<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 July, 2000
PEACE ARCH ENTERTAINMENT GROUP INC.
-----------------------------------------------------------------------------
(Translation of Registrant's name into English)
#302, 1132 Hamilton Street, Vancouver, B.C., Canada, V6B 2S2
-----------------------------------------------------------------------------
(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
PEACE ARCH ENTERTAINMENT REPORTS 24% INCREASE IN
THIRD QUARTER EARNINGS
RECORD REVENUE ANTICIPATED IN FY2001, AS PROGRAMMING DELIVERIES FOR NEW
TELEVISION SERIES ACCELERATE
VANCOUVER, British Columbia (July 20, 2000) -- PEACE ARCH ENTERTAINMENT
GROUP INC. (AMEX: "PAE"; TSE: "PAE.A", "PAE.B"), which creates, develops,
produces and distributes proprietary television and Internet programming for
worldwide markets, today announced its results for the third quarter and
first nine months of FY2000.
For the three months ended May 31, 2000, net income increased 24% to
approximately $493,000, or $0.12 per diluted share, when compared with net
income of $398,000, or $0.12 per diluted share, in the third quarter of
FY1999. Revenue totaled $7.2 million in the quarter ended May 31, 2000,
versus $8.7 million in the year-earlier quarter. Diluted earnings per share
were calculated on 4,223,439 weighted average shares outstanding in the most
recent quarter, compared with 3,150,543 weighted average shares in the
prior-year period. The 34% increase in the number of diluted shares
outstanding was the result of additional shares issued pursuant to a public
offering in July 1999.
For the nine-month period ended May 31, 2000, the Company earned $0.9
million, or $0.23 per diluted share, on revenue of approximately $18.4
million. This compared with earnings of $1.4 million, or $0.45 per diluted
share, and revenue of approximately $39 million, in the year-earlier period.
The number of weighted average diluted shares outstanding totaled 4,130,189
during the first nine months of FY2000, compared with 3,304,543 in the
corresponding period of the previous fiscal year.
"The collection of refundable tax credits allowed us to repay a substantial
portion of our operating line of credit early in the quarter, which resulted
in a significant decline in interest expense," noted Juliet Jones, Chief
Financial Officer of Peace Arch. "At May 31, 2000, borrowings against the
Company's $25 million operating credit line totaled less than $2 million."
"The seasonal pattern of television programming deliveries typically causes
revenue in our third quarter to be the lowest of any three-month period
during most fiscal years," continued Ms. Jones. "During the most recent
quarter, we completed the second season of programming for First Wave, which
generated most of our revenues for the period."
"Although not reflected in revenue and earnings, our third quarter was one of
the most productive periods since Peace Arch was founded," stated Cameron
White, Chief Executive Officer of Peace Arch. "Not only did we enter our
third season of programming for our highly successful cable-television
series, First Wave, but we commenced production on two new proprietary series
that will have a major impact upon our growing program library. Initial
deliveries of The Immortal and Big Sound are scheduled to begin late in the
current fiscal quarter, with the full financial impact of programming
deliveries for the new series anticipated in the first quarter of Fiscal 2001
and beyond."
"We are now underway with the largest production slate in our Company's
history," stated Tim Gamble, President of Peace Arch. "Revenue and earnings
should increase significantly in the upcoming fiscal year, which begins
September 1, 2000."
PEACE ARCH ALSO ANNOUNCED THAT, IN ORDER TO FUND THE INCREASED PRODUCTION
LEVELS, IT HAS ARRANGED, SUBJECT TO FINAL DOCUMENTATION AND REGULATORY
FILINGS, A SUBORDINATE DEBT ISSUE OF APPROXIMATELY CDN$7 MILLION. THIS ISSUE
WILL BEAR INTEREST AT 18% (APPROXIMATELY 10% AFTER TAX) AND HAVE ATTACHED
WARRANTS TO PURCHASE 30,000 SHARES, AT AN APPROXIMATE 10% PREMIUM OVER
MARKET, FOR EACH $1.0 MILLION OF DEBT. THE DEBT ISSUE IS RELATIVELY SHORT
TERM AT 18 MONTHS AND WILL BE REPAYABLE OUT OF CASH FLOWS ALREADY IDENTIFIED.
GIVEN THE ANTICIPATED INCREASE IN REVENUES AND EARNINGS, THE CURRENT
FINANCING HAS BEEN STRUCTURED TO MEET CURRENT CAPITAL REQUIREMENTS, WHILE
MINIMIZING THE DILUTIVE EFFECT TO SHAREHOLDERS.
Peace Arch Entertainment Group Inc. creates, develops, produces and
distributes proprietary television and Internet 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".
<PAGE>
(NOTE: THE FINANCIAL STATISTICS INCLUDED IN THIS RELEASE ARE REPRESENTED IN
CANADIAN DOLLARS. ON MAY 31, 2000 THE BANK OF CANADA NOON SPOT RATE WAS US
$0.67 FOR EACH $1.00 CANADIAN).
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 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:
Juliet Jones, CFO at (604) 681-9308
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>
PEACE ARCH ENTERTAINMENT GROUP INC.
