<PAGE>
FORM 8-K/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT TO REPORT
Filed pursuant to Section 13 or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
THE TODD-AO CORPORATION
(Exact name of registrant as specified in its charter)
File No. 0-1461
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items of its Form
8-K, dated February 15, 1995 as set forth in the pages attached hereto.
7(a). Financial statements of Kaytea Rose, Inc.
7(b). Pro Forma financial information combining The Todd-AO Corporation and
Kaytea Rose, Inc.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendments to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: April 10, 1995
THE TODD-AO CORPORATION
---------------------------
/s/ Silas R. Cross
---------------------------
Silas R. Cross
Principal Accounting Officer
<PAGE>
THE TODD-AO CORPORATION
Item 7(a)
Financial Statements of Kaytea Rose, Inc.
I. For the years ended March 31, 1994 and 1993, the five months ended March
31, 1992 and the year ended October 31, 1991 (Audited).
(a) Report of Independent Accountants.
(b) Balance Sheets as of March 31, 1994 and 1993.
(c) Statements of Operations for the years ended March 31, 1994, 1993,
the five months ended March 31, 1992 and the year ended October 31,
1991.
(d) Statements of Stockholder's Deficit for the years ended March 31,
1994, 1993, the five months ended March 31, 1992 and the year ended
October 31, 1991.
(e) Statements of Cash Flows for the years ended March 31, 1994, 1993,
the five months ended March 31, 1992 and the year ended October 31,
1991.
(f) Notes to Financial Statements.
II. For the nine months ended December 31, 1994 and 1993 (Unaudited)
a) Balance Sheet as of December 31, 1994.
b) Statements of Operations for the nine months ended December 31,
1994 and 1993.
c) Statements of Cash Flows for the nine months ended December 31,
1994 and 1993.
<PAGE>
KAYTEA ROSE, INC.
__________
REPORT ON FINANCIAL STATEMENTS
For The Years Ended March 31, 1994 And 1993,
The Five Months Ended March 31, 1992 And
The Year Ended October 31, 1991
__________
<PAGE>
KAYTEA ROSE, INC.
For The Years Ended March 31, 1994 And 1993,
The Five Months Ended March 31, 1992 And
The Year Ended October 31, 1991
__________
C O N T E N T S
<TABLE>
<CAPTION>
Pages
-----
<S> <C>
Report of Independent Accountants 1
Financial Statements:
Balance Sheets 2
Statements of Operations 3
Statements of Stockholder's Deficit 4
Statements of Cash Flows 5
Notes to Financial Statements 6-13
</TABLE>
<PAGE>
Coopers & Lybrand [Letterhead]
REPORT OF INDEPENDENT ACCOUNTANTS
__________
To the Stockholder and Board of Directors of
Kaytea Rose, Inc.
We have audited the accompanying balance sheets of Kaytea Rose, Inc. as of
March 31, 1994 and 1993, and the related statements of operations, stockholder's
deficit and cash flows for the years ended March 31, 1994 and 1993, for the five
months ended March 31, 1992 and for the year ended October 31, 1991. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
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 financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the 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, the financial statements referred to above present fairly, in
all material respects, the financial position of Kaytea Rose, Inc. as of
March 31, 1994 and 1993, and the results of its operations and its cash flows
for the years ended March 31, 1994 and 1993, for the five months ended March 31,
1992 and for the year ended October 31, 1991 in conformity with generally
accepted accounting principles.
As discussed in Note 6 to the financial statements, the Company changed its
method of accounting for income taxes in 1993.
/s/ Coopers & Lybrand L.L.P.
Sherman Oaks, California
October 7, 1994
1
Coopers & Lybrand L.L.P., a registered limited liability partnership, is a
member firm of Coopers & Lybrand (International).
<PAGE>
KAYTEA ROSE, INC.
