<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED APRIL 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER
0-21631
TICKETMASTER GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
ILLINOIS 36-3597489
(STATE OR OTHER JURISDICTION OF I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
8800 SUNSET BOULEVARD, WEST HOLLYWOOD, 90069
CALIFORNIA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
</TABLE>
(310) 360-6000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
(NOT APPLICABLE)
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT)
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 [ ]
The number of shares outstanding of the registrant's Common Stock as of April
30, 1997 was 24,739,715.
================================================================================
<PAGE> 2
TICKETMASTER GROUP, INC.
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Independent Auditors' Review Report........................................... 2
Consolidated Balance Sheets -- January 31, 1997 and April 30, 1997............ 3
Consolidated Statements of Operations -- Three months ended April 30, 1996 and
1997......................................................................... 4
Consolidated Statements of Cash Flows -- Three months ended April 30, 1996 and
1997......................................................................... 5
Condensed Notes to Consolidated Financial Statements.......................... 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations................................................................. 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings........................................................ 15
Item 6. Exhibits and Reports on Form 8-K......................................... 15
Signatures.................................................................... 16
</TABLE>
1
<PAGE> 3
INDEPENDENT AUDITOR'S REVIEW REPORT
The Board of Directors
Ticketmaster Group, Inc.:
We have reviewed the consolidated balance sheet of Ticketmaster Group, Inc.
and subsidiaries as of April 30, 1997, the consolidated statements of operations
for the three month periods ended April 30, 1996 and 1997, and the related
statements of cash flows for the three month periods ended April 30, 1996 and
1997. These consolidated financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the consolidated financial statements referred to above for
them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Ticketmaster Group, Inc. and
subsidiaries as of January 31, 1997, and the related consolidated statements of
operations, shareholders' equity and cash flows for the year then ended (not
presented herein); and in our report dated March 12, 1997, except for Notes 13
and 14, which are as of April 17, 1997, we expressed an unqualified opinion on
those consolidated financial statements. In our opinion, the information set
forth in the accompanying consolidated balance sheet as of January 31, 1997, is
fairly stated, in all material respects, in relation to the consolidated balance
sheet from which it has been derived.
KPMG Peat Marwick LLP
Los Angeles, California
June 6, 1997
2
<PAGE> 4
TICKETMASTER GROUP, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE INFORMATION)
ASSETS
<TABLE>
<CAPTION>
JANUARY 31, APRIL 30,
1997 1997
----------- -----------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents......................................... $ 60,880 $ 100,206
Accounts receivable, ticket sales................................. 12,014 14,799
Accounts receivable, other........................................ 8,884 10,779
Inventory......................................................... 4,093 4,281
Prepaid expenses.................................................. 8,079 9,396
---------- ----------
Total current assets...................................... 93,950 139,461
Property, equipment and leasehold improvements, net................. 32,923 38,635
Investments in and advances to affiliates........................... 7,308 7,890
Cost in excess of net assets acquired, net.......................... 65,074 85,810
Intangible and other assets, net.................................... 26,031 32,292
Deferred income taxes, net.......................................... 3,948 3,908
---------- ----------
$ 229,234 $ 307,996
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt................................. $ 190 $ 397
Accounts payable, trade........................................... 10,767 10,239
Accounts payable, clients......................................... 35,842 77,112
Accrued expenses.................................................. 16,863 23,084
Deferred revenue.................................................. 9,233 12,358
---------- ----------
Total current liabilities................................. 72,895 123,190
Long-term debt, net of current portion.............................. 127,514 137,995
Deferred rent and other............................................. 7,400 7,393
Minority interests.................................................. 80 73
Shareholders' equity:
Preferred stock................................................... -- --
Common stock, no par value, authorized 80,000,000 shares, issued
and outstanding 24,739,715 shares at January 31, and April 30,
1997, respectively............................................. -- --
Exchangeable, Class B common stock of a subsidiary, non-voting,
non-participating, no par value, issued and outstanding
1,115,531 shares at April 30, 1997............................. -- 16,175
Additional paid-in capital........................................ 127,466 127,466
Cumulative currency translation adjustment........................ (53) (109)
Accumulated deficit............................................... (106,068) (104,187)
---------- ----------
Total shareholders' equity................................ 21,345 39,345
---------- ----------
$ 229,234 $ 307,996
========== ==========
</TABLE>
See condensed notes to consolidated financial statements.
3
<PAGE> 5
TICKETMASTER GROUP, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE INFORMATION)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED APRIL
30,
---------------------------
1996 1997
----------- -----------
<S> <C> <C>
Revenue:
Ticketing operations............................................ $ 44,013 $ 67,392
Concession control systems...................................... -- 6,250
Publications.................................................... 1,990 2,967
Merchandising................................................... 738 394
----------- -----------
46,741 77,003
Operating costs, expenses and other items:
Ticketing operations............................................ 27,750 39,105
Ticketing selling, general and administrative................... 7,825 10,600
Concession control systems operations........................... -- 3,701
Concession control systems selling, general & administrative.... -- 2,287
Publications.................................................... 4,521 4,723
Merchandising................................................... 651 350
Corporate general and administrative............................ 4,226 5,121
Depreciation.................................................... 1,350 2,233
Amortization of goodwill........................................ 448 1,028
Amortization of other........................................... 555 1,667
Equity in net income of unconsolidated affiliates............... (1,012) (656)
----------- -----------
Operating income............................................. 427 6,844
Other expenses:
Interest expense, net........................................... 2,912 2,100
Minority interests.............................................. 144 43
----------- -----------
Income (loss) before income taxes............................ (2,629) 4,701
Income tax (benefit) provision.................................... (650) 2,820
----------- -----------
Net income (loss)............................................ $ (1,979) $ 1,881
=========== ===========
Net income (loss) per share....................................... $ (0.13) $ 0.07
=========== ===========
Weighted average number of common shares and exchangeable common
shares outstanding.............................................. 15,310,405 25,483,402
=========== ===========
</TABLE>
See condensed notes to consolidated financial statements.
4
<PAGE> 6
TICKETMASTER GROUP, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
APRIL 30,
---------------------
1996 1997
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss).................................................... $ (1,979) $ 1,881
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization..................................... 2,353 4,928
Income attributable to minority interests......................... 144 43
Equity in net income of unconsolidated affiliates................. (1,012) (656)
Deferred income taxes............................................. (500) 40
Changes in operating assets and liabilities net of effects from
purchase of licensees' interests:
Accounts receivable, ticket sales............................... (4,745) (1,769)
Accounts receivable, other...................................... (1,296) 152
Inventory....................................................... 174 (188)
Prepaid expenses................................................ (335) (562)
Accounts payable, trade......................................... (61) (1,982)
Accounts payable, clients....................................... 10,848 26,863
Accrued expenses................................................ 1,978 4,187
Deferred revenue................................................ 3,438 2,706
Deferred rent and other......................................... 525 (7)
-------- --------
Net cash provided by operating activities.................... 9,532 35,636
-------- --------
Cash flows from investing activities:
Purchase of property, equipment and leasehold improvements........... (1,615) (4,913)
Payments for investments in affiliates............................... (1,680) (451)
Cash distributions received from affiliates.......................... 1,140 525
Intangible and other assets.......................................... 595 (430)
Payment for acquisitions of licensees' interests, net of cash
acquired.......................................................... (1,550) (905)
-------- --------
Net cash used in investing activities........................ (3,110) (6,174)
-------- --------
Cash flows from financing activities:
Proceeds from long-term debt......................................... 7,839 19,024
Reduction of long-term debt.......................................... (851) (9,054)
Distributions to minority shareholders............................... (85) (50)
-------- --------
Net cash provided by financing activities.................... 6,903 9,920
-------- --------
Effect of exchange rate changes on cash and cash equivalents........... -- (56)
-------- --------
Net increase (decrease) in cash and cash equivalents......... 13,325 39,326
Cash and cash equivalents, beginning of period......................... 34,004 60,880
-------- --------
Cash and cash equivalents, end of period............................... $ 47,329 $100,206
======== ========
</TABLE>
See condensed notes to consolidated financial statements.
