<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended FEBRUARY 28, 1995
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number: 0-1461
THE TODD-AO CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 13-1679856
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation)
172 GOLDEN GATE AVENUE, SAN FRANCISCO, CALIFORNIA 94102
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (415) 928-3200
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
---------- --------
The number of shares of common stock outstanding at April 11, 1995 was:
5,816,428 Class A Shares and 1,588,346 Class B Shares.
<PAGE>
THE TODD-AO CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FEBRUARY 28, 1995
INDEX
- --------------------------------------------------------------------------------
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following financial statements are filed herewith:
Consolidated Balance Sheets, February 28, 1995
and August 31, 1994. Page 3
Consolidated Statements of Income and Retained Earnings
for the Six Months and Three Months Ended
February 28, 1995 and 1994. Page 5
Consolidated Statements of Cash Flows for the Six Months
Ended February 28, 1995 and 1994. Page 6
Notes to Consolidated Financial Statements for the
Six Months Ended February 28, 1995. Page 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS Page 11
PART II - OTHER INFORMATION
ITEM 1.
Legal Proceedings Page 14
ITEM 4.
Submission of Matters to a Vote of Security Holders Page 14
ITEM 6.
Exhibits and Reports on Form 8-K Page 14
Signature Page 14
2
<PAGE>
PART I - FINANCIAL INFORMATION
THE TODD-AO CORPORATION
CONSOLIDATED BALANCE SHEETS
FEBRUARY 28, 1995 and AUGUST 31, 1994
(Dollars in Thousands)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FEBRUARY 28, AUGUST 31,
1995 1994
------------ ----------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 2,711 $ 606
Marketable securities 3,367 3,880
Trade receivables
(net of allowance for doubtful
accounts of $408 at February 28, 1995
and August 31, 1994) 8,524 4,278
Inventory (first-in first-out basis) 484 374
Prepaid income taxes 329 148
Deferred income taxes 563 563
Other 351 195
----------- ----------
Total current assets 16,329 10,044
----------- ----------
INVESTMENTS 1,684 1,270
----------- ----------
PROPERTY AND EQUIPMENT - at cost:
Land 4,270 3,487
Buildings 9,082 8,201
Leasehold improvements 5,672 5,569
Lease acquisition costs 2,187 2,187
Equipment 18,051 26,171
Equipment under capitalized leases 1,746 1,746
Construction in progress 163 57
----------- ----------
Total 41,171 47,418
Accumulated depreciation and
amortization (13,345) (22,083)
----------- ----------
Property and equipment - net 27,826 25,335
----------- ----------
OTHER ASSETS 433 79
----------- ----------
TOTAL $ 46,272 $ 36,728
----------- ----------
----------- ----------
</TABLE>
See notes to consolidated financial statements.
- -------------------------------------------------------------------------------
3
<PAGE>
THE TODD-AO CORPORATION
CONSOLIDATED BALANCE SHEETS
FEBRUARY 28, 1995 and AUGUST 31, 1994
(Dollars in Thousands)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FEBRUARY 28, AUGUST 31,
1995 1994
------------ -----------
LIABILITIES AND SHAREOWNERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 1,760 $ 684
Accrued liabilities:
Payroll and related taxes 2,986 2,518
Interest 18 10
California franchise taxes 100
Equipment lease 394
Other 175 279
Current maturities of long-term debt 150 150
Capitalized lease obligations - current 629 708
Current portion of deferred gain 1,469
Deferred income 434 162
Security deposits 37 73
------------ ------------
Total current liabilities 8,052 4,684
----------- ----------
LONG-TERM DEBT 1,137 600
CAPITALIZED LEASE OBLIGATIONS 608 867
DEFERRED COMPENSATION 520 565
DEFERRED GAIN ON SALE OF EQUIPMENT 5,631
DEFERRED INCOME TAXES 1,966 2,064
SHAREOWNERS' EQUITY:
Common Stock:
Class A authorized 20,000,000 shares
of $0.25 par value; issued 5,816,428
at February 28, 1995 and 5,797,928 at
August 31, 1994 1,454 1,449
Class B authorized 4,000,000
shares of $0.25 par value;
issued and outstanding 1,588,346 397 397
Additional capital 15,070 15,015
Retained earnings 11,160 11,087
Unrealized gains on marketable securities
and long-term investments 277
----------- ----------
Total shareowners' equity 28,358 27,948
----------- ----------
TOTAL $ 46,272 $ 36,728
----------- ----------
----------- ----------
</TABLE>
See notes to consolidated financial statements.