BALANCE SHEETS
March 31, 1994 And 1993
(In Thousands)
__________
<TABLE>
<CAPTION>
1994 1993
---- ----
A S S E T S:
<S> <C> <C>
Current assets:
Cash $80 $117
Trade accounts receivable, net of
allowance for doubtful accounts
of $198 in 1994 and $75 in 1993 1,393 1,511
Income taxes receivable - LFL 1,910 1,211
Inventory 163 135
Prepaids and other assets 309 269
Deferred income taxes 25
------ ------
Total current assets 3,880 3,243
Property and equipment, net 7,266 8,913
Deferred income taxes 204
------ ------
Total assets $11,350 $12,156
------ ------
------ ------
LIABILITIES AND STOCKHOLDER'S DEFICIT:
Current liabilities:
Accounts payable and accrued expenses $546 $578
Amounts due - affiliates 7,639 5,808
Current portion of obligations
under capital leases 1,608 1,337
Mortgage payable 1,556
------ ------
Total current liabilities 11,349 7,723
Obligations under capital leases,
net of current portion 1,636 3,126
Mortgage payable 1,556
Deferred taxes 20
------ ------
Total liabilities 12,985 12,425
------ ------
Commitments and contingencies
Stockholder's deficit:
Common stock, no par, 1,000,000 shares
authorized, 100 and 25,000 shares
issued and outstanding in 1994 and
1993, respectively 2,001 2,001
Accumulated deficit (3,636) (2,270)
------ ------
Total stockholder's deficit (1,635) (269)
Total liabilities and ------ ------
stockholder's deficit $11,350 $12,156
------ ------
------ ------
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
KAYTEA ROSE, INC.
STATEMENTS OF OPERATIONS
For The Years Ended March 31, 1994, 1993,
The Five Months Ended March 31, 1992 And
The Year Ended October 31, 1991
(In Thousands)
__________
<TABLE>
<CAPTION>
1994 1993 1992 1991
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating revenues $11,226 $12,337 $4,847 $8,848
Direct costs:
Post production 6,747 6,931 2,225 4,038
Trademark fees 469 413 138 170
------ ------ ------ ------
Gross profit 4,010 4,993 2,484 4,640
Operating expenses:
General and administrative 3,871 3,227 2,015 3,662
Depreciation and
amortization 1,863 1,808 750 1,704
------ ------ ------ ------
Operating loss (1,724) (42) (281) (726)
Interest, net (590) (728) (399) (636)
------ ------ ------ ------
Loss before income
tax benefit (2,314) (770) (680) (1,362)
Income tax benefit 948 293 272 545
------ ------ ------ ------
Loss before cumulative
effect of change in
accounting for
income taxes (1,366) (477) (408) (817)
Cumulative effect of change
in accounting
for income taxes (202)
------ ------ ------ ------
Net loss $(1,366) $(679) $(408) $(817)
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
KAYTEA ROSE, INC.
STATEMENTS OF STOCKHOLDER'S DEFICIT
For The Years Ended March 31, 1994, 1993,
The Five Months Ended March 31, 1992 And
The Year Ended October 31, 1991
(In Thousands)
__________
<TABLE>
<CAPTION>
Common Stock
---------------------
Number of Accumulated
Shares Amount Deficit Total
--------- ------ ----------- -----
<S> <C> <C> <C> <C>
Balance
October 31, 1990 25,000 $2,001 $(366) $1,635
Net loss for the year
ended October 31, 1991 (817) (817)
------ ------ ------ ------
Balance
October 31, 1991 25,000 2,001 (1,183) 818
Net loss for the five
months ended March 31,
1992 (408) (408)
------ ------ ------ ------
Balance
March 31, 1992 25,000 2,001 (1,591) 410
Net loss for the year
ended March 31, 1993 (679) (679)
------ ------ ------ ------
Balance
March 31, 1993 25,000 2,001 (2,270) (269)
Cancellation of 25,000
shares owned by LEC
and issuance of 100
shares to LDL in
connection with the
Restructure (24,900)
Net loss for the year
ended March 31, 1994 (1,366) (1,366)
------ ------ ------ ------
Balance
March 31, 1994 100 $2,001 $(3,636) $(1,635)
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
KAYTEA ROSE, INC.
