<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 May 31, 1996
/ / 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,
37,589,845 shares outstanding as of July 2, 1996.
<PAGE> 2
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(Dollars in thousands)
<TABLE>
<CAPTION>
May 31, August 31,
1996 1995
----------- ----------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . $483,117 $446,896
Accounts receivable (net of
allowance for doubtful accounts of
$4,196 at May 31, 1996 and
August 31, 1995) . . . . . . . . . . . . . . . . . . . . . . . . . . 66,947 51,356
Producer advances and
deferred costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81,921 90,085
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . 1,974 506
-------- --------
Total current assets . . . . . . . . . . . . . . . . . . . . . . 633,959 588,843
-------- --------
LONG-TERM INVESTMENTS, at cost,
which approximates market . . . . . . . . . . . . . . . . . . . . . 124,855 82,129
-------- --------
FIXED ASSETS, at cost . . . . . . . . . . . . . . . . . . . . . . . . . . 13,276 12,955
Less - accumulated depreciation
and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . (10,295) (9,703)
-------- --------
2,981 3,252
-------- --------
PRODUCER ADVANCES
AND OTHER ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,712 12,562
-------- --------
$842,507 $686,786
======== ========
</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>
May 31, August 31,
1996 1995
------------ ----------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable and
accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,582 $ 11,070
Payable to producers and others . . . . . . . . . . . . . . . . . . . . 83,762 74,349
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . 30,870 25,630
-------- --------
Total current liabilities . . . . . . . . . . . . . . . . . . 130,214 111,049
-------- --------
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value;
5,000,000 shares authorized,
none issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- --
Common stock, $.01 par value;
75,000,000 shares autho-
rized, 50,726,739 shares
and 49,893,745 shares issued
at May 31, 1996 and
August 31, 1995, respectively . . . . . . . . . . . . . . . . . . . . 507 499
Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110,167 87,628
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . 896,660 782,651
Treasury stock, at cost; 13,141,394
shares at May 31, 1996 and
August 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . (295,041) (295,041)
-------- --------
712,293 575,737
-------- --------
$842,507 $686,786
======== ========
</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 Nine Months Ended
May 31, May 31,
------------------------ -------------------------
1996 1995 1996 1995
-------- -------- -------- --------
(Dollars in thousands except per share data)
<S> <C> <C> <C> <C>
REVENUES....................... $165,763 $142,632 $504,687 $433,448
-------- -------- -------- --------
EXPENSES:
Producers' fees, programming
and other direct
operating costs............ 98,648 84,264 304,779 258,036
Selling, general and
administrative expenses.... 18,106 18,265 56,153 54,068
-------- -------- -------- --------
116,754 102,529 360,932 312,104
-------- -------- -------- --------
Income from operations..... 49,009 40,103 143,755 121,344
INTEREST AND
DIVIDEND INCOME.............. 6,218 5,497 19,124 14,526
NONRECURRING GAIN - Sale of
Buffalo Broadcasting Co. Inc. -- -- 14,060 --
-------- -------- -------- --------
Income before provision
for income taxes......... 55,227 45,600 176,939 135,870
PROVISION FOR INCOME TAXES..... 20,041 16,379 62,930 48,891
-------- -------- -------- --------
Net income................. $ 35,186 $ 29,221 $114,009 $ 86,979
======== ======== ======== ========
PRIMARY EARNINGS PER
SHARE........................ $ 0.92 $ 0.78 $ 3.03 $ 2.33
======== ======== ======== ========
</TABLE>
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>
Nine Months Ended
May 31,
-------------------------------
1996 1995
--------- ---------
(Dollars in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $114,009 $ 86,979
Items not affecting cash:
Gain on sale of Buffalo
Broadcasting Co. Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14,060) --
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . 592 492
Change in assets and liabilities:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15,552) (6,347)
Producer advances and deferred
costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (56,836) (2,996)
Accounts payable and accrued
liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,512 3,119
Payable to producers and others . . . . . . . . . . . . . . . . . . . . . . . . . 13,671 4,760
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,240 (3,681)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,657) (530)
-------- --------
Net cash provided by operating
activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,919 81,796
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
(Increase) decrease in investments . . . . . . . . . . . . . . . . . . . . . . . . . . . (42,726) 18,185
Proceeds from Sale of Buffalo
Broadcasting Co. Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,802 --
Additions to fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (321) (1,275)
-------- --------
Net cash (used in) provided
by investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (33,245) 16,910
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . . . 22,547 4,354
Purchase of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (6,111)
-------- --------
Net cash provided by (used in)
financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,547 (1,757)
-------- --------
NET INCREASE IN CASH AND CASH
EQUIVALENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,221 96,949
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 446,896 341,857
-------- --------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $483,117 $438,806
======== ========
</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)
(1) 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 nine months
and three months ended May 31, 1996 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
fiscal year ended August 31, 1995 and the footnotes related thereto included in
the Company's Annual Report on Form 10-K from which the August 31, 1995
balances presented herein have been derived. The results of operations for the
nine months and three months ended May 31, 1996 are not necessarily indicative
of the results of operations for the full year.