5
<PAGE> 7
TICKETMASTER GROUP, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED APRIL 30,
-----------------
1996 1997
------ ------
<S> <C> <C>
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest............................................... $2,908 $2,352
Income taxes........................................... 73 197
</TABLE>
Supplemental schedule of noncash investing and financing activities:
During the quarter ended April 30, 1997, the Company acquired its
licensees' equity interest in the Canadian operations. In conjunction with the
acquisition, liabilities were assumed as follows:
<TABLE>
<S> <C>
Fair value of assets acquired.................................. $51,385
Cash paid for interests acquired............................... 16,175
Exchangeable Common Stock (defined in Note 2) issued for
interests acquired.......................................... 16,175
-------
Liabilities assumed.................................... $19,035
=======
</TABLE>
See condensed notes to consolidated financial statements.
6
<PAGE> 8
TICKETMASTER GROUP, INC.
AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(1) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements include the
accounts of Ticketmaster Group, Inc. and subsidiaries (the "Company") for the
three months ended April 30, 1996 and 1997, and have been prepared in accordance
with generally accepted accounting principles for interim financial information
and the rules and regulations of the Securities and Exchange Commission. The
consolidated balance sheet presented herein for January 31, 1997 was derived
from the Company's audited consolidated financial statements for the fiscal year
then ended. The financial statements presented herein for the three months ended
April 30, 1996 and 1997 include all material adjustments (consisting of normal
and recurring matters) which are, in the opinion of management, necessary for a
fair presentation of the financial position, results of operations and cash
flows for such periods. However, these results are not necessarily indicative of
results for any other interim period or for the results that may be expected for
the full year.
Certain information and footnote disclosures normally included in financial
statements in accordance with generally accepted accounting principles have been
omitted pursuant to the rules and regulations of the Securities and Exchange
Commission. Management believes that the disclosures included in the
accompanying interim financial statements and footnotes are adequate to make the
information not misleading, but that they should be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the fiscal year ended January 31, 1997 (File No.
0-21631).
(2) BUSINESS ACQUISITION
Pursuant to an Agreement of Purchase and Sale of Stock, dated as of May 13,
1997 (with effect from March 1, 1997), the Company acquired all of the issued
and outstanding shares of capital stock of its Canadian licensees for a purchase
price of Canadian $44,650,000 (approximately US $32,350,000) consisting of
approximately Canadian $22,325,000 in cash and 1,115,531 non-voting,
non-participating Class B Shares of the Company's new Canadian subsidiary
(Exchangeable Common Stock). This acquisition has been recorded as a purchase
transaction; accordingly, the purchase price was allocated to the net assets
acquired based on their estimated fair market values. Approximately $6.4 million
was allocated to purchased user agreements; the excess of the estimated fair
value of net assets acquired amounted to approximately $20.9 million, which has
been accounted for as goodwill and is being amortized over 30 years using the
straight line method. The accompanying consolidated statements of operations
include the results of operations since the effective date of the acquisition.
Upon the occurrence or satisfaction, as applicable, of certain specified events
and conditions relating to operations in Canada, the purchase price will be
increased by approximately 12.3%, payable on May 1, 1998, 50% in cash and 50% in
additional Class B Shares of the Canadian subsidiary. If increased, the purchase
price will be allocated between purchased user agreements and goodwill. Holders
of the Class B Shares have the right, at any time, to exchange such Class B
Shares for shares of the Company's Common Stock on a one-for-one basis, subject
to adjustment. In addition, the Company has the right to require such exchange
to occur at any time on or after January 1, 2001, or earlier if certain
specified events occur.
The following pro forma information presents a summary of consolidated
results of the Company, the European, Indiana and Pacer/CATS/CCS Joint Ventures,
the Delaware Valley (Philadelphia), Canadian and Mexico licensees and the Texas
and Florida operating subsidiaries for the three months ended April 30, 1996 and
1997 assuming the acquisitions had been made as of February 1, 1996, with pro
forma adjustments to give affect to amortization of goodwill and purchased user
agreements, interest on the related acquisitions and the related income tax
effect utilizing a statutory rate for Federal taxes equal to 34% and for state
and foreign taxes equal to the rate applicable in each jurisdiction. The pro
forma financial information is not necessarily indicative of the results of
operations as they would have been had the transactions been effective on
February 1, 1996.
7
<PAGE> 9
TICKETMASTER GROUP, INC.
AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED APRIL
30,
---------------------------
1996 1997
----------- -----------
(IN THOUSANDS, EXCEPT PER
SHARE AMOUNTS)
<S> <C> <C>
Total Revenue..................................... $ 70,396 $ 79,454
Net income (loss)................................. (740) 2,001
Income (loss) per share........................... (0.03) 0.08
</TABLE>
8
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
The following contains forward-looking statements. These forward-looking
statements are based largely on the Company's expectations and are subject to a
number of risks and uncertainties, certain of which are beyond the Company's
control. Actual results could differ materially from those anticipated by these
forward-looking statements as a result of various factors. In light of these
risks and uncertainties, there can be no assurance that events anticipated by
the forward-looking statements contained below will in fact transpire.
GENERAL
The Company's Managed Businesses are comprised of the Consolidated
Businesses (i.e., its wholly and majority owned subsidiaries) together with the
Unconsolidated Joint Ventures (i.e., those joint ventures in which it acts as
managing partner). The Company seeks to optimize the performance of each of the
Managed Businesses regardless of its percentage ownership. The Company provides
the same scope of ticket inventory control and management, distribution and
dedicated marketing and support services to its joint ventures as it does to its
wholly owned operating subsidiaries. Consequently, certain aspects of the
performance of the Managed Businesses are better understood by measuring their
performance as a whole without regard to the Company's ownership interest. Where
relevant, certain aspects of the performance of the Managed Businesses are also
discussed with regard to the Consolidated Businesses and Unconsolidated Joint
Ventures separately.
All discussion included herein calculates the percentage changes using
actual dollar amounts, versus rounded dollar amounts.
9
<PAGE> 11
RESULTS OF OPERATIONS
FOR THE QUARTER ENDED APRIL 30, 1997 COMPARED WITH THE QUARTER ENDED APRIL 30,
1996
The following tables set forth unaudited operating results for the
Consolidated Businesses and the Unconsolidated Joint Ventures, collectively, the
Managed Businesses. The amounts shown for the Unconsolidated Joint Ventures
represent the full balance for each line item and do not give effect to the
Joint Venture ownership interests held by entities other than the Company.
