<PAGE>
APPENDIX 2
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C., 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of November, 1999
PEACE ARCH ENTERTAINMENT GROUP INC.
- --------------------------------------------------------------------------------
(Translation of Registrant's name into English)
#302, 1132 Hamilton Street, Vancouver, B.C., Canada, V6B 2S2
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(Address of principal executive office)
[Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20F or Form 40-F.
Form 20-F [ X ] Form 40-F [___]]
[Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes [___] No [ X ]
(If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): 82-_______________ )]
<PAGE>
[PEACE ARCH LOGO APPEARS HERE]
FOR IMMEDIATE RELEASE
PEACE ARCH ENTERTAINMENT ANNOUNCES RECORD REVENUE AND
EARNINGS FOR FY1999
REVENUE INCREASES 59% TO $51.5 MILLION, AS COMPANY LEVERAGES
COMPETITIVE STRENGTHS IN ENTERTAINMENT INDUSTRY
VANCOUVER, British Columbia (November 30, 1999) -- Peace Arch Entertainment
Group Inc. (AMEX: "PAE"; TSE: "PAE.A", "PAE.B"), which develops, produces and
distributes proprietary television programming for worldwide markets, today
announced record revenue and earnings for its 1999 fiscal year.
For the fiscal year ended August 31, 1999, revenue increased 59% to a record
$51.5 million, compared with $32.5 million in FY1998. Proprietary programming
represented approximately 92% of total revenue in FY1999, versus 86% in the
previous fiscal year.
Pretax earnings rose 94% in the most recent fiscal year, to a record $4.0
million (7.7% of revenue), compared with $2.1 million (6.3% of revenue) in
FY1998, while EBITDA (earnings before interest, taxes, depreciation and
amortization) increased 87% to $5.7 million (vs. $3.0 million). Net income
reached a record $1.9 million, versus $1.8 million in the prior year.
The Company became fully taxable at the end of FY1998. As a result, taxes of
approximately $2.1 million were recorded against pretax income of $4.0
million in FY1999, whereas the Company paid taxes of only $297,000 on pretax
income of $2.0 million in the previous fiscal year.
Basic earnings per diluted share declined to $0.60 in FY1999 ($0.58 diluted),
from $0.68 in FY1998 ($0.63 diluted), primarily due to the issuance of
additional shares in a private placement completed towards the end of FY1998
and a U.S. public offering in July 1999. The weighted average number of
diluted shares outstanding in FY1999 increased 11% to 3,473,357 (vs.
3,124,007 in FY1998), primarily due to the issuance of additional shares in
the above mentioned private and public stock offerings.
"Fiscal 1999 represented the Company's third consecutive year of impressive
operating performance, with pretax earnings almost doubling and revenue
increasing 59% over the previous year. During the past three years, revenue
has increased at a 108% compound annual rate," observed Juliet Jones, Chief
Financial Officer of Peace Arch Entertainment Group Inc. "EBITDA, which is
often used as a measure of the operating performance for entertainment
companies, also demonstrated very solid growth. We are very pleased with the
strength of our results, and we look forward to the full deployment of the
capital raised in our U.S. public offering during the current fiscal year."
During the year, the Company sold one of its commercial properties and
entered into an agreement to lease such property from the new owner for a
minimum term of two years. The Company realized an approximate $800,000 gain
on the sale --$285,000 of which was recorded in FY1999 ($187,000 after
taxes). The balance of the gain will be recognized over the balance of the
minimum lease term.
For the quarter ended August 31, 1999, revenue totaled $12.6 million,
compared with $15.0 million in the fourth quarter of FY1998. Pretax earnings
of $1.5 million reflected improved production margins and a gain on the sale
of commercial property, while net earnings totaled $446,000, or $0.14 per
basic share ($0.13 diluted). In the fourth quarter of the previous year, the
Company reported pretax earnings of $1.7 million and net earnings of $1.3
million, or $0.49 per basic share ($0.45 diluted).
"Fourth quarter revenue declined due to a decrease in programming deliveries
during the period, a factor which will also impact the first two quarters of
fiscal year 2000," commented Cameron White, Chief Executive Officer of the
Company. "Contributing to the decrease is the delayed delivery of a number of
episodes, caused by a ten week production hiatus. Production will re-commence
January 2000 and the delayed episodes will be delivered in the third fiscal
quarter. The hiatus was arranged to allow a cast
<PAGE>
member to undergo elective back surgery. We expect revenue to accelerate in
the third quarter and fourth quarters as we begin delivering our production
slate for the fall 2000 broadcast season."
