<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 SEPTEMBER 30, 1997 Commission File Number 0-21917
____________________
VDI MEDIA
(Exact name of registrant as specified in its charter)
California 95-4272619
(State 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 November 11, 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, September 30,
1996 1997
---------------- -----------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash $ 564,000 $ 3,614,000
Accounts receivable, net of allowances for doubtful
accounts of $460,000 and $733,000, respectively 4,537,000 9,928,000
Amounts receivable from officer 1,214,000 -
Amounts receivable from employees 224,000 6,000
Inventories 144,000 268,000
Prepaid expenses and other current assets 2,000 454,000
---------------- -----------------
Total current assets 6,685,000 14,270,000
Property and equipment, net 3,520,000 7,325,000
Deferred offering costs 876,000 -
Goodwill (Note 2) - 7,385,000
Other assets 97,000 105,000
---------------- -----------------
Total Assets $ 11,178,000 $ 29,085,000
---------------- -----------------
---------------- -----------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,394,000 $ 3,691,000
Accrued expenses 1,606,000 2,319,000
Borrowings under revolving credit agreement - 417,000
Current portion of notes payable 728,000 342,000
Current portion of capital lease obligations 32,000 712,000
Deferred tax liability (Note 1) - 185,000
---------------- -----------------
Total current liabilities 4,760,000 7,666,000
---------------- -----------------
Notes payable, less current portion 1,102,000 653,000
---------------- -----------------
Capital lease obligations, less current portion 75,000 743,000
---------------- -----------------
Shareholders' equity:
Preferred stock; no par value; 5,000,000 authorized;
none outstanding - -
Common stock; no par value; 50,000,000 authorized;
6,660,000 and 9,580,000 shares, respectively, issued
and outstanding 1,015,000 18,711,000
Retained earnings 4,226,000 1,312,000
---------------- -----------------
Total shareholders' equity 5,241,000 20,023,000
---------------- -----------------
$ 11,178,000 $ 29,085,000
---------------- -----------------
---------------- -----------------
</TABLE>
See accompanying notes to consolidated financial statements
2
<PAGE>
VDI MEDIA
CONSOLIDATED INCOME STATEMENT
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
-------------------------- --------------------------
(Unaudited) (Unaudited)
1996 1997 1996 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $ 6,874,000 $11,248,000 $18,182,000 $28,546,000
Cost of goods sold 3,988,000 7,096,000 11,080,000 17,513,000
----------- ----------- ----------- -----------
Gross profit 2,886,000 4,152,000 7,102,000 11,033,000
Selling, general and adminisrative expense 1,479,000 2,518,000 4,205,000 6,752,000
----------- ----------- ----------- -----------
Operating income 1,407,000 1,634,000 2,897,000 4,281,000
Interest expense 117,000 74,000 271,000 239,000
Interest income 39,000 57,000 48,000 205,000
----------- ----------- ----------- -----------
Income before income taxes 1,329,000 1,617,000 2,674,000 4,247,000
Provision for income taxes 22,000 665,000 45,000 1,421,000
Establishment of deferred tax liability (Note 1) - - - 185,000
----------- ----------- ----------- -----------
Net income $ 1,307,000 $ 952,000 $ 2,629,000 $ 2,641,000
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Net income per share $ 0.10 $ 0.30
----------- -----------
----------- -----------
Weighted average number of shares 9,580,000 8,894,222
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements
3
<PAGE>
VDI MEDIA
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
-------------------------
1996 1997
----------- ----------
(Unaudited)
<S> <C> <C>
Cash flows from operating activites:
Net income $2,630,000 $2,641,000
Adjustment to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,222,000 2,573,000
Increase in deferred taxes - 185,000
Provision for doubtful accounts 57,000 110,000
Gain on sale of assets - (11,000)
Changes in assets and liabilities net of effects
from purchase of Woodholly Productions:
Increase in accounts receivable (859,000) (2,112,000)
(Increase) decrease in other receivables (39,000) 210,000
Decrease in inventories 54,000 14,000
Decrease (increase) in prepaid expenses and
other current assets 25,000 (385,000)
Increase in other assets (6,000) (18,000)
(Increase) decrease in deferred offering costs (584,000) 876,000
Increase in accounts payable 433,000 279,000
Increase in accrued expenses 384,000 375,000
Decrease in accrued settlement obligation (41,000) -
----------- ----------
Net cash provided by operatring activities 3,276,000 4,737,000
----------- ----------
