<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM 8-K/A
Amendment No. 2 to
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): June 30, 1998
PRODUCTION RESOURCE GROUP, L.L.C.
(Exact name of Registrant as Specified in its Charter)
Delaware 333-46235 14-1786937
-------- --------- ----------
(State or other Jurisdiction (Commission File Number) (IRS Employer
of Formation) Identification No.)
539 Temple Hill Road, New Windsor, New York 12553
------------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
(914) 567-5700
--------------
(Registrant's Telephone Number, Including Area Code)
<PAGE>
Explanatory Note
- ----------------
The Current Report on Form 8-K of Production Resource Group, L.L.C. (the
"Company" or "PRG"), initially filed with the Securities and Exchange Commission
(the "Commission") on July 6, 1998, amended by a Form 8-K/A filed on September
2, 1998, is hereby further amended by this Form 8-K/A so as to comply with the
instructions to Item 7 of Form 8-K and the provisions of Rule 3-05 of Regulation
S-X. The 8-K filed July 6, 1998 reflected PRG's acquisition of Light & Sound
Design Holdings Limited ("Holdings") and the assets of Production Arts Lighting,
Inc. and affiliates, Production Arts Lighting West, Inc., and Production Arts
Europe, Inc. (collectively "Production Arts"). The combined historical financial
statements for the most recent three fiscal years and latest interim period
preceding the acquisition of Production Arts have been included in this Form
8-K/A. The pro forma effects of the acquisitions of Holdings and Production Arts
on the Company's results of operations for the six months ended June 30, 1998
and for the most recent fiscal year are also presented in this Form 8-K/A. Since
the acquisitions of Holdings and Production Arts were completed on June 19, 1998
and June 30, 1998, respectively the effect of the acquisitions on the Company's
balance sheet was reflected in the Company's balance sheet at June 30, 1998 in
the Form 10-Q filed for such period.
On September 2, 1998, the Company filed Amendment No. 1 to the Current Report on
Form 8-K initially filed with the Commission on July 6, 1998. Amendment No. 1
included the consolidated historical financial statements for the most recent
three fiscal years of Holdings. In addition, the pro forma effects of the
acquisition of Holdings on the Company's results of operations for the six
months ended June 30, 1998 and on its results of operations for the most recent
fiscal year were also presented (Addendum II from Form 8-K/A previously filed on
September 2, 1998.).
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of the Business Acquired
Holdings was acquired by the Company on June 19, 1998. The audited financial
statements of Holdings, and the related Auditor's Report as at March 31, 1998,
and 1997 and for the fiscal years ended March 31, 1998, 1997 and 1996 are
located at Addendum I of the Form 8-K/A previously filed on September 2, 1998.
Production Arts was acquired by the Company on June 30, 1998. The audited
combined financial statements of Production Arts, and the related Independent
Accountants' Report as of December 31, 1997, 1996 and 1995 and for the years
then ended are located at Addendum III.
(b) Pro Forma Financial Information
Pro forma Combined Financial Information (unaudited for the year ended
December 31, 1997 and for the six months ended June 30, 1998) is located at
Addendum IV.
(c) Exhibits
10.9 Share Purchase Agreement dated June 19, 1998 among N B Jackson & Others
and the Company (incorporated by reference from Form 8-K filed on July 6,
1998)
10.10 Acquisition Agreement dated June 25, 1998 among Production Arts Lighting,
Inc., Production Arts Lighting West, Inc., Production Arts Europe, Inc., John
T. McGraw, Steven R. Terry and the Company (incorporated by reference from
Form 8-K filed on July 6, 1998)
<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.
PRODUCTION RESOURCE GROUP, L.L.C.
September 14, 1998 By /s/ Robert A. Manners
- ------------------ ---------------------
Date Robert A. Manners
Sr. Vice President Business Affairs
and General Counsel
<PAGE>
Addendum III.