STATEMENTS OF CASH FLOWS
For The Years Ended March 31, 1994, 1993,
The Five Months Ended March 31, 1992 And
The Year Ended October 31, 1991
(In Thousands)
__________
<TABLE>
<CAPTION>
1994 1993 1992 1991
---- ---- ---- ----
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss $(1,366) $(679) $(408) $(817)
----- ----- ----- -----
Adjustments to reconcile net loss
to net cash provided by operating
activities:
Depreciation and amortization 1,863 1,808 750 1,704
Changes in assets and liabilities:
(Increase) decrease in trade
accounts receivable 118 (243) 48 (712)
(Increase) in income taxes
receivable-LFL (699) (372) (332) (423)
(Increase) decrease in inventory (28) (32) 4 (52)
(Increase) decrease in prepaids and
other assets (40) 32 (47) (1)
(Increase)decrease in deferred taxes (249) 281 60 (122)
Decrease in accounts payable and
accrued liabilities (32) (109) (399) (920)
Increase in amounts due affiliates 1,831 279 839 (4)
----- ----- ----- -----
Total adjustments 2,764 1,644 923 (530)
----- ----- ----- -----
Net cash provided by (used in)
operating activities 1,398 965 515 (1,347)
----- ----- ----- -----
Cash flows from investing activities:
Purchases of property and equipment (216) (305) (1) (4,000)
----- ----- ----- -----
Net cash used in investing
activities (216) (305) (1) (4,000)
----- ----- ----- -----
Cash flows from financing activities:
Capital lease obligations (1,219) (1,255) (441) 5,982
----- ----- ----- -----
Net cash (used in) provided
by financing activities (1,219) (1,255) (441) 5,982
----- ----- ----- -----
Net (decrease) increase
in cash (37) (595) 73 635
Cash at beginning of period 117 712 639 4
----- ----- ----- -----
Cash at end of period $80 $117 $712 $639
----- ----- ----- -----
----- ----- ----- -----
Supplemental disclosures of cash flow
information:
Cash paid during the year for:
Interest $590 $728 $399 $636
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
KAYTEA ROSE, INC.
NOTES TO FINANCIAL STATEMENTS
__________
1. Summary Of Significant Accounting Policies And Operations:
FORMATION OF THE COMPANY AND OPERATIONS:
On October 16, 1989, Kaytea Rose, Inc. (referred to as "Skywalker Sound
South" or the "Company") was formed to conduct the post-production sound
editorial and effects work for motion pictures, television and commercials.
The Company was a wholly owned subsidiary of LucasArts Entertainment
Company ("LEC"), which was a wholly owned subsidiary of Lucasfilm Ltd.
("LFL").
On March 29, 1993, LFL and LEC entered into an agreement to restructure the
business operations of LEC (the "Restructure"). This agreement required
LEC to transfer certain of its business activities to newly created
corporations which are wholly owned subsidiaries of LEC and transfer
certain other of its business activities to LFL. Upon the completion of
the Restructure, LEC became a holding company wholly owned by LFL and
changed its name to Lucas Holdings, Inc.
Lucas Digital Services, Inc. ("LDS"), a California corporation, was formed
for the purpose of effecting the Restructure, and as a result the business
activities and net assets of Skywalker Sound South and other businesses
were transferred to LDS. LDS subsequently changed its name to Lucas
Digital Ltd. ("LDL"). In connection with the Restructure, all of the prior
outstanding shares owned by LEC were transferred to LDS. Simultaneously
with the Restructure, 24,900 of the previously outstanding shares of the
Company were cancelled.
PRINCIPLES OF CONSOLIDATION AND STATEMENT PRESENTATION:
These financial statements include only the activity of Skywalker Sound
South.
For purposes of presentation, the Company has indicated its fiscal period
as ending on March 31. In fact, the financial statements for 1994 and 1993
are for the fifty-two weeks ended March 27, 1994 and March 28, 1993,
respectively. The financial statements for 1992 and 1991 are for the
twenty-two weeks ended March 29, 1992 and for the fifty-two weeks ended
October 27, 1991.
REVENUES AND COSTS:
Revenues and costs from post-production sound work are recognized as the
services are performed.
Continued
6
<PAGE>
KAYTEA ROSE, INC.
NOTES TO FINANCIAL STATEMENTS, Continued
__________
1. Summary Of Significant Accounting Policies And Operations, Continued:
CONCENTRATION OF CREDIT RISK:
Credit is extended based on an evaluation of each customer's financial
condition, and generally collateral is not required. Credit losses, if
any, have been provided for in the financial statements and have been
consistently within management's expectations.
INVENTORY:
Inventory consists primarily of post-production products and film.
Inventory is stated at the lower of cost or market on the first-in,
first-out basis.
