-----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, QDxu6XCMhf55IjnfwLWLIl6FgiRyPC08A3kS82keAp4bahrq96EeCVe2BPKIug0V M2yRLN0hBpLNJtNhk+bMwQ== 0000910680-00-000125.txt : 20000217 0000910680-00-000125.hdr.sgml : 20000217 ACCESSION NUMBER: 0000910680-00-000125 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000216 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: SEC FILE NUMBER: 000-15192 FILM NUMBER: 547648 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 FOR DICK CLARK PRODUCTIONS 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 December 31, 1999. 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 February 11, 2000. Class Outstanding at February 11, 2000 - -------------------------------------------------------------------------------- Common Stock, $0.01 par value 8,438,000 Class A Common Stock, $0.01 par value 827,000 dick clark productions, inc. Form 10-Q For the Quarter Ended December 31, 1999
PART 1. FINANCIAL INFORMATION PAGE ---- Item 1. Financial Statements Consolidated Balance Sheets as of December 31, 1999 (unaudited) and June 30, 1999............................................................ 3 Consolidated Statements of Operations for the three and six months ended December 31, 1999 and December 31, 1998 (unaudited).......................... 4 Consolidated Statements of Cash Flows for the six months ended December 31, 1999 and December 31, 1998 (unaudited).......................... 5 Notes to Consolidated Financial Statements................................... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations........................................................ 8 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K............................................. 11 SIGNATURES................................................................... 12
ITEM 1. dick clark productions, inc. FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS DECEMBER 31, JUNE 30, 1999 1999 ----------- ----------- (UNAUDITED) Assets - -------------------------------------------------------------------- Cash and cash equivalents $ 10,931,000 $ 6,023,000 Marketable securities 42,910,000 39,075,000 Accounts receivable 4,241,000 4,540,000 Program costs, net 5,878,000 5,067,000 Prepaid royalty, net 2,576,000 2,728,000 Leasehold improvements and equipment 13,086,000 10,907,000 Goodwill and other assets, net 1,417,000 1,578,000 ------------------- ----------------- Total assets $ 81,039,000 $ 69,918,000 =================== ================= Liabilities & Stockholders' Equity - -------------------------------------------------------------------- Liabilities: Accounts payable $ 5,474,000 $ 4,369,000 Accrued residuals and participations 1,618,000 2,075,000 Production advances and deferred revenue 9,243,000 695,000 Current and deferred income taxes 846,000 316,000 ------------------- ----------------- Total liabilities 17,181,000 7,455,000 Commitments and contingencies Minority interest 689,000 652,000 Stockholders' Equity: Class A common stock, $.01 par value, 2,000,000 shares authorized 827,000 shares outstanding 8,000 8,000 Common stock, $.01 par value, 20,000,000 shares authorized 8,438,000 and 8,433,000 shares outstanding at December 31, 1999 and June 30, 1999, respectively 84,000 84,000 Treasury Stock, at cost, 1,358 shares at December 31, 1999 (23,000) - Additional paid-in capital 18,806,000 18,783,000 Retained earnings 44,294,000 42,936,000 ------------------- ----------------- Total stockholders' equity 63,169,000 61,811,000 ------------------- ----------------- Total liabilities & stockholders' equity $ 81,039,000 $ 69,918,000 =================== ================= The accompanying notes are an integral part of these consolidated statements.
