<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended February 28, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from to
-------- --------
Commission File Number 1-9244
KING WORLD PRODUCTIONS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-2565808
------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1700 Broadway
New York, New York 10019
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 212 315-4000
------------
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
------ ------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. Common Stock, $.01 par value,
36,707,751 shares outstanding as of April 7, 1995.
<PAGE> 2
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(Dollars in thousands)
<TABLE>
<CAPTION>
February 28, August 31,
1995 1994
------------ ----------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ............................ $ 399,833 $ 341,857
Accounts receivable (net of
allowance for doubtful accounts
of $4,283 and $4,412 at
February 28, 1995 and August 31,
1994, respectively) ................................ 55,784 41,231
Producer loans, advances and
deferred costs ..................................... 25,748 21,314
Other current assets ................................. 600 419
--------- ---------
Total current assets ............................. 481,965 404,821
--------- ---------
LONG-TERM INVESTMENTS, at cost,
which approximates market ............................ 67,844 88,191
--------- ---------
FIXED ASSETS, at cost ................................... 11,712 10,631
Less - accumulated depreciation
and amortization .................................... (9,398) (9,099)
--------- ---------
2,314 1,532
--------- ---------
OTHER ASSETS:
Producer advances ..................................... 65,500 65,500
Other non-current assets .............................. 9,846 9,518
--------- ---------
75,346 75,018
--------- ---------
$ 627,469 $ 569,562
========= =========
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of these balance sheets.
2
<PAGE> 3
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
(Dollars in thousands)
<TABLE>
<CAPTION>
February 28, August 31,
1995 1994
------------ ----------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable and
accrued liabilities ................................. $ 14,126 $ 14,780
Payable to producers and others ...................... 76,259 69,647
Income taxes payable:
Current ..................................... 22,151 23,506
Deferred .................................... 1,106 2,552
--------- ---------
Total current liabilities ................... 113,642 110,485
--------- ---------
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value;
5,000,000 shares authorized,
none issued ......................................... -- --
Common stock, $.01 par value;
75,000,000 shares authorized
49,840,145 shares and
49,722,218 shares issued
at February 28, 1995 and
August 31, 1994, respectively ....................... 499 497
Paid-in capital ...................................... 85,271 82,171
Retained earnings .................................... 723,098 665,339
Treasury stock, at cost; 13,141,394
shares and 12,960,894 shares
at February 28, 1995 and
August 31, 1994 respectively ........................ (295,041) (288,930)
--------- ---------
513,827 459,077
--------- ---------
$ 627,469 $ 569,562
========= =========
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of these balance sheets.
3
<PAGE> 4
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
February 28, February 28,
----------------------- -----------------------
1995(1) 1994 1995(1) 1994
--------- --------- --------- ---------
(Dollars in thousands)
<S> <C> <C> <C> <C>
REVENUES ..................... $ 143,732 $ 137,138 $ 290,816 $ 330,182
--------- --------- --------- ---------
EXPENSES:
Producers' fees, programming
and other direct
operating costs .......... 85,334 81,297 173,772 193,140
Selling, general and
administrative expenses .. 17,734 19,771 35,803 42,710
--------- --------- --------- ---------
103,068 101,068 209,575 235,850
--------- --------- --------- ---------
Income from operations ... 40,664 36,070 81,241 94,332
INTEREST AND
DIVIDEND INCOME ............ 5,052 3,167 9,030 6,368
--------- --------- --------- ---------
Income before provision
for income taxes ....... 45,716 39,237 90,271 100,700
PROVISION FOR INCOME TAXES ... 15,825 14,950 32,512 37,691
--------- --------- --------- ---------
Net income ............... $ 29,891 $ 24,287 $ 57,759 $ 63,009
========= ========= ========= =========
PRIMARY EARNINGS PER
SHARE ...................... $ .80 $ .64 $ 1.55 $ 1.65
========= ========= ========= =========
</TABLE>
_____________________________
(1) The results of operations for the six and three months ended February 28,
1995 reflect a change in accounting for revenue recognition adopted
prospectively in the fourth quarter of fiscal 1994. On a basis of accounting
comparable to that employed for the six month period ended February 28, 1994,
revenues, net income and earnings per share for the six months ended February
28, 1995 would have been approximately $56.7 million, $13.3 million and $.36
higher, respectively, than that actually reported and for the three months
ended February 28, 1995, would have been approximately the same as that
actually reported. See Management's Discussion and Analysis of Results of
Operations and Financial Condition.
The accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.
4
<PAGE> 5
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
February 28,
-----------------------------
1995 1994
-------- --------
(Dollars in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 57,759 $ 63,009
Items not affecting cash:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . 301 241
Change in assets and liabilities:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . (14,538) (66,520)
Producer loans, advances and
deferred costs . . . . . . . . . . . . . . . . . . . . . . . . . (4,434) 9,989
Accounts payable and accrued
liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . (654) 13,628
Payable to producers and others . . . . . . . . . . . . . . . . . . 6,612 30,278
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . (2,801) 19,375
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . (497) 995
-------- --------
Net cash provided by operating activities . . . . . . . . . . . . . . . 41,748 70,995
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease in investments . . . . . . . . . . . . . . . . . . . . . . . . 20,347 5,762
Additions to fixed assets . . . . . . . . . . . . . . . . . . . . . . . (1,088) (150)
-------- --------
Net cash provided by investing activities . . . . . . . . . . . . . . . 19,259 5,612
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock . . . . . . . . . . . . . . . . . 3,080 1,778
Purchase of treasury stock . . . . . . . . . . . . . . . . . . . . . . . (6,111) --
-------- --------
Net cash provided by (used in)
financing activities . . . . . . . . . . . . . . . . . . . . . . . . (3,031) 1,778
-------- --------
NET INCREASE IN CASH AND
CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,976 78,385
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 341,857 300,219
-------- --------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $399,833 $378,604
======== ========
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.
5
<PAGE> 6
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Summary of significant accounting policies
Principles of consolidation
The accompanying consolidated financial statements include the
accounts of King World Productions, Inc. ("King World") and its wholly-owned
subsidiaries. All significant intercompany transactions have been eliminated.
Unless the context suggests otherwise, the "Company", as used herein, means
King World and its subsidiaries.
The unaudited consolidated financial statements for the six
months and three months ended February 28, 1995 have been prepared in
accordance with the instructions to Form 10-Q and include, in the opinion of
management, all adjustments (consisting only of normal recurring accruals)
necessary for a fair presentation of the results of operations for such
periods. They do not, however, include all of the information and disclosures
required by generally accepted accounting principles for complete financial
statements. For further information, reference is made to the consolidated
financial statements for the year ended August 31, 1994 and the footnotes
related thereto included in the Company's Annual Report on Form 10-K from which
the August 31, 1994 balances presented herein have been derived. The results
of operations for the six months and three months ended February 28, 1995 are
not necessarily indicative of the results of operations for the full year.
Revenue recognition
Historically, King World followed a practice of recognizing
license fees from the distribution of first-run syndicated television
properties at the commencement of the license period and as each show was
produced (even though the particular show may not have been broadcast by
television stations for several months). In the fourth quarter of the 1994
fiscal year, the Company adopted a change in accounting for revenue recognition
which was applied prospectively as a change in estimate as opposed to a change
in principle. Under the modified practice, license fees from first-run
syndicated television properties are recognized at the commencement of the
license period pursuant to noncancelable agreements and as each show is made
available to the licensee via satellite transmission, rather than at the time
6
<PAGE> 7
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
the show is produced. Because transmission to the satellite takes place, on
the average, no more than two to three days prior to the broadcast of the
programming and in some cases up to several months after the programming is
produced, the effect of adopting the modified practice is to cause revenues to
be recognized closer to the air date than under the prior practice. In
addition, the accounting change will eliminate the quarterly revenue and
earnings fluctuations that were attributable to variations in production
schedules.
The impact of adopting the change was to cause revenues, net
income and earnings per share for the six month period ended February 28, 1995
to be approximately $56.7 million, $13.3 million and $.36 lower, respectively,
than they would have been under the prior practice, with no impact on cash
flow. Such revenues will be recognized in subsequent periods under the
modified practice.
The following pro forma financial information assumes the
Company's prior revenue recognition practice has been in effect for the first
and second quarters of fiscal 1995:
<TABLE>
<CAPTION>
Six Months Ended
February 28,
--------------------------
1995 Pro forma 1994
-------------- ----
(Dollars in thousands
except per share data)
<S> <C> <C>
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . $347,498 $330,182
Income from operations . . . . . . . . . . . . . . . . . . . 102,516 94,332
Income before provision for
income taxes . . . . . . . . . . . . . . . . . . . . . . . 111,546 100,700
Net income . . . . . . . . . . . . . . . . . . . . . . . . . 71,031 63,009
======== ========
Primary earnings per
share . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.91 $ 1.65
======== ========
</TABLE>
The Company typically receives a portion of the fees derived
from the licensing of syndicated television programming in the form of retained
advertising time, which is sold to advertisers by Camelot Entertainment Sales,
Inc. ("Camelot"), a wholly-owned subsidiary of the Company. Such revenues are
7
<PAGE> 8
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
recognized at the same time as the cash portion of the license fees derived
from such programming is recognized, in amounts adjusted for expected ratings.
