-----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, UNXuPwF1A/H43tYOov7hjvamLnSWSAz8sNK56SUglQTvUfMLAfkGpqS0eH4PUu5B EsP1GbqjAFU9uCG5Slz/hA== 0000898430-95-002371.txt : 19951119 0000898430-95-002371.hdr.sgml : 19951119 ACCESSION NUMBER: 0000898430-95-002371 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CLARK DICK PRODUCTIONS INC CENTRAL INDEX KEY: 0000805370 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE & VIDEO TAPE PRODUCTION [7812] IRS NUMBER: 232038115 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15192 FILM NUMBER: 95592184 BUSINESS ADDRESS: STREET 1: 3003 W OLIVE AVE CITY: BURBANK STATE: CA ZIP: 91510 BUSINESS PHONE: 818-841-3003 MAIL ADDRESS: STREET 1: 3003 W. OLIVE AVENUE CITY: BURBANK STATE: CA ZIP: 91505 10-Q 1 FORM 10-Q DATED 09/30/95 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 1995. 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 No. 0-15192 DICK CLARK PRODUCTIONS, INC. ---------------------------- (Exact name of registrant as specified in its charter) DELAWARE 23-2038815 - ------------------------------- ------------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3003 West Olive Avenue, Burbank, California 91505-4590 ------------------------------------------------------ (Address of principal executive offices, including zip code) (818) 841-3003 --------------- (Registrant's telephone number, including area code) 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 ----- ----- Below are indicated the number of shares outstanding of each of the registrant's classes of common stock as of November 8, 1995.
Class Outstanding at November 8, 1995 - ---------------------------------------- ------------------------------- Common Stock, $0.01 par value 7,528,500 Class A Common Stock, $0.01 par value 750,000
DICK CLARK PRODUCTIONS, INC. NOTES TO FINANCIAL STATEMENTS ----------------------------- (Unaudited) 1. Basis of Financial Statement Presentation ----------------------------------------- The consolidated financial statements of dick clark productions, inc. and subsidiaries (collectively the "Company") have been prepared in accordance with generally accepted accounting principles for interim financial information. Interim financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete year-end financial statements. The accompanying financial statements should be read in conjunction with the more detailed financial statements and related footnotes for the fiscal year ended June 30, 1995, as included in the Company's 1995 Annual Report on Form 10-K (the "Annual Report") filed with the Securities and Exchange Commission. A signed independent accountant's report regarding the June 30, 1995 balance sheet is included on page 31 of the Annual Report. Significant accounting policies used by the Company are summarized in Note 2 to the financial statements included in the Annual Report. In the opinion of management, all adjustments (which include only recurring normal adjustments) required for a fair presentation of the financial position of the Company as of September 30, 1995, and the results of its operations and cash flows for the periods ended September 30, 1995 and 1994 respectively, have been made. Operating results for the three-month period ended September 30, 1995, are not necessarily indicative of the operating results for the entire fiscal year. 2. Prepaid Royalties ----------------- Pursuant to a Redemption and Settlement Agreement dated June 30, 1990 (the "Redemption Agreement") between Harmon Entertainment Corporation ("Harmon"), a previous co-venturer with the Company in its restaurant business, the Company, dick clark restaurants, inc. ("dcri") and certain other parties, the Company had an obligation to pay Harmon a royalty of up to $10,000,000 at a rate of 1.5% of all restaurant revenues of which $1,000,000 was advanced to Harmon at the time the Redemption Agreement was entered into by the parties thereto. Pursuant to a recent modification to the Redemption Agreement entered into during the fiscal quarter ended December 31, 1994, the Company paid Harmon $3,128,000 as a pre-payment of the remaining portion of the royalty. As part of this transaction, Harmon paid the Company $358,000 in settlement of amounts owed to the Company by Harmon pursuant to the findings of an audit conducted in connection with the Redemption Agreement. As a result of the pre-payment, the Company has satisfied in full its royalty obligation to Harmon under the Redemption Agreement. Harmon also dropped a previously asserted claim that Harmon was owed certain other amounts under the Redemption Agreement. The Company will amortize the pre-paid royalty at the rate of 1.5% of revenues after the $1,000,000 advanced to Harmon is recouped. 1 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL ------- A majority of the Company's revenues are derived from its television production business which primarily involves the production and licensing of television programming. The Company's television programming is generally licensed to the major television networks, cable networks, domestic and foreign syndicators, and advertisers. The Company also receives production fees from program buyers who retain ownership of the programming. In addition, the Company derives revenues from the rerun broadcast of its programs on network and cable television and in foreign markets, as well as the licensing of its media and film archives for use in feature films, television movies, etc. The Company, on a limited basis, also develops theatrical films in association with established studios