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dick clark productions, inc. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) For the Three Months Ended For the Six Months Ended December 31, December 31, -------------------------- ------------------------ 1999 1998 1999 1998 ---------- ----------- ---------- ---------- Revenue $ 22,646,000 $ 16,391,000 $ 33,231,000 $ 29,529,000 Costs related to revenue 20,358,000 14,165,000 29,889,000 26,435,000 -------------- ------------- -------------- -------------- Gross profit 2,288,000 2,226,000 3,342,000 3,094,000 General and administrative expense 1,179,000 1,417,000 2,346,000 2,765,000 Minority interest expense (income) 174,000 (36,000) 244,000 (32,000) Interest and other income (589,000) (531,000) (1,491,000) (1,088,000) -------------- ------------- -------------- -------------- Income before provision for income taxes 1,524,000 1,376,000 2,243,000 1,449,000 Provision for income taxes 526,000 509,000 774,000 536,000 -------------- ------------- -------------- -------------- Income before cumulative effect of accounting change 998,000 867,000 1,469,000 913,000 Cumulative effect of accounting change - - (111,000) - -------------- ------------- -------------- -------------- Net income $ 998,000 $ 867,000 $ 1,358,000 $ 913,000 ============== ============= ============== ============== Per share data: Basic earnings per share: Before cumulative effect of accounting change $ 0.11 $ 0.09 $ 0.16 $ 0.10 Cumulative effect of accounting change - - (0.01) - -------------- ------------- -------------- -------------- Net Income $ 0.11 $ 0.09 $ 0.15 $ 0.10 ============== ============= ============== ============== Diluted earnings per share: Before cumulative effect of accounting change $ 0.11 $ 0.09 $ 0.16 $ 0.10 Cumulative effect of accounting change - - (0.01) - -------------- ------------- -------------- -------------- Net Income $ 0.11 $ 0.09 $ 0.14 $ 0.10 ============== ============= ============== ============== Weighted average number of shares outstanding, basic 9,262,000 9,249,000 9,261,000 9,249,000 ============== ============= ============== ============== Weighted average number of shares outstanding, diluted 9,401,000 9,382,000 9,395,000 9,383,000 ============== ============= ============== ==============
The accompanying notes are an integral part of these consolidated statements. -4-
dick clark productions, inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Six Months Ended December 31, -------------------------------- 1999 1998 ------------- -------------- Cash flows from operating activities: Net income $ 1,358,000 $ 913,000 Adjustments to reconcile net income to net cash provided by operations: Amortization expense 18,792,000 15,377,000 Depreciation expense 712,000 999,000 Investment in program costs (18,702,000) (18,310,000) Minority interest, net 37,000 (32,000) Disposals of property, plant and equipment 7,000 64,000 Changes in assets and liabilities: Accounts receivable 299,000 1,149,000 Other assets (588,000) (128,000) Accounts payable, accrued residuals and participations 648,000 (3,041,000) Production advances and deferred revenue 8,548,000 8,424,000 Current and deferred income taxes payable 530,000 55,000 ------------- -------------- Net cash provided by operations 11,641,000 5,470,000 ------------- -------------- Cash flows from investing activities: Purchases of marketable securities (15,763,000) (14,092,000) Sales of marketable securities 11,928,000 10,479,000 Expenditures on property, plant and equipment (2,898,000) (243,000) ------------- -------------- Net cash used for investing activities (6,733,000) (3,856,000) ------------- -------------- Cash flows from financing activities: Exercise of stock options - 65,000 ------------- -------------- Net cash provided by financing activities - 65,000 ------------- -------------- Net increase in cash and cash equivalents 4,908,000 1,679,000 Cash and cash equivalents at beginning of the period 6,023,000 7,092,000 ------------- -------------- Cash and cash equivalents at end of the period $ 10,931,000 $ 8,771,000 ============= ============== Supplemental Disclosures of Cash Flow Information: Cash paid during the year for income taxes $ 173,000 $ 556,000 ============= ==============
The accompanying notes are an integral part of these consolidated statements. -5- dick clark productions, inc. NOTES TO CONSOLIDATED 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, 1999, as included in the Company's 1999 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, 1999 financial statements is included on page 28 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 December 31, 1999, and the results of its operations and cash flows for the periods ended December 31, 1999 and 1998, respectively, have been made. Operating results for the three-month and six-month periods ended December 31, 1999 are not necessarily indicative of the operating results for the entire fiscal year. The carrying values of the Company's assets are reviewed when events and circumstances indicate that the carrying value of an asset may not be recoverable. If it is determined that an impairment loss has occurred based on undiscounted future cash flows, then a loss is recognized in the statement of operations using a discounted cash flow or fair value model. For the three-month and six-month periods ended December 31, 1999 and 1998, the Company had no elements of comprehensive income other than net income. In April, 