That portion of recognized revenue that is to be paid to the producers and
owners of the licensed program material is accrued as the license fees are
earned.
License fees for non-first-run syndicated properties are
recognized at the gross contract amount (net of discount to present value for
license periods greater than one year) at the commencement of the license
period.
Principal properties
The Company's principal properties are licenses to distribute
The Oprah Winfrey Show, Wheel of Fortune and Jeopardy!; and Inside Edition, a
first-run syndicated series produced and distributed by the Company. The Oprah
Winfrey Show accounted for approximately 36% and 40% of revenues for the six
months ended February 28, 1995 and 1994, respectively; Wheel of Fortune
accounted for approximately 21% and 18% of revenues for the six months ended
February 28, 1995 and 1994, respectively; Jeopardy! accounted for approximately
18% and 20% of revenues for the six months ended February 28, 1995 and 1994,
respectively; and Inside Edition accounted for approximately 8% and 7% of
revenues for the six months ended February 28, 1995 and 1994, respectively.
On a basis of accounting comparable to that employed for the
six months ended February 28, 1994, The Oprah Winfrey Show, Wheel of Fortune,
Jeopardy!, and Inside Edition would have accounted for approximately 40%, 19%,
20% and 7%, respectively, of the Company's revenues for the six months ended
February 28, 1995.
Stockholders' equity
Primary earnings per share has been computed using the
weighted average number of common shares outstanding of 37,156,000 and
38,096,000 shares, respectively, for the three months ended February 28, 1995
and 1994, and 37,259,000 and 38,097,000 shares, respectively, for the six
months ended February 28, 1995 and 1994, which includes the dilutive effect
from the assumed exercise of vested and unvested stock options out-
8
<PAGE> 9
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
standing as of the end of the period. The difference between primary and fully
diluted earnings per share for both periods presented was not significant.
9
<PAGE> 10
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition
RESULTS OF OPERATIONS
COMPARISON OF SIX MONTHS AND THREE MONTHS ENDED FEBRUARY 28, 1995 AND 1994
Revenues
Revenues for the first six months of fiscal 1995 decreased by
approximately 12% compared to the first six months of fiscal 1994 due to the
adoption of a change in accounting for revenue recognition on a prospective
basis in the fourth quarter of fiscal 1994. Had revenues in the first six
months of fiscal 1995 been recognized on a basis comparable to that of the
first six months of fiscal 1994, revenues in the fiscal 1995 period would have
been approximately 5% higher than the prior period, due primarily to increased
cash license fees from The Oprah Winfrey Show and, to a lesser extent, an
increase in revenues derived from the sale of retained advertising time on
Wheel of Fortune and Jeopardy! as a result of the retention of one additional
30-second advertising spot per episode commencing with the 1994-1995 television
season. For the three months ended February 28, 1995, revenues were
approximately 5% higher than the three months ended February 28, 1994, and
would have been approximately 6% higher on a basis of accounting comparable to
the earlier period, due primarily to the same factors as those discussed above
for the six month period.
The Oprah Winfrey Show, Wheel of Fortune, Jeopardy! and Inside
Edition accounted for approximately 36%, 21%, 18% and 8%, respectively, of the
Company's revenues for the first six months of fiscal 1995 compared to 40%,
18%, 20% and 7%, respectively, for the first six months of fiscal 1994.
American Journal accounted for approximately 4% of the Company's revenues for
each of the six months ended February 28, 1995 and 1994, and Rolonda, which
debuted in January 1994, accounted for approximately 3% of the Company's
revenues for the first six months of fiscal 1995 and 1% for the first six
months of fiscal 1994. The Les Brown Show accounted for approximately 2% of
the Company's revenues for the first six months of fiscal 1994, but was
cancelled in January 1994. On a basis of accounting comparable to that
employed for the first six months of fiscal 1994, The Oprah Winfrey Show, Wheel
of Fortune, Jeopardy! and Inside Edition would have accounted for approximately
40%, 19%, 20% and 7%, respectively, and American Journal and Rolonda would have
accounted for approximately 4% and 3%, respectively, of the Company's revenues
for the first six months of fiscal 1995.