PROPERTY AND EQUIPMENT:
Property and equipment are stated at cost. Asset and accumulated
depreciation accounts are relieved for dispositions with resulting gains or
losses reflected in operations. Depreciation and amortization are provided
using the straight-line or declining-balance method. The estimated useful
lives are:
Buildings 30 years
Equipment and furnishings 3 to 5 years
Capital leases - equipment 5 years
Leasehold improvements The shorter of useful life
or lease term
INCOME TAXES:
Effective April 1, 1992, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109).
The new statement supersedes the Company's previous accounting practice of
accounting for income taxes under APB No. 11. The new statement requires
the use of the liability method of accounting for income taxes and deferred
taxes are determined based on the difference between the financial
statement and tax bases of assets and liabilities, using enacted tax rates
in effect for the year in which the differences are expected to reverse.
Continued
7
<PAGE>
KAYTEA ROSE, INC.
NOTES TO FINANCIAL STATEMENTS, Continued
__________
INCOME TAXES, CONTINUED:
For the five months ended March 31, 1992,and the year ended October 31,
1991, the Company accounted for income taxes under the requirements of APB
Opinion No. 11. Under this method, the tax effects of transactions are
recognized in the period such transactions enter into the determination of
income, regardless of when they are recognized for income tax purposes.
The Company and LFL have a tax-sharing agreement which provides, among
other things, that the Company's tax obligations will be determined on a
separate-company basis. The Company is required to pay LFL its share of any
resulting tax liability included in LFL's consolidated tax returns. LFL is
required to pay the Company for any tax benefits resulting from any net
operating losses, tax credits, or capital losses generated by the Company
and utilized in LFL's consolidated tax returns.
In connection with this agreement, the Company recorded income taxes
receivable from LFL of $1,910,000 and $1,211,000 at March 31, 1994 and
1993, respectively.
2. Related-Party Transactions:
The following are significant related-party agreements between the Company
and LFL and LucasArts Entertainment Company, an affiliated company.
TRADEMARK LICENSE FEE:
During fiscal 1990, the Company, as part of LEC and later as part of LDL,
entered into an agreement with LFL to pay a license fee for the worldwide
use of certain proprietary trademarks of LFL. On March 29, 1993, this
agreement was amended to include the Company as part of LDL. Trademark
fees are allocated to the Company based upon a percentage of the Company's
budgeted revenue to total budgeted revenues of LDL in 1994 and LEC in 1993
and 1992. The Company expensed $469,000, $413,000 and $138,000 in trademark
fees during fiscal 1994, 1993 and 1992, respectively. In fiscal 1991
trademark fees allocated to the Company were $170,000. The agreement does
not contain a specific term; however, the agreement may be terminated by
either party with 180 days' notice.
Continued
8
<PAGE>
KAYTEA ROSE, INC.
NOTES TO FINANCIAL STATEMENTS, Continued
__________
CORPORATE ALLOCATIONS:
The Company is allocated certain expenses from LFL and LDL for services
including accounting and finance, publicity, human resources, maintenance,
legal and the president's office. These allocations are based upon
budgeted revenues and estimated percentages of planned time incurred on
Company operations. The Company was allocated $785,000, $761,000 and
$275,000 in fiscal 1994, 1993 and 1992, respectively. In 1991 the Company
was allocated certain expenses totalling $45,000. These expenses are
included in general and administrative expenses.
Amounts due affiliates on the balance sheets are non-interest bearing loans
due on demand.
3. Property And Equipment:
Property and equipment are summarized as follows (in thousands):
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Land, buildings and improvements $5,139 $5,103
Equipment and furnishings 1,848 1,395
Capitalized leases - equipment 6,752 6,992
Construction-in-progress 9 42
------ ------
13,748 13,532
Less accumulated depreciation:
Capitalized leases 4,374 3,187
Other 2,108 1,432
------ ------
$7,266 $8,913
------ ------
------ ------
</TABLE>
4. Mortgage Payable:
The Company and an unrelated third party are each 50% owners of the land
and building of a post-production facility (the "Property") currently used
by the Company in its post-production business.
In 1990, the Company and the unrelated third party entered into a
nonrecourse loan agreement with a bank to refinance the Property for
$3,113,000. The loan is collateralized by a deed of trust on the Property
and bears interest at a fixed rate of 10.49%. The loan is due on October 1,
1994 with interest only payable quarterly. During fiscal 1994, 1993, 1992
and 1991 $166,000, $166,00, $69,000 and $185,000 of interest expense was
incurred under the loan. The Company has recorded its 50% interest in the
Property and the loan on its balance sheet at March 31, 1994 and 1993.