In addition to its financial results, Peace Arch Entertainment Group Inc.
achieved several milestones during 1999 fiscal year:
- - The Company received an unprecedented order for 66 episodes of its one-hour
dramatic television series FIRST WAVE from the USA Network's Sci-fi
Channel.
- - The popularity of FIRST WAVE continued to expand, with the series airing in
40 countries around the globe by fiscal year-end. Broadcasters in many of
these countries, including South Africa, Portugal, Romania and Denmark,
have reported that the show is outperforming their average channel market
shares.
- - The Company completed a reorganization of its share capital, which resulted
in the exchange of its old common shares into Class A shares and Class B
shares. The Class A shares and Class B shares have virtually identical
rights, except that each Class A share has ten votes and each Class B share
has one vote. The reorganization of share capital will allow the Company to
maintain its entitlement to certain tax incentives available to
Canadian-controlled companies.
- - Following the reorganization, the Company registered a public offering of
Class B shares in the United States. The offering of 750,000 Class B shares
was completed at a price of $5.00 per share in July, and the Class B shares
were listed for trading on the American Stock Exchange. Both classes of
shares remain listed on the Toronto Stock Exchange.
- - Coincident with the capital reorganization and U.S. stock offering, the
Company changed its name from Vidatron Entertainment Group Inc. to Peace
Arch Entertainment Group Inc. Named after the Peace Arch monument, which
straddles the border between British Columbia, Canada and Washington State,
USA, the name "Peace Arch" symbolizes the Company's growing international
presence and the strength of its relationships with international partners.
- - Peace Arch entered into an innovative relationship with MP3.com, which
involves a ground-breaking technological convergence between television,
the Internet and the music industry. Utilizing the latest streaming
technology to access the vast community of MP3 artists, FIRST WAVE has
become the first television series to obtain its original source music
exclusively from the World Wide Web.
- - Peace Arch launched its new web-based business, STREAMSCAPES, to focus on
Pay-Per View and On-Demand programming for specific target audiences.
Initially targeted at the business-to-business community, STREAMSCAPES
offers a complete family of products and services developed to advance the
use of real-time media on the World Wide Web.
"During the past few years, the growth of Peace Arch has been fueled by a
tremendously talented and dedicated team of people operating in an
environment which has made British Columbia one of the fastest-growing
production centers in the world," continued White. "Our proximity to major
U.S. markets, our reputation for delivering quality programming on time and
on budget, and the unique economic advantages that we can deliver to
customers, allow us to be highly competitive. As we continue to build our
global library of quality programming, the future for Peace Arch looks very
bright."
Peace Arch Entertainment Group Inc. (formerly Vidatron Entertainment Group
Inc.) develops, produces and distributes proprietary television programming
for worldwide markets. The Company is headquartered in Vancouver, British
Columbia, and its stock trades on the American Stock Exchange under the
symbol "PAE", and on the Toronto Stock Exchange under the symbols "PAE.A" and
"PAE.B".
(Note: All financial statistics in the text and tables accompanying this
release are stated in Canadian dollars, unless otherwise identified and are
presented in accordance with Generally Accepted Accounting Principles in
Canada.)
THIS PRESS RELEASE INCLUDES STATEMENTS THAT MAY CONSTITUTE
FORWARD-LOOKING STATEMENTS, USUALLY CONTAINING THE WORDS BELIEVE ,
ESTIMATE , PROJECT , EXPECT OR SIMILAR EXPRESSIONS. THESE STATEMENTS
ARE MADE PURSUANT TO THE SAFE HARBOR PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION
<PAGE>
REFORM ACT OF 1995. FORWARD-LOOKING STATEMENTS INHERENTLY INVOLVE
RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THE FORWARD-LOOKING STATEMENTS. FACTORS THAT WOULD
CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED
TO, CONTINUED ACCEPTANCE OF THE COMPANY'S PRODUCTS AND SERVICES IN THE
MARKETPLACE, COMPETITIVE FACTORS, DEPENDENCE UPON THIRD-PARTY VENDORS,
AND OTHER RISKS DETAILED IN THE COMPANY'S PERIODIC REPORT FILINGS WITH
THE SECURITIES AND EXCHANGE COMMISSION. BY MAKING THESE
FORWARD-LOOKING STATEMENTS, THE COMPANY UNDERTAKES NO OBLIGATION TO
UPDATE THESE STATEMENTS FOR REVISIONS OR CHANGES AFTER THE DATE OF
THIS RELEASE.