<TABLE>
<CAPTION>
THREE MONTHS ENDED APRIL 30, 1996 THREE MONTHS ENDED APRIL 30, 1997
------------------------------------------ ------------------------------------------
TICKETMASTER UNCONSOLIDATED TOTAL TICKETMASTER UNCONSOLIDATED TOTAL
CONSOLIDATED JOINT MANAGED CONSOLIDATED JOINT MANAGED
BUSINESS(1) VENTURES(2) BUSINESSES BUSINESS(1) VENTURES(2) BUSINESSES
------------ -------------- ---------- ------------ -------------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Ticketing operations............. $ 44,013 $ 17,785 $ 61,798 $ 67,392 $ 8,984 $ 76,376
Concession Control Systems....... -- 6,241 6,241 6,250 -- 6,250
Publications..................... 1,990 -- 1,990 2,967 -- 2,967
Merchandising.................... 738 -- 738 394 -- 394
-------- -------- --------- -------- -------- ---------
Total revenues........... 46,741 24,026 70,767 77,003 8,984 85,987
-------- -------- --------- -------- -------- ---------
Operating costs:
Ticketing operations............. 27,750 9,768 37,518 39,105 4,848 43,953
Ticketing selling, general and
administrative................ 7,825 3,242 11,067 10,600 1,728 12,328
Concession Control Systems
operations.................... -- 4,234 4,234 3,701 -- 3,701
Concession Control Systems
selling, general and
administrative................ -- 2,333 2,333 2,287 -- 2,287
Publications..................... 4,521 -- 4,521 4,723 -- 4,723
Merchandising.................... 651 -- 651 350 -- 350
Corporate general and
administrative................ 4,226 -- 4,226 5,121 -- 5,121
Depreciation..................... 1,350 697 2,047 2,233 253 2,486
Amortization of goodwill......... 448 30 478 1,028 -- 1,028
Amortization of other............ 555 643 1,198 1,667 457 2,124
-------- -------- --------- -------- -------- ---------
Total operating costs.... 47,326 20,947 68,273 70,815 7,286 78,101
-------- -------- --------- -------- -------- ---------
(585) $ 3,079 $ 2,494 6,188 $ 1,698 $ 7,886
======== ========= ======== =========
Equity in net income of
unconsolidated affiliates..... (1,012) (656)
-------- --------
Operating income................. 427 6,844
Interest expense and other....... 3,056 2,143
Income tax (benefit) provision... (650) 2,820
-------- --------
Net (loss) income.................. $ (1,979) $ 1,881
======== ========
Supplemental information:
EBITDA(3)..................... $ 1,768 $ 4,449 $ 6,217 $ 11,116 $ 2,408 $ 13,524
======== ======== ========= ======== ======== =========
Attributable EBITDA(4)........ $ 3,604 $ 12,201
========= =========
Net cash provided by operating
activities.................. $ 9,532 $ 5,627 $ 15,159 $ 35,636 $ 4,976 $ 40,612
Net cash used in investing
activities.................. (3,110) (1,742) (4,852) (6,176) (876) (7,052)
Net cash provided by (used in)
financing activities........ 6,903 (1,214) 5,689 9,920 (1,578) 8,342
Number of tickets sold........ 10,466 4,802 15,268 14,808 2,425 17,233
Gross dollar value of tickets
sold........................ $292,200 $133,182 $ 425,382 $464,869 $ 67,891 $ 532,760
</TABLE>
Notes following
10
<PAGE> 12
Notes:
(1) Defined as results of operations from businesses included in the Company's
Consolidated Financial Statements included elsewhere in this Form 10-Q,
which include the accounts of the Company, its wholly owned subsidiaries and
majority (80% or greater) owned companies and joint ventures. Investments in
companies and joint ventures, in which ownership ranges from 33 1/3%-50% and
in which the Company exercises significant influence over operating and
financial policies, are accounted for using the equity method.
(2) Defined as the combined results of operations from unconsolidated ticketing
joint ventures. Ticketmaster's ownership interest in these businesses range
from 33 1/3%-50% and are in companies and joint ventures in which
Ticketmaster exercises significant influence over operating and financial
policies, and are accounted for under the equity method included in the
Consolidated Businesses.
(3) Defined as revenue less operating costs before interest, taxes, depreciation
and amortization. Managed Business EBITDA does not represent cash flows from
operations, as defined by generally accepted accounting principles, and
should not be considered to be an alternative to net income as an indicator
of operations performance or to cash flows from operations as a measure of
liquidity. Management believes that an EBITDA presentation is an important
factor in evaluating the amount of cash available for repayment of debt,
future investment, dividends and future distributions.
(4) Defined as Ticketmaster's pro rata share in the results of its Consolidated
Businesses and Unconsolidated Joint Ventures' revenue less operating costs
before interest, taxes, depreciation and amortization. EBITDA does not
represent cash flows from operations, as defined by generally accepted
accounting principles, and should not be considered to be an alternative to
net income as an indicator of operating performance or to cash flows from
operations as a measure of liquidity. Management believes that an EBITDA
presentation is an important factor in evaluating the amount of cash
available for repayment of debt, future investments, dividends and future
distributions.
CONSOLIDATED BUSINESSES
Ticketing operations revenues increased by $23.4 million, or 53%, to $67.4
million versus $44.0 million for the same quarter of the prior year. The
increase is attributed to an increase of 41% in ticket sales (from 10.5 million
to 14.8 million tickets), an 8% increase in average per ticket operations
revenue (from $4.21 to $4.55) and an increase in sponsorship and promotions
revenue. Increased ticket sales were largely attributed to the acquisition of a
joint venture partner's interest in (and subsequent consolidation of) the
Ticketmaster Europe operations in June 1996 and Ticketmaster-Indiana operations
in November 1996, the acquisition of the Company's Delaware Valley
(Philadelphia) licensee in October 1996 and Canadian licensees in March 1997.
Increased sponsorship and promotions revenue is primarily attributed to an
increase in activity with strategic marketing partners resulting from the
Company's efforts to create integrated marketing opportunities around live
events, its call centers, ticket stock and envelopes and event promotional
material and in additional media outlets such as Ticketmaster Online and
Ticketmaster Travel.
Revenues generated by concession and control systems for the three months
ended April 30, 1997 are included in Consolidated Businesses while the revenues
generated for the three months ended April 30, 1996 are included in
Unconsolidated Joint Ventures due to the acquisition of the joint venture
partner's interest on July 29, 1996. Accordingly, the discussion and analysis
included herein is based upon a comparison of Consolidated Businesses to
Unconsolidated Joint Ventures. Revenues remained consistent at $6.2 million in
each period.
Publications revenues increased by $1.0 million, or 49%, to $3.0 million
versus $2.0 million for the same quarter of the prior year. In January 1996, the
Company distributed its first issue of Live! magazine, a monthly consumer
oriented entertainment magazine. Prior to the creation of Live! magazine, the
Company published and distributed an Entertainment Guide without significant
advertising revenue. All existing subscription holders of the Entertainment
Guide automatically became subscription holders of Live! magazine. The
11
<PAGE> 13
subscription rate for Live! magazine exceeded the subscription rate for the
Entertainment Guide. The increase is attributed to both higher annual
subscription rates and a modest increase in the subscriber base.