10
<PAGE> 11
For the three months ended February 28, 1995, The Oprah
Winfrey Show, Wheel of Fortune, Jeopardy! and Inside Edition accounted for
approximately 36%, 21%, 18% and 8%, respectively, of the Company's revenues
compared to 31%, 16%, 27% and 8%, respectively, for the three months ended
February 28, 1994. American Journal accounted for approximately 4% of the
Company's revenues for the three months ended February 28, 1995 compared to 5%
for the three months ended February 28, 1994, and Rolonda accounted for
approximately 3% of the Company's revenues for each of the three months ended
February 28, 1995 and 1994. The Les Brown Show accounted for approximately 1%
of the Company's revenues for the three months ended February 28, 1994. On a
basis of accounting comparable to that employed for the three months ended
February 28, 1994, The Oprah Winfrey Show, Wheel of Fortune, Jeopardy! and
Inside Edition would have accounted for approximately 31%, 17%, 28% and 8%,
respectively, and American Journal and Rolonda would have accounted for
approximately 5% and 3%, respectively, of the Company's revenues for the three
months ended February 28, 1995.
Producers' fees, programming and other direct operating costs
Producers' fees, programming and other direct operating costs
primarily include the producers' share of both cash license fees from the sale
of programming to television stations and revenues derived from the sale of
retained advertising time to advertisers with respect to programming
distributed by the Company; participation fees payable by the Company to
producers and talent; and production and distribution costs for first-run
syndicated programming. The share of license fees payable by the Company to
producers, talent and others is generally paid as cash license fees and
revenues derived from the sale of retained advertising time are received from
television stations and advertisers.
Producers' fees, programming and other direct operating costs
decreased by approximately 10% in the six months ended February 28, 1995
compared to the six months ended February 28, 1994. Because the recognition of
these costs generally coincides with the recognition of the revenues with which
they are associated, the adoption of the modified accounting practice in the
fourth quarter of fiscal 1994 caused such costs to be substantially lower in
the first quarter of fiscal 1995 than they would have been under the prior
revenue recognition practice. For the three months ended February 28, 1995,
producers' fees, programming and other direct operating costs increased by
approximately 5% compared to the three months ended February 28, 1994. On a
basis of accounting comparable to that employed in the comparable periods of
fiscal 1994, producers' fees, programming and other direct operating costs
would have increased by approximately 7% in the first six months and the second
quarter of fiscal 1995
11
<PAGE> 12
over the corresponding periods of the prior fiscal year, primarily as a result
of the higher level of revenues generated by The Oprah Winfrey Show, Wheel of
Fortune and Jeopardy! (a portion of which is payable to the producers of such
series) and, to a lesser extent, increased production costs associated with
Inside Edition, American Journal and Rolonda.
Selling, general and administrative expenses
Selling, general and administrative expenses decreased by
approximately 16% and 10% in the first six months and the second quarter of
fiscal 1995, respectively, over the corresponding periods of the prior fiscal
year, primarily due to the accounting change. On a basis of accounting
comparable to that employed in the first six months of fiscal 1994, such
expenses would have decreased by approximately 8% and 11%, respectively, due
primarily to lower advertising and promotion costs.
In December 1993, the Company entered into new employment
agreements with four executive officers. The agreements provide, among other
things, for new bonuses that are intended to qualify as "performance based
compensation" (within the meaning of Section 162(m) of the Internal Revenue
Code of 1986, as amended), including bonuses payable upon the introduction of
new shows and bonuses contingent upon the Company's Common Stock achieving
specified target prices during pre-established measurement periods. As a
result, the Company's compensation expense will increase if the Common Stock
price exceeds the specified target prices during the applicable measurement
periods.
As of February 28, 1995, the applicable target prices for the
Company's Common Stock for certain of such bonuses had not been met. In the
third and fourth quarters of fiscal 1994, the Company provided for the
probability that such target prices would be met in future measurement periods
and such bonuses would be paid pursuant to the terms of such employment
agreements. No additional provision was made in the first or second quarters
of fiscal 1995.