- -------------------------------------------------------------------------------
4
<PAGE>
THE TODD-AO CORPORATION
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE SIX MONTHS AND THREE MONTHS ENDED FEBRUARY 28, 1995 AND 1994
(Dollars in Thousands, except per share amounts)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS THREE MONTHS
---------------------- -------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES $ 18,835 $ 16,446 $ 10,057 $ 7,471
-------- -------- -------- --------
COSTS AND EXPENSES:
Operating costs and other expenses 16,533 12,884 8,541 6,396
Depreciation and amortization 1,570 1,233 740 620
Interest 100 54
Equipment lease expense - net 149 149
Other expense (income) - net 48 (440) 319 (427)
-------- -------- -------- --------
Total 18,400 13,677 9,803 6,589
-------- -------- -------- --------
INCOME BEFORE JOINT VENTURE
AND INCOME TAXES 435 2,769 254 882
LOSS FROM JOINT VENTURE 109 567 54 285
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES 326 2,202 200 597
INCOME TAXES 36 937 86 256
-------- -------- -------- --------
NET INCOME 290 1,265 $ 114 $ 341
-------- --------
-------- --------
RETAINED EARNINGS BEGINNING OF PERIOD 11,087 9,735
LESS: DIVIDENDS PAID (217) (213)
-------- --------
RETAINED EARNINGS END OF PERIOD $ 11,160 $ 10,787
-------- --------
-------- --------
NET INCOME PER COMMON SHARE
AND COMMON SHARE EQUIVALENTS $ .04 $ .17 $ .02 $ .05
-------- -------- -------- --------
-------- -------- -------- --------
AVERAGE SHARES OUTSTANDING 7,586,673 7,462,686 7,552,595 7,433,631
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
See notes to consolidated financial statements.
- -------------------------------------------------------------------------------
5
<PAGE>
THE TODD-AO CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1995 AND 1994
(Dollars in Thousands)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 290 $ 1,265
Adjustments to reconcile net
income to net cash provided
by (used in) operating activities:
Depreciation and amortization 1,570 1,233
Deferred income taxes (98) 126
Loss from joint venture 109 567
Deferred compensation and other (45) (9)
Amortization of deferred (gain)
on sale/leaseback transaction (245)
(Gain) loss on sale of marketable
securities and investments 56 (334)
Changes in assets and liabilities:
Trade receivables (4,246) (2,033)
Inventory and other current assets (134) (87)
Accounts payable and accrued
liabilities 1,312 1,217
Accrued equipment lease 394
Income taxes payable (181) 312
Deferred income 272 (53)
--------- ---------
Net cash flows provided by (used in)
operating activities: (946) 2,204
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities
and investments (2,197) (2,250)
Proceeds from sale of marketable
securities and investments 2,517 888
Capital expenditures (1,275) (864)
Contributions to joint venture (109) (400)
Purchase of Skywalker Sound South (6,966)
Other assets (179) (313)
--------- ---------
Net cash flows (used in)
investing activities: (8,209) (2,939)
--------- ---------
</TABLE>
CONTINUED ON PAGE 7
- -------------------------------------------------------------------------------
6
<PAGE>
THE TODD-AO CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1995 AND 1994
(Dollars in Thousands)
- -------------------------------------------------------------------------------
CONTINUED FROM PAGE 6
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt 600
Payments of long-term debt (63)
Payments on capital lease obligation (338)
Proceeds from sale/leaseback transaction 11,218
Proceeds from issuance of common stock 60 1
Treasury stock transactions (509)
Dividends paid (217) (213)
--------- ---------
Net cash flows provided by (used in)
financing activities: 11,260 (721)
--------- ---------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 2,105 (1,456)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 606 2,289
--------- ---------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 2,711 $ 833
--------- ---------
--------- ---------
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest $ 88 $ 0
--------- ---------
--------- ---------
Income taxes $ 140 $ 403
--------- ---------
--------- ---------
</TABLE>
See notes to consolidated financial statements.
