-----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, SDqNyIRxVTWCeH0OY2cUBK4XZu9b0v1aYnaVMXrb+yxD9txMHRIHpe2d9wgL7q+h zkv+SwE7mGL6B3Qg021QHw== 0000910680-98-000383.txt : 19981116 0000910680-98-000383.hdr.sgml : 19981116 ACCESSION NUMBER: 0000910680-98-000383 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981113 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: 98748784 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 DICK CALRK PRODUCTIONS 10-Q 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, 1998. 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 13, 1998. Class Outstanding at November 13, 1998 - -------------------------------------------------------------------------------- Common Stock, $0.01 par value 8,021,000 Class A Common Stock, $0.01 par value 787,000 dick clark productions, inc. Form 10-Q For the Quarter Ended September 30, 1998
PART I. FINANCIAL INFORMATION Page ---- Item 1. Financial Statements Consolidated Balance Sheets as of September 30, 1998 (unaudited) and June 30, 1998 .......................................................... 3 Consolidated Statements of Operations for the three months ended September 30, 1998 and September 30, 1997 (unaudited)....................... 4 Consolidated Statements of Cash Flows for the three months ended September 30, 1998 and September 30, 1997 (unaudited)....................... 5 Notes to Consolidated Financial Statements.................................. 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations....................................................... 7 Part II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K............................................ 9 SIGNATURES.................................................................. 10
2 dick clark productions, inc. CONSOLIDATED BALANCE SHEETS ITEM 1. FINANCIAL STATEMENTS
September 30, 1998 June 30, (Unaudited) 1998 ------------------ ------------- Assets - --------------------------------------------------------------- Cash and cash equivalents $ 6,828,000 $ 7,092,000 Marketable securities 31,927,000 32,211,000 Accounts receivable 4,646,000 6,673,000 Program costs, net 8,330,000 5,963,000 Prepaid royalty, net 2,957,000 3,041,000 Leasehold improvements and equipment 15,823,000 16,339,000 Goodwill and other assets, net 1,911,000 1,896,000 ------------------ ------------- Total assets $ 72,422,000 $ 73,215,000 ================== ============= Liabilities & Stockholders' Equity - --------------------------------------------------------------- Liabilities: Accounts payable $ 5,016,000 $ 6,861,000 Accrued residuals and participations 2,491,000 3,241,000 Production advances and deferred revenue 4,123,000 1,861,000 Current and deferred income taxes 1,060,000 1,570,000 ------------------ ------------- Total liabilities 12,690,000 13,533,000 Commitments and contingencies Minority interest 733,000 729,000 Stockholders' Equity: Class A common stock, $.01 par value, 2,000,000 shares authorized 787,000 shares outstanding 8,000 8,000 Common stock, $.01 par value, 20,000,000 shares authorized 8,021,000 shares outstanding 80,000 80,000 Additional paid-in capital 13,831,000 13,831,000 Retained earnings 45,080,000 45,034,000 ------------------ ------------- Total stockholders' equity 58,999,000 58,953,000 ------------------ ------------- Total liabilities & stockholders' equity $ 72,422,000 $ 73,215,000 ================== =============
The accompanying notes are an integral part of these consolidated balance sheets. 3 dick clark productions, inc. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Three Months Ended September 30, ---------------------------- 1998 1997 ------------- ------------- Revenue $ 13,138,000 $ 14,055,000 Costs related to revenue 12,270,000 13,067,000 ------------- ------------- Gross profit 868,000 988,000 General and administrative expense 1,348,000 1,226,000 Minority interest expense 4,000 25,000 Interest and other income (557,000) (448,000) ------------- ------------- Income before provision for income taxes 73,000 185,000 Provision for income taxes 27,000 70,000 ------------- ------------- Net income $ 46,000 $ 115,000 ============= ============= Per share data: Basic earnings per share $ 0.01 $ 0.01 ============= ============= Diluted earnings per share $ 0.01 $ 0.01 ============= ============= Weighted average number of shares outstanding 8,808,000 8,801,000 ============= =============
The accompanying notes are an integral part of these consolidated statements. 4