To the Stockholders of
Production Arts Lighting, Inc. and Affiliates
We have audited the accompanying combined balance sheets of Production Arts
Lighting, Inc., and Affiliates as of December 31, 1997, 1996 and 1995 and the
related combined statements of income, retained earnings and cash flows for
the years then ended. These combined financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these combined financial statements based on our audits. We did
not audit the 1997 financial statements of Production Arts Europe, Inc., which
statements reflect total assets of $1,265,185 as of December 31, 1997 and
total operating revenues of $822,988 for the year then ended. Those statements
were audited by chartered accountants in England whose report has been
furnished to us, and our opinion, insofar as it relates to amounts included
for Production Arts Europe, Inc. as of December 31, 1997 and for the year then
ended, is based solely on the report of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the combined financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the combined
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report of other auditors, the
financial statements referred to above present fairly, in all material
respects, the combined financial position of Production Arts Lighting, Inc.
and Affiliates as of December 31, 1997, 1996 and 1995, and the combined
results of their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.
MANGINI & COMPANY, P.C.
Armonk, New York
September 1, 1998
<PAGE>
PRODUCTION ARTS LIGHTING, INC. and AFFILIATES
Combined Balance Sheets
December 31, 1997, 1996 and 1995
Assets
<TABLE>
<CAPTION>
1997 1996 1995
------------ ----------- -----------
<S> <C> <C> <C>
Current Assets
Cash and cash equivalents $ 389,728 $ 292,997 $ 141,523
Accounts receivable 2,148,132 2,309,035 1,247,367
Inventory 710,657 441,617 501,621
Prepaid insurance and taxes 97,427 49,596 123,267
Due from shareholders -- 27,048 31,513
Other current assets 46,847 58,366 41,469
------------ ----------- -----------
Total Current Assets 3,392,791 3,178,659 2,086,760
------------ ----------- -----------
Property and Equipment
Rental equipment 14,180,866 11,850,066 11,336,207
Other 2,437,224 1,700,813 1,571,564
------------ ----------- -----------
16,618,090 13,550,879 12,907,771
Accumulated depreciation (8,528,583) (7,742,185) (7,215,961)
------------ ----------- -----------
Net Property and Equipment 8,089,507 5,808,694 5,691,810
------------ ----------- -----------
Other Assets
Cash surrender value of officers'
life insurance - net of loans 238,468 191,903 149,024
Security and other deposits 223,771 158,804 169,872
Organization costs, net 5,565 7,422 617
------------ ----------- -----------
Total Other Assets 467,804 358,129 319,513
------------ ----------- -----------
Total Assets $ 11,950,102 $ 9,345,482 $ 8,098,083
============ =========== ===========
</TABLE>
The accompanying notes are an integral part hereof.
-2-
<PAGE>
PRODUCTION ARTS LIGHTING, INC. and AFFILIATES
Combined Balance Sheets
December 31, 1997, 1996 AND 1995
Liabilities and Stockholders' Equity
<TABLE>
<CAPTION>
1997 1996 1995
----------- ---------- ----------
<S> <C> <C> <C>
Current Liabilities
Notes payable - current portion $ 1,280,553 $1,396,567 $2,386,450
Accounts payable 1,898,825 1,939,536 1,660,290
Customer and security deposits 3,300 2,150 9,098
Accrued payroll 48,983 104,605 78,674
Accrued expenses and taxes 71,691 54,926 41,481
Accrued profit sharing contribution 220,232 206,830 200,000
Corporate income taxes payable 34,022 11,467 --
Other current liabilities 31,327 -- --
----------- ---------- ----------
Total Current Liabilities 3,588,933 3,716,081 4,375,993
Notes payable - net of current portion 3,489,388 1,841,111 996,027
Deferred income taxes -- 84,940 70,804
----------- ---------- ----------
Total Liabilities 7,078,321 5,642,132 5,442,824
----------- ---------- ----------
Stockholders' Equity
Common stock 52,000 52,000 52,000
Additional paid-in capital 648,203 448,203 139,545
Retained earnings 4,168,596 3,201,307 2,463,714
Translation adjustment 2,982 1,840 --
----------- ---------- ----------
Total Stockholders' Equity 4,871,781 3,703,350 2,655,259
----------- ---------- ----------
Total Liabilities and
Stockholders' Equity $11,950,102 $9,345,482 $8,098,083
=========== ========== ==========
</TABLE>
The accompanying notes are an integral part hereof.
