<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997 Commission File Number 0-21917
_________________
VDI MEDIA
(Exact name of registrant as specified in its charter)
California 95-4272619
(State of or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6920 Sunset Boulevard, 90028
Hollywood, California (Zip Code)
(Address of principal
executive offices)
Registrant's telephone number, including area code (213) 957-5500
Securities registered pursuant to Section 12(b) of the Act
None.
Securities registered pursuant to Section 12(g) of the Act
Common Stock, no par value.
_____________
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 [ ]
As of August 13, 1997, there were 9,580,000 shares of Common Stock
outstanding.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VDI MEDIA
CONSOLIDATED BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1996 1997
------------ ------------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash............................................................... $ 564,000 $ 10,747,000
Accounts receivable, net of allowances for doubtful
accounts of $460,000 and $665,000, respectively................... 4,537,000 5,999,000
Amounts receivable from officer.................................... 1,214,000
Amounts receivable from employees.................................. 224,000 5,000
Inventories........................................................ 144,000 155,000
Prepaid expenses and other current assets.......................... 2,000 662,000
----------- ------------
Total current assets............................................ 6,685,000 17,568,000
Property and equipment, net........................................ 3,520,000 5,448,000
Deferred offering costs............................................ 876,000
Goodwill, net (Note 2)............................................. 2,240,000
Other assets, net.................................................. 97,000 98,000
----------- ------------
Total assets.................................................... 11,178,000 $ 25,354,000
----------- ------------
----------- ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable................................................... $ 2,394,000 $ 2,276,000
Accrued expenses................................................... 1,606,000 1,794,000
Current portion of notes payable................................... 728,000 14,000
Current portion of capital lease obligations....................... 32,000 814,000
Deferred tax liability (Note 3).................................... 185,000
----------- ------------
Total current liabilities....................................... 4,760,000 5,083,000
----------- ------------
Notes payable, less current portion................................ 1,102,000
----------- ------------
Capital lease obligations, less current portion.................... 75,000 855,000
----------- ------------
Shareholders' equity:
Preferred stock; no par value; 5,000,000 authorized;
none outstanding .................................................
Common stock; no par value; 50,000,000 authorized;
9,580,000 shares issued and outstanding........................... 1,015,000 19,056,000
Retained earnings.................................................. 4,226,000 360,000
----------- ------------
Total shareholders' equity...................................... 5,241,000 19,416,000
----------- ------------
$11,178,000 $25,354,000
----------- ------------
----------- ------------
</TABLE>
See accompanying notes to consolidated financial statements
2
<PAGE>
VDI MEDIA
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- ---------------------------
1996 1997 1996 1997
----------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
Revenues............................................ $ 5,471,000 $8,811,000 $ 11,308,000 $17,298,000
Cost of goods sold.................................. 3,446,000 5,345,000 7,093,000 10,417,000
----------- ---------- ------------ -----------
Gross profit........................................ 2,025,000 3,466,000 4,215,000 6,881,000
Selling, general and administrative expense......... 1,306,000 2,084,000 2,724,000 4,236,000
----------- ---------- ------------ -----------
Operating income.................................... 719,000 1,382,000 1,491,000 2,645,000
Interest expense.................................... 85,000 46,000 155,000 165,000
Interest income..................................... 5,000 99,000 10,000 151,000
----------- ---------- ------------ -----------
Income before income taxes.......................... 639,000 1,435,000 1,346,000 2,631,000
Provision for income taxes.......................... 11,000 566,000 23,000 757,000
Establishment of deferred tax liability (Note 3).... 185,000
----------- ---------- ------------ -----------
Net income.......................................... $ 628,000 $ 869,000 $ 1,323,000 $ 1,689,000
----------- ---------- ------------ -----------
----------- ---------- ------------ -----------
Net income per share................................ $ 0.09 $ 0.20
---------- -----------
---------- -----------
Weighted average number of shares................... 9,580,000 8,551,333
---------- -----------
---------- -----------
</TABLE>
See accompanying notes to consolidated financial statements