CONSOLIDATED BALANCE SHEETS
AS AT MAY 31, 1999 AND 2000
(unaudited)
<TABLE>
<CAPTION>
(Expressed in thousands of Canadian dollars)
=========================================================================================
1999 2000
-----------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 1,664 $ 2,275
Accounts receivable 2,398 3,675
Tax credits receivable 14,110 5,979
Productions in progress 6,710 11,981
Prepaid expenses and deposits 183 632
Investment in television programming 7,985 12,680
Property and equipment 9,572 7,295
Deferred costs 440 443
Future income tax 38 -
Goodwill and trademarks 2,447 3,089
-----------------------------------------------------------------------------------------
$ 45,547 $ 48,049
=========================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Bank indebtedness $ 8,070 $ 1,910
Accounts payable and accrued liabilities 6,693 7,437
Deferred revenue 4,032 5,766
Deferred gain - 291
Future income tax - 1,559
Debt 7,009 4,228
-----------------------------------------------------------------------------------------
25,804 21,191
-----------------------------------------------------------------------------------------
Shareholders' equity:
Share capital 26,644 32,378
Authorized:
100,000,000 Class A Multiple Voting Shares
Issued - 1,400,999 (May 31, 1999 - 1,512,965)
100,000,000 Class B Subordinate Voting Shares
Issued - 2,421,748 (May 31, 1999 - 1,512,978)
25,000,000 Preference Shares, issuable in series
Issued - nil
Other paid-up capital 136 136
Deficit (7,037) (5,656)
-----------------------------------------------------------------------------------------
19,743 26,858
-----------------------------------------------------------------------------------------
$ 45,547 $ 48,049
=========================================================================================
</TABLE>
-4-
<PAGE>
PEACE ARCH ENTERTAINMENT GROUP INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
FOR THE THREE AND NINE MONTHS ENDED MAY 31, 1999 AND 2000
(unaudited)
<TABLE>
<CAPTION>
(Expressed in thousands of Canadian dollars except per share information)
=============================================================================================================
3 MONTHS ENDED 9 MONTHS ENDED
1999 2000 1999 2000
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUE $ 8,729 $ 7,214 $ 38,981 $ 18,494
EXPENSES:
Amortization of television programming 6,322 4,984 31,388 12,384
Other costs of production and sales 325 274 1,833 1,231
Depreciation and amortization 147 183 352 460
Selling, general and administrative 668 911 1,998 2,592
Interest 403 67 892 316
-------------------------------------------------------------------------------------------------------------
7,865 6,419 36,463 16,983
-------------------------------------------------------------------------------------------------------------
Earnings (loss) from operations before undernoted 864 795 2,518 1,511
Gain on sale of asset - 58 - 214
Earnings before income taxes 864 853 2,518 1,725
Income taxes 466 360 1,111 789
Net earnings for the period $ 398 $ 493 $ 1,407 $ 936
Deficit, beginning of period (7,435) (6,149) (8,444) (6,592)
-------------------------------------------------------------------------------------------------------------
DEFICIT, END OF PERIOD $ 7,037 $ 5,656 $ 7,037 $ 5,656
=============================================================================================================
BASIC NET EARNINGS PER COMMON SHARE $ 0.13 $ 0.13 $ 0.46 $ 0.24
=============================================================================================================
FULLY DILUTED EARNINGS PER COMMON SHARE $ 0.12 $ 0.12 $ 0.45 $ 0.23
=============================================================================================================
Weighted average number of shares outstanding
during the period (000's) 3,026 3,726 3,026 3,801
Fully diluted weighted average number of shares
outstanding during the period (000's) 3,151 4,223 3,305 4,130
</TABLE>
-5-
<PAGE>
PEACE ARCH ENTERTAINMENT GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE AND NINE MONTHS ENDED MAY 31, 1999 AND 2000
(unaudited)
<TABLE>
<CAPTION>
(Expressed in thousands of Canadian dollars)
=============================================================================================================
3 MONTHS ENDED 9 MONTHS ENDED
1999 2000 1999 2000
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating activities:
Net earnings $ 398 $ 493 $ 1,407 $ 936
Items not involving cash:
Depreciation and amortization 5,739 5,163 31,350 12,794
Future income taxes 139 252 428 766
Recognition of deferred gain - (58) - (223)
Other 87 8 87 25
Changes in non-cash working capital 1,769 3,337 (4,268) 3,922
-------------------------------------------------------------------------------------------------------------
8,132 9,195 29,004 18,220
-------------------------------------------------------------------------------------------------------------
Investing activities:
Investments in marketable securities (105) - (105) -
Investment in television programming (4,043) (6,006) (33,350) (14,787)
Increase in deferred costs (296) (13) (393) (308)
Increase in goodwill and trademarks - (3) - (32)
Property and equipment acquired (105) (369) (246) (406)
-------------------------------------------------------------------------------------------------------------
(4,549) (6,391) (34,094) (15,533)
-------------------------------------------------------------------------------------------------------------
Financing activities:
Issue of common shares, net - 6 - 191
Repayments to directors and shareholders - - (386) -
Increase in bank indebtedness (1,286) (6,210) 5,421 (5,021)
Increase in debt - 171 1,200 171
Repayment of debt (1,182) (81) (1,462) (208)
-------------------------------------------------------------------------------------------------------------
(2,468) (6,114) 4,773 (4,867)
-------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents 1,115 (3,310) (317) (2,180)
Cash and cash equivalents, beginning of period 549 5,585 1,981 4,455
-------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,664 $ 2,275 $ 1,664 $ 2,275
=============================================================================================================
Supplementary information:
Interest paid (net of amounts capitalized) $ 403 $ 134 $ 892 $ 281
Income taxes paid - 526 7 526
</TABLE>
-6-
<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.
Peace Arch Entertainment Group Inc.
-----------------------------------
(Registrant)
Date July 20, 2000 By /S/ JULIET JONES
-------------------------- -----------------------------------
(Signature)*
Juliet Jones, CFO
-------------------------------
*Print the name and title under the signature of the signing officer.
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 sub-mission 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 com-plete 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 manu-ally 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.
-7-