-3-
<PAGE>
PRODUCTION ARTS LIGHTING, INC. and AFFILIATES
Combined Statements of Income
Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Revenues
Rental income $ 10,313,010 $ 10,375,415 $ 8,533,926
Design and custom installations 9,986,505 6,180,959 5,225,080
Sales of equipment 5,487,839 4,427,045 3,850,519
------------ ------------ ------------
Total Operating Revenues 25,787,354 20,983,419 17,609,525
------------ ------------ ------------
Costs and Expenses
Costs of rentals, installations and sales 15,873,206 12,513,484 10,866,922
Selling expenses 1,764,568 1,449,405 1,662,379
General and administrative expenses 4,180,029 4,164,029 3,346,222
Depreciation and amortization 1,501,291 1,192,994 892,223
Profit sharing contribution 204,000 206,830 200,000
------------ ------------ ------------
Total Operating Expenses 23,523,094 19,526,742 16,967,746
------------ ------------ ------------
Operating Income 2,264,260 1,456,677 641,779
------------ ------------ ------------
Other Income (Expense)
Interest expense (338,504) (299,130) (231,102)
Miscellaneous revenue 21,378 6,870 23
Interest income 7,786 6,026 5,851
Foreign currency exchange 21,206 720 (16,062)
------------ ------------ ------------
(288,134) (285,514) (241,290)
------------ ------------ ------------
Income Before Income Taxes 1,976,126 1,171,163 400,489
Income taxes 159,153 124,911 45,975
------------ ------------ ------------
Net Income $ 1,816,973 $ 1,046,252 $ 354,514
============ ============ ============
</TABLE>
-4-
<PAGE>
PRODUCTION ARTS LIGHTING, INC. and AFFILIATES
Combined Statements of Retained Earnings
Years Ended December 31, 1997, 1996 and 1995
1997 1996 1995
----------- ----------- -----------
Retained earnings - beginning $ 3,201,307 $ 2,463,714 $ 2,333,455
Net income 1,816,973 1,046,252 354,514
"S" corporation distributions (849,684) (308,659) (224,255)
----------- ----------- -----------
Retained earnings - ending $ 4,168,596 $ 3,201,307 $ 2,463,714
=========== =========== ===========
The accompanying notes are an integral part hereof.
-5-
<PAGE>
PRODUCTION ARTS LIGHTING, INC. and AFFILIATES
Combined Statements of Cash Flows
Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net income $ 1,816,973 $ 1,046,252 $ 363,430
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation 1,501,291 1,192,994 892,223
Gain on sale of assets (514,763) (447,298) (336,850)
Deferred taxes (84,940) 14,136 20,452
Bad debts 26,719 48,276 (5,139)
Translation adjustment 1,142 1,840 --
(Increase) decrease in
Accounts receivables 134,185 (1,003,331) 244,900
Inventory (269,040) 60,004 (181,072)
Prepaid expenses (47,832) 72,974 (32,423)
Other current assets 25,079 96,905 (88,913)
Cash surrender value of officers'
life insurance- net of loans (46,565) (42,879) (25,104)
Security and other deposits (64,967) 3,541 (8,297)
Organization costs -- (8,659) (616)
Increase (decrease) in
Accounts payable (40,711) 127,639 296,499
Accrued expenses and taxes 34,909 (9,860) 28,378
Customer and security deposits 1,150 -- 218
----------- ----------- -----------
Net Cash Provided by
Operating Activities 2,472,630 1,152,534 1,167,686
----------- ----------- -----------
Cash Flows from Investing Activities
Purchase of property and equipment (4,163,253) (1,684,656) (2,409,804)
Proceeds from sale of assets 897,796 823,931 806,527
----------- ----------- -----------
Net Cash Used by
Investing Activities (3,265,457) (860,725) (1,603,277)
----------- ----------- -----------
</TABLE>
-6-
<PAGE>
PRODUCTION ARTS LIGHTING, INC. and AFFILIATES
Combined Statements of Cash Flows
Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Cash Flows from Financing Activities
(Increase) decrease in amounts due