Ticketing operations costs increased by $11.4 million, or 41%, to $39.1
million versus $27.8 million for the same quarter of the prior year. This
increase is attributed to the increase in ticketing operations revenue as these
costs are primarily variable in nature. Ticketing operations costs decreased as
a percentage of ticket operations revenues to 58% from 63%. Much of this
decrease is attributed to operating efficiencies and increased revenues
generated from sponsorship and promotion activity which yields higher margins.
Ticketing selling, general & administrative costs increased by $2.8
million, or 35%, to $10.6 million versus $7.8 million for the same quarter of
the prior year. The increase was largely attributed to the increase in markets
serviced by Consolidated Businesses resulting from the acquisitions of a joint
venture partner's interest in (and subsequent consolidation of) the Ticketmaster
Europe operations in June 1996 and Ticketmaster-Indiana operations in November
1996, the acquisition of the Company's Delaware Valley (Philadelphia) licensee
in October 1996 and Canadian licensees in March 1997.
The operating costs of concession and control systems decreased by $0.5
million, or 13%, to $3.7 million included in the Consolidated Businesses from
$4.2 million included in the Unconsolidated Joint Ventures for the same quarter
of the prior year. As a percentage of revenue, these expenses decreased from 68%
to 59%, which decrease is primarily attributed to a combination of product mix
and improvements in the quotation, assembly and delivery processes. The selling,
general and administrative costs of concession and control systems remained
consistent at $2.3 million in each period.
Corporate general & administrative costs increased by $0.9 million, or 21%,
to $5.1 million versus $4.2 million for the same quarter of the prior year. Much
of the increase resulted from increased compensation expense associated with
growth in administrative functions necessary to support the development of the
Company's principal business, and more recent development efforts in
Ticketmaster Publications and Ticketmaster Online.
Depreciation increased by $0.9 million, or 65%, to $2.2 million versus $1.4
million for the same quarter of the prior year. The increase is attributed to
acquisitions (and subsequent consolidation) of interests previously owned by
third parties in Pacer/CATS/CCS and in Ticketmaster's operations in Europe,
Indiana, Delaware Valley (Philadelphia) and Canada.
Amortization of goodwill increased by $0.6 million, or 129%, to $1.0
million versus $0.4 million for the same quarter of the prior year. The increase
is attributed to acquisitions (and subsequent consolidation) of interests
previously owned by third parties in Pacer/CATS/CCS and in Ticketmaster's
operations in Europe, Indiana, Delaware Valley (Philadelphia), Florida, Texas
and Canada.
Other amortization increased by $1.1 million, or 200%, to $1.7 million
versus $0.6 million for the same quarter of the prior year. The increase is
attributed to the acquisitions (and subsequent consolidation) of interests
previously owned by third parties in Ticketmaster's operations in Europe,
Indiana, Delaware Valley (Philadelphia), Florida, Texas and Canada.
Consolidated interest and other expense decreased by $0.9 million, or 30%,
to $2.1 million for the quarter, reflecting lower borrowing levels and lower
cost of capital.
Income tax expense, measured as a percentage of pre-tax income, increased
from a benefit of 25% resulting from pre-tax losses in the first quarter of the
prior year, to 60% of pre-tax income in the first quarter of the current year.
The higher effective tax rate occurred primarily because of the mix of state tax
rates, foreign tax rates and increased non-deductible amortization resulting
from acquisitions.
As a result of the foregoing, the Company had net income of $1.9 million in
the current quarter compared to net losses of $2.0 million for the same quarter
of the prior year.
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<PAGE> 14
UNCONSOLIDATED JOINT VENTURES
Ticketing operations revenues decreased by $8.8 million, or 49%, to $9.0
million versus $17.8 million for the same quarter of the prior year. The
decrease is attributed to the reacquisition by the Company of it's partners'
joint venture interests (and thus inclusion of operating results in Consolidated
Businesses rather than Unconsolidated Joint Ventures) in the Ticketmaster Europe
and Indiana operations in June and November 1996, respectively.
Concession and Control Systems became a wholly-owned subsidiary of the
Company on July 29, 1996, the results of which have been discussed in
Consolidated Businesses.
Ticketing operations costs decreased by $4.9 million, or 50%, to $4.8
million versus $9.8 million for the same quarter of the prior year, which is
consistent with the decrease in ticketing operations revenue caused by the
acquisition of certain ticketing businesses discussed above. As a percentage of
ticketing operations revenues, these expenses decreased from 55% to 54%.
Ticketing selling, general & administrative costs decreased by $1.5
million, or 47%, to $1.7 million versus $3.2 million for the same quarter of the
prior year. The decrease is attributed to the reacquisition by the Company of
its partners' joint venture interests (and thus inclusion of operating results
in Consolidated Businesses rather than Unconsolidated Joint Ventures) in the
Ticketmaster Europe and Indiana operations in June and November 1996,
respectively.
Depreciation decreased by $0.4 million or 64% to $0.3 million in the
current year versus $0.7 million for the same quarter of the prior year. The
decrease is attributed to the reacquisition by the Company of it's partners'
joint venture interests (and thus inclusion of operating results in Consolidated
Businesses rather than Unconsolidated Joint Ventures) in Pacer/CATS/CCS and in
the Ticketmaster Europe and Indiana operations in June and November 1996,
respectively.
As a result of the foregoing, net income from Unconsolidated Joint Ventures
decreased by $1.1 million, or 39%, to $1.7 million versus $2.8 million for the
same quarter of the prior year.
MANAGED BUSINESSES
Aggregate revenues for the Managed Businesses increased by $15.2 million,
or 22%, to $86.0 million versus $70.8 million for the same quarter of the prior
year. The increase is primarily attributed to an increase of $14.6 million, or
24%, to $76.4 million in ticketing operation revenue.
As a result of the foregoing, EBITDA for the Managed Businesses increased
by $7.3 million, or 118%, to $13.5 million versus $6.2 million for the same
quarter of the prior year.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of liquidity are cash flows from operations
and available credit under its revolving bank credit facilities.
Net cash provided by operating activities was $35.6 million in the quarter
ended April 30, 1997 compared with $9.5 million in the quarter ended April 30,
1996. This change primarily reflects an increase in net income and timing of
cash payments to be made to clients.
As of April 30, 1997, the Company had cash and cash equivalents of $23.1
million for its own account, separate from funds held in accounts on behalf of
venues and promoters and working capital of $16.3 million.
Net cash used in investing activities was $6.2 million in the quarter ended
April 30, 1997 compared with $3.1 million in the quarter ended April 30, 1996.
The increase related to payments for improvements made to the Company's recently
acquired corporate headquarters building, equipment and other fixed assets.
Excluding possible acquisitions and formations of new venture investment
activity, the Company's anticipated capital expenditures for the remainder of
fiscal 1998 are expected to include $1.0 million for improvements to its
recently acquired corporate headquarters building, $3.0 million of replacements
or
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<PAGE> 15
upgrades of computer equipment, $3.0 million in expanded call center capacity
and additional amounts which management determines are necessary in order to
maintain the Company's competitive position or to otherwise achieve its business
strategies.
