-----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, VmERRTqCMQaSsidH0gCaAGUWJqjUDgaz0Xkq2jJJah+qUqNDAkBKcRiNTZKayNOn Tkyb2axTmha406ASJY6lfA== 0001011438-97-000125.txt : 19970808 0001011438-97-000125.hdr.sgml : 19970808 ACCESSION NUMBER: 0001011438-97-000125 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970805 ITEM INFORMATION: Other events FILED AS OF DATE: 19970807 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: IWERKS ENTERTAINMENT INC CENTRAL INDEX KEY: 0000830404 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE THEATERS [7830] IRS NUMBER: 954439361 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-22558 FILM NUMBER: 97653020 BUSINESS ADDRESS: STREET 1: 4540 WEST VALERIO ST CITY: BURBANK STATE: CA ZIP: 91505 BUSINESS PHONE: 8188417766 MAIL ADDRESS: STREET 1: 4540 WEST VALERIO ST CITY: BURBANK STATE: CA ZIP: 91505 8-K 1 FORM 8-K 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 5, 1997 IWERKS ENTERTAINMENT, INC. (Exact Name of Registrant as Specified in Charter) Delaware 0-22558 95-4439361 (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 4540 West Valerio Street Burbank, California 91505-1045 (Address of Principal Executive Offices) (818) 841-7766 (Registrant's Telephone Number) ITEM 5. OTHER EVENTS Reference is made to the two press releases of Registrant, both issued on August 5, 1997, which contain information meeting the requirements of this Item 5, and which are incorporated herein by this reference. Copies of these press releases are attached to this Form 8-K as Exhibit 99.1 and 99.2. 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 hereunto duly authorized. August 5, 1997 IWERKS ENTERTAINMENT, INC. By: /S/ BRUCE HINCKLEY ------------------- Bruce Hinckley Chief Financial Officer EXHIBIT INDEX EXHIBITS PAGE NUMBER 99.1 Press Release dated August 5, 1997. 99.2 Press Release dated August 5, 1997. EX-99.1 2 PRESS RELEASE FOR IMMEDIATE RELEASE - --------------------- For Iwerks Entertainment, Inc. Contacts: William Battison Joseph Kessler Executive Vice President Bozell Sawyer Miller Group Iwerks Entertainment (310) 442-2532 (818) 840-6111 For Showscan Entertainment, Inc. Contacts: W. Tucker Lemon Steve Stern Sr. Vice President & Stern & Company General Counsel Showscan Entertainment (310) 442-8414 (310) 558-0150 IWERKS AND SHOWSCAN ANNOUNCE ---------------------------- MERGER AGREEMENT ---------------- Burbank, CA - August 5, 1997 - Iwerks Entertainment (NASDAQ:IWRK) and Showscan Entertainment (NASDAQ: SHOW) today announced that they have signed a definitive agreement to merge. The combined company, which will bring together the two largest motion simulation companies, will be the largest provider of ride simulation entertainment attractions and software in the world. The transaction calls for each share of Showscan common stock to be converted into 0.85 of a share of Iwerks common stock. Outstanding Showscan convertible preferred stock will be exchanged for Iwerks common stock at the 0.85 ratio on an as converted basis. Iwerks expects to issue approximately 5.62 million shares of Iwerks common stock in the merger (plus shares issuable upon exercise of outstanding Showscan options and convertible notes), resulting in an estimated transaction value of approximately $27.4 million (based upon a closing price of Iwerks common stock on the Nasdaq National Market on August 4, 1997 of $4.875 per share). The transaction will be accounted for as a pooling of interests, after which Showscan will become a wholly owned subsidiary of Iwerks. Completion of the merger is subject to stockholder approval, as well as other customary closing conditions. The transaction is expected to close in the fourth calendar quarter of this year. As a result of the merger, the combined company will have: - Over 160 simulation theaters, which is the largest installed base of simulation theaters in the world; - Pro forma recurring film licensing revenues of approximately $12 million, based on Iwerks' and Showscan's fiscal 1997 results; - An expanded presence in the important Asian market, where Showscan has a strong installed base of 26 theaters; - Distribution rights to an industry-leading library of more than 60 ride simulation titles, including the critically-acclaimed DEVIL'S MINE RIDE and COSMIC PINBALL from the Showscan 28 title library and DINO ISLAND and SECRETS OF THE LOST TEMPLE from the Iwerks 40 title library; and - Showscan's interests in owned-and-operated attractions in Los Angeles at Universal City Walk and in London at the Trocadero, among others. Roy A. Wright, Iwerks' Chairman and Chief Executive Officer, will be Chairman and Chief Executive Officer of the combined company. Wright said, "This significant strategic move creates a company that is the strong leader in the ride simulation market. The creative and technical skills of the combined company will help us better serve and support our existing networks via premium software and technical innovation, while strengthening our marketing and sales effort to continue the growth of the market overall. "This merger also provides the combined company significant opportunities to realize efficiencies and synergies available by operating with a combined corporate overhead. We expect to realize significant cost savings in the combination, particularly in the areas of general and administrative expenses as well as marketing and selling expenses." Dennis Pope, President and Chief Executive Officer of Showscan, said, "This transaction allows Showscan stockholders to be part of the largest motion simulation entertainment company in the