from stockholder $ 27,048 $ 4,465 $ (17,913)
Payments of long-term debt (555,525) (1,094,799) (1,357,384)
Acquisition of long-term debt 2,067,719 950,000 2,000,000
Stockholders distributions (849,684) (308,659) (224,255)
Proceeds from sale of stock and additional paid-in capital 200,000 308,658 31,115
----------- ----------- -----------
Net Cash Provided (Used in)
By Financing Activities 889,558 (140,335) 431,563
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents 96,731 151,474 (4,028)
Cash and cash equivalents - beginning 292,997 141,523 145,551
----------- ----------- -----------
Cash and cash equivalents - ending $ 389,728 $ 292,997 $ 141,523
=========== =========== ===========
Supplemental Disclosure of Cash Flow Information
Cash paid during the year for interest $ 338,504 $ 299,130 $ 231,102
=========== =========== ===========
Cash paid during the year for income taxes $ 110,672 $ 82,823 $ 7,027
=========== =========== ===========
</TABLE>
Noncash Investing and Financing Activities
In 1995 the Companies incurred seller-financed debt of $808,463 for the
purchase of equipment.
The accompanying notes are an integral part hereof.
-7-
<PAGE>
PRODUCTION ARTS LIGHTING, INC. and AFFILIATES
Notes to Combined Financial Statements
December 31, 1997, 1996 and 1995
Note A - Summary of Significant Accounting Policies
Principles of Combination
The combined financial statements include the accounts of Production Arts
Lighting, Inc. (the Company) and its affiliates, Production Arts Lighting
West, Inc. (Lighting West) and Production Arts Europe, Inc. (Europe) (the
Companies), all of which are owned by the same shareholders. All significant
intercompany transactions and balances have been eliminated in combination.
Nature of Operation
The Companies rent, design and sell custom lighting systems and equipment and
sell accessories and used equipment to the theatre industry. Significantly all
of the accounts receivable are from theatre companies throughout the United
States and Western Europe.
Inventory
Inventory, consisting of finished goods, is stated at the lower of cost,
determined by specific identification, or market.
Property and equipment
Property and equipment are carried at cost. Depreciation is computed by
straight-line and accelerated methods over the estimated useful lives of the
assets. When assets are retired or disposed of, the cost and related
accumulated depreciation are removed from the accounts, and any gain or loss
is recognized in the period.
Income Recognition
The Company leases its equipment to theatre companies under operating leases
with terms of up to one year. Accordingly, income is recognized on a
straight-line basis over the term of the applicable lease.
Gain on sales of used rental equipment is included in operating revenues.
Cash Equivalents
For purposes of the Statement of Cash Flows, the companies consider all liquid
investments with a maturity of three months or less to be cash equivalents.
Advertising
The Companies expense advertising costs as incurred in accordance with the
provisions of SOP 93-7. Advertising costs for the years 1997, 1996 and 1995
totaled $500,895, $245,743 and $332,587, respectively.
-8-
<PAGE>
PRODUCTION ARTS LIGHTING, INC. and AFFILIATES
Notes to Combined Financial Statements
December 31, 1997, 1996 and 1995
Foreign Operations
Production Arts Europe, Inc. maintains its books and records in British
pounds. The accounts are translated into U.S. dollars using the spot rate as
of the balance sheet date for assets and liabilities and a weighted average
exchange rate for revenues and expenses. The resulting translation adjustment
is reported as a separate component of stockholders' equity.