- -------------------------------------------------------------------------------
7
<PAGE>
THE TODD-AO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1995
(Dollars in Thousands, except per share amounts)
- -------------------------------------------------------------------------------
If complete notes were to accompany these statements they would be substantially
in the same form as those to the Company's Financial Statements for the Year
Ended August 31, 1994. In addition the following notes are applicable:
1. In the opinion of management for the Company, all adjustments (which
comprise only normal recurring accruals) necessary for a fair presentation
of the results of operations have been included.
2. The consolidated financial statements include the Company and its wholly
owned subsidiaries Todd-AO Studios East, Inc. ("Todd-AO East"), Todd-AO
Productions, Inc., Todd-AO Digital Images, Inc. ("TDI"), Todd-AO Video
Services, Inc. ("TVS") and Todd-AO Studios West ("TSW"). All significant
intercompany balances and transactions have been eliminated.
3. Net income per common share is computed based on the weighted average
number of common and common equivalent shares outstanding including common
share equivalents arising from the assumed conversion of any outstanding
dilutive stock options.
4. The Company is an investor in QSound Labs, Inc. ("QSound"), formerly Archer
Communications, Inc., which engages in the development and licensing of a
sound imaging audio technology known as QSound. QSound's principal
facilities are located in Calgary, Alberta (Canada) and its shares are
listed on the Vancouver and Toronto Stock Exchanges and are traded over
NASDAQ.
As of February 28, 1995, the Company owned 306,500 QSound shares. On
February 28, 1995, the closing QSound NASDAQ stock price was $3.0625.
5. During 1992, Todd-AO Productions, Inc., a wholly owned subsidiary of the
Company, entered into a Joint Venture Agreement with Trans-Atlantic
Enterprises, Inc., for the development of motion picture and television
projects. Todd-AO Productions and the Venture are each distinct from the
Company's sound studio operations. The Joint Venture Agreement was
extended and amended in October 1993 and in September 1994. In accordance
with the amendments, the Development Phase of the Venture expired on
October 31, 1994 and the Venture's entertainment projects (which consist
primarily of rights to scripts and screenplays) were divided between Todd-
AO Productions and TAE, which are now each entitled to independently
exploit their respective projects (the "Todd-AO Projects" and the "TAE
Projects"). Dissolution of the Venture is being finalized.
Todd-AO Productions is entitled to recoup its capital contributions from
50% of any compensation received by TAE or its affiliates from exploitation
of the TAE projects, and is deemed to have recouped its capital
contributions to the extent of 50% of any compensation received by Todd-AO
Productions or its affiliates from the Todd-AO projects. Todd-AO
Productions and TAE also have a 25% interest in the net profits of each
other's designated projects. Through February 28, 1995 Todd-AO Productions
had contributed $2,426 in cash and services to the Venture.
8
<PAGE>
The Company is accounting for this investment under the equity method of
accounting as they do not control either voting or financial rights.
The following represents condensed financial information of the Todd-AO/TAE
joint venture as of and for the six months ended February 28, 1995 and
1994.
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Cash and other assets $ 0 $ 163
Development costs, net 0 0
------- --------
Total assets $ 0 $ 163
------- --------
------- --------
Liabilities $ 0 $ 169
Partner's capital - Todd-AO Productions, Inc. 0 (6)
Partner's capital - TAE 0 0
------- --------
Total liabilities and partner's capital $ 0 $ 163
------- --------
------- --------
Revenues $ 0 $ 0
Expenses 109 567
------- --------
Net loss $ (109) $ (567)
------- --------
------- --------
</TABLE>
6. On August 31, 1994, TVS (a wholly owned subsidiary of the Company) acquired
certain of the assets and liabilities of Film Video Masters ("Paskal").
TVS provides post production video services to the film and television
industries. In consideration of the purchase, TVS paid Paskal $1,150 in
cash and issued a note in the amount of $750.