Continued
9
<PAGE>
KAYTEA ROSE, INC.
NOTES TO FINANCIAL STATEMENTS, Continued
__________
The Company has agreed to purchase the third party's 50% ownership on
October 1, 1994 at a price to be agreed upon at that time (See Note 9 -
Subsequent Events).
5. Obligations Under Capital Leases:
During fiscal 1991, the Company and LEC, as co-lessees, entered into an
equipment lease agreement with a leasing company which provided a total
commitment of $6,750,000 for the acquisition of machinery and equipment
used in connection with the Company's post-production business. The lease
is for a term of approximately five years and has been recorded as a
capital lease. The lease is guaranteed by LFL and is collateralized by a
security interest in the leased equipment and in certain other equipment
owned and used by the Company in its post-production business.
At March 31, 1994, the future minimum lease payments of obligations under
capital leases are as follows (in thousands):
<TABLE>
<CAPTION>
<S> <C>
Year Ending March 31,
1995 $1,760
1996 1,600
1997 288
-----
Total minimum lease payments 3,648
Less amount attributed to interest 404
-----
Net present value of future
lease payments 3,244
Less current portion 1,608
-----
$1,636
-----
-----
</TABLE>
6. Income Taxes:
Effective April 1, 1992, the Company adopted SFAS 109. The cumulative
effect of this change in accounting for income taxes as of April 1, 1992
increased the net loss by $202,000, which represents the net decrease to
the deferred tax assets as of that date. Such amount has been reported
separately in the statement of operations for the year ended March 31,
1993. Excluding the amount recognized as the cumulative effect of the
change, the effect of applying SFAS #109 did not have a material effect on
net loss for the year ended March 31, 1993.
Continued
10
<PAGE>
KAYTEA ROSE, INC.
NOTES TO FINANCIAL STATEMENTS, Continued
__________
6. Income Taxes, Continued:
The benefit (provision) for income taxes is comprised of the following (in
thousands):
<TABLE>
<CAPTION>
1994 1993 1992 1991
---- ---- ---- ----
<S> <C> <C> <C> <C>
Current:
Federal $637 $281 $249 $308
State and local 208 46 83 115
--- --- --- ---
845 327 332 423
--- --- --- ---
Deferred:
Federal 97 (28) (40) 111
State and local 6 (6) (20) 11
--- --- --- ---
103 (34) (60) 122
--- --- --- ---
Total tax benefit $948 $293 $272 $545
--- --- --- ---
--- --- --- ---
</TABLE>
The primary components of temporary differences which give rise to deferred
taxes are (in thousands):
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Deferred tax assets:
Accounts receivable $ 58 $ 32
Property and equipment 204
Accrued expenses 37
--- ---
Total deferred tax assets 262 69
--- ---
Deferred tax liabilities:
Property and equipment 89
Accrued expenses 33
--- ---
Total deferred tax liabilities 33 89
--- ---
Net deferred tax assets
(liabilities) $229 $(20)
--- ---
--- ---
</TABLE>
As a result of the tax-sharing agreement with LFL, and the current tax
position of LFL, both LFL and the Company's management believe a valuation
allowance is not required.
Continued
11
<PAGE>
KAYTEA ROSE, INC.
NOTES TO FINANCIAL STATEMENTS, Continued
__________
6. Income Taxes, Continued:
For fiscal 1992 and 1991, the provision for deferred taxes resulted from
timing differences between financial and tax reporting, principally related
to state taxes and depreciation.
The Company's effective tax rates, as a percent of pretax loss, differ from
the statutory federal rate as follows:
<TABLE>
<CAPTION>
1994 1993 1992 1991
---- ---- ---- ----
<S> <C> <C> <C> <C>
Statutory federal rate (35.00)% (34.00)% (34.00)% (34.00)%
State taxes, net of federal
benefit (6.00) (6.00) (6.11) (6.10)
Other .03 1.95 .11 .09
------ ------ ------ ------
(40.97)% (38.05)% (40.00)% (40.01)%
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
7. Pension And Retirement Savings Plans:
The Company provides benefits for its nonunion employees by participating
in a defined contribution savings plan through LFL. The Company made
matching contributions of $24,000, $6,000, $1,000, and $3,000 to the plan
in fiscal 1994, 1993, 1992 and 1991, respectively.