Cash used in investing activities:
Capital expenditures (1,043,000) (1,009,000)
Proceeds from sale of assets - 16,000
Payment for purchase of Woodholly, net of
cash acquired - (4,703,000)
Payment for purchase of MultiMedia, net of
cash acquired - (6,838,000)
----------- ----------
Net cash used in investing activities (1,043,000) (12,534,000)
Cash flows from financing activities:
S Corporation distributions to shareholders (1,264,000) (5,555,000)
Change in revolving credit agreement 1,014,000 17,000
Proceeds from sale of common stock - 17,696,000
Repayment of notes payable (577,000) (1,854,000)
Repayment of amounts receivable from officer (1,175,000) 1,227,000
Repayment of subordinated notes payable to
related parties (255,000) -
Repayment of capital lease obligations (118,000) (684,000)
----------- ----------
Net cash (used in) provided by financing activities (2,375,000) 10,847,000
Net (decrease) increase in cash (142,000) 3,050,000
Cash at beginning of period 415,000 564,000
----------- ----------
Cash at end of period $ 273,000 $3,614,000
----------- ----------
----------- ----------
Supplemental disclosure of cash flows information:
Cash paid for:
Interest 236,000 219,000
----------- ----------
----------- ----------
Income tax 48,000 1,792,000
----------- ----------
----------- ----------
</TABLE>
See accompanying notes to consolidated financial statements
4
<PAGE>
VDI MEDIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 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, motion picture 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 Los Angeles, California; Tulsa, Oklahoma; Chicago,
Illinois; New York, New York and San Francisco, California.
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 nine months ended September 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 PRODUCTIONS AND MULTI-MEDIA ACQUISITIONS
On January 1, 1997, the Company acquired all of the assets of 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 $9.0 million, net of
adjustments, of which $4.0 million was paid in the first quarter of 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.
To date, the Company has made earn-out payments totaling $0.6 million for the
first three quarters of 1997.
On July 31, 1997, the Company acquired all of the outstanding shares of
Multi-Media Services, Inc. ("Multi-Media Services"), a duplication and
distribution company specializing in commercial advertisers and major ad
agencies. As consideration, the Company paid a purchase price of $6.8
million, net of adjustments. In addition, the
5
<PAGE>
purchase agreement calls for earn-out payments of up to $2.0 million
(exclusive of interest) in the event Multi-Media Services meets specified
financial goals.
The Company has accounted for both of these acquisitions as purchases.
Goodwill arising from these transactions is being amortized over twenty
years. The contingent purchase price for each of these transactions, to the
extent earned, will be recorded as an increase to goodwill.
The accompanying consolidated financial statements include the accounts
of Woodholly Productions, Multi-Media Services and the Company. All material
intercompany transactions and balances have been eliminated. The
consolidated statement of income includes both Woodholly Productions and
Multi-Media Services' results of operations from the effective date of their
acquisitions.
The following table reflects unaudited pro forma combined results of
operations of the Company, Woodholly Productions and Multi-Media Services as
if the acquisitions had occurred on January 1, 1996:
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1997 1996
---- ----
<S> <C> <C>
Net Sales $ 32,756 $ 28,727
Net Income $ 2,340 $ 1,793
Earnings per share $ 0.26 $ 0.25
</TABLE>
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 paid on or before November 30,
1997 to the Company's pre-offering Shareholders.
6
<PAGE>
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
statement 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 filed with the Securities
and Exchange Commission dated February 18, 1997.
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1996
REVENUES. Revenues increased by $10.4 million or 57.0% to $28.5 million
for the nine month period ended September 30, 1997 compared to $18.2 million
for the nine month period ended September 30, 1996. This increase in revenue
was due to increased volume resulting from (i) new clients and the availability
of new services and capacity resulting from the acquisition of Woodholly
Productions and Multi-Media Services and (ii) substantially increased
marketing of the Company's national distribution capabilities through the
Broadcast One/Multi-Media Services division.