3
<PAGE>
VDI MEDIA
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30,
--------------------------
1996 1997
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income ....................................................... $ 1,323,000 $ 1,689,000
Adjustment to reconcile net income
to net cash provided by operating activities
Depreciation and amortization..................................... 889,000 1,599,000
Increase in deferred taxes........................................ 185,000
Provision for doubtful accounts................................... 51,000 65,000
Changes in assets and liabilities net of effects from
purchase of Woodholly Productions:
Decrease in accounts receivable................................... 103,000 65,000
(Increase) decrease in other receivables.......................... (1,348,000) 209,000
Decrease (increase) in inventories................................ 25,000 (11,000)
Decrease (increase) in prepaid expenses and other current assets.. 49,000 (599,000)
Decrease in other assets.......................................... 1,000
(Increase) decrease in deferred offering costs.................... (236,000) 876,000
Decrease in accounts payable...................................... (13,000) (607,000)
Decrease in accrued expenses...................................... (128,000) (106,000)
----------- -----------
Net cash provided by operating activities........................... 716,000 3,365,000
----------- -----------
Cash used in investing activities
Capital expenditures.............................................. (723,000) (329,000)
Payment for purchase of Woodholly, net of cash acquired........... (4,278,000)
----------- -----------
Net cash used in investing activities............................... (723,000) (4,607,000)
Cash flows from financing activities:
Distributions to shareholders..................................... (501,000) (5,555,000)
Change in revolving credit agreement.............................. 1,010,000
Proceeds from sale of common stock................................ 18,041,000
Repayment of notes payable........................................ (399,000) (1,816,000)
Repayment of amounts receivable from officer...................... 1,225,000
Repayment of subordinated notes payable to related parties........ (255,000)
Repayment of capital lease obligations............................ (54,000) (470,000)
----------- -----------
Net cash (used in) provided by financing activities................. (199,000) 11,425,000
Net (decrease) increase in cash..................................... (206,000) 10,183,000
Cash at beginning of period......................................... 415,000 564,000
----------- -----------
Cash at end of period............................................... $ 209,000 $10,747,000
----------- -----------
----------- -----------
Supplemental disclosure of cash flows information:
Cash paid for:
Interest.......................................................... $ 168,000 $ 165,000
----------- -----------
----------- -----------
Income tax........................................................ $ 68,000 $ 1,316,000
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to financial statements
4
<PAGE>
VDI MEDIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1997
NOTE 1 -- THE COMPANY
VDI MEDIA (the "Company") is a provider of high quality value-added video
distribution and duplication services including distribution of national
television spot advertising, trailers and electronic press kits. The
Company's services consist of (i) the physical and electronic delivery of
broadcast quality advertising, including spots, trailers, electronic press
kits and infomercials, and syndicated television programming to television
stations, cable television and other end-users nationwide and (ii) a broad
range of video services, including the duplication of video in all formats,
element storage, standards conversions, closed captioning and transcription
services, and video encoding for air play verification purposes. The Company
also provides its customers value-added post production and editing services.
The Company is headquartered in Hollywood, California and has additional
facilities in West Los Angeles and Culver City, California and Tulsa,
Oklahoma.
In the first quarter of 1997, the Company completed the sale of 3,120,000
common shares, no par value ("Common Stock"), in an initial public offering (the
"Offering"). Prior to the Offering, the Company had elected S Corporation
status for federal and state income tax purposes. As a result of the Offering,
the S Corporation status terminated. Thereafter, the Company has paid federal
and state income taxes as a C Corporation. The termination of the Company's S
Corporation status resulted in the establishment of a net deferred tax liability
calculated at normal federal and state income rates, causing a one-time non-cash
charge of $185,000 against earnings for additional income tax expense in the
quarter ended March 31, 1997.
In May 1996, the Company effected a 333-for-1 common stock split and
increased the number of authorized shares to 50,000,000 shares of common
stock. All share amounts in the accompanying financial statements have been
retroactively restated to reflect this split.