Additional information on Peace Arch Entertainment Group can be accessed
on the Internet at www.peacearch.net
-----------------
For additional information, please contact:
Tina Baird, Media Relations at (604) 985-8991
or
R. J. Falkner & Company, Investor Relations Counsel at (800) 377-9893 or
via e-mail at [email protected].
(Financial Highlights to Follow)
<PAGE>
CONSOLIDATED BALANCE SHEETS
AS AT AUGUST 31, 1998 AND 1999
<TABLE>
<CAPTION>
(Expressed in thousands of Canadian dollars)
==============================================================================================
1998 1999
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<S> <C> <C>
ASSETS
Cash and cash equivalents $ 1,876 $ 4,455
Accounts receivable 10,235 19,901
Productions in progress 11,906 3,446
Prepaid expenses and deposits 367 292
Investment in television programming 5,632 10,227
Property and equipment 9,498 7,079
Deferred costs 129 278
Goodwill and trademarks 2,544 3,185
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$ 42,187 $ 48,863
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LIABILITIES AND SHAREHOLDERS' EQUITY
Bank indebtedness $ 2,649 $ 6,932
Accounts payable and accrued liabilities 3,317 6,674
Loans due to directors and shareholders 400 -
Deferred revenue 10,770 3,980
Deferred gain - 514
Future income taxes - 797
Debt 7,318 4,240
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24,454 23,137
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Shareholders' equity:
Share capital 26,178 32,182
Authorized:
100,000,000 Class A Multiple Voting Shares
Issued - 1,517,965 (August 31, 1998 - 1,512,965)
100,000,000 Class B Subordinate Voting Shares
Issued - 2,267,978 (August 31, 1998 - 1,512,978)
25,000,000 Preference Shares, issuable in series;
Issued - nil
Other paid-up capital - 136
Deficit (8,445) (6,592)
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17,733 25,726
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$ 42,187 $ 48,863
==============================================================================================
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED AUGUST 31, 1998 AND 1999
(Expressed in thousands of Canadian dollars except per share information)
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEARS ENDED
1998 1999 1998 1999
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue $14,970 $12,566 $32,457 $51,547
Expenses:
Amortization of television programming 11,265 8,908 23,659 40,296
Other costs of production and sales 1,047 1,072 3,577 2,905
Depreciation and amortization 154 132 389 484
Selling, general and administrative 641 1,051 2,201 3,049
Interest 184 296 576 1,188
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13,291 11,459 30,402 47,922
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Earnings from operations before undernoted 1,679 1,107 2,055 3,625
Gain (loss) on sale of assets - 360 - 360
Provision against Limited Partnership interests - - - -
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- 360 - 360
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Earnings (loss) before income taxes 1,679 1,467 2,055 3,985
Income taxes 349 1,021 297 2,132
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Net earnings (loss) $ 1,330 $ 446 $ 1,758 $ 1,853
=======================================================================================================================
Basic net earnings (loss) per common share $ 0.49 $ 0.14 $ 0.68 $ 0.60
=======================================================================================================================
Fully diluted earnings (loss) per common share $ 0.45 $ 0.13 $ 0.63 $ 0.58
=======================================================================================================================
</TABLE>
<PAGE>
PEACE ARCH ENTERTAINMENT GROUP INC.