On February 15, 1995, TSW (a wholly owned subsidiary of the Company)
acquired substantially all of the property, equipment and inventory of
Kaytea Rose, Inc. (dba Skywalker Sound South)("SSS"). TSW provides post
production sound services to the film and television industries. In
consideration of the purchase, TSW paid $6,878 in cash. TSW is included in
the Company's results of operations from February 1995.
The acquisitions are being accounted for under the purchase method of
accounting. The following unaudited pro forma consolidated financial
information is presented as if the acquisitions had occurred on September
1, 1993. Pro forma adjustments for TVS for 1994 are primarily to
depreciation expense relating to the acquisition of assets, interest
expense on issued debt and income taxes. Pro forma adjustments for TSW for
1994 and 1995 are primarily to operating expenses related to non-applicable
allocations made by the parent corporation of SSS, depreciation expense
relating to the acquisition of assets, interest expense on borrowings in
connection with the acquisition and income taxes.
<TABLE>
<CAPTION>
Six Months ended Six Months ended
February 28, 1995 February 28, 1994
----------------- -----------------
<S> <C> <C>
Revenues $ 22,577 $ 24,347
--------- ---------
--------- ---------
Net income (loss) $ (216) $ 1,417
--------- ---------
--------- ---------
Net income (loss)
per common share $ (0.03) $ 0.19
--------- ---------
--------- ---------
</TABLE>
9
<PAGE>
7. In December 1994 the Company signed an agreement with its bank to implement
a lease intended as security (sale/leaseback of certain equipment) in the
amount of $15,000. The agreement terminates on December 30, 1999 and is
being treated as an operating lease for financial statement purposes. On
December 30, 1994 an aggregate of $11,218 was sold and leased back. The
total deferred gain on the transaction to be amortized over five years is
$7,345. The annual lease cost is expected to be approximately $2,400.
The net equipment lease expense for the period ended February 28, 1995 is
as follows:
<TABLE>
<S> <C>
Equipment lease costs $ 394
Amortization of deferred gain
on sale of equipment $ (245)
-------
Equipment lease expense, net $ 149
-------
-------
</TABLE>
8. The Company has a stock repurchase program under which 1,300,000 shares may
be purchased from time to time in the open market or in private
transactions. As of February 28, 1995, 726,954 shares had been
repurchased. All of these shares have been cancelled and returned to
authorized but unissued status.
9. The Company has adopted Statement of Financial Accounting Standards
("SFAS") No. 115 which must be applied for fiscal years beginning after
December 15, 1993. SFAS No. 115 addresses the accounting and reporting for
investments in equity securities that have readily determinable fair values
and for all investments in debt securities. Management has classified
these investments as available for sale.
10. On March 16, 1995, FCB 1120, Ltd. (a wholly owned subsidiary of the
Company)("FCB") acquired all of the outstanding shares of Chrysalis
Television Facilities Ltd. ("CTV") from Chrysalis Holdings Ltd ("CHL").
FCB, CTV and CHL are all corporations organized under the laws of the
United Kingdom and headquartered in London. The transaction has been
accounted for as a purchase and the acquisition price was equal to the sum
of: (i) $1,966 (paid at closing); (ii) an amount equal to CTV's net asset
value as at February 28, 1995 less $240 (expected to be approximately
$1,360) payable $480 on each of the first and second anniversaries and $400
on the third anniversary of the completion date (March 16, 1995), with
interest on the unpaid balance at the National Westminster Bank base rate
plus 1 1/2%. Any difference between CTV's net asset value (less $240) and
$1,360 will be settled after the closing when the net asset value is
determined. Concurrently with the acquisition, FCB advanced and paid on
behalf of CTV its intercompany debt in the amount of $4,585. FCB's
obligations have been guaranteed by the Company.
Subsequent to the acquisition, FCB advanced and paid on behalf of CTV debt
due to the Bank of Scotland in the amount of $1,336.
CTV specializes in the collation of television programming for satellite
broadcast in Europe and also provides post production video and other
services to a variety of clients. It is anticipated that CTV will be
renamed "Chrysalis/Todd-AO Europe Ltd." and FCB will be renamed "Todd-AO
Europe Holding Company Ltd.".