Net cash provided by financing activities was $9.9 million in the quarter
ended April 30, 1997 compared to $6.9 million in the quarter ended April 30,
1996. The current period activity is primarily attributed to borrowings for the
Canadian acquisition, while the activity for the same quarter of the prior year
is primarily attributed to borrowings for general business purposes.
Amounts available under the Credit Agreement are limited to the lower of
the commitment amount or a borrowing base calculated as a multiple of cash flows
as defined in the Credit Agreement. As of April 30, 1997, the Company had $121
million in outstanding bank borrowings under its $175 million revolving bank
credit line. Amounts available under the credit line decrease to $165 million as
of December 31, 1997 and reduces further to $150 million as of December 31,
1998. As of April 30, 1997, the borrowing base calculation did not restrict the
Company's availability under the Credit Agreement. The Company's Credit
Agreement contains other covenants and restrictions, as to which the Company was
in compliance at April 30, 1997.
On April 23, 1997, the Company entered into a $9.0 million Promissory Note
secured by a Deed of Trust, the proceeds of which were used to pay-down existing
commitments outstanding under the Company's Credit Agreement.
Also as of April 30, 1997, Pacer/CATS/CCS had indebtedness of $7.5 million
outstanding under a bank term loan, with monthly interest payments only due
through June 1997 and principal and interest payable monthly from July 1997
through June 1999. The loan agreement is secured by all of Pacer/CATS/CCS's
assets and contains certain restrictions and covenants, with which
Pacer/CATS/CCS is in full compliance at April 30, 1997 or has obtained the
necessary waivers from its bank.
The Company anticipates that funds from operations and available credit
from its bank lending facilities will be sufficient to meet its working capital,
capital expenditure and debt service requirements through the end of fiscal
1998. However, to the extent that such funds are insufficient, the Company may
need to incur additional indebtedness and/or refinance existing indebtedness.
The Company's ability to do so may be restricted by borrowing base calculations
and other financial covenants described in the Credit Agreement.
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<PAGE> 16
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The following summarizes certain recent events that have taken place with
respect to the matters described under "Legal Proceedings" in the Company's
Annual Report filed on Form 10-K for the year ended January 31, 1997: (i) with
regard to Ticketmaster Corporation of Washington's (TCW) action against HBI
Financial, Inc. (HBI), on May 23, 1997, the court granted TCW's motion in part
for partial summary judgment and denied HBI's motion for partial summary
judgment. On the same date, the court entered an order authorizing HBI to
immediately appeal the decision, and HBI filed its notice of appeal on June 6,
1997; (ii) with regard to the Company's action against Microsoft, an amended
complaint was filed by the Company on May 9, 1997; and Microsoft filed its
answer, affirmative defenses and counterclaim on May 29, 1997; and (iii) with
regard to the action filed against the Company by Ticketmaster Group Limited
Partnership, the Company's licensee in Maryland, Washington, D.C. and parts of
Virginia, the Company filed its answer, affirmative defenses and counterclaim on
May 5, 1997.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
<TABLE>
<S> <C>
10.45 Employment Agreement dated as of May 2, 1997 between the Company and Terry
Barnes(1)
10.46 Amendment No. 1 to Employment Agreement dated as of May 15, 1997 between
the Company and Alan Citron(1)
11.1 Computation of Earnings Per Share
</TABLE>
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(1) Management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K
A Form 8-K was filed on May 28, 1997 in regards to the acquisition of
Ticketmaster Canada Holdings Ltd.
A Form 8-K/A was filed on June 12, 1997 in regards to the acquisition of
Ticketmaster Canada Holdings Ltd.
15
<PAGE> 17
SIGNATURE
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.
TICKETMASTER GROUP, INC.
Date: June 13, 1997 By: /s/ PETER B. KNEPPER
Peter B. Knepper
Senior Vice President and
Chief Financial Officer
(Principal Financial and Accounting
Officer)
By: /s/ NED S. GOLDSTEIN
Ned S. Goldstein
Senior Vice President
and General Counsel
(Duly Authorized Officer)
16
<PAGE> 1
EXHIBIT 10.45
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of May 2, 1997, between Ticketmaster Corporation,
an Illinois Corporation (the "Company"), and Terry Barnes ("Executive").
W I T N E S S E T H:
WHEREAS, prior to the date hereof, Executive has been employed
by the Company and its affiliates in various positions; and
WHEREAS, the Company is desirous of continuing to employ Executive, and
Executive is desirous of continuing to be employed by the Company, on the terms
and subject to the conditions set forth in this Agreement, with effect as of
February 1, 1997;
NOW, THEREFORE, in consideration of the premises, the mutual covenants
and agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby mutually acknowledged, the parties
hereto agree as follows:
1. Definitions. The following terms shall have the
indicated meanings when used in this Agreement, unless the context
requires otherwise:
(a) "Base Salary Amount" shall mean $400,000 during the first
Contract Year, $410,000 during the second Contract Year, $425,000
during the third Contract Year, $435,000 during the fourth Contract
Year and $450,000 during the fifth Contract Year.
(b) "Benefit Plan" shall mean each vacation pay, sick pay,
retirement, welfare, medical, dental, disability, life insurance,
deferred compensation, incentive compensation, stock option or other
employee benefit plan, program or arrangement, if any.
(c) "Board of Directors" shall mean the Board of
Directors of the Company.
(d) "Cause" shall have the meaning ascribed to that term
in Section 7.
(e) "Consulting Period" shall have the meaning ascribed
to that term in Section 9(a).
(f) "Contract Year" shall mean each year during the term
hereof commencing February 1 and ending on the immediately following
January 31.
<PAGE> 2
(g) "Customer" shall have the meaning ascribed to that
term in Section 9(d).
(h) "Disability" shall have the meaning ascribed to that
term in Section 6(a).
(i) "Disability Period" shall have the meaning ascribed
to that term in Section 6(a).
(j) "Proprietary Information of the Company" shall have
the meaning ascribed to that term in Section 10.
(k) "Ticketmaster Businesses" shall have the meaning
ascribed to that term in Section 9(b).
2. Employment. The Company hereby employs Executive, and
Executive hereby accepts employment with the Company, on the terms
and subject to the conditions set forth herein.
3. Term of Employment. The term of employment covered
hereunder shall be the five-year period commencing on February 1,
1997 and ending on January 31, 2002, subject to early termination
as herein provided.
4. Position and Duties. Executive shall serve as the President
and Chief Operating Officer of Ticketmaster Ticketing Co., Inc. a wholly-owned
subsidiary of the Company ("Ticketing"). Subject to the authority of the Board
of Directors of Ticketing, Executive shall have all of the powers and duties
incident to the office of President and Chief Operating Officer and such other
powers and duties as may from time to time be prescribed by the Board of
Directors or the Chief Executive Officer. Executive agrees to serve without
further compensation, if elected or appointed thereto, as an officer or a
director of any of the Company's domestic and foreign subsidiaries and
affiliates. During Executive's employment by the Company, he will be entitled to
indemnification as an officer of the Company (and, if so elected, as an officer
or director of any of the Company's domestic and foreign subsidiaries or
affiliates) in the manner provided by the Illinois Business Corporation Act of
1983, as amended, and the Company's Articles of Incorporation and By-Laws, as
amended.