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles and the Securities
and Exchange Commission's rules and regulations for reporting interim
financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for
the six months ended June 30, 1997 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1997. These
financial statements should be read in conjunction with the financial
statements and related notes contained in the Company's Form 10-K for the
year ended December 31, 1996.
NOTE 2--WOODHOLLY ACQUISITION
On January 1, 1997, the Company acquired all of the assets of Woodholly
Productions ("Woodholly Productions"). Woodholly Productions provides full
service duplication, distribution, video content storage and ancillary services
to major motion picture studios, advertising agencies and independent production
companies for both domestic and international use. As consideration, the
Company will pay the partners of Woodholly Productions a maximum of $9 million,
of which $4 million is to be paid in installments commencing in January 1997.
The remaining balance is subject to earn-out provisions which are predicated
upon Woodholly Productions attaining certain operating income goals, as set
forth in the purchase agreement, in each quarter through December 31, 2001. The
Company has accounted for this acquisition as a purchase. Goodwill arising
from this transaction is being amortized over twenty years. The contingent
purchase price, to the extent earned, will be recorded as an increase to
goodwill.
5
<PAGE>
The accompanying consolidated financial statements include the accounts of
Woodholly Productions and the Company. All material intercompany transactions
and balances have been eliminated. The consolidated statement of income
includes Woodholly Productions' results of operations from the effective date
of the acquisition.
NOTE 3 -- S CORPORATION DISTRIBUTION
In connection with the termination of its S Corporation status (see Note
1), the Company distributed $5.6 million of the net proceeds of the Offering ("S
Corp Distribution") to its three shareholders in respect of previously taxed and
undistributed earnings of the Company. A final distribution of approximately
$0.3 million is expected to be made in August 1997.
NOTE 4 -- SUBSEQUENT EVENT
On July 31, 1997, the Company agreed to acquire all of the outstanding
shares of Multi-Media Services, Inc. a duplication and distribution company
specializing in commercial advertisers and major ad agencies. The Company paid
a purchase price of $7 million. In addition, the agreement calls for earn-out
payments of up to $2 million (exclusive of interest) in the event Multi-Media
meets specified financial goals. The Company expects to account for this
transaction as a purchase. The contingent purchase price, to the extent earned,
will be recorded as an increase in goodwill and will be amortized over the
remaining life of such intangible asset.
6
<PAGE>
VDI MEDIA
MANAGEMENT'S DISCUSSION AND ANALYSIS - (CONTINUED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
In connection with the "safe-harbor" provisions of the Private Securities
Litigation Reform Act of 1995, the Company, in its Annual Report on Form 10-K
for the year ended December 31, 1996, outlined cautionary statements
identifying important factors that could cause the Company's actual results to
differ materially from those projected in forward-looking statements made by, or
on behalf of, the Company. Such forward-looking statements, as made within this
Quarterly Report on Form 10-Q, should be considered in conjunction with the
information included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1996 and the risk factors set forth in the Company's
prospectus as filed with the Securities and Exchange Commission on February 19,
1997.
SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996
REVENUES. Revenues increased by $6.0 million or 53.0% to $17.3 million for
the six month period ended June 30, 1997 compared to $11.3 million for the six
month period ended June 30, 1996. The increase in revenue was due to increased
volume resulting from (i) the availability of new services and capacity
resulting from the acquisition of Woodholly Productions and (ii) substantially
increased marketing of the Company's national distribution capabilities through
the Tulsa Control Center.