10
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
1. Material Changes in Financial Condition
In December 1994 the Company signed agreements with its bank to implement a
lease intended as security (sale/leaseback of certain equipment) and a new
long-term revolving and term loan credit agreement in amounts of $15,000
and $10,000 respectively. In March 1995 the Company signed an amendment to
the long-term revolving and term loan credit agreement increasing the
amount by $8,000. The sale/leaseback agreement terminates on December 30,
1999. An aggregate of $11,218 was sold and leased back on December 30,
1994. Under the new credit agreement, the Company may borrow up to $18,000
in revolving loans until November 30, 1997 when all revolving loans become
term loans for the remainder of the agreement which expires November 30,
2000. These credit facilities are available for general corporate
purposes, capital expenditures and acquisitions. Management believes that
the proceeds from the sale/leaseback and the borrowings available under the
new credit facility will be sufficient to meet the needs of the Company for
the foreseeable future.
In February 1995 the Company used $6,878 of the proceeds from the
sale/leaseback agreement to acquire substantially all of the property,
equipment and inventory of Skywalker Sound South.
In March 1995 the Company used $7,726 under the credit agreement in
connection with the acquisition of Chrysalis Television Facilities Ltd.
In addition to the above, the Company expects capital expenditures of
approximately $3,700 for its Los Angeles and New York City facilities in
fiscal 1995. These capital expenditures will be financed by bank leasing
and credit facilities and by internally generated funds.
As of February 28, 1995 the Company has $600 outstanding under the credit
agreement.
2. Material Changes in Results of Operations
YEAR-TO-DATE
Total revenues increased 14.5% ($2,389) and operating costs and expenses
increased 28.3% ($3,649).
SOUND SERVICES:
Sound studio revenues in California and New York decreased $1,148. Revenue
increases due to the inclusion of the Santa Monica and West Los Angeles
Studios of Todd-AO Studios West ("TSW") ($1,068) beginning in February 1995
were offset by revenue decreases at the Los Angeles and New York studios
due primarily to decreases in feature film dubbing bookings and a different
customer mix reflecting productions with limited budgets. A threatened
strike in Los Angeles during 1994 accelerated major feature film product
which resulted in scheduling irregularities through December 1994. In
addition, one feature film stage was closed for remodelling through early
January 1995.
Sound studio operating costs and expenses increased $776 due to the
inclusion of TSW beginning in February 1995. In addition, sound studio
11
<PAGE>
operating costs and expenses related to the revenue decreases described
above increased $45 primarily due to union contract increases.
VIDEO SERVICES:
Revenues increased $3,548 due to the inclusion of Todd-AO Video Services
("TVS") ($3,042) and Todd-AO Digital Images ("TDI") ($506) in the current
year. TVS, which acquired certain assets and liabilities of Film Video
Masters, Inc. on August 31, 1994, provides post production video services
to the film and television industries. TDI, which was formed in the latter
half of fiscal 1994, provides visual effects services to the same
industries.
Operating costs and expenses for TVS and TDI were $2,818.
CORPORATE:
Depreciation and amortization increased 27.3% ($337) due to the inclusion
of TVS, TDI and TSW in the current year.
Equipment lease expense net of amortization of deferred gain on sale of
equipment in connection with a sale/leaseback agreement entered into on
December 30, 1994 with the Company's institutional lender is $149.
A net decrease in other income of $488 is primarily due to the following: a
$174 increase due to stock appreciation rights provision adjustments
related to fluctuations in the Company's stock price; a $130 increase in
dividend and investment income primarily due to investing activities in
connection with the proceeds from the sale/leaseback agreement; current
year research and development costs ($122) and non-recurring severance
costs ($121); and a decrease of $529 due to gains on sales of investments
in the prior year.
Losses from the Company's entertainment project development joint venture
decreased $458 primarily due to the termination of the development phase of
the venture in the current year.
As a result of the above, income before taxes decreased $1,876. Net income
decreased $975 which includes the reversal of a $100 provision made for
contested 1983-86 California franchise taxes for which, in the Company's
judgement, there is no ongoing liability.
CURRENT QUARTER
Total revenues increased 34.6% ($2,586) and operating costs and expenses
increased 33.5% ($2,145).