Foreign Currency Transactions
The Company and its European affiliate enter into transactions for the
purchase of equipment and other production expenses denominated in foreign
currencies. The Company records the transaction in the appropriate functional
currency (U.S. dollars or British pounds) on the transaction date. Changes in
exchange rates from the transaction date to the payment date result in foreign
currency gain or loss which is included in other income (expenses) in the
accompanying Statements of Income.
Use of Estimates
The preparation of the combined financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the combined financial
statements and disclosure of contingent assets and liabilities at the
financial statement dates. Actual results could differ from those estimates.
Note B - Concentration of Credit Risk
The Company maintains cash and cash equivalent accounts at a national bank and
at the bank's U.K. affiliate. The U.S. accounts are insured by the Federal
Deposit Insurance Corporation (FDIC) up to $100,000. The total amount of
uninsured balance as of December 31, 1997, 1996 and 1995 was $720,473,
$619,821 and $330,204, respectively.
Note C - Property and Equipment
Major classifications and estimated useful lives of property and equipment are
as follows:
1997 1996 1995
----------- ----------- -----------
Rental equipment (5-7 years) $14,180,866 $11,850,066 $11,336,207
Office equipment (5 years) 1,763,596 1,279,300 1,174,239
Leasehold improvements (various) 324,108 267,040 277,964
Software development (5 years) 349,520 154,473 119,361
----------- ----------- -----------
$16,618,090 $13,550,879 $12,907,771
=========== =========== ===========
Substantially all of the property and equipment is pledged as collateral for
notes payable.
Depreciation and amortization charged to expense in 1997, 1996 and 1995 was
$1,501,291, $1,192,994 and $892,223, respectively.
Note D - Cash Surrender Value of Officers' Life Insurance and Stock Purchase
Agreements
-9-
<PAGE>
PRODUCTION ARTS LIGHTING, INC. and AFFILIATES
Notes to Combined Financial Statements
December 31, 1997, 1996 and 1995
The Company is the beneficiary of insurance policies on the lives of its
president, vice president (who own all of the stock of the companies) and a
former stockholder, bearing face value amounts of $1,960,000, $590,000 and
$650,000, respectively, as of December 31, 1997. The life insurance contracts
are accompanied by mandatory stock purchase agreements. In the event of the
insured's death, the "purchase price" of the stock will, by previous action,
be established. The insured's estate will be obligated to sell, and the
Company will be obligated to purchase the insured's stock up to, but not in
excess of the purchase price. In the event that the insurance proceeds shall
be less than the purchase price, the balance thereof shall be paid by the
Company in five equal annual installments, the first such installment to be
due on the anniversary of death, provided that any insurance proceeds received
subsequent to said closing shall be immediately applied against the
installment(s) first coming due. The purpose is to protect the Company against
an abrupt change in ownership or management.
At December 31, 1997, 1996 and 1995 notes payable to the insurance company in
the amounts of $360,905, $345,349 and $328,732, respectively, were
collateralized by the cash value of the policies.
Note E - Notes Payable
Notes payable is comprised of the following:
December 31,
------------------------------------
1997 1996 1995
---------- ---------- ----------
Bank revolving line of credit,
with interest-only payments
at the bank's prime lending
rate or 2% over the LIBOR
rate, renewed in 1998 $1,875,000 $ 430,000 $1,500,000
Bank revolving line of credit
with interest-only payments
at 1/2% above the bank's
prime lending rate or 250
basis points above the
adjusted LIBOR rate 980,000 460,000
Note payable to bank in
monthly installments of
$16,928 plus interest at
8.5% maturing May 1997 84,622 287,755
Note payable to bank in
monthly installments of
$43,056 plus interest at
8.31%, maturing April 1997 215,278 731,944
Note payable to bank in
monthly installments of
$5,016, including interest
at 8.5%, maturing May 2001 172,719 --- ---
Note payable to bank in
monthly installments of
$13,889 plus interest at
8.6%, maturing May 1998 69,445 236,111 402,778
-10-
<PAGE>
PRODUCTION ARTS LIGHTING, INC. and AFFILIATES
Notes to Combined Financial Statements
December 31, 1997, 1996 and 1995
Note E - Notes Payable (cont'd.)