GROSS PROFIT. Gross profit increased $2.7 million or 66.3% to $6.9
million for the six month period ended June 30, 1997 compared to $4.2 million
for the six month period ended June 30, 1996. As a percentage of revenues,
gross profit increased from 37.3% to 39.8%. The increase in gross profit as
a percentage of revenues was attributable to (i) a reduction in the cost of
fiber optic and satellite costs which resulted from improved video
trafficking logistics through the Tulsa Control Center and (ii) lower
shipping expenses for the services provided by Woodholly Productions which
are generally distributed to fewer locations. These amounts were offset by
increased direct labor resulting from the Woodholly Productions acquisition.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and
administrative expense increased $1.5 million or 55.5% to $4.2 million for
the six month period ended June 30, 1997 compared to $2.7 million for the six
month period ended June 30, 1996. As a percentage of revenues, selling,
general and administrative expense increased to 24.5% for the six month
period ended June 30, 1997 compared to 24.1% for the six month period ended
June 30, 1996. This increase is due to increased headcount in the Company's
sales and marketing departments and, in addition, selling, general and
administrative expense for the three months ended March 31, 1997 includes
salaries paid to the former owners of Woodholly Productions; such amounts
were formerly recorded as partnership distributions, and, as such, were not
reflected in Woodholly Production's results of operations.
OPERATING INCOME. Operating income increased $1.2 million or 77.4% to
$2.6 million for the six month period ended June 30, 1997 compared to $1.5
million for the six month period ended June 30, 1996.
INCOME TAXES. Prior to the Offering, the Company operated as an
S Corporation. As such, the Company was not responsible for federal income
taxes and provided for state income taxes at reduced rates. As a result of the
Offering, the Company's S Corporation status has terminated. Accordingly, the
Company will, in future periods, provide for all income taxes at higher
statutory rates. These factors are estimated to result in an effective tax
rate for periods subsequent to the Offering of approximately 40%. For the six
month period ended June 30, 1997, the Company has recorded an additional
one-time non-cash charge of $0.2 million for additional deferred taxes based
upon an increase in the effective tax rate for the Company's S Corporation
status (1.5%) to C Corporation status
7
<PAGE>
VDI MEDIA
MANAGEMENT'S DISCUSSION AND ANALYSIS - (CONTINUED)
(40%) applied to the temporary differences between the financial reporting
and tax basis of the Company's assets and liabilities.
NET INCOME. Net income for the six month period ended June 30, 1997
increased $0.4 million or 27.7% to $1.7 million compared to $1.3 million in
1996. Such increase is not proportionate to the increase in operating income
as the Company currently provides for income taxes at an effective rate of
approximately 40%. In the prior comparable period the Company was taxed as an
S Corporation and provided for income taxes at an effective rate of 1.5%.
THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO THREE MONTHS ENDED JUNE 30, 1996
REVENUES. Revenues increased by $3.3 million or 61.0% to $8.8 million for
the three month period ended June 30, 1997 compared to $5.5 million for the
three month period ended June 30, 1996. The increase in revenue was due to
increased volume resulting from (i) the availability of new services and
capacity resulting from the acquisition of Woodholly Productions and
(ii) substantially increased marketing of the Company's national distribution
capabilities through the Tulsa Control Center.
GROSS PROFIT. Gross profit increased $1.5 million or 71.2% to $3.5
million for the three month period ended June 30, 1997 compared to $2.0
million for the three month period ended June 30, 1996. As a percentage of
revenues, gross profit increased from 37.0% to 39.3%. The increase in gross
profit as a percentage of revenues was attributable to (i) reduction in the
cost of fiber optic and satellite costs which resulted from improved video
trafficking logistics through the Tulsa Control Center and (ii) lower
shipping expenses for the services provided by Woodholly Productions which
are generally distributed to fewer locations.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and
administrative expense increased $0.8 million or 59.6% to $2.1 million for
the three month period ended June 30, 1997 compared to $1.3 million for the
three month period ended June 30, 1996. As a percentage of revenues,
selling, general and administrative expense decreased to 23.7% for the three
month period ended June 30, 1997 compared to 23.9% for the three month period
ended June 30, 1996. This decrease in selling, general and administrative
expense as a percentage of revenues was primarily due to the spreading of
fixed overhead expenses, in particular the fixed portion of administrative
wages, over a higher revenue base in the three month period ended June 30,
1997 than to the comparable period in 1996.
OPERATING INCOME. Operating income increased $0.7 million or 92.2% to
$1.4 million for the three month period ended June 30, 1997 compared to $0.7
million for the three month period ended June 30, 1996.