Revenue recognition
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. Because transmission to the satellite takes place, on the
average, no more than two to three days prior to the broadcast of the
programming, revenues are recognized on or about the air date.
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
recognized at the same time as the cash portion of the license fees derived
from such programming is recognized, in amounts
6
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KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Summary of significant accounting policies (continued)
adjusted for expected ratings.
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 39% and 37% of revenues for the nine
months ended May 31, 1996 and 1995, respectively; Wheel of Fortune accounted
for approximately 19% and 21% of revenues for such periods; Jeopardy! accounted
for approximately 17% and 18% of revenues for such periods; and Inside Edition
accounted for approximately 8% of revenues for each such period.
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; production and distribution costs for first-run
syndicated programming; and the direct operating costs of King World Direct.
That portion of recognized revenue that is to be paid to producers and owners
of programming is accrued as the license fees are earned. The share of license
fees payable by the Company to such producers 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.
Stockholders' equity
Primary earnings per share has been computed using the weighted
average number of common shares outstanding of 38,178,000 and 37,435,000,
respectively, for the three months ended May 31, 1996 and 1995 and 37,646,000
and 37,327,000,
7
<PAGE> 8
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
respectively, for the nine months ended May, 1996 and 1995, which include the
dilutive effect from the assumed exercise of vested and unvested stock options
outstanding as of the end of each such period. The difference between primary
and fully diluted earnings per share for all periods presented was not
significant.
(2) Nonrecurring gain - sale of Buffalo Broadcasting Co. Inc.
In October 1995, the Company closed its agreement to sell WIVB-TV,
the CBS-affiliated VHF television station in Buffalo, New York, to LIN
Television Corporation for $95 million in cash. As a result of this
transaction, the Company recorded a nonrecurring gain of approximately $14.1
million, of which approximately $9.8 million represents cash proceeds to the
Company from the sale. The remaining $4.3 million of such gain represents the
reversal of previously recognized accounting losses (with no associated income
tax effect) in excess of the Company's original investment.
(3) Producer advances
On January 2, 1996, the Company paid Harpo, Inc. ("Harpo"), the
producer of The Oprah Winfrey Show, two advances of $65 million each against
its aggregate minimum participation payments for the 1996-1997 and 1997-1998
broadcast seasons. Based on the license agreements in place for the seasons
covered by such advances, the Company believes that revenues from the series
will be sufficient to enable the Company to recoup such advances. Such
advances are refundable to the Company by Harpo and Ms. Winfrey if King World
terminates such license agreements with Harpo due to Harpo's failure to deliver
episodes of The Oprah Winfrey Show.
8
<PAGE> 9
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition
RESULTS OF OPERATIONS
COMPARISON OF NINE MONTHS AND THREE MONTHS ENDED MAY 31, 1996 AND 1995
Revenues
Revenues for the first nine months of fiscal 1996 increased by
approximately 16% compared to the first nine months of the prior fiscal year.
Such increase was primarily due to increased cash license fees from The Oprah
Winfrey Show and a general increase in revenues derived from the sale of
retained advertising time primarily on The Oprah Winfrey Show, Inside Edition
and American Journal, as a result of a 50% increase in the number of 30-second
advertising spots retained by the Company in each such series commencing with
the 1995-1996 television season. In addition, revenues from King World Direct,
the Company's direct response marketing subsidiary, increased substantially in
the first nine months of fiscal 1996 compared with the first nine months of
fiscal 1995, due primarily to the successful telemarketing campaigns for the
Wild America video series and the Sears Craftsman Robogrip pliers. King World
Direct operates in a seasonal business with revenues heavily reliant on the
Christmas selling season. Consequently, King World Direct's revenues and
earnings have historically been higher in the Company's second fiscal quarter
than in the first, third and fourth fiscal quarters. For the three months
ended May 31, 1996, the Company's revenues were approximately 16% higher than
the three months ended May 31, 1995, due primarily to the same factors as those
discussed above for the nine month period.