that can provide financing necessary for production. The Company also derives substantial revenue from its entertainment- related businesses, including a restaurant business (dick clark restaurants, inc. and its subsidiaries), and a corporate events and production business (dick clark corporate productions, inc.). These businesses combined contributed approximately 47% and 56% of the Company's consolidated revenues for the three-month periods ended September 30, 1995 and 1994, respectively. License fees for the production of television programming are paid to the Company pursuant to license agreements during production and upon delivery of the programs or shortly thereafter. Revenues from network and cable television license agreements are recognized for financial statement purposes upon delivery of each program or in the case of a series, each episode. Revenues from the rerun broadcast of television programming (both domestic and foreign) are recognized for each program when a particular program becomes contractually available for broadcast. Production costs of television programs are capitalized and charged to operations on an individual basis in the ratio that the current year's gross revenues bear to management's estimate of the total revenues for each program from all sources. Substantially all television production costs are amortized in the initial year of delivery except for television movies where there would be anticipated future revenues earned from rerun and other exploitation. Successful television movies can achieve substantial revenues from rerun broadcasts in both foreign and domestic markets after the initial broadcast, thereby allowing a portion of the production costs to be amortized against future revenues. Distribution costs of television programs are expensed in the period incurred. Depending on the type of contract, revenues for dick clark corporate productions, inc. are recognized when the services are completed for a live event, 2 when a tape or film is delivered to a customer, or when services are completed pursuant to a particular phase of a contract which provides for periodic payments. Costs for corporate event productions are capitalized and expensed as revenues are recognized. RESULTS OF OPERATIONS --------------------- Revenues for the three months ended September 30, 1995 were $8,384,000 compared with $8,451,000, for the comparable period in the previous fiscal year. The revenues remained relatively unchanged for the three months ended September 30, 1995 as compared to the corresponding period in the previous fiscal year, as a result of increased revenues from the corporate production business, increased sales from the dick clark media archives subsidiary, offset by a decrease in revenues from the Geviderm cosmetic line, as well as reduced sales from the restaurant business. Restaurant sales decreased due to the initial opening period last year that were not replicated in the current fiscal year. Gross profit for any period is a function of the profitability of the individual programs and projects delivered during that period. Gross profit as a percentage of revenues remained unchanged for the three-month period ended September 30, 1995, as compared to the corresponding period in the previous fiscal year. This was the result of increased profitability recognized from the aforementioned increased sales from the dick clark media archives subsidiary which was offset by decreased profitability of the Geviderm cosmetic line, as well as the Company's television production business. LIQUIDITY AND CAPITAL RESOURCES ------------------------------- The Company has funded its working capital requirements for television production primarily through installment payments from license fees from the television networks and minimum guaranteed distribution payments from independent distributors. The Company has generally been able to cover the costs of its television programming through license or syndication fees and has incurred no significant capital expenditure commitments. The Company intends to continue to accelerate the opening of additional American Bandstand Grill restaurants. In connection with the implementation of this strategy, the Company modified the Redemption Agreement to buy-out Harmon's right to all future royalty payments (see Note 2 to the Financial Statements). In arriving at the amount of the pre-payment, the Company's decision was based on certain assumptions including, the number of restaurants the Company expects to open, the anticipated revenue from each restaurant over a period of fifteen years, and a factor to discount the stream of payments to present value. The Company expects that the opening of additional restaurants will be financed from available capital and alternative financing methods such as joint ventures and limited recourse borrowings. In August of 1993, the Company opened a dance-club-only version of the American Bandstand Grill in Reno, Nevada which was 3 financed through a joint venture arrangement. The two restaurants opened during fiscal 1994 were financed by the Company. The Company plans to open a restaurant in Cincinatti, Ohio in January of 1996 and it is possible that it will begin construction of one additional location in fiscal 1996 at a total estimated capital investment of $4,000,000 which will be funded by the Company. Capital requirements for the Company's corporate events business, dick clark corporate productions, inc., are anticipated to be immaterial to the Company's overall capital position. The Company expects that its available capital base and cash generated from operations will be more than sufficient to meet its cash requirements for the foreseeable future. The Company has no outstanding bank borrowings or other borrowed indebtedness and had cash and marketable securities (principally consisting of government securities) of approximately $28,015,000 as of September 30, 1995. 