INCOME TAXES. Prior to the Offering, the Company operated as an S
Corporation. As such, the Company was not responsible for federal income taxes
and provided for state income taxes at reduced rates. As a result of the
Offering, the Company's S Corporation status has terminated. Accordingly, the
Company will, in future periods, provide for all income taxes at higher
statutory rates. These factors are estimated to result in an effective tax rate
for periods subsequent to the Offering of approximately 40%.
NET INCOME. Net income for the three month period ended June 30, 1997
increased $0.2 million or 38.4% to $0.9 million compared to $0.6 million in
1996. Such increase is not proportionate to the increase in operating income as
the Company currently provides for income taxes at an effective rate of
approximately 40%. In the prior comparable period the Company was taxed as an
S Corporation and provided for income taxes at an efffective rate of 1.5%.
8
<PAGE>
VDI MEDIA
MANAGEMENT'S DISCUSSION AND ANALYSIS - (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES
This discussion should be read in conjunction with the notes to the
financial statements and the corresponding information more fully described
in the Company's Form 10-K for the year ended December 31, 1996.
Since its inception, the Company has financed its operations through
internally generated cash flow, borrowings under lending agreements with
financial institutions and, to a lesser degree, borrowings from related
parties. On February 24, 1997 the Company completed the Offering of 2,800,000
shares of Common Stock, 200,000 of which were sold on behalf of a selling
shareholder. The net proceeds of the Offering to the Company were
approximately $15.9 million after deducting the underwriters' discount of
approximately $1.3 million and offering expenses of approximately $1.1
million. Additionally, on March 25, 1997, the underwriters of the Offering
exercised their over-allotment option for an additional 320,000 shares of
Common Stock with net proceeds to the Company of approximately $2.1 million
after deduction of the underwriters' discount of approximately $0.2 million.
At June 30, 1997, the Company's cash and cash equivalents aggregated
$10.7 million. The Company's operating activities provided cash of $3.4
million for the six months ended June 30, 1997 and $0.7 million for the six
months ended June 30, 1996.
The Company's investing activities used cash of $4.6 million for the six
months ended June 30, 1997, including $4.3 million for the acquisition of
Woodholly Productions and $0.3 million for the addition and replacement of
capital equipment necessary to accommodate increased customer demands for the
Company's services, as well as investments in management information systems.
The Company's business is equipment intensive, requiring periodic
expenditures of cash or the incurrence of additional debt to acquire
additional videotape duplication equipment in order to increase capacity or
replace existing equipment.
The Company spent approximately $0.3 million of capital expenditures
during the first six month of 1997 to upgrade and replace equipment, and for
management information systems upgrades. The Company expects to spend
approximately $1.0 million on capital expenditures during the third quarter
of 1997 to upgrade and replace equipment and for management information
systems upgrades.
The Company's financing activities provided cash of $11.4 million in the
first six months of fiscal 1997. Cash flows from financing activities during
such six month period include the effect of the Offering and the subsequent
exercise of the over allotment option, which raised net proceeds of
approximately $18.0 million. Using the proceeds of the Offering, the Company
repaid $1.8 million outstanding under its term loan with a bank. In addition,
the Company paid the first two installments of the final S Corp Distribution to
its shareholders. Such distribution represents previously taxed and
undistributed earnings of the Company while an S Corporation. The final
installment, which is currently estimated to be approximately $0.3 million, is
expected to be paid on or before August 31, 1997.
In January 1997 the Company acquired substantially all of the assets and
assumed certain liabilities of Woodholly Productions (the "Woodholly
Acquisition"). In connection with the Woodholly Acquisition the Company
executed $4.0 million promissory notes. These promissory notes bore interest
at 8% per annum and were repaid on February 28, 1997. The purchase price
consists of an initial purchase price of $4.0 million plus an as yet
undetermined contingent purchase price. The contingent purchase price is to
be earned and paid based on the total operating income (as defined) resulting
from the financial results of Woodholly Productions as a separate division of
the Company. The contingent purchase price, in total, is limited to $5.0
million. The excess of the initial consideration over the fair value of the
assets acquired and liabilities assumed of approximately
9
<PAGE>
VDI MEDIA
MANAGEMENT'S DISCUSSION AND ANALYSIS - (CONTINUED)
$1.8 million has been allocated to goodwill. Goodwill associated with the
transaction will be amortized over 20 years. The contingent purchase price,
to the extent earned, will be treated as an increase in goodwill. The
Woodholly Acquisition was accounted for by the Company under the purchase
method of accounting.