The Oprah Winfrey Show, Wheel of Fortune, Jeopardy! and Inside
Edition accounted for approximately 39%, 19%, 17% and 8%, respectively, of the
Company's revenues for the first nine months of fiscal 1996 compared to 37%,
21%, 18% and 8%, respectively, for the first nine months of fiscal 1995.
American Journal accounted for approximately 4% of the Company's revenues for
the nine months in each of fiscal 1996 and fiscal 1995, and Rolonda accounted
for approximately 2% of the Company's revenues for the first nine months of
fiscal 1996 and 3% for the first nine months of fiscal 1995. King World Direct
accounted for approximately 5% of the Company's revenues for the first nine
months of fiscal 1996 and 1% for the first nine months of fiscal 1995.
For the three months ended May 31, 1996, The Oprah Winfrey Show,
Wheel of Fortune, Jeopardy! and Inside Edition accounted for approximately 40%,
20%, 17% and 8%, respectively, of the Company's revenues compared to 38%, 21%,
18% and 8%, respectively, for the three months ended May 31, 1995. American
Journal accounted for approximately 4% of the Company's revenues
9
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for each of the three months ended May 31, 1996 and 1995, and Rolonda accounted
for approximately 2% of the Company's revenues for the three months ended May
31, 1996 and 3% for the three months ended May 31, 1995. King World Direct
accounted for approximately 2% of the Company's revenues for the three months
ended May 31, 1996 and 1% for the three months ended May 31, 1995.
Producers' fees, programming and other direct operating costs
Producers' fees, programming and other direct operating costs
increased by approximately 18% in the first nine months of fiscal 1996 compared
to the first nine months of fiscal 1995, primarily as a result of the higher
level of revenues generated by The Oprah Winfrey Show (a portion of which is
payable to the producer), increased production fees associated with The Oprah
Winfrey Show in the 1995-1996 television season and increased operating
expenses for King World Direct. For the three months ended May 31, 1996,
producers' fees, programming and other direct operating costs increased by
approximately 17% compared to the three months ended May 31, 1995, due
primarily to the same factors as those discussed above for the nine month
period.
Selling, general and administrative expenses
In December 1995, the Company entered into new employment agreements
with its President and Chief Executive Officer and its Chairman of the Board.
The agreements provide, among other things, for annual performance-based
bonuses, including bonuses payable upon the introduction of new shows and
bonuses which vary depending on the Company's net income and Common Stock price
during preestablished measurement periods. As a result, the Company's
compensation expense will increase if the Company introduces a new series in
syndication, if the Company's net income increases or if the Common Stock price
exceeds the specified levels during the applicable measurement periods. The
Company has recognized the proportionate share of certain of these bonuses in
its operating results for the first, second and third quarters of fiscal 1996.
Selling, general and administrative expenses were comparable for the
periods presented, increasing by approximately 4% and decreasing by
approximately 1% for the first nine months and third quarter of fiscal 1996,
respectively.
Net income and primary earnings per share
Due to the factors discussed above, the Company's operating income
for the nine months and three months ended May 31, 1996 increased by
approximately 18% and 22%, respectively, compared to the corresponding period
of the prior year. In addition, during the first quarter of fiscal 1996, the
Company recorded a nonrecurring gain of approximately $14.1 million on
10
<PAGE> 11
the sale of Buffalo Broadcasting Co. Inc. ("Buffalo") to LIN Television
Corporation.
Net income increased by approximately $27.0 million, or 31%, for the
nine months ended May 31, 1996, reflecting the increase in operating income,
the nonrecurring gain on the sale of Buffalo and higher interest income earned
on the Company's cash and investments. In addition, the Company's effective
tax rate for the first nine months of fiscal 1996 was slightly lower than in
the first nine months of fiscal 1995, due principally to the nontaxability of a
portion of the Buffalo gain. Primary earnings per share increased by $.70 per
share, or approximately 30%, to $3.03 per share in the nine months ended May
31, 1996 as a result of the increase in net income. Excluding the nonrecurring
gain on the sale of Buffalo, net income increased by approximately $16.7
million, or 19%, for the nine months ended May 31, 1996, and primary earnings
per share increased by $.43 per share, or approximately 18%, for such period to
$2.76 per share.
