<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
( X ) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended December 31, 1995.
OR
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ____________ to ____________
Commission File No. 0-15192
DICK CLARK PRODUCTIONS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 23-2038815
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3003 West Olive Avenue, Burbank, California 91505-4590
(Address of principal executive offices, including zip code)
(818) 841-3003
(Registrant's telephone number, including area code)
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
--- ---
Below are indicated the number of shares outstanding of each of the registrant's
classes of common stock as of November 8, 1995.
<TABLE>
<CAPTION>
Class Outstanding at February 12, 1996
- ------------------------------------- --------------------------------
<S> <C>
Common Stock, $0.01 par value 7,528,500
Class A Common Stock, $0.01 par value 750,000
</TABLE>
<PAGE> 2
DICK CLARK PRODUCTIONS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
December 31, June 30,
Assets 1995 1995
- ------ ----------- --------
<S> <C> <C>
Cash and cash equivalents $ 9,330,000 $ 3,297,000
Marketable securities 24,481,000 25,769,000
Accounts receivable 3,932,000 2,303,000
Program costs, net 5,287,000 4,306,000
Prepaid royalty 3,128,000 3,128,000
Leasehold improvements and equipment 8,494,000 7,152,000
Goodwill and other assets 2,485,000 2,353,000
----------- -----------
Total assets $57,137,000 $48,308,000
=========== ===========
Liabilities & Stockholders' Equity
- ----------------------------------
Accounts payable $ 5,233,000 $ 4,109,000
Accrued residuals and participations 1,526,000 1,438,000
Production advances and deferred revenue 10,684,000 4,097,000
Current and deferred income taxes 812,000 348,000
----------- -----------
Total liabilities 18,255,000 9,992,000
Commitments and contingencies -- --
Minority interest 521,000 524,000
Stockholders' equity:
Class A common stock, $.01 par value,
2,000,000 shares authorized
750,000 shares outstanding 7,000 7,000
Common stock, $.01 par value,
20,000,000 shares authorized
7,528,500 shares outstanding 76,000 76,000
Additional paid-in capital 7,790,000 7,790,000
Retained earnings 30,488,000 29,919,000
----------- -----------
Total stockholders' equity 38,361,000 37,792,000
Total liabilities & stockholders' equity $57,137,000 $48,308,000
=========== ===========
</TABLE>
The accompanying note is an integral part of these consolidated balance sheets.
<PAGE> 3
DICK CLARK PRODUCTIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For The Three Months Ended For The Six Months Ended
December 31, December 31,
---------------------------- ---------------------------
1995 1994 1995 1994
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Gross revenues $18,561,000 $9,869,000 $26,946,000 $18,320,000
Costs related to revenue 17,012,000 8,470,000 24,695,000 16,170,000
----------- ---------- ----------- -----------
Gross profit 1,549,000 1,399,000 2,251,000 2,150,000
General and administrative expenses 1,189,000 1,037,000 2,188,000 2,088,000
Minority interest expense -- 21,000 46,000 51,000
Interest and other income (428,000) (431,000) (860,000) (790,000)
----------- ---------- ----------- -----------
Income before provision for income taxes 788,000 772,000 877,000 801,000
Provision for income taxes 276,000 270,000 308,000 280,000
----------- ---------- ----------- -----------
Net income $ 512,000 $ 502,000 $ 569,000 $ 521,000
=========== ========== =========== ===========
Net income per share $ 0.06 $ 0.06 $ 0.07 $ 0.06
=========== ========== =========== ===========
Weighted average number of shares outstanding 8,279,000 8,277,000 8,279,000 8,277,000
=========== ========== =========== ===========
</TABLE>
The accompanying note is an integral part of these consolidated statements.
<PAGE> 4
DICK CLARK PRODUCTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
<TABLE>
<CAPTION>
For the Six Months Ended
December 31,
---------------------------
1995 1994
------------ ----------
<S> <C> <C>
Cash flows from operating activities
Net income $ 569,000 $ 19,000
Adjustments to reconcile net income to net cash
provided by operations
Amortization expense 18,878,000 3,598,000
Depreciation expense 503,000 235,000
Minority interest, net (3,000) 30,000
Disposals of leasehold improvements and equipment 16,000 0
Changes in assets and liabilities
Accounts receivable (1,629,000) 846,000
Goodwill and other assets (185,000) (114,000)
Accounts payable, accrued residuals and participations 1,212,000 386,000
Production advances and deferred revenue 6,587,000 205,000
Current and deferred income taxes payable 464,000 (55,000)
------------ -----------
Net cash provided by operations 26,412,000 5,150,000
Cash flows from investing activities
Investment in program costs (19,806,000) (5,652,000)
Purchases of marketable securities (4,674,000) (827,000)
Sales of marketable securities 5,962,000 1,996,000
Capital expenditures (1,861,000) (158,000)
------------ -----------
Net cash used for investing activities (20,379,000) (4,641,000)
------------ -----------
Net increase (decrease) in cash and cash equivalents 6,033,000 509,000
Cash and cash equivalents at beginning of the year 3,297,000 4,336,000
------------ -----------
Cash and cash equivalents at end of the period $ 9,330,000 $ 4,845,000
============ ===========
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for income taxes $ 44,000 $ 65,000
============ ===========
</TABLE>
The accompanying note is an integral part of these consolidated statements.
<PAGE> 5
DICK CLARK PRODUCTIONS, INC.
NOTE TO FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Financial Statement Presentation
The