In connection with the purchase of a portion of the common stock owned by
one of the Company's founders in April 1996, the Company borrowed an
additional $1.2 million under its revolving credit agreement and loaned such
amount to the Company's chief executive officer. This loan was repaid in
April 1997.
The Company had a $2.0 million revolving credit agreement with Union Bank
(the "Revolving Credit Agreement"). The Revolving Credit Agreement expired on
June 30, 1997. Management is in the process of negotiating a new facility at
similar terms in the near future.
In July 1995, the Company obtained a term loan in the original amount of
approximately $2.8 million with a bank. Amounts outstanding under the term
loan were repaid by the Company in February 1997 with a portion of the
proceeds of the Offering.
Management believes that cash generated from the Offering, ongoing
operations, and its existing working capital will fund necessary capital
expenditures and provide adequate working capital for at least the next
twelve months.
10
<PAGE>
VDI MEDIA
MANAGEMENT'S DISCUSSION AND ANALYSIS - (CONTINUED)
The Company, from time to time, considers the acquisition of businesses
complementary to its current operations. Consummation of any such acquisition
or other expansion of the business conducted by the Company may be subject to
the Company securing additional financing.
NEW ACCOUNTING STANDARDS
In March 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings per Share" ("FAS 128")
which will become effective in the fourth quarter of 1997, FAS 128 replaces
the presentation of earnings per share reflected on the Statement of Income
with a dual presentation of Basic Earnings per Share ("Basic EPS") and
Diluted Earnings per Share ("Diluted EPS"). FAS 128 does not permit early
application; however, it requires, when implemented in the fourth quarter of
1997, restatement of previously reported earnings per share for each income
statement presented. The Company does not expect the adoption of FAS 128 to
have a material impact on its financial condition or results of operations.
In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 130, "Reporting Comprehensive Income"
("FAS 130") which will become effective in fiscal 1998. The Company does not
expect the adoption of FAS 130 to have a material impact on its financial
condition or results of operations.
In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information" ("FAS 131") which will become effective
in fiscal 1998. FAS 131 establishes standards for the way publicly-held
companies report information about operating segments as well as disclosures
about products and services, geographic areas and major customers. However,
the Company does not expect the adoption of FAS 131 to have a material impact
on its consolidated financial condition or results of operations.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
NO. DESCRIPTION
------- -----------
27 Financial Data Schedule
(b) Reports on Form 8-K
None.
11
<PAGE>
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 thereunto duly authorized.
VDI MEDIA
DATE: August 14, 1997 BY: /s/ DONALD R. STINE
------------------------------
Donald R. Stine
Chief Financial Officer
and Treasurer
(duly authorized officer and
principal financial officer)
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,349,000
<SECURITIES> 9,398,000
<RECEIVABLES> 6,664,000
<ALLOWANCES> (665,000)
<INVENTORY> 155,000
<CURRENT-ASSETS> 17,568,000
<PP&E> 17,352,000
<DEPRECIATION> (11,904,000)
<TOTAL-ASSETS> 25,354,000
<CURRENT-LIABILITIES> 6,083,000
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 25,354,000
<SALES> 17,298,000
<TOTAL-REVENUES> 17,298,000
<CGS> 10,417,000
<TOTAL-COSTS> 10,417,000
<OTHER-EXPENSES> 4,236,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 185,000
<INCOME-PRETAX> 2,631,000
<INCOME-TAX> 942,000
<INCOME-CONTINUING> 1,689,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,689,000
<EPS-PRIMARY> 0.20
<EPS-DILUTED> 0.20
</TABLE>