SOUND SERVICES:
Sound studio revenues in California and New York decreased $498. Revenue
increases due to the inclusion of the TSW facilities ($1,068) beginning in
February 1995 were offset by revenue decreases at the Los Angeles and New
York studios which primarily reflect decreases in feature film dubbing
bookings due to scheduling irregularities and the remodelling of a feature
film stage.
Sound studio operating costs and expenses increased $776 due to the
inclusion of TSW beginning in February 1995. Offsetting this increase,
12
<PAGE>
sound studio operating costs and expenses related to the revenue decreases
described above decreased $158.
VIDEO SERVICES:
Revenues increased $2,096 due to the inclusion of Todd-AO Video Services
("TVS") ($1,749) and Todd-AO Digital Images ("TDI") ($347) in the current
year.
Operating costs and expenses for TVS and TDI were $1,511.
CORPORATE:
Depreciation and amortization increased 19.4% ($120) due to the inclusion
of TVS, TDI and TSW in the current year.
Equipment lease expense net of amortization of deferred gain on sale of
equipment in connection with a sale/leaseback agreement entered into on
December 30, 1994 with the Company's institutional lender is $149.
A net decrease in other income of $746 is primarily due to the following: a
$593 decrease due to stock appreciation rights provision adjustments
related to fluctuations in the Company's stock price; a $121 increase in
dividend and investment income primarily due to investing activities in
connection with the proceeds from the sale/leaseback agreement; current
year research and development costs ($122) and non-recurring severance
costs ($121); and a decrease of $136 due to gains on sales of investments
in the prior year.
Losses from the Company's entertainment project development joint venture
decreased $231 primarily due to the termination of the development phase of
the venture in the current year.
As a result of the above, income before taxes decreased $397 and net
income decreased $227.
13
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in litigation and similar claims incidental to the
conduct of its business. None of the pending actions is considered
material.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Stockholders was held at 900 N. Seward Street, Los
Angeles, CA on February 7, 1995. In addition to the election of directors
and procedural matters, disclosure of which has been omitted pursuant to
the instructions, proposals were submitted to the stockholders to: (i)
approve the extension of the 1986 Stock Option Plan until August 31, 2004
and update the definition of fair market value, in each case only with
respect to options for 194,250 Class A Shares granted on September 26,
1994; and (ii) approve the adoption of the 1995 Stock Option Plan. The
text of the proposals and other information relating thereto is included in
the Company's Proxy Statement dated January 3, 1995. The proposal relating
to the 1986 Stock Option Plan was adopted by the stockholders with at least
16,495,933 affirmative votes and at least 11,584 negative votes or
abstentions. The proposal relating to the 1995 Stock Option Plan was
adopted by the stockholders with at least 16,496,933 affirmative votes and
at least 7,984 negative votes or abstentions.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(b). (1) On February 27, 1995 the Company filed a report on Form 8-K
which was amended on April 10, 1995. In these filings, the
Company reported the acquisition of the property, equipment
and inventory of Kaytea Rose, Inc. (dba Skywalker Sound
South).
(2) On March 31, 1995 the Company filed a report on Form 8-K
reporting the acquisition of the entire issued share capital
of Chrysalis Television Facilities Ltd.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE TODD-AO CORPORATION
April 14, 1995 /s/ Silas R. Cross
- --------------- -----------------------------
Date Silas R. Cross
Chief Accounting Officer
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-START> SEP-1-1994
<PERIOD-END> FEB-28-1995
<CASH> 2,711
<SECURITIES> 3,367
<RECEIVABLES> 8,932
<ALLOWANCES> 408
<INVENTORY> 484
<CURRENT-ASSETS> 16,329
<PP&E> 41,171
<DEPRECIATION> 13,345
<TOTAL-ASSETS> 46,272
<CURRENT-LIABILITIES> 8,052
<BONDS> 0
<COMMON> 1,851
0
0
<OTHER-SE> 26,507
<TOTAL-LIABILITY-AND-EQUITY> 46,272
<SALES> 0
<TOTAL-REVENUES> 18,835
<CGS> 0
<TOTAL-COSTS> 18,252
<OTHER-EXPENSES> 157
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 100
<INCOME-PRETAX> 326
<INCOME-TAX> 36
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 290
<EPS-PRIMARY> 0
<EPS-DILUTED> .04
</TABLE>