December 31,
------------------------------------
1997 1996 1995
---------- ---------- ----------
Note payable to bank in
monthly installments of
$41,667 plus interest equal
to 1% above the bank's
prime lending rate or 2.5%
over the LIBOR rate,
maturing July 1999 791,667 1,291,667 ---
Note payable to bank in
monthly installments of
$27,778 plus interest at
7.99% maturing July 2000 861,110 --- ---
Note payable to bank in
monthly installments of
$20,833 plus interest at
7.92% maturing December 31,
2000 750,000 --- ---
Note payable to bank in
monthly installments of
$6,944 plus interest at
7.92% maturing December 31,
2000 250,000 --- ---
---------- ---------- ----------
Total Notes Payable 4,769,941 3,237,678 3,382,477
Less: current portion 1,280,553 1,396,567 2,386,450
---------- ---------- ----------
$3,489,388 $1,841,111 $ 996,027
========== ========== ==========
Substantially all of the notes payable are personally guaranteed by the major
stockholder and are collateralized by property and equipment.
Maturities of long-term debt are as follows:
Year ending December 31,
------------------------
1998 $1,280,553
1999 1,268,001
2000 1,207,353
2001 649,451
2002 364,583
------------
$4,769,941
============
Note F - Profit Sharing Plan and Deferred Income Plans
The Company sponsors a profit sharing plan that covers substantially all
employees and has been qualified with the Internal Revenue Service. The
Company's contributions to the plan are at the discretion of the Board of
Directors. Contributions to the plan charged to expense were $204,000;
$206,830 and $200,000 in 1997, 1996 and 1995, respectively.
Effective March 1996, the Company instituted a 401(K) salary deferral plan.
Under this plan the Company makes a matching contribution equal to 25% of
voluntary contributions by employees, up to a maximum of 1.5% of the
employee's salary. Company contributions for the years ended December 31, 1997
and 1996 totaled $30,705 and $23,565, respectively.
-11-
<PAGE>
PRODUCTION ARTS LIGHTING, INC. and AFFILIATES
Notes to Combined Financial Statements
December 31, 1997, 1996 and 1995
Note G - Leases
The Companies lease office and warehouse space in New York, New Jersey and
England under leases expiring at various times through December 2007. The New
Jersey lease was revised in 1997 to include rent increases in exchange for
renovations to the building's roof, air conditioning, and heating systems. In
addition to lease payments, the Company is responsible for real estate taxes,
water and sewer taxes and certain operating expenses of the New Jersey
property.
In addition, the Companies lease computer equipment and vehicles under
operating leases expiring at various times through June 2002.
Minimum future lease payments under these leases are as follows:
Year Ending Office and
December 31, Warehouse Equipment
----------- ---------- ----------
1998 $ 452,252 $ 99,751
1999 459,972 63,532
2000 443,192 48,324
2001 449,176 31,992
2002 476,596 14,787
2003 and beyond 2,042,675 --
---------- ----------
Total $4,323,863 $ 258,386
========== ==========
Rent expense for 1997, 1996 and 1995 totaled $536,496; $523,581 and $461,142,
respectively.
Note H - Income Taxes
The Companies are "S" corporations for federal income tax purposes only. Net
income or loss flows through to the individual returns of the stockholders.
The Company and Lighting West are subject to state and local income taxes.
Lighting Europe is taxed on its foreign income.
In 1998 the Companies elected "S" corporation status for New York and New
Jersey purposes. Previously recorded deferred tax liability arising from book
to tax timing differences of $84,940 related to recognition of depreciation
expense has been taken into income at December 31, 1997.