The Company makes contributions to a multiemployer pension plan for its
union employees. Such contributions totalled $82,000, $58,000,
$31,000 and $67,000 in fiscal 1994, 1993, 1992 and 1991, respectively.
8. Commitments And Contingencies:
The Company leases a portion of its office and production facilities under
long-term leases expiring at various dates through 2011. Certain of the
leases also have renewal options. Rent expense was $1,555,000, $1,333,000,
$572,000 and $1,231,000 in fiscal 1994, 1993, 1992 and 1991, respectively.
Continued
12
<PAGE>
KAYTEA ROSE, INC.
NOTES TO FINANCIAL STATEMENTS, Continued
__________
8. Commitments And Contingencies, Continued:
Minimum lease payments under noncancellable operating leases follow (in
thousands):
<TABLE>
<CAPTION>
Year Ending March 31,
<S> <C>
1995 $ 1,381
1996 1,056
1997 1,056
1998 1,056
1999 1,056
Thereafter 12,405
------
$18,010
------
------
</TABLE>
The Company is a party to various legal proceedings arising in the normal
course of business. Although it is not possible to predict the outcome of
pending litigation, management believes the actions pending will not have a
material effect upon the financial statements of the Company.
9. Subsequent Events:
On September 20, 1994 the Company and the unrelated third party amended the
mortgage payable so as to extend the maturity date of the loan. The
amendment provides for a maturity date of December 30, 1994, and bears
interest at a one month LIBOR rate, with interest only payable quarterly.
In September 1994, the Company amended the agreement to purchase the
unrelated third party's interest in the property so as to extend the
deadline to December 31, 1994, or a prior mutually agreed upon date.
In August 1994 the Company signed a letter of intent to sell substantially
all of the assets of Skywalker Sound South to Todd-AO Studios West. The
transaction is subject to, among other considerations, a due diligence
examination by Todd-AO Studios West and the signing of a definitive
agreement.
13
<PAGE>
KAYTEA ROSE, INC.
BALANCE SHEET (Unaudited)
as of December 31, 1994
(Dollars in thousands)
<TABLE>
<S> <C>
ASSETS
------
Current assets:
Cash $ 0
Trade accounts receivable, net 1,842
Income taxes receivable, net 2,085
Inventory 94
Prepaids and other assets 341
------
Total current assets 4,362
Property and equipment, net 5,922
------
Total assets $10,284
------
------
LIABILITIES AND STOCKHOLDER'S DEFICIT
-------------------------------------
Current liabilities:
Accounts payable and accrued expenses $ 479
Amounts due - affiliates 10,034
Current portion of obligations under capital leases 1,608
Mortgage payable 1,556
------
Total current liabilities 13,677
Obligations under capital leases, net of current portion 543
------
Total liabilities 14,220
------
Stockholder's deficit:
Common stock 2,001
Accumulated deficit (5,937)
------
Total stockholder's deficit (3,936)
------
Total liabilities and stockholder's deficit $10,284
------
------
</TABLE>
<PAGE>
KAYTEA ROSE, INC.
STATEMENTS OF OPERATIONS (Unaudited)
For the nine months ended
December 31, 1994 and December 31, 1993
(Dollars in thousands)
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Operating revenues $ 7,698 $ 8,147
Direct costs:
Post production 5,320 4,831
Trademark fees 284 285
------- -------
Gross profit 2,094 3,031
Operating expenses:
General and administrative 2,796 2,883
Depreciation & amortization 1,389 1,381
------- -------
Operating loss (2,091) (1,233)
Interest, net (339) (454)
------- -------
Loss before income tax benefit (2,430) (1,687)
Income tax benefit 972 675
------- -------
Net loss $(1,458) $(1,012)
------- -------
------- -------
</TABLE>
<PAGE>
KAYTEA ROSE, INC.