(FORMERLY VIDATRON ENTERTAINMENT GROUP INC.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED AUGUST 31, 1998 AND 1999
<TABLE>
<CAPTION>
(Expressed in thousands of Canadian dollars)
========================================================================================================
1998 1999
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<S> <C> <C>
Operating activities:
Net earnings (loss) $ 1,520 $ 1,853
Items not involving cash:
Depreciation and amortization 24,513 40,119
Interest on debt discount - 96
Deferred income taxes 238 1,816
Loss (Gain) on sale of assets - (361)
Provision against Limited Partnership interest - -
Other 19 7
Changes in non-cash working capital (4,817) (3,759)
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21,473 39,771
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Investing activities:
Investments in television programming (27,698) (44,231)
Increase in deferred costs - (243)
Increase in goodwill and trademarks - (12)
Property and equipment acquired (633) (270)
Proceeds on sale of assets, net - 626
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(28,331) (44,130)
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Financing activities:
Issue of common shares, net 4,875 4,177
Increase (repayments) in loans due to directors and shareholders 378 (386)
Increase in bank indebtedness 1,704 4,282
Increase in debt 1,737 1,200
Repayment of debt (1,704) (2,335)
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6,990 6,938
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Increase (decrease) in cash and cash equivalents 132 2,579
Cash and cash equivalents, beginning of year 1,744 1,876
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Cash and cash equivalents, end of year $ 1,876 $ 4,455
========================================================================================================
Supplementary information:
Interest paid (net of amounts capitalized) $ 543 $ 1,142
Income taxes paid - 12
Non-cash transactions:
Property acquired through increase in long-term debt 4,100 -
Property sold through decrease in long-term debt and
increase in accounts receivable - 2,467
Value assigned to common shares issued:
On acquisition of product revenue interests - -
For acquisition of Peace Arch Productions Inc. 1,980 803
</TABLE>
<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.
<TABLE>
<S> <C>
Peace Arch Entertainment Group Inc.
---------------------------------------------
(Registrant)
Date November 30, 1999 By /s/ JULIET JONES
------------------------------------------- ---------------------------------------------
(Signature)*
Juliet Jones, CFO
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*Print the name and title under the signature of the signing officer.
</TABLE>
GENERAL INSTRUCTIONS
A. Rule as to Use of Form 6-K,
This form shall be used by foreign private issuers which are required to furnish
reports pursuant to Rule 13a-16 or 15d-16 under the Securities Exchange Act of
1934.
B. Information and Document required to be Furnished,
Subject to General Instruction D herein, an issuer furnishing a report on this
form shall furnish whatever information, not required to be furnished on Form
40-F or previously furnished, such issuer (i) makes or is required to make
public pursuant to the law of the jurisdiction of its domicile or in which it is
incorporated or organized, or (ii) files or is required to file with a stock
exchange on which its securities are traded and which was ;made public by that
exchange, or (iii) distributes or is required to distribute to its security
holders.
The information required to be furnished pursuant to (i), (ii) or (iii) above is
that which is material with respect to the issuer and its subsidiaries
concerning: changes in business; changes in management or control; acquisitions
or dispositions of assets; bankruptcy or receivership; changes in registrant's
certifying accountants; the financial condition and results of operations;
material legal proceedings; changes in securities or in the security for
registered securities; defaults upon senior securities; material increases or
decreases in the amount outstanding of securities or indebtedness; the results
of the submission of matters to a vote of security holders; transactions with
directors, officers or principal security holders; the granting of options or
payment of other compensation to directors or officers; and any other
information which the registrant deems of material importance to security
holders.
This report is required to be furnished promptly after the material contained in
the report is made public as described above. The information and documents
furnished in this report shall not be deemed to be "filed" for the purpose of
Section 18 of the Act or otherwise subject to the liabilities of that section.
If a report furnished on this form incorporates by reference any information not
previously filed with the Commission, such information must be attached as an
exhibit and furnished with the form.
C. Preparation and Filing of Report
This report shall consist of a cover page, the document or report furnished by
the issuer, and a signature page. Eight complete copies of each report on this
form shall be deposited with the Commission. At least one complete copy shall be
filed with each United States stock exchange on which any security of the
registrant is listed and registered under Section 12(b) of the Act. At least one
of the copies deposited with the Commission and one filed with each such
exchange shall be manually signed. Unsigned copies shall be conformed.
D. Translations of Papers and Documents into English
Reference is made to Rule 12b-12(d) [17 CFR 240.12b-12(d)]. Information required
to be furnished pursuant to General Instruction B in the form of press releases
and all communications or materials distributed directly to security holders of
each class of securities to which any reporting obligation under Section 13(a)
or 15(d) of the Act relates shall be in the English language. English versions
or adequate summaries in the English language of such materials may be furnished
in lieu of original English translations.
Notwithstanding General Instruction B, no other documents or reports, including
prospectuses or offering circulars relating to entirely foreign offerings, need
be furnished unless the issuer otherwise has prepared or caused to be prepared
English translations, English versions or summaries in English thereof. If no
such English translations, versions or summary have been prepared, it will be
sufficient to provide a brief description in English of any such documents or
reports. In no event are copies of original language documents or reports
required to be furnished.
