBER 30, 1995 (Unaudited) The accompanying unaudited pro forma statements of operations for the periods ended March 31, 1995 and September 30, 1995 have been prepared to present the effect of the purchase of all of the assets of Supercenter Entertainment Corporation ("SEC"). No pro forma balance sheet has been presented as the transaction is already reflected in the consolidated September 30, 1995 balance sheet. The pro forma statements assume that such events were effective at the beginning of the respective periods. The pro forma statements of operations have been prepared based upon the historical financial statements of Rentrak Corporation and SEC. Pro forma adjustments are described in the accompanying notes. The Pro Forma Statements of Operations may not be indicative of the results of operations that actually would have occurred if the transactions had been in effect as of the beginning of the respective periods nor do they purport to indicate the results of future operations of Rentrak Corporation. The pro forma statements of operations should be read in conjunction with the audited and unaudited financial statements and notes thereto of SEC included elsewhere in this Form 8-K. RENTRAK CORPORATION PRO FORMA STATEMENT OF OPERATIONS SIX MONTHS ENDED SEPTEMBER 30, 1995 (UNAUDITED)
Rentrak SuperCenter Pro Forma Pro Forma Corporation Entertainment D Adjustments Combined REVENUES: PPT $47,847,732 - - $47,847,732 Other 20,887,342 3,872,939 - 24,760,281 68,735,074 3,872,939 - 72,608,013 OPERATING COSTS AND EXPENSES: Cost of Sales 51,623,215 2,293,437 (530,658) 3 53,385,994 Selling and administrative 19,213,585 3,865,424 75,155 4 23,154,164 70,836,800 6,158,861 (455,503) 76,540,158 LOSS FROM OPERATIONS (2,101,726) (2,285,922) 455,503 (3,932,145) OTHER INCOME (EXPENSE) Interest income 549,284 - - 549,284 Interest expense (244,560) (14,539) - (259,099) Other 439,732 - - 439,732 744,456 (14,539) 0 729,917 INCOME/(LOSS) FROM OPERATIONS BEFORE INCOME TAXES AND EXTRAORDINARY ITEM (1,357,270) (2,300,461) 455,503 (3,202,228) INCOME TAX BENEFIT 794,250 - 2,055,733 5 2,849,983 NET INCOME/(LOSS) ($563,020) ($2,300,461) $2,511,236 $352,245 NET INCOME (LOSS) PER SHARE ($0.05) N/A N/A ($0.03) SHARES USED IN PER SHARE CALCULATION 11,797,893 N/A 730,076 B 12,527,969 The accompanying notes are an integral part of these statements. RENTRAK CORPORATION PRO FORMA STATEMENT OF OPERATIONS YEAR ENDED MARCH 31, 1995 (UNAUDITED) Rentrak SuperCenter Pro Forma Pro Forma Corporation Entertainment C Adjustments Combined REVENUES: PPT $79,793,584 - - $79,793,584 Other 32,372,647 3,452,921 - 35,825,568 112,166,231 3,452,921 - 115,619,152 OPERATING COSTS AND EXPENSES: Cost of Sales 83,533,328 1,535,853 - 85,069,181 Selling and administrative 26,183,434 4,176,476 180,372 1 30,540,282 109,716,762 5,712,329 180,372 115,609,463 LOSS FROM OPERATIONS 2,449,469 (2,259,408) (180,372) 9,689 OTHER INCOME (EXPENSE) Interest income 600,415 - - 600,415 Interest expense (35,979) (3,766) - (39,745) Other 2,826,849 - - 2,826,849 3,391,285 (3,766) 0 3,387,519 INCOME/(LOSS) FROM OPERATIONS BEFORE INCOME TAXES AND EXTRAORDINARY ITEM 5,840,754 (2,263,174) (180,372) 3,397,208 INCOME TAX PROVISION (BENEFIT) 727,231 - (897,091) 2 (169,860) NET INCOME/(LOSS) $5,113,523 ($2,263,174) $716,719 $3,567,068 EARNINGS PER COMMON SHARE AND COMMON EQUIVALENT SHARE: NET INCOME (LOSS) PER SHARE $0.41 N/A N/A $0.28 SHARES USED IN PER SHARE CALCULATION 13,397,951 N/A 878,000 B 14,275,951 EARNINGS PER COMMON SHARE AND COMMON EQUIVALENT SHARE - assuming issuance of all dilutive contingent shares: NET INCOME (LOSS) PER SHARE $0.40 N/A N/A $0.27 SHARES USED IN PER SHARE CALCULATION 14,317,380 N/A 878,000 B 15,195,380 The accompanying notes are an integral part of these statements.
RENTRAK CORPORATION NOTES TO PRO FORMA FINANCIAL STATEMENTS SEPTEMBER 30, 1995 (Unaudited) A. The pro forma statements of operations show the adjustments for the acquisition of all ofthe assets of SEC. The adjustments reflect the acquisition as if such acquisition had occurred at the beginning of the respective periods. The pro forma adjustments for the above transaction are as follows: 1. Selling and Administrative - Year Ended March 31, 1995 (a) To record amortization of intangibles of $180,372 related to the stock purchase (assumes amortization period of ten (10) years which is based on the period of time covered by the lease agreements). 2. Income Tax Provision (Benefit) - Year Ended March 31, 1995 (a) To record an income tax benefit of $897,091 based on the Company's effective tax rate of five percent. 3. Cost of Sales - Six Months Ended September 30, 1995 (a) To eliminate a non-recurring expense of $530,658 which is associated with a liability which was not assumed. 4. Selling and Administrative - Six Months Ended September 30, 1995 (a) To record amortization of intangibles of $75,155 related to the stock purchase (assumes amortization period of ten (10) years which is based on the period of time covered by the lease agreements). 5. Income Tax Provision (Benefit) - Six Months Ended September 30, 1995 (a) To record an income tax benefit of $2,055,733 based on the Company's projected current effective tax rate of eighty-nine percent. B. Includes 878,000 shares issued upon acquisition. C. These amounts represent the results of operations for the period January 1, 1994 through December 31, 1994. D. These amounts represent the results of operations for the period January 1, 1995 through June 30, 1995. -----END PRIVACY-ENHANCED MESSAGE-----