5. Exclusive Duties. During Executive's employment by the
Company, Executive shall devote his entire working time, attention
and energies to the business of the Company and will not take any
actions of the kind described in Sections 9(b), 9(c) and 9(d).
6. Compensation and Other Benefits.
(a) Base Salary. During each Contract Year of the term
hereof, the Company shall pay to Executive the Base Salary
Amount. The Base Salary Amount shall be paid to Executive in
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<PAGE> 3
accordance with the Company's regular payroll practices with respect to
senior management compensation.
In the event that Executive shall become disabled as a result
of bodily injury or physical or mental illness (whether or not
occupational) to such extent that in the sole opinion of the Board of
Directors, based upon competent medical advice, he can no longer
perform the duties of President and Chief Operating Officer of
Authority of the Company (a "Disability"), the Company shall only be
obligated to continue to pay the Base Salary Amount to Executive for
the 120-day period immediately following the date of Disability (the
"Disability Period"). The right to receive salary payments during the
Disability Period, if applicable, shall survive any termination of
employment by virtue of Disability pursuant to Section 7.
(b) Annual Performance Bonuses. During each Contract Year, the
Company shall pay Executive an annual performance bonus as determined
by the Board of Directors or its Compensation Committee in its sole
discretion, the determination of which shall be based upon such
standards, guidelines and factual circumstances as the Board of
Directors or its Compensation Committee deems relevant, including,
without limitation, the operating results for the Company during such
Contract Year, the importance of the efforts of Executive in achieving
such operating results and the achievement by the Company and/or
Executive of performance goals previously established by the Board of
Directors or its Compensation Committee for such Contract Year;
provided, however, that in no event shall the bonus for any full
Contract Year of the term hereof be less than $75,000 during the first
Contract Year, $80,000 during the second Contract Year, $80,000 during
the third Contract Year, $90,000 during the fourth Contract Year and
$100,000 during the fifth Contract Year.
(c) Expenses. Executive shall be entitled to receive prompt
reimbursement from the Company for all documented business expenses
incurred by him in the performance of his duties hereunder, provided
that Executive properly accounts therefor in accordance with the
Company's reimbursement policy, including, without limitation, the
submission of supporting evidence as reasonably requested by the
Company.
(d) Fringe Benefits. During the term hereof, Executive shall
be entitled (i) to participate in and receive benefits under all of the
Company's Benefit Plans generally available to senior management of the
Company and (ii) to receive an automobile allowance in the amount of
$1,500 per month. Without limiting the generality of the foregoing,
Executive shall be entitled to participate in additional stock option
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<PAGE> 4
grants or plans as may be available to executives of the Company from
time to time, in the sole discretion of the Compensation Committee of
the Board of Directors of the Company or its parent. To the extent not
covered by the Company's Benefit Plans, Executive shall be entitled to
reimbursement from the Company for all reasonable medical and health
expenses incurred by Executive for his benefit or for the benefit of
his dependents.
(e) Insurance. The Company agrees to maintain in effect during
the term hereof insurance on Executive's life payable to his estate or
his named beneficiary or beneficiaries in the amount of $1,500,000;
provided, however, that Executive shall reimburse the Company for any
and all premiums paid by the Company with respect to such insurance in
excess of the preferred or select premium rate for non-smokers. In
addition, so long as Executive is insurable at standard insurable rates
(which rates shall in no event increase during any Contract Year by a
percentage greater than the percentage increase in the consumer price
index for all urban workers (1967=100) over the indexed figure for the
immediately preceding Contract Year, in each case measured as of the
month of February), the Company agrees to also maintain in effect
during the term hereof a disability insurance policy with coverage
substantially equivalent to the coverage under the disability insurance
policy now in effect with respect to Executive.
(f) Vacations. During the term hereof, Executive shall be
entitled to sick leave and paid holidays consistent with the Company's
sick leave and holiday policy for senior management and up to three
weeks paid vacation during each Contract Year (or such other vacation
time as is consistent with the Company's policy for senior management).
7. Termination. The Company or Executive may terminate the employment
of Executive hereunder upon the occurrence of a Disability (as defined in
Section 6(a)) for a period of no less than 120 days during any consecutive
twelve-month period. The Company may also terminate the employment of Executive
hereunder upon Executive's death or for Cause. For purposes hereof, "Cause"
shall mean (i) fraud, theft, misappropriation of funds or conviction of a
felony, (ii) Executive's engagement in illegal conduct tending to place
Executive or the Company in disrepute, (iii) dereliction or gross misconduct in
Executive's performance of his duties as an employee of the Company or the
failure of Executive to perform his duties in a manner consistent with the
instructions of the Board of Directors, the Chief Executive Officer or the Chief
Operating Officer of the Company or (iv) violation by Executive of any of his
material covenants contained in this Agreement, including, without limitation,
Section 10. Notwithstanding the foregoing, before the Company may terminate the
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<PAGE> 5
employment of Executive for Cause, the Company shall deliver to Executive not
less than ten business days prior written notice of the Company's intention to
terminate Executive's employment together with a statement of the basis for such
termination, and Executive shall be afforded (i) an opportunity to respond to
the Company during such ten-business day period and (ii) in the event that the
basis for such termination is clause (iii) or (iv) above, an opportunity to
remedy the situation resulting in the Company's determination to terminate for
Cause so long as such situation is non-repetitive in nature. Upon the
termination of Executive's employment for any reason, Executive shall be
entitled to receive all compensation (including, without limitation, a pro rata
portion of the minimum annual performance bonus, unless such termination is for
Cause) for the then current Contract Year through the date of such termination
plus all accrued but unreimbursed expenses. In addition, upon the termination of
Executive's employment for any reason other than for or by virtue of Cause,
death, Disability or Executive's voluntary termination of employment, the
Company shall continue to be responsible for the payment of all Base Salary
Amount and minimum annual performance bonuses for the remainder of the term
hereof; provided, however, that Executive shall have a duty to mitigate
commencing on the first anniversary of the date of termination; and, further
provided that Executive shall perform his covenants, duties and obligations
under Sections 9(b), 9(c) and 9(d) during the remainder of the term hereof.
8. Developmental Rights. Executive agrees that any developments by way
of invention, design, copyright, trademark or other matters which may be
developed or perfected by him during the term hereof, and which relate to the
business of the Company or its subsidiaries or affiliates, shall be the property
of the Company without any interest therein by Executive, and he will, at the
request and expense of the Company, apply for and prosecute letters patent
thereon in the United States or in foreign countries if the Company so requests,
and will assign and transfer the same to the Company together with any letters
patent, copyrights, trademarks and applications therefor; provided, however,
that the foregoing shall not apply to an invention that Executive develops
entirely on his own time without using the Company's equipment, supplies,
facilities or trade secret information except for those inventions that either:
(a) relate at the time of conception or reduction to
practice of the invention to the Company's business, or actual
or demonstrably anticipated research or development of the
Company; or
(b) result from any work performed by Executive for the
Company.