dick clark productions, inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Three Months Ended September 30, ------------------------------------------ 1998 1997 ----------------- ----------------- Cash flows from operating activities Net income $ 46,000 $ 115,000 Adjustments to reconcile net income to net cash provided by operations Amortization expense 6,487,000 7,608,000 Depreciation expense 616,000 532,000 Investment in program costs (8,668,000) (7,829,000) Minority interest, net 4,000 25,000 Disposals of property, plant and equipment 49,000 - Changes in assets and liabilities Accounts receivable 2,027,000 624,000 Other assets (117,000) 175,000 Accounts payable, accrued residuals and participations (2,592,000) (494,000) Production advances and deferred revenue 2,262,000 639,000 Current and deferred income taxes payable (510,000) 65,000 ----------------- ----------------- Net cash provided by (used for) operations (399,000) 1,460,000 ----------------- ----------------- Cash flows from investing activities Purchases of marketable securities (1,384,000) (2,014,000) Sales of marketable securities 1,668,000 4,064,000 Expenditures on property, plant and equipment (149,000) (375,000) ----------------- ----------------- Net cash provided by investing activities 135,000 1,675,000 ----------------- ----------------- Net increase (decrease) in cash and cash equivalents (264,000) 3,135,000 Cash and cash equivalents at beginning of the period 7,092,000 3,322,000 ----------------- ----------------- Cash and cash equivalents at end of the period $ 6,828,000 $ 6,457,000 ==================== ===================== Supplemental Disclosures of Cash Flow Information: Cash paid during the year for income taxes $ 556,000 $ 5,000 ==================== =====================
The accompanying notes are an integral part of these consolidated statements. 5 dick clark productions, inc. NOTE 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, 1998, as included in the Company's 1998 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, 1998 financial statements is included on page 34 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, 1998, and the results of its operations and cash flows for the periods ended September 30, 1998 and 1997, respectively, have been made. Operating results for the three-month period ended September 30, 1998 are not necessarily indicative of the operating results for the entire fiscal year. In 1997, the Company adopted SFAS No. 128, 'Earnings per Share,' effective December 15, 1997. Basic earnings per common share were computed by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share were determined by applying the treasury stock method to compute dilution for common stock equivalents. In June 1997, the FASB issued SFAS No. 130, 'Reporting Comprehensive Income' which is effective for the Company's fiscal year ending June 30, 1999. This statement established standards for the reporting and display of comprehensive income and its components in financial statements and thereby reports a measure of all changes in equity of an enterprise that result from transactions and other economic events other than transactions with owners. For the three-month periods ended September 30, 1998 and 1997, the Company had no elements of comprehensive income which would require additional financial statement disclosure. In June 1997, the FASB issued SFAS No. 131, 'Disclosure about Segments of An Enterprise and Related Information', which the Company will adopt for the fiscal year ending June 30, 1999. This statement changes the requirements under which public businesses report disaggregated information. On April 23, 1998, the Company declared 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 dividend. -6- 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 55% of the Company's consolidated revenues for the three-month period ended September 30, 1998. 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 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 corporate 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 corporate projects are capitalized and expensed as revenues are recognized. RESULTS OF OPERATIONS Revenues for the three-month period ended September 30, 1998, were $13,138,000, compared to $14,055,000 for the comparable period in the previous fiscal year. The decrease in revenues for the three months ended September 30, 1998, as compared to the corresponding period in the previous fiscal year, is primarily due to decreased revenues from the Company's corporate projects, offset in part by an increase in revenues from television series programming. 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 September 30, 1998, as compared to the -7- corresponding period in the previous fiscal year, primarily as a result of decreased profitability associated with the Company's corporate projects. 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 $38,755,000 as of September 30, 1998. 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. -8- PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 27.1 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. -9- 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. Date: November 13, 1998 By: /s/ William S. Simon ------------------------------ William S. Simon Chief Financial Officer and Treasurer -10- EX-27 2 FINANCIAL DATA SCHEDULE
5 0000805370 dick clark productions, inc. 1,000 Jun-30-1999 Jul-01-1998 Sep-30-1998 3-mos 6,828 31,927 4,646 0 8,330 43,401 23,532 7,709 72,422 9,139 0 13,919 0 0 45,080 72,422 13,138 13,138 12,270 12,270 1,352 0 (557) 73 27 46 0 0 0 46 0.01 0.01
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