4 PART II. OTHER INFORMATION Item 1. None Item 2. None Item 3. None Item 4. Not Applicable Item 5. None Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Financial Data Schedule (b) Reports No event has occurred during the quarter for which this report is filed that would require the filing of a report on Form 8-K and, therefore, no such report has been filed. 5 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. dick clark productions, inc. --------------------------------------------------- by: /s/ Kenneth H. Ferguson ----------------------------------------------- Kenneth H. Ferguson Chief Financial Officer and Treasurer (Principal Financial Officer and authorized to sign on behalf of Registrant) Date: November 8, 1995 6 ITEM 1. FINANCIAL STATEMENTS DICK CLARK PRODUCTIONS, INC. CONSOLIDATED BALANCE SHEETS
(Unaudited) September 30, June 30, 1995 1995 ------------- ------------ ASSETS - ------ Cash and cash equivalents $ 2,763,000 $ 3,297,000 Marketable securities 25,252,000 25,769,000 Accounts receivable 1,868,000 2,303,000 Program costs, net 6,319,000 4,306,000 Prepaid royalty 3,128,000 3,128,000 Leasehold improvements and equipment 7,290,000 7,152,000 Goodwill and other assets 2,362,000 2,353,000 ----------- ----------- Total assets $48,982,000 $48,308,000 =========== =========== LIABILITIES & STOCKHOLDERS' EQUITY - ---------------------------------- Accounts payable $ 2,817,000 $ 4,109,000 Accrued residuals and participations 1,470,000 1,438,000 Production advances and deferred revenue 5,937,000 4,097,000 Current and deferred income taxes 336,000 348,000 ----------- ----------- Total liabilities 10,560,000 9,992,000 Commitments and contingencies --- --- Minority interest 570,000 524,000 Stockholders' equity: Class A common stock, $.01 par value, 2,000,000 shares authorized 750,000 shares outstanding 7,000 7,000 Common stock, $.01 par value, 20,000,000 shares authorized 7,528,500 shares outstanding 76,000 76,000 Additional paid-in capital 7,790,000 7,790,000 Retained earnings 29,979,000 29,919,000 ----------- ----------- Total stockholders' equity 37,852,000 37,792,000 Total liabilities and stockholders' equity $48,982,000 $48,308,000 =========== ===========
The accompanying notes are an integral part of these consolidated balance sheets. 7 DICK CLARK PRODUCTIONS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Three Months Ended September 30, -------------------------- 1995 1994 ---------- ---------- Gross revenues $8,384,000 $8,451,000 Costs related to revenue 7,683,000 7,700,000 ---------- ---------- Gross profit 701,000 751,000 General and administrative expenses 996,000 1,051,000 Minority interest expense 46,000 30,000 Interest and other income (433,000) (359,000) ---------- ---------- Income before provision for income taxes 92,000 29,000 Provision for income taxes 32,000 10,000 ---------- ---------- Net income $ 60,000 $ 19,000 ========== ========== Net income per share $ 0.01 $ 0.00 ========== ========== Weighted average number of shares outstanding 8,279,000 8,277,000 ========== ==========
The accompanying notes are an integral part of these consolidated statements. 8 DICK CLARK PRODUCTIONS, INC. CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
For the Three Months Ended September 30, --------------------------- 1995 1994 ----------- ----------- Cash flows from operating activities Net income $ 60,000 $ 19,000 Adjustments to reconcile net income to net cash provided by operations Amortization expense 4,734,000 3,598,000 Depreciation expense 249,000 235,000 Minority interest, net 46,000 30,000 Disposals of L/H Improvements & Equipment 15,000 0 Changes in assets and liabilities Accounts receivable 435,000 846,000 Goodwill and other assets (36,000) (114,000) Accounts payable, accrued residuals and participations (1,260,000) 386,000 Production advances and deferred revenue 1,840,000 205,000 Current and deferred income taxes payable (12,000) (55,000) ----------- ---------- Net cash provided by operations 6,071,000 5,150,000 Cash flows from investing activities Investment in program costs (6,720,000) (5,652,000) Purchases of marketable securities (1,435,000) (827,000) Sales of marketable securities 1,952,000 1,996,000 Capital expenditures (402,000) (158,000) ----------- ---------- Net cash used for investing activities (6,605,000) (4,641,000) ----------- ---------- Net increase (decrease) in cash and cash equivalents (534,000) 509,000 Cash and cash equivalents at beginning of the year 3,297,000 4,336,000 ----------- ---------- Cash and cash equivalents at end of the period $ 2,763,000 $ 4,845,000 =========== =========== Supplemental Disclosures of Cash Flow Information: Cash paid during the year for income taxes $ 44,000 $ 65,000 =========== ===========
The accompanying notes are an integral part of these consolidated statements. 9 EX-27 2 FDS ART 5 DATED 09/30/95
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AND INCOME STATEMENT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS JUN-30-1996 SEP-30-1995 2,763 25,252 1,868 0 6,319 29,883 7,290 2,251 48,982 8,754 0 7,873 0 0 37,852 48,982 8,384 8,384 7,683 7,683 1,042 0 (433) 92 32 60 0 0 0 60 0.01 0.01
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