-12-
<PAGE>
The provision for state and local income taxes for the years ended December
31, 1997, 1996 and 1995 is comprised of the following:
1997 1996 1995
--------- --------- ---------
Current $ 244,093 $ 110,092 $ 25,523
Deferred (84,940) 14,136 20,452
--------- --------- ---------
$ 159,153 $ 124,911 $ 45,975
========= ========= =========
Note I - Stockholders' Equity
As of December 31, 1997, 1996 and 1995 the Companies had no par value common
stock as follows:
Lighting Lighting
Lighting West Europe
-------- -------- --------
Share: Authorized 200 200 1,000
Issued and
Outstanding 111 61 61
Note J - Events Subsequent to the Balance Sheet
In June 1998, the Company and its affiliates sold substantially all of its
operating assets.
In connection with the sale, a provision in an existing contract with a
health-care provider for its employees requires a payment of approximately
$80,000 for subsequent claims incurred prior to termination date of the
contract.
-13-
<PAGE>
Addendum IV.
Pro forma combined financial data
The following unaudited pro forma combined statements of operations for the
year ended December 31, 1997 and the six month period ended June 30, 1998 give
effect to (i) the acquisition of Light and Sound Design Holdings Limited
("Holdings") on June 19, 1998 and (ii) the acquisition of Production Arts on
June 30, 1998, as if such acquisitions occurred on the first day of the period
covered by the statements of operations.
The unaudited pro forma combined statements of operations are based on the
historical financial statements of the Company and the historical results of
operations for Production Arts and Holdings. The historical results of
operations for Holdings are for the year ended March 31, 1998 and for the period
January 1, 1998 to June 19, 1998. The historical results of operations of
Holdings have been adjusted to conform to generally accepted accounting
principles of the United States and have been translated into United States
Dollars based upon appropriate exchange rates. The unaudited pro forma combined
statement of operations gives effect to the combinations under the purchase
method of accounting.
The unaudited pro forma combined statements of operations have been prepared by
the management of the Company, Production Arts and Holdings based upon
historical information included herein and other financial information. These
pro forma statements do not purport to be indicative of the results of
operations which would have been achieved had the transactions described above
taken place at the dates indicated and should not be construed as representative
of the Company's results of operations for any future date or period.
The effect of the acquisitions of Production Arts and Holdings, which closed
on June 30 and June 19, 1998, respectively, was reflected in the Company's June
30, 1998 Balance Sheet, which was included in the Form 10-Q filed for such
period.
-14-
<PAGE>
PRODUCTION RESOURCE GROUP, L.L.C.
Unaudited Pro Forma Combined Statements of Operations
($ In thousands)
<TABLE>
<CAPTION>
PRG Holdings Production Arts
For the year ended For the year ended For the year ended
December 31, 1997 March 31, 1998 December 31, 1997
--------------------------------------------------------------
<S> <C> <C> <C>
Revenues $ 75,180 $ 31,638 $ 25,787
Direct production expenses:
Direct production costs 46,131 18,133 15,873
Depreciation expense 6,181 2,607 1,231
--------------------------------------------------------------
52,312 20,740 17,104
--------------------------------------------------------------
Gross profit 22,868 10,898 8,683
Selling, general and administrative expenses 16,185 6,854 6,106
Other depreciation and amortization 2,182 518 270
Non recurring compensation expense 2,125 -- --
--------------------------------------------------------------
Operating profit 2,376 3,526 2,307
Interest expense 3,956 10 339
Interest (income) (117) (40) (8)
--------------------------------------------------------------
Income (loss) from continuing operations before income taxes, (1,463) 3,556 1,976
extraordinary item and minority interest
Provision for income taxes 392 1,343 159
--------------------------------------------------------------
Income (loss) from continuing operations (1,855) 2,213 1,817
Discontinued operations:
Income from operations of discontinued
Themed Attraction Permanent Installation Business (5,302) -- --
--------------------------------------------------------------
Income (loss) before minority interest and extraordinary item