world. It is another step in bringing the remarkable promise of simulation entertainment to fruition. "The combined company will be the strongest, broadest and most versatile player in the industry. Existing and potential customers of both companies will win because they will not have access to the broadest selection of software and technology options, as well as the exemplary service and support the combined company will provide." In connection with execution of the definitive merger agreement, certain stockholders of Showscan, holding approximately 1.2 million shares of capital stock, have granted Iwerks an irrevocable proxy to vote their shares in favor of the merger at a forthcoming meeting of Showscan's stockholders. In addition, certain stockholders of Iwerks, holding approximately 1.6 million shares of Iwerks common stock, have granted Showscan an irrevocable proxy to vote their shares in favor of the merger at a forthcoming meeting of Iwerks' stockholders. In PAGE 2 addition, three members of Showscan's board of directors will join the combined company's board of directors. Showscan Entertainment, based in Culver City, California, was founded in 1984 to commercially exploit the patented Showscan(TM) film process created by Douglas Trumbull and Paramount Pictures. In 1984, Showscan created the first major motion simulation entertainment attraction at the CN Tower in Toronto, Canada. Showscan then developed a motion simulation theater product using the hyper-realistic Showscan process which was marketed to theme parks and entertainment centers worldwide. Showscan has long-term multi-theater installation agreements with United Artists Theatre Circuit, Imagine Japan, King's Entertainment Co. (Taiwan) and Reality Cinemas (Australia). Today, Showscan is an international leader in the production and exhibition of exciting movie-based entertainment attractions shown in large-screen, special- format theaters worldwide. Showscan's simulation and specialty theaters are open or under construction in 24 countries around the world, located in theme parks, motion picture multiplexes, expos, world's fairs, resorts, shopping centers, casinos, museums and other tourist destinations. Showscan owns and operates its own theaters, and operates others in partnership with leading entertainment companies around the world. Iwerks Entertainment, Inc. is the world's leading producer of innovative, high- tech, multi-sensory experiences such as ride simulation, giant screen theaters and other immersive attractions for the location-based entertainment (LBE) market. Founded in 1986 in Burbank, California, Iwerks Entertainment has installed over 270 attractions worldwide. Clients include Paramount Parks, Six Flags Theme Parks, Walt Disney Theme Parks, AT&T, Hoyts Corporation, and Dave and Buster's. Note: With the exception of the historical information, the matters discussed above include forward-looking statements that involve risks and uncertainties. Certain important factors could cause actual results to differ materially from those indicated in the forward-looking statements. The ability of the combined company to achieve cost savings and revenue growth will depend on its ability to quickly and effectively merge the operations and the product lines and manage the resulting larger operations. Other factors impacting future results include revenue, costs of sales and the ability of the Company to maintain pricing at a level necessary to maintain gross profit margins, the level of selling, general and administrative costs, the performance by the Company under its existing purchase contracts and the ability to obtain new contracts, the success of the Company's owned and operating strategy, the ability of the Company to find additional sponsors for its Reactors(TM) or alternative sources of revenue, the ability of the Company to identify and successfully negotiate arrangements with joint venture and other strategic partners, the success of the Company's film software, the effects of technological developments, competition, general economic conditions and acts of God and other events outside the control of the Company. PAGE 3 EX-99.2 3 PRESS RELEASE FOR IMMEDIATE RELEASE - --------------------- For Iwerks Entertainment, Inc. Contacts: William Battison Joseph Kessler Executive Vice President Bozell Sawyer Jiller Group Iwerks Entertainment (310) 442-2532 (818) 840-6111 IWERKS ENTERTAINMENT ANNOUNCES ------------------------------ FOURTH QUARTER AND FISCAL 1997 RESULTS -------------------------------------- Burbank, CA, August 5, 1997 - Iwerks Entertainment, Inc. [NASDAQ NM:IWRK] reported financial results for its fourth quarter and fiscal year ended June 30, 1997. The Company reported a net loss of $(10.3) million, or $(0.85) per share, for the quarter and a net loss of $(10.0) million, or $(0.84) per share, for the year. These results compare with 1996 fourth quarter net income of $976,000, or $0.08 per share, and fiscal year 1996 net income of $3.1 million, or $0.26 per share. Approximately $5.6 million of the net loss in the 1997 fiscal year was the result of a write-down of the Reactor(TM) Portable Simulation Theaters under SFAS 121, Accounting for the Impairment of Long Lived Assets and for Long Lived Assets to be Disposed of." As previously disclosed, the Company lost AT&T as a major sponsor of the Reactor(TM) fleet in the first quarter of fiscal 1997. Since that time, and through the fourth quarter, the Company has aggressively pursued new sponsorship opportunities and other options to replace these revenues. The failure to consummate these