1998, the AICPA issued Statement of Position (SOP) 98-5, "Reporting on the Costs of Start-Up Activities." This SOP requires that all nongovernmental entities expense costs of start-up activities (pre-opening, pre-operating and organizational costs) as those costs are incurred and requires the write-off of any unamortized balances upon implementation. SOP 98-5 is effective for financial statements issued for periods beginning after December 15, 1998. The Company adopted SOP 98-5 in the first quarter of the fiscal year ending June 30, 2000. The financial impact of SOP 98-5 was recorded in the first quarter as a cumulative effect of an accounting change of $111,000, net of a tax benefit of $60,000. On May 11, 1999, the Company declared a 5% common stock dividend to stockholders of record on May 21, 1999. The Company previously paid a 5% common stock dividend to stockholders of record on May 4, 1998. Accordingly, common stock share data have been adjusted to include the effect of the stock dividends. Included in the Company's balance sheet for the period ended December 31, 1999 are shares of treasury stock, which were acquired through a non-cash transaction in which an employee exchanged outstanding shares of the Company's common stock to compensate for the exercise price of incentive stock options. -6- 2. Business Segment Information ---------------------------- The Company's business activities consist of two business segments: entertainment operations and restaurant operations. The factors for determining the reportable segments were based on the distinct nature of their operations. They are managed as separate business units because each requires and is responsible for executing a unique business strategy, as managed by the respective chief operating decision makers. Summarized financial information concerning the Company's reportable segments is shown in the following tables (in thousands):
BUSINESS SEGMENTS ENTERTAINMENT RESTAURANTS TOTAL - --------------------------------------------------------- ------------------- ------------------- ------------------ Three-months ended December 31, 1999 Revenue $17,532 $ 5,114 $22,646 Gross profit (loss) 1 2,751 (463) 2,288 Identifiable assets 64,752 16,287 81,039 - --------------------------------------------------------- ------------------- ------------------- ------------------ Three-months ended December 31, 1998 Revenue $11,122 $5,269 $16,391 Gross profit 1 2,131 95 2,226 Identifiable assets 58,040 21,558 79,598 - --------------------------------------------------------- ------------------- ------------------- ------------------
1 Does not include corporate overhead of $541,000 and $796,000 for entertainment and $638,000 and $621,000 for the restaurant segment during the three-months ended December 31, 1999 and 1998, respectively. Gross profit also excludes minority interest expense and interest and other income.
BUSINESS SEGMENTS ENTERTAINMENT RESTAURANTS TOTAL - --------------------------------------------------------- ------------------- ------------------- ------------------ Six-months ended December 31, 1999 Revenue $23,186 $10,045 $33,231 Gross profit (loss) 1 4,021 (679) 3,342 - --------------------------------------------------------- ------------------- ------------------- ------------------ Six-months ended December 31, 1998 Revenue $18,393 $11,136 $29,529 Gross profit 1 2,928 166 3,094 - --------------------------------------------------------- ------------------- ------------------- ------------------
1 Does not include corporate overhead of $1,099,000 and $1,498,000 for entertainment and $1,247,000 and $1,267,000 for the restaurant segment during the six-months ended December 31, 1999 and 1998, respectively. Gross profit also excludes minority interest expense and interest and other income. -7- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INTRODUCTION ------------ The Company's business activities consist of two business segments: entertainment operations and restaurant operations. The entertainment segment contributed approximately 77% and 70% of the Company's consolidated revenues for the three-month and six-month periods ended December 31, 1999. 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 also derives revenues from the development and execution of non-traditional marketing communications programs, corporate meetings and special events, new product introductions, trade shows and exhibits, event marketing, film, video and leisure attractions. The Company, on a limited basis, also develops feature films in association with established studios that can provide financing necessary for production. 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. Depending on the type of contract, revenues for the Company's communications projects are recognized when the services are completed for a live event, 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. 