Minority interest (7,157) 2,213 1,817
Extraordinary item (614)
--------------------------------------------------------------
Net income (loss) $ (7,771) $ 2,213 $ 1,817
==============================================================
<CAPTION>
PRG
Pro Forma Company Pro
Adjustments Forma
----------------------------------------
<S> <C> <C>
Revenues $ $132,605
Direct production expenses:
Direct production costs 80,137
Depreciation expense 10,019
----------------------------------------
90,156
----------------------------------------
Gross profit 42,449
Selling, general and administrative expenses 29,145
Other depreciation and amortization (1) 495 3,465
Non recurring compensation expense 2,125
----------------------------------------
Operating profit (495) 7,714
Interest expense (3) 2,257 6,562
Interest (income) (165)
----------------------------------------
Income (loss) from continuing operations before income taxes, (2,752) 1,317
extraordinary item and minority interest
Provision for income taxes 1,894
----------------------------------------
Income (loss) from continuing operations (2,752) (577)
Discontinued operations:
Income from operations of discontinued
Themed Attraction Permanent Installation Business (5,302)
----------------------------------------
Income (loss) before minority interest and extraordinary item (2,752) 5,897
Minority interest (2) 126 (126)
Extraordinary item (614)
----------------------------------------
Net income (loss) $ (2,878) $ (6,619)
========================================
</TABLE>
1. To record the estimated goodwill amortization attributable to the
transactions. Goodwill is amortized over a period of twenty five years.
2. To record minority interest for the year.
3. To record the estimated effect of interest expense on borrowings incurred
by the Company to fund the acquisitions.
-15-
<PAGE>
PRODUCTION RESOURCE GROUP, L.L.C.
Unaudited Pro Forma Combined Statements of Operations
($ In thousands)
<TABLE>
<CAPTION>
PRG Holdings Production Arts
For the six For the period For the six
months ended January 1, 1998 to months ended
June 30, 1998 June 19, 1998 June 30, 1998
---------------------------------------------------------
<S> <C> <C> <C>
Revenues $ 55,365 $ 13,551 $ 14,093
Direct production expenses:
Direct production costs 32,548 7,477 9,122
Depreciation expense 4,761 1,481 788
---------------------------------------------------------
37,309 8,958 9,910
---------------------------------------------------------
Gross profit 18,056 4,593 4,183
Selling, general and administrative expenses 13,463 3,518 2,505
Other depreciation and amortization 2,247 126
---------------------------------------------------------
Operating profit 2,346 1,075 1,552
Interest expense 6,233 3 185
Interest (income) (433) -- --
---------------------------------------------------------
Income (loss) before income taxes and minority
interest (3,454) 1,072 1,367
Provision for income taxes 193 433 19
---------------------------------------------------------
Income (loss) before minority interest (3,647) 639 1,348
Minority interest (11)
---------------------------------------------------------
Net income (loss) (3,658) 639 1,348
=========================================================
<CAPTION>
Pro Forma Company Pro
Adjustments Forma
----------------------------------------
<S> <C> <C>
Revenues $ $ 83,009
Direct production expenses:
Direct production costs 49,147
Depreciation expense 7,030
----------------------------------------
56,177
----------------------------------------
Gross profit 26,832
Selling, general and administrative expenses 19,486
Other depreciation and amortization (4) 236 2,609
----------------------------------------
Operating profit (236) 4,737
Interest expense (6) 1,080 7,501
Interest (income) (433)
----------------------------------------
Income (loss) before income taxes and minority
interest (1,316) (2,331)
Provision for income taxes 645
----------------------------------------
Income (loss) before minority interest (1,316) (2,976)
Minority interest (5) (21) (32)
----------------------------------------
Net income (loss) (1,337) (3,008)
========================================
</TABLE>
4. To record the estimated goodwill amortization attributable to the
transactions. Goodwill is amortized over a period of twenty five years.
5. To record minority interest for the period.
6. To record the estimated effect of interest expense on borrowings incurred
by the Company to fund the acquisitions.
-16-