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<PAGE> 6
9. Consulting.
(a) Consulting Services. During the two-year period commencing
immediately upon the termination of Executive's employment for any
reason (other than Executive's death) (the "Consulting Period"),
Executive shall be available for consultation with the Company and its
subsidiaries and affiliates concerning their general operations and the
industries in which they engage in business. In addition, during the
Consulting Period, consultant will aid, assist and consult with the
Company and its subsidiaries and affiliates with respect to their
dealings with clients and the enhancement of their recognition and
reputation. During the Consulting Period, Executive shall devote such
time and energies to the affairs of the Company as may be reasonably
required to carry out his duties hereunder without jeopardizing
Executive's then full-time, non-Ticketmaster Business employment
opportunities; provided, however, that Executive shall not be obligated
to devote more than 50 hours per year to the performance of such
duties. In consideration of Executive's consulting services, and in
consideration of Executive's covenants contained in this Section 9, the
Company shall pay to Executive $30,000 during each full year of the
Consulting Period, payable in equal monthly installments. The Company
further agrees to reimburse Executive for all reasonable and necessary
business expenses incurred by Executive in the performance of his
consulting services in accordance with the Company's reimbursement
policy, including, without limitation, the submission of supporting
evidence as reasonably required by the Company.
(b) Covenant Not to Compete. During the Consulting Period,
Executive shall not, without the prior written consent of the Company,
directly or indirectly engage in or assist any activity which is the
same as, similar to or competitive with the Ticketmaster Businesses
(other than on behalf of the Company or any of its subsidiaries or
affiliates) including, without limitation, whether such engagement or
assistance is as an officer, director, proprietor, employee, partner,
investor (other than as a holder of less than 5% of the outstanding
capital stock of a publicly traded corporation), guarantor, consultant,
advisor, agent, sales representative or other participant, anywhere in
the world that the Company or any of its subsidiaries or affiliates has
been engaged, including, without limitation, the United States, Canada,
Mexico, England, Ireland, Scotland, Europe and Australia. Nothing
herein shall limit Executive's ability to own interests in or manage
entities which sell tickets as an incidental part of their primary
businesses (e.g. cable networks, on-line computer services, sport
teams, arenas, hotels, cruise lines, theatrical and movie productions
and the like) and which do not hold themselves out generally as
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<PAGE> 7
competitors of the Company and its subsidiaries and affiliates. The
"Ticketmaster Businesses" shall mean the computerized sale of tickets
for sporting, theatrical, cinematic, live theatrical, musical or any
other events on behalf of various venues and promoters through
distribution channels currently being utilized by the Company or any of
its subsidiaries or affiliates (as such term is defined in Rule 405 of
Regulation C promulgated under the Securities Act of 1933, as amended).
(c) Solicitation of Employees. During the Consulting Period,
Executive shall not (i) directly or indirectly induce or attempt to
induce (regardless of who initiates the contact) any person then
employed (whether part-time or full-time) by the Company or any of its
subsidiaries or affiliates, whether as an officer, employee,
consultant, adviser or independent contractor, to leave the employ of
the Company or to cease providing or otherwise alter the services then
provided to the Company or to any of its subsidiaries or affiliates or
(ii) in any other manner seek to engage or employ any such person
(whether or not for compensation) as an officer, employee, consultant,
adviser or independent contractor in connection with the operation of
any business which is the same as or similar to any of the Ticketmaster
Businesses.
(d) Non-Solicitation of Customers. During the Consulting
Period, Executive shall not solicit any Customers of the Company or any
of its subsidiaries or affiliates or encourage (regardless of who
initiates the contact) any such Customers to use the facilities or
services of any Competitor of the Company or any of its subsidiaries or
affiliates. "Customer" shall mean any person who engages the Company or
any of its subsidiaries or affiliates to sell, on its behalf as agent,
tickets to the public.
10. Confidentiality. Executive shall not at any time during or for a
period of sixty (60) months after termination of employment) disclose (except as
may be required by law) or use, except in the pursuit of the business of the
Company or any of its subsidiaries or affiliates, any Proprietary Information of
the Company. "Proprietary Information of the Company" means all information
known or intended to be known only to employees of the Company or any of its
subsidiaries or affiliates in a confidential relationship with the Company or
any of its subsidiaries or affiliates relating to technical matters pertaining
to the business of the Company or any of its subsidiaries or affiliates, but
shall not include any information within the public domain. Executive agrees not
to remove any documents, records or other information from the premises of the
Company or any of its subsidiaries or affiliates containing any such Proprietary
Information, except in the pursuit of the business of the Company or any of its
subsidiaries or affiliates, and acknowledges that such documents,
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<PAGE> 8
records and other information are the exclusive property of the Company or its
subsidiaries or affiliates. Upon termination of Executive's employment,
Executive shall immediately return all Proprietary Information of the Company
and all copies thereof to the Company.
11. General Provisions.
(a) Expenses. All costs and expenses incurred by either of the
parties in connection with this Agreement and any transactions
contemplated hereby shall be paid by that party.
(b) Notices. All notices, demands and other communications
hereunder shall be in writing and shall be given or made (and shall be
deemed to have been duly given or made upon receipt) by delivery in
person, by overnight courier service, by cable, by telecopy, by
telegram, by telex or by registered or certified mail to the respective
parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with this
Section 11(b)):
(i) If to the Company:
Ticketmaster Corporation
8800 Sunset Boulevard
West Hollywood, California 90069
Attention: President
Telecopy No.: (213) 382-1146
With a copy to:
Neal, Gerber & Eisenberg
Two North LaSalle Street
Chicago, Illinois 60602
Attention: Charles Evans Gerber
Telecopy No.: (312) 269-8000
(ii) If to Executive:
Terry Barnes
717 N. Camden Dr.
Beverly Hills, CA 90210
Telecopy No.: (310) 278-1115
(c) Headings. The descriptive headings contained in
this Agreement are for convenience of reference only and shall
not affect in any way the meaning or interpretation of this
Agreement.
(d) Successors; Binding Agreement. This Agreement shall
be binding upon and inure to the benefit of the parties hereto
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<PAGE> 9
and their respective heirs, devisees, legatees, executors,
administrators, successors and personal or legal representatives. If
Executive is domiciled in a community property state or a state that
has adopted the Uniform Marital Property Act or equivalent or if
Executive is domiciled in a state that grants to his spouse any other
marital rights in Executive's assets (including, without limitation,
dower rights or a right to elect against Executive's will or to claim a
forced share of Executive's estate), this Agreement shall also inure to
the benefit of, and shall also be binding upon, his spouse. If
Executive should die while any amounts would still be payable to him
hereunder if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms
of this Agreement to Executive's designee or, if there be no such
designee, to Executive's heirs, devisees, legatees or executors or
administrators of Executive's estate, as appropriate.
(e) Severability. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under existing or future laws
effective during the term of this Agreement, such provisions shall be
fully severable, the Agreement shall be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised a
part of this Agreement, and the remaining provisions of this Agreement
shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance from
this Agreement. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as part of
this Agreement a provision as similar in terms to such illegal, invalid
or unenforceable provision as may be possible and be legal, valid and
enforceable.
(f) Entire Agreement. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter
hereof and thereof and supersedes all prior agreements and
understandings, both written and oral, between the Company and
Executive with respect to the subject matter hereof and thereof.