Net income and primary earnings per share
The Company's operating income for the first six months of
fiscal 1995 decreased by approximately 14% compared to the corresponding period
of the prior year, primarily due to the change in accounting for revenue
recognition. Absent such change, the Company's operating income for the first
six months of fiscal 1995 would have been approximately 9% higher than the
comparable period of fiscal 1994. The accounting change also resulted in an 8%
decrease in net income for the first six months of fiscal 1995 compared to the
corresponding period of the prior year. Absent the accounting change, net
income would have been
12
<PAGE> 13
approximately $8.0 million (or 13%) higher than the first six months of fiscal
1994, reflecting higher operating income, higher interest income earned on the
Company's cash and investments (due primarily to an increase in interest rates
over the prior year), and a lower effective tax rate for the first six months
of fiscal 1995. Primary earnings per share, which were $.10 lower in the first
six months of fiscal 1995 compared to the first six months of fiscal 1994,
would have been $.26 (or 16%) higher in the first six months of fiscal 1995
compared with the first six months of fiscal 1994 had the prior method of
revenue recognition been employed, due to the increase in net income and a
smaller number of shares outstanding as a result of the Company's ongoing stock
repurchase program.
For the three months ended February 28, 1995, operating income
increased by approximately 13% compared to the corresponding period of the
prior year, while net income and earnings per share increased by approximately
23% and 25%, respectively. On a basis of accounting comparable to that
employed for the three months ended February 28, 1994, operating income, net
income and earnings per share would have increased by approximately 12%, 22%
and 25%, respectively, over the comparable period of fiscal 1994, due primarily
to the factors discussed above for the six month period.
The Company's results of operations are highly dependent upon
the viewing preferences of television audiences and the Company's ability to
acquire distribution rights to, or itself produce, television programming that
achieves broad and enduring audience acceptance. The success of the Company's
programming could be significantly affected by changes in viewer preferences or
the unavailability of new programming or talent. Moreover, the amount of
revenue derived from the sale of retained advertising time is dependent upon a
large number of factors, such as household ratings, the demographic composition
of the viewing audience and economic conditions in general and in the
advertising business in particular.
Due to the success of the shows distributed by the Company and
in order to mitigate the influence of some of the factors referred to above,
the Company has been obtaining multi-year licenses and license renewals from
television stations for its principal distribution properties, extending as far
into the future as the 1999-2000 broadcast season. In general, these licenses
and renewals have been at rates as favorable or more favorable to the Company
than the rates applicable to the 1993-1994 and 1994-1995 broadcast seasons.
All such licenses and renewals are contingent upon the continued production of
the series by their respective producers through the broadcast seasons for
which the licenses run.
13
<PAGE> 14
The Company believes that the impact of inflation on its
operations has not been significant.
LIQUIDITY AND CAPITAL RESOURCES
The Company requires capital resources to fund development,
production and promotion costs of independently produced programming,
including, in some instances, advances to producers and talent, to produce its
own programs and to acquire distribution rights to new programming. In
acquiring distribution rights from independent producers, King World has tried
to avoid making significant capital commitments to such producers until it has
obtained broadcast commitments from a substantial number of television
stations. As a result of this strategy and the success of its existing
syndication properties, to date, King World has funded substantially all
programming acquisition, development and production costs and advances from its
operations.
As King World has developed and produced its own programming
for syndication, it has assumed a greater portion of the risk associated with
the introduction of new series. The introductions of American Journal and The
Les Brown Show in the 1993-1994 broadcast season, and Rolonda, which premiered
in January 1994, have necessitated the expenditure by King World of substantial
amounts to fund development, production and promotion costs. The Company has
funded and intends to continue to fund such costs out of its internal cash
resources.
The distribution of television programming is highly
competitive and the Company may be obliged to offer, among other things,
guarantees and cash advances to acquire, renew or extend distribution rights.
In connection with the extension for the 1993-1994 and 1994-1995 broadcast
seasons of the commitment by Harpo, Inc. ("Harpo"), the producer of The Oprah
Winfrey Show, to produce The Oprah Winfrey Show for those seasons, the Company
made an interest-free loan to Harpo and became obligated to pay Harpo certain
minimum amounts against its participation fees for such periods, irrespective
of the amount of license fees generated by the series in such periods. Harpo's
participation fees for the 1993-1994 broadcast season exceeded such minimum
amounts for the 1993-1994 and 1994-1995 broadcast seasons. The loan is due in
two installments of $8,625,000 each, one of which was paid in July 1994 and the
other of which is due in July 1995.
Under the terms of the Company's agreement with Harpo, the
Company has the exclusive right, and has agreed, to distribute episodes of The
Oprah Winfrey Show produced through the 1999-2000 television season, subject to
Harpo's and Ms. Winfrey's right to decline to produce and host the show in any
season after the 1995-1996 season. Under the agreement, the Company has,
14
<PAGE> 15
among other things, agreed to pay Harpo production fees and to guaranty
payments to Harpo at levels which, commencing with the 1995-1996 season, will
be substantially higher than those currently in effect. In addition, in the
1997-1998 season and thereafter, profit sharing arrangements between Harpo and
the Company currently in effect will terminate and the Company will instead
receive distribution fees based on a percentage of gross revenues derived from
the series. The Company has paid Harpo a $60,000,000 advance against its
minimum participation fees for the 1995-1996 broadcast season. Based on the
license agreements in place for the 1995-1996 broadcast season, the revenues
from the series will be sufficient to recoup such amount.
From time to time, the Company has used cash reserves and/or
borrowed funds to make acquisitions of and investments in broadcast and related
properties in the entertainment field, to repurchase shares of its Common Stock
and to fund development and production of new programming. The Company
continues to evaluate opportunities in these areas, and may seek to raise
capital in public or private securities markets to finance such activities if
it considers it advantageous to do so.
In December 1992, the Company announced that the Board of
Directors had approved a program to repurchase up to 2,000,000 shares of its
Common Stock from time to time in the open market and in privately negotiated
transactions. In the fiscal years ended August 31, 1994 and 1993, 753,100 and
765,200 shares, respectively, of Common Stock were repurchased in open market
transactions, for aggregate consideration of approximately $28.9 million (or
approximately $38.40 per share) and $24.8 million (or approximately $32.40 per
share), respectively. In the first quarter of fiscal 1995, the Company
repurchased an aggregate 40,000 shares for aggregate consideration of
approximately $1.44 million (or approximately $36.00 per share), and in the
second quarter of fiscal 1995, the Company repurchased an additional 140,500
shares for aggregate consideration of approximately $4.7 million (or
approximately $33.25 per share). As of April 7, 1995, there remained 301,200
shares available for repurchase under such program. The Company intends to
continue to repurchase shares of Common Stock in the open market and in
privately negotiated transactions if and when it deems it advantageous to do
so.
15
<PAGE> 16
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
At the Company's 1995 annual meeting of stockholders, held on
February 17, 1995, an aggregate 33,606,655 shares of Common Stock were present
in person or by proxy. Votes cast for and against, abstentions and broker
non-votes for the matters submitted to a vote of security-holders were as
follows:
(i) ELECTION OF DIRECTORS:
<TABLE>
<CAPTION>
Authority
Votes to Vote
Nominee For Withheld
- ------- ----- ---------
<S> <C> <C>
Ronald S. Konecky 31,003,647 2,603,008
James M. Rupp 33,295,552 311,103
</TABLE>
(ii) APPOINTMENT OF ARTHUR ANDERSEN LLP AS AUDITORS FOR THE
FISCAL YEAR ENDING AUGUST 31, 1995:
<TABLE>
<CAPTION>
Votes Votes Broker
For Against Abstentions Non-Votes
- ----- ------- ----------- ---------
<S> <C> <C> <C>
33,522,291 55,513 28,851 --
</TABLE>
16
<PAGE> 17
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.
KING WORLD PRODUCTIONS, INC.
By: /s/ Steven A. LoCascio
-----------------------------------
Steven A. LoCascio,
Vice President and Controller
As Chief Accounting Officer
and on behalf of the Registrant
April 13, 1995
17
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-START> DEC-01-1994
<PERIOD-END> FEB-28-1995
<CASH> 399,833
<SECURITIES> 0
<RECEIVABLES> 55,784
<ALLOWANCES> 4,283
<INVENTORY> 0
<CURRENT-ASSETS> 481,965
<PP&E> 11,712
<DEPRECIATION> 9,398
<TOTAL-ASSETS> 627,469
<CURRENT-LIABILITIES> 113,642
<BONDS> 0
<COMMON> 499
0
0
<OTHER-SE> 513,328
<TOTAL-LIABILITY-AND-EQUITY> 627,469
<SALES> 0
<TOTAL-REVENUES> 143,732
<CGS> 0
<TOTAL-COSTS> 85,334
<OTHER-EXPENSES> 17,734
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 45,716
<INCOME-TAX> 15,825
<INCOME-CONTINUING> 29,891
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 29,891
<EPS-PRIMARY> .80
<EPS-DILUTED> .80
</TABLE>