GROSS PROFIT. Gross profit increased $3.9 million or 55.3% to $11.0
million for the nine month period ended September 30, 1997 compared to $7.1
million for the nine month period ended September 30, 1996. As a percentage
of revenues, gross profit decreased from 39.1% to 38.6%. The decrease in
gross profit as a percentage of revenues was attributable to an increase in
direct labor costs and depreciation charges resulting from the acquisition of
Woodholly Productions and Multi-Media Services. These amounts were partially
offset by 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 $2.5 million or 60.6% to $6.8 million for
the nine month period ended September 30, 1997 compared to $4.2 million for
the nine month period ended September 30, 1996. As a percentage of revenues,
selling, general and administrative expense increased to 23.7% for the nine
month period ended September 30, 1997 compared to 23.1% for the nine month
period ended September 30, 1996. This increase is due to increased headcount
in the Company's sales and marketing departments and an increase in
depreciation and amortization charges resulting from the acquisition of
Woodholly Productions and Multi-Media Services. In addition, selling, general
and administrative expense for the nine months ended September 30, 1997
includes salaries paid to the four former owners of Woodholly Productions.
OPERATING INCOME. Operating income increased $1.4 million or 47.7% to
$4.3 million for the nine month period ended September 30, 1997 compared to
$2.9 million for the nine month period ended September 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 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
nine month period ended September 30, 1997, the Company recorded a one-time
non-cash charge of $0.2 million for deferred taxes based upon an increase in
the effective tax rate for the Company's S Corporation status (1.5%) to C
Corporation status (40%) applied to the temporary differences between the
financial reporting and tax bases of the Company's assets and liabilities.
NET INCOME. Net income for the nine month period ended September 30,
1997 remained constant at $2.6 million compared to the nine month period
ended September 30, 1996. Net income did not rise proportionately to the
increase in operating income as the Company currently provides for taxes at
a higher effective rate of approximately
7
<PAGE>
VDI MEDIA
MANAGEMENT'S DISCUSSION AND ANALYSIS - (CONTINUED)
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 SEPTEMBER 30, 1997 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1996
REVENUES. Revenues increased by $4.4 million or 63.6% to $11.2 million
for the three month period ended September 30, 1997 compared to $6.9 million
for the three month period ended September 30, 1996. This increase in revenue
was due to increased volume resulting from (i) new clients and the availability
of new services and capacity resulting from the acquisition of Woodholly
Productions and Multi-Media Services and (ii) substantially increased
marketing of the Company's national distribution capabilities through the
Broadcast One/Multi-Media Services division.
GROSS PROFIT. Gross profit increased $1.3 million or 43.8% to $4.2
million for the three month period ended September 30, 1997 compared to $2.9
million for the three month period ended September 30, 1996. As a percentage
of revenues, gross profit decreased from 42.0% to 36.9%. The decrease in
gross profit as a percentage of revenues was attributable to an increase in
direct labor costs, depreciation charges and outsourcing costs resulting from
the acquisition of Multi-Media Services. These amounts were partially offset
by 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 $1.0 million or 70.2% to $2.5 million for
the three month period ended September 30, 1997 compared to $1.5 million for
the three month period ended September 30, 1996. As a percentage of
revenues, selling, general and administrative expense increased to 22.4% for
the three month period ended September 30, 1997 compared to 21.5% for the
three month period ended September 30, 1996. This increase in selling,
general and administrative expense as a percentage of revenues was primarily
due to the increased headcount resulting from the acquisition of Multi-Media
Services and an increase in depreciation and amortization charges resulting
from the acquisition of Woodholly Productions and Multi-Media Services, and
was offset by the spreading of fixed overhead expenses over a higher revenue
base in the three month period ended September 30, 1997 than to the
comparable period in 1996.
OPERATING INCOME. Operating income increased $0.2 million or 16.1% to
$1.6 million for the three month period ended September 30, 1997 compared to
$1.4 million for the three month period ended September 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 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 September 30,
1997 decreased $0.4 million or -27.2% to $1.0 million compared to $1.3
million for the three month period ended September 30, 1996. Such decrease
is not proportionate to the increase in operating income as the Company
currently provides for taxes at a higher 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%.