alternatives prior to the end of the year prompted the Company to take the charge under SFAS 121. Additional fourth quarter charges were taken for: allowances for doubtful accounts, establishment of an inventory reserve, certain film costs, additional reserves for legal affairs, and professional fees associated with a merger agreement with Showscan Entertainment announced earlier today. Iwerks' merger agreement with Showscan Entertainment will create the world's largest player in ride simulation attractions, Iwerks' most profitable business segment. The combined companies will have an installed base of more than 160 ride simulation theaters worldwide and a combined film library of more than 60 simulation films. The merger agreement is subject to approval by shareholders of both companies, as well as other closing conditions. The transaction is expected to be consummated in the fourth quarter of calendar 1997. "We are obviously disappointed with these results, but we believe that we are now positioned to move forward as a major player in out-of-home entertainment with a greater market presence and a strong balance sheet," said Roy A. Wright, Chairman and Chief Executive Officer of Iwerks. Mr. Wright continued: "Although we expect to report a loss in our first and second quarters of fiscal 1998 due to acquisition costs and seasonal factors, we expect to begin to realize the benefits of the merger in the last half of the fiscal year." Iwerks also reported a decline in revenues, from $11.4 million in fourth quarter 1996 to $8.9 million in fourth quarter 1997, and from $48.5 million in fiscal 1996 to $39.6 million in fiscal 1997. The decline in annual revenues was due primarily to significantly lower Reactor(TM) revenues due to the lost sponsorship, lower hardware sales, lower film production, and a one-time cancellation settlement in fiscal 1996 with the Tokyo Expo. Iwerks Entertainment is one of the world's leading producers of high-tech, multi-sensory experiences such as ride simulation and giant-screen theaters. Serving prestigious entertainment, information and marketing providers, Iwerks attractions can be found worldwide at location-based entertainment centers, amusement parks, family entertainment centers, shopping centers, casinos, resorts, nightclubs, restaurants, museums, fairs, festivals and more. FORWARD-LOOKING STATEMENTS DISCLOSURE ------------------------------------- With the exception of the historical information, the matters discussed above include forward-looking statements that involve risks and uncertainties. Certain important factors could cause actual results to differ materially from those indicated in the forward-looking statements including, in connection with the merger, the ability of the combined company to achieve cost savings and revenue growth will depend on its ability to quickly and effectively merge the operations and the product lines and manage the resulting larger operations. Other factors impacting future results include the level of revenue, costs of sales and the ability of the Company to maintain pricing at a level necessary to maintain gross profit margins, the level of selling, general and administrative costs, the performance by the Company under its existing purchase contracts and the ability to obtain new contracts, the success of the Company's owned and operating strategy, the ability of the Company to find additional sponsors for its Reactors(TM) or alternative sources of revenue, the ability of the Company to identify and successfully negotiate arrangements with joint venture and other strategic partners, the success of the Company's film software, the effects of technological developments, competition, general economic conditions and acts of God and other events outside the control of the company. PAGE 2 FINANCIAL HIGHLIGHTS FISCAL 1997 (IN 000S, EXCEPT PER SHARE DATA) CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED FISCAL YEARS ENDED JUNE 30 JUNE 30 --------------------- - ---------------------- 1997 1996 1997 1996 ------- ------- ------- - -------- Revenue $8,924 $11,388 $39,584 $48,510 ------- ------- ------- - -------- Costs and expenses: Cost of Sales 8,421 7,074 28,948 28,675 Selling, General & Administrative 5,027 3,277 14,897 17,019 Research & Development 311 89 726 358 Loss on Impairment of Assets 5,586 -- 5,586 -- ------- ------- ------ - ------- Total costs 19,345 10,440 50,157 46,052 Operating income (loss) (10,421) 948 (10,573) 2,464 Interest income, net 195 177 734 784 ------- ------- ------ - ------ Net income (loss) before taxes (10,226) 1,125 (9,839) 3,248 Provision for income taxes (117) (149) (117) (149) ------ ------- ------ - ------ Net income (loss) $ (10,343) $ 976 $ (9,956) $ 3,099 ====== ====== ====== ====== Net income (loss) per common share (0.85) 0.08 (0.84) 0.26 ====== ====== ====== ====== Weighted average shares outstanding 12,153 12,659 11,855 12,144 ====== ====== ====== ======
CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION
JUNE 30, 1997 JUNE 30, 1996 ------------- ------------- ASSETS Cash and marketable securities $ 19,067 $ 19,456 Other current assets 16,188 13,621 Investment in debt securities -- 5,826 Properties, net 10,377 15,975 Goodwill 15,367 17,360 Other assets 3,530 688 ----- ----- Total Assets $ 64,529 $ 72,926 ====== ======= LIABILITIES & STOCKHOLDERS EQUITY Current liabilities $14, 316 $13,529 Long-term liabilities 1,827 2,732 Stockholders' equity 48,386 56,665 ------ ------ Total liabilities & stockholders' equity $ 64,529 $ 72,926 ======== ========
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