STATEMENTS OF CASH FLOWS (Unaudited)
For the nine months ended
December 31, 1994 and December 31, 1993
(Dollars in thousands)
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Operating activities
Net loss $(1,458) $(1,012)
Adjustments to reconcile net loss
to net cash provided by operating
activities:
Depreciation and amortization 1,389 1,381
Increase in amounts due affiliates 2,395 1,373
Other changes in operations,
assets & liabilities (1,239) (723)
------- -------
Net cash provided by
operating activities 1,087 1,019
Investing activities:
Purchases of fixed assets (45) (162)
Financing activities:
Capital lease obligations (1,122) (914)
------- -------
Net (decrease) in cash (80) (57)
Cash balance beginning of period 80 117
------- -------
Cash balance end of period $ 0 $ 60
------- -------
------- -------
</TABLE>
<PAGE>
THE TODD-AO CORPORATION
Item 7(b)
Pro Forma Financial Information
THE TODD-AO CORPORATION AND
KAYTEA ROSE, INC.
PRO FORMA CONDENSED FINANCIAL STATEMENTS (Unaudited)
I. Balance Sheet as of November 30, 1994
II. Statements of income for the year ended August 31, 1994 and the three
months ended November 30, 1994.
III. Footnotes to Financial Statements
Todd-AO Studios West ("TSW"), a wholly owned subsidiary of Todd-AO
Corporation ("Todd-AO") purchased substantially all of the property, equipment
and inventory of Kaytea Rose, Inc. (dba Skywalker Sound South) ("SSS") for cash
as of January 29, 1995. The following pro forma condensed financial information
and explanatory notes are presented to show the pro forma effect of the
acquisition of SSS on Todd-AO's historical results of operations. The
acquisition is reflected in the pro forma condensed financial information using
the purchase method of accounting.
The Pro Forma Condensed Balance Sheet as of November 30, 1994 assumes the
acquisition was consummated on that date. The Pro Forma Condensed Income
Statements assume the acquisition was consummated on September 1, 1993. Such
Pro Forma Condensed Financial Information is not necessarily indicative of the
financial position or results of operations as they may be in the future or as
they might have been had the acquisition been effected on the assumed dates.
The Pro Forma Condensed Financial Information should be read in
conjunction with the historical financial statements and notes thereto of Todd-
AO, the audited historical financial statements and notes thereto of Kaytea
Rose, Inc. filed with this amendment to report, and the notes to the Pro Forma
Condensed Financial Information.
<PAGE>
THE TODD-AO CORPORATION
PRO FORMA CONDENSED BALANCE SHEET (Unaudited)
as of November 30, 1994
(Dollars in thousands, except amounts per share)
<TABLE>
<CAPTION>
Kaytea Consolidated
Todd-AO (1) Rose (2) Adjust Pro Forma
----------- ------- ------ ---------
<S> <C> <C> <C> <C>
ASSETS
- ------
CURRENT ASSETS:
Cash $ 845 $ 845
Marketable securities - at cost 2,532 2,532
Trade receivables - net 5,180 5,180
Inventories 389 $ 105 494
Other 864 27 891
-------------------------------- --------
Total current assets 9,810 132 0 9,942
INVESTMENTS 1,527 1,527
PROPERTY AND EQUIPMENT - NET 25,077 6,659 31,736
OTHER ASSETS 67 175 242
-------------------------------- --------
TOTAL $ 36,481 $ 6,966 $ 0 $ 43,447
-------------------------------- --------
-------------------------------- --------
LIABILITIES AND SHAREHOLDERS EQUITY
- -----------------------------------
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 3,441 $ 3,441
Capitalized lease obligations - current 667 667
Other 384 384
-------------------------------- --------
Total current liabilities 4,492 0 0 4,492
LONG-TERM DEBT 576 6,966 [3] 7,542
CAPITALIZED LEASE OBLIGATIONS 723 723
DEFERRED COMPENSATION 550 550
DEFERRED INCOME TAXES 2,065 2,065
SHAREHOLDERS EQUITY:
Common stock 1,851 1,851
Additional capital 15,070 6,966 (6,966)[4] 15,070
Retained earnings 11,154 11,154
-------------------------------- --------
Total shareholders equity 28,075 6,966 (6,966) 28,075
-------------------------------- --------
TOTAL $ 36,481 $ 6,966 $ 0 $ 43,447
-------------------------------- --------