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. In the first quarter of 1997, the Company completed the Offering of
3,120,000 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
8
<PAGE>
VDI MEDIA
MANAGEMENT'S DISCUSSION AND ANALYSIS - (CONTINUED)
were approximately $18.0 million.
At September 30, 1997, the Company's cash and cash equivalents
aggregated $3.6 million. The Company's operating activities provided cash of
$4.7 million for the nine months ended September 30, 1997 and $3.3 million
for the nine months ended September 30, 1996.
The Company's investing activities used cash of $12.5 million for the
nine months ended September 30, 1997 including $4.7 million for the
acquisition of Woodholly Productions and $6.8 million for the acquisition of
Multi-Media Services. The Company also spent approximately $1.0 million for
the addition and replacement of capital equipment necessary to accommodate
increased customer demands for the Company's services, and for 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 expects
to spend approximately $1.0 million on capital expenditures during the fourth
quarter of 1997 to acquire additional equipment and management information
systems.
The Company's financing activities provided cash of $10.8 million in the
nine months ended September 30, 1997. Cash flows from financing activities
during such nine month period include the effect of the Offering 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 Corporation 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 November 30,
1997 to the Company's pre-offering Shareholders.
In January 1997 the Company acquired substantially all of the assets and
assumed certain liabilities of Woodholly Productions (the "Woodholly
Acquisition"). The purchase price consisted of an initial payment of $4.0
million, net of adjustments, plus an 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. To date, the Company
has made earn-out payments totaling $0.6 million for the first three quarters
of 1997. The excess of the initial consideration over the fair value of the
assets acquired and liabilities assumed of approximately $1.8 million has
been allocated to goodwill.
In August 1997 the Company acquired substantially all of the outstanding
capital stock of Multi-Media Services (the "Multi-Media Acquisition"). The
purchase price consisted of an initial payment of $6.8 million, net of
adjustments, plus an 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 Multi-Media Services as
a separate division of the Company. The contingent purchase price, in total,
is limited to $2.0 million. The excess of the initial consideration over the
fair value of the assets acquired and liabilities assumed of approximately
$5.0 million has been allocated to goodwill.
Goodwill arising from the Woodholly Acquisition and Multi-Media
Acquisition (the "acquisitions") will be amortized over 20 years. The
contingent purchase price for the acquisitions, to the extent earned, will be
treated as an increase in goodwill. The acquisitions were accounted for by
the Company under the purchase method of accounting.
The Company had a $2.0 million revolving credit agreement with Union
Bank which expired on June 30, 1997. Management is in the process of
negotiating a new credit facility. Additionally, in connection with the
purchase of Multi-Media, the Company assumed responsibility for a $0.5
million revolving credit agreement with Wells Fargo Bank (the "Wells Fargo
Credit Agreement") which expires on January 10, 1998. The amount currently
outstanding under the Wells Fargo Credit Agreement is $0.4 million.
9
<PAGE>
VDI MEDIA
MANAGEMENT'S DISCUSSION AND ANALYSIS - (CONTINUED)
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) EXHIBIT NO. DESCRIPTION
----------- -----------
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K
Current Report on Form 8-K filed on August 14, 1997 relating to the
acquisition of Multi-Media Services
Current Report on Form 8-K/A filed on October 14, 1997 relating to
the acquisition of Multi-Media Services
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: Nov. 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 374,000
<SECURITIES> 3,240,000
<RECEIVABLES> 10,667,000
<ALLOWANCES> (733,000)
<INVENTORY> 268,000
<CURRENT-ASSETS> 14,270,000
<PP&E> 24,081,000
<DEPRECIATION> (16,756,000)
<TOTAL-ASSETS> 29,085,000
<CURRENT-LIABILITIES> 7,666,000
<BONDS> 0
0
0
<COMMON> 18,711,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 29,085,000
<SALES> 28,546,000
<TOTAL-REVENUES> 28,546,000
<CGS> 17,513,000
<TOTAL-COSTS> 17,513,000
<OTHER-EXPENSES> 6,752,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 239,000
<INCOME-PRETAX> 4,247,000
<INCOME-TAX> 1,606,000
<INCOME-CONTINUING> 2,641,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,641,000
<EPS-PRIMARY> .30
<EPS-DILUTED> .30
</TABLE>