(g) Assignment. This Agreement and the rights and duties
hereunder are not assignable by Executive. This Agreement and the
rights and duties hereunder may not be assigned by the Company without
the express written consent of Executive (which consent may be granted
or withheld in the sole discretion of Executive), except that such
consent shall not be required in order for the Company to assign this
Agreement or the rights or duties hereunder to an affiliate (as such
term is defined in Section 9(b)) of the Company or to a third party in
connection with the merger or consolidation
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<PAGE> 10
of the Company with, or the sale of all or substantially all of the
assets or business of the Company to, that third party.
(h) Amendment; Waiver. This Agreement may not be amended or
modified except by an instrument in writing signed by, or on behalf of,
the Company and Executive. Either party to this Agreement may (a)
extend the time for the performance of any of the obligations or other
acts of the other party or (b) waive compliance with any of the
agreements or conditions of the other party contained herein. Any such
extension or waiver shall be valid only if set forth in an instrument
in writing signed by the party to be bound thereby. Any waiver of any
term or condition shall not be construed as a waiver of any subsequent
breach or a subsequent waiver of the same term or condition, or a
waiver of any other term or condition, of this Agreement. The failure
of any party to assert any of its rights hereunder shall not constitute
a waiver of any such rights.
(i) Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of
Illinois, applicable to contracts executed in and to be
performed entirely within that state.
(j) Jurisdiction and Venue. The parties hereto agree that all
actions or proceedings initiated by either party hereto and arising
directly or indirectly out of this Agreement which are brought pursuant
to judicial proceedings shall be litigated in a Federal or state court
located in the State of California. The parties hereto expressly submit
and consent in advance to such jurisdiction and agree that service of
summons and complaint or other process or papers may be made by
registered or certified mail addressed to the relevant party at the
address to which notices are to be sent pursuant to Section 11(b) of
this Agreement. The parties hereto waive any claim that a Federal or
state court located in the State of California is an inconvenient forum
or an improper forum based on lack of venue.
(k) Equitable Relief. Executive acknowledges that the
covenants contained in Sections 9 and 10 are reasonable and necessary
to protect the legitimate interests of the Company, that in the absence
of such covenants the Company would not have entered into this
Agreement, that any breach or threatened breach of such covenants will
result in irreparable injury to the Company and that the remedy at law
for such breach or threatened breach would be inadequate. Accordingly,
the Executive agrees that the Company, in addition to any other rights
or remedies which it may have, shall be entitled to seek such equitable
and injunctive relief as may be available from any court of competent
jurisdiction to restrain
-10-
<PAGE> 11
the Executive from any breach or threatened breach of such
covenants.
(l) Attorneys' Fees. If any legal action or other proceeding
is brought for the enforcement of this Agreement, the prevailing party
shall be entitled to recover reasonable attorneys' fees and other costs
incurred in that action or proceeding, in addition to any other relief
to which it may be entitled.
(m) Counterparts. This Agreement may be executed in one or
more counterparts, and by the parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original while all
of which taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and Executive have executed this
Agreement as of the date and year first written above.
TICKETMASTER CORPORATION
By: /s/ Fredric D. Rosen
------------------------------
Title: President
/s/ Terry Barnes
--------------------------------
TERRY BARNES
-11-
<PAGE> 1
EXHIBIT 10.46
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
AMENDMENT, dated as of May 15, 1997, between Ticketmaster Corporation,
an Illinois corporation (the "Company"), and Alan Citron ("Executive").
W I T N E S S E T H:
WHEREAS, the Company and Executive are parties to that certain
Employment Agreement, dated as of December __, 1994 (the "Agreement"), relative
to Executive's employment by the Company; and
WHEREAS, the Company and Executive have agreed to make certain
amendments to the Agreement;
NOW, THEREFORE, in consideration of the premises, the mutual covenants
and agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby mutually acknowledged, the parties
hereto agree as follows:
1. Definitions. Terms defined in the Agreement shall have
the same meaning when used in this Amendment, unless the context
requires otherwise.
2. Extension of the Term. The term of the Agreement is hereby extended
for a period of three additional years, commencing on February 1, 1998 and
ending on January 31, 2001. The Contract Years ending on January 31, 1999,
January 31, 2000 and January 31, 2001 are hereinafter referred to as the "Fourth
Contract Year", "Fifth Contract Year" and "Sixth Contract Year", respectively.
3. Position and Duties. The first sentence of Section 4 of the
Agreement is hereby deleted and the following sentence is substituted
therefor: "Executive shall serve as a Senior Vice President of the Company and
President and Chief Operating Officer of Ticketmaster Multimedia Holdings,
Inc.".
4. Base Salary Amount During Extension Period. The Base
Salary Amount during the extension period shall be $250,000 during
the Fourth Contract Year, $275,000 during the Fifth Contract Year
and $300,000 during the Sixth Contract Year.
5. Car Allowance. The automobile allowance specified in Section
6(d) is hereby increased from $5,000 per year, payable monthly, in advance,
to $8400 per year, payable monthly, in advance.
6. Continued Effectiveness of Agreement. Except as
expressly set forth herein, the Agreement shall continue in full
force and effect in accordance with its terms and provisions
thereof.
<PAGE> 2
IN WITNESS WHEREOF, the Company and Executive have executed this
Agreement as of the date and year first written above.
TICKETMASTER CORPORATION
By: /s/ Fredric D. Rosen
---------------------------------
Title: President
---------------------------------
/s/ Alan Citron
---------------------------------
Alan Citron
<PAGE> 1
EXHIBIT 11.1
TICKETMASTER GROUP, INC.
COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE INFORMATION) (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED APRIL
30,
---------------------------
1996 1997
----------- -----------
<S> <C> <C>
Weighted average number of common shares and exchangeable common
shares outstanding(1)........................................... 15,310,405 25,483,402
Common Stock equivalents from outstanding stock options........... n/a n/a
----------- -----------
15,310,405 25,483,402
=========== ===========
Net income (loss)................................................. $ (1,979) $ 1,881
=========== ===========
Net income (loss) per share....................................... $ (0.13) $ 0.07
=========== ===========
</TABLE>
- ---------------
(1) Includes 1,115,531 of exchangeable common shares outstanding in 1997 for two
months commencing March 1, 1997 issued in connection with the acquisition of
Ticketmaster Canada Holdings Ltd.
17
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> FEB-01-1997
<PERIOD-END> APR-30-1997
<CASH> 100,206
<SECURITIES> 0
<RECEIVABLES> 25,578
<ALLOWANCES> 0
<INVENTORY> 4,281
<CURRENT-ASSETS> 139,461
<PP&E> 63,355
<DEPRECIATION> (24,720)
<TOTAL-ASSETS> 307,996
<CURRENT-LIABILITIES> 123,190
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 39,345
<TOTAL-LIABILITY-AND-EQUITY> 307,996
<SALES> 77,003
<TOTAL-REVENUES> 77,003
<CGS> 65,887
<TOTAL-COSTS> 65,887
<OTHER-EXPENSES> 4,272
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,100
<INCOME-PRETAX> 4,701
<INCOME-TAX> 2,820
<INCOME-CONTINUING> 1,881
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,881
<EPS-PRIMARY> 0.07
<EPS-DILUTED> 0.07
</TABLE>