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 and series where there would be anticipated future revenues earned from rerun and other exploitation. Successful television movies and series 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. Costs for communications projects are capitalized and expensed as revenues are recognized. -8- RESULTS OF OPERATIONS --------------------- Revenues for the three-month and six-month periods ended December 31, 1999, were $22,646,000 and $33,231,000, compared to $16,391,000 and $29,529,000 for the comparable periods in the previous fiscal year. The increase in revenues for the three-month and six-month periods ended December 31, 1999, as compared to the corresponding periods in the previous fiscal year, is primarily due to increased revenues from television series production and communications projects, offset in part by decreased revenues in same store sales from restaurant operations. Included in the three-month and six-month periods ended December 31, 1999 were revenues from two new restaurants which were not in operation during the corresponding periods in the previous fiscal year. Gross profit for the Company's productions 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 decreased for the three-month period ended December 31, 1999, as compared to the corresponding period in the previous fiscal year, primarily as a result of decreased profitability from restaurant operations. Gross profit as a percentage of revenue for the six-months ended December 31, 1999 remained consistent with the corresponding period in the previous fiscal year as increased profitability from the Company's communications projects was offset by decreased profitability in restaurant operations. The Company's gross profits from restaurant operations decreased for the three-month and six-month periods ended December 31, 1999, as compared to the corresponding periods in the previous fiscal year, as a result of decreased profitability in existing units due to a decline in same store sales. 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 and cable networks and minimum guaranteed distribution payments from independent distributors. The Company has generally been able to cover the costs of its television programming and corporate projects through license or syndication fees and production revenues respectively, and has incurred no significant capital expenditure commitments. 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 $53,841,000 as of December 31, 1999. -9- YEAR 2000 --------- The Company has assessed and continues to assess the impact of the Year 2000 Issue on its reporting systems and operations. The Year 2000 Issue exists because computer systems and applications were historically designed to use two digit fields to designate a year, and date sensitive systems may not recognize 2000 at all, or if recognized, as 1900. Information Technology systems account for most of the Year 2000 work and include all computer systems and technology managed by the Company. All core systems have been assessed and work has been undertaken to test and implement changes where required. Information Technology vendors and suppliers have been contacted as to their Year 2000 compliance and their responses have been factored into the Company's plans. Normal software version upgrades and hardware replacements, for which budget allocations had been made, have solved a majority of the Company's Year 2000 Issues. Based on the nature of the Company's business, it is not expected that any non-financial software applications and hardware that may be impacted by the Year 2000 Issue would cause any interruption in operations. The Company is communicating with its significant customers and vendors regarding their Year 2000 Issues and how they relate to the Company. To date, no significant customers or vendors have informed the Company that a material Year 2000 Issue exists which will have a material adverse effect on the Company. The Company completed all changes that were identified as necessary to overcome the Year 2000 Issue during fiscal 1999; and the total cost to remediate was not material to the Company's results of operations, liquidity, or capital resources. The Company is monitoring computer systems and other date sensitive devices and will continue to communicate with outside vendors to ensure that Year 2000 Issues, if any, will be detected and resolved in a timely manner. GENERAL ------- Certain statements in the foregoing Management's Discussion and Analysis (the "MD&A") are not historical facts or information and certain other statements in the MD&A are forward looking statements that involve risks and uncertainties, including, without limitation, the Company's ability to develop and sell television programming, timely completion of negotiations for new restaurant sites and the ability to construct, finance and open new restaurants and to attract new corporate productions clients, and such competitive and other business risks as from time to time may be detailed in the Company's Securities and Exchange Commission reports. -10- 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. -11- 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/ William S. Simon ---------------------------- William S. Simon Chief Financial Officer and Treasurer (Principal financial officer and authorized to sign on behalf of registrant) Date: February 11, 2000 EX-27.1.1 2 FINANCIAL DATA SCHEDULE FOR 3-MONTH PERIOD END
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-30-2000 DEC-31-1999 10,931 42,910 4,241 0 5,878 58,082 25,786 12,700 81,039 14,717 0 18,875 0 0 44,294 81,039 22,646 22,646 20,358 20,358 1,353 0 (589) 1,524 526 998 0 0 0 998 0.11 0.11
EX-27.1.2 3 FINANCIAL DATA SCHEDULE FOR 9-MONTH PERIOD END
5 1,000 6-MOS JUN-30-2000 DEC-31-1999 10,931 42,910 4,241 0 5,878 58,082 25,786 12,700 81,039 14,717 0 18,875 0 0 44,294 81,039 33,231 33,231 29,889 29,889 2,590 0 (1,491) 2,243 774 1,469 0 0 (111) 1,358 0.15 0.14
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