-------------------------------- --------
</TABLE>
<PAGE>
THE TODD-AO CORPORATION
PRO FORMA CONDENSED STATEMENT OF INCOME
For the twelve months ended
August 31, 1994 (Unaudited)
(Dollars in thousands, except amounts per share)
<TABLE>
<CAPTION>
Kaytea Consolidated
Todd-AO (1) Rose (5) Adjust Pro Forma
----------- ------- ------ ---------
<S> <C> <C> <C> <C>
REVENUES $ 32,892 $ 11,461 $ 44,353
-------------------------------- --------
COST AND EXPENSES:
Operating costs and other expenses 27,021 10,997 $ (1,101)[6] 36,917
Depreciation and amortization 2,603 1,876 (1,121)[7] 3,358
Interest 24 553 (13)[8] 564
Other 442 435 (435)[9] 442
-------------------------------- --------
Total costs and expenses 30,090 13,861 (2,670) 41,281
-------------------------------- --------
INCOME (LOSS) BEFORE
INCOME TAXES 2,802 (2,400) 2,670 3,071
INCOME TAXES 1,022 (982) 1,081 [10] 1,121
-------------------------------- --------
NET INCOME (LOSS) $ 1,780 $ (1,418) $ 1,589 $ 1,951
-------------------------------- --------
-------------------------------- --------
INCOME PER SHARE $ 0.24 $ 0.26
-------- --------
-------- --------
WEIGHTED AVERAGE
SHARES OUTSTANDING 7,450,616 7,450,616
--------- ---------
--------- ---------
</TABLE>
<PAGE>
THE TODD-AO CORPORATION
PRO FORMA CONDENSED STATEMENT OF INCOME
For the three months ended
November 30, 1994 (Unaudited)
(Dollars in thousands, except amounts per share)
<TABLE>
<CAPTION>
Kaytea Consolidated
Todd-AO (1) Rose (5) Adjust Pro Forma
----------- ------- ------ ---------
<S> <C> <C> <C> <C>
REVENUES $ 8,778 $ 2,245 $ 11,023
--------------------------------- ---------
COST AND EXPENSES:
Operating costs and other expenses 8,136 2,637 $ (214)[6] 10,559
Depreciation and amortization 830 461 (272)[7] 1,019
Interest 46 108 27 [8] 181
Other (360) 79 (79)[9] (360)
--------------------------------- ---------
Total costs and expenses 8,652 3,285 (538) 11,399
--------------------------------- ---------
INCOME (LOSS) BEFORE
INCOME TAXES 126 (1,040) 538 (376)
INCOME TAXES (50) (415) 215 [10] (250)
--------------------------------- ---------
NET INCOME (LOSS) $ 176 $ (625) $ 323 $ (126)
--------------------------------- ---------
--------------------------------- ---------
INCOME PER SHARE $ 0.02 $ (0.02)
--------- ---------
--------- ---------
WEIGHTED AVERAGE
SHARES OUTSTANDING 7,620,750 7,620,750
--------- ---------
--------- ---------
</TABLE>
<PAGE>
THE TODD-AO CORPORATION
NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS (Unaudited)
[1] Condensed from audited financial statements included in the Todd-AO
Corporation Quarterly Report on Form 10-Q for the three months ended
November 30, 1994 and Annual Report on Form 10-K for the year ended August
31, 1994.
[2] Recognizes the February 15, 1995 purchase of the property, equipment and
inventory of Kaytea Rose, Inc. by the Todd-AO Studios West including the
estimated legal, accounting, sales tax, audit and other acquisition related
costs.
[3] The net bank borrowings to acquire the assets of Kaytea Rose, Inc. if the
transaction were effected on September 1, 1993.
[4] Elimination of Kaytea Rose, Inc. equity.
[5] Condensed from an unaudited pro forma income statements for the year ended
June 30, 1994 and for the three months ended December 31, 1994 prepared for
Kaytea Rose, Inc. (dba Skywalker Sound South) (utilizing the latest
available reports for this company).
[6] To eliminate corporate allocation of expenses from the parent corporation
(Lucasfilm Ltd.) including accounting, publicity, human resources,
maintenance, legal and the president's office.
To eliminate intercompany lease costs for the Bundy building.
To eliminate Editdroid rent from facility costs (facilities not included in
purchase).
[7] To adjust to depreciation for asset purchase costs.
To adjust amortization for non-compete payment.
[8] To adjust interest to borrowings from Company's institutional lender for
purchase of assets. ($6,966 @ 1 1/2% above Libor - estimated 7 3/4%)
[9] To eliminate Lucasfilm Ltd. charges for Trademark fees - not applicable.
[10] To adjust income taxes for income resulting from the pro-forma adjustments
noted above.