For the three months ended May 31, 1996, net income increased by
approximately $6.0 million, or 20%, reflecting the increase in operating income
and higher interest income earned on the Company's cash and investments, offset
by a slightly higher effective tax rate for the fiscal 1996 third quarter as
compared to the fiscal 1995 third quarter. Primary earnings per share
increased by $.14 per share, or approximately 18%, to $.92 in the three months
ended May 31, 1996 as a result of the increase in net income.
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 1994-1995 broadcast season. All such licenses
and renewals are contingent upon the continued production of the series by
their
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<PAGE> 12
respective producers through the broadcast seasons for which the licenses run.
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 at the commencement of 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. 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.
To date, Harpo and Ms. Winfrey have committed to produce and host the show
through the 1997-1998 broadcast season. Under the agreement, the Company has,
among other things, agreed to pay Harpo production fees and to guarantee
participation payments to Harpo at levels which, commencing with the 1995-1996
season, are substantially higher than those previously in effect. In addition,
in the 1997-1998 season and thereafter, the 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. These ar-
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<PAGE> 13
rangements are less favorable to the Company than those contained in prior
agreements between the Company and Harpo and, unless offset by significant
increases in license fees paid by television stations for the series in
forthcoming seasons, increased barter revenues from the series, or both, the
Company's net profits and cash flow derived from The Oprah Winfrey Show will
decline in the coming years.
The Company has paid Harpo a $60 million advance against its minimum
participation payments for the 1995-1996 broadcast season, which was fully
recouped as of May 31, 1996. In addition, on January 2, 1996, the Company paid
Harpo two advances of $65 million each against its aggregate minimum
participation payments for the 1996-1997 and 1997-1998 broadcast seasons.
Based on the license agreements in place for the seasons covered by such
advances, the Company believes that revenues from the series will be sufficient
to enable the Company to recoup such advances. Such advances are refundable to
the Company by Harpo and Ms. Winfrey if King World terminates the agreement due
to Harpo's failure to deliver episodes of the series.
Over the past few years, the regulatory environment in which the
Company operates has undergone significant changes and additional changes have
been proposed. As a result, the Company anticipates that it will face
increased competition from the networks and perhaps other telecommunications
carriers, that it will have more difficulty licensing its programming to
stations owned and operated by the three major television networks for all day
parts and to network-owned and -affiliated stations in the top 50 markets for
prime time access time periods and, even if it is able to so license its
programming, the profitability of such programming to the Company may be
reduced. These developments may have an adverse effect on the Company's future
net profits and cash flow.
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.
Through July 2, 1996, 1,698,800 shares of Common Stock were repurchased in open
market transactions, for aggregate consideration of approximately $59.8 million
(or approximately $35.20 per share), leaving 301,200 shares available for
repurchase under such program. The Company
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<PAGE> 14
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.
In October 1995, the Company closed its agreement to sell WIVB-TV,
the CBS-affiliated VHF television station in Buffalo, New York, to LIN
Television Corporation for $95 million in cash. As a result of this
transaction, the Company recorded a nonrecurring gain of approximately $14.1
million, of which approximately $9.8 million represents cash proceeds to the
Company from the sale. The remaining $4.3 million of such gain represents the
reversal of previously recognized accounting losses (with no associated income
tax effect) in excess of the Company's original investment.
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
As Interim Chief Financial Officer
and on behalf of the Registrant
July 15, 1996
14
<PAGE> 15
EXHIBIT INDEX
Exhibit No. Description
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-START> MAR-01-1996
<PERIOD-END> MAY-31-1996
<CASH> 483,117
<SECURITIES> 0
<RECEIVABLES> 71,143
<ALLOWANCES> 4,196
<INVENTORY> 0
<CURRENT-ASSETS> 633,959
<PP&E> 13,276
<DEPRECIATION> 10,295
<TOTAL-ASSETS> 842,507
<CURRENT-LIABILITIES> 130,214
<BONDS> 0
0
0
<COMMON> 507
<OTHER-SE> 711,786
<TOTAL-LIABILITY-AND-EQUITY> 842,507
<SALES> 0
<TOTAL-REVENUES> 165,763
<CGS> 0
<TOTAL-COSTS> 98,648
<OTHER-EXPENSES> 18,106
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 55,227
<INCOME-TAX> 20,041
<INCOME-CONTINUING> 35,186
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,186
<EPS-PRIMARY> 0.92
<EPS-DILUTED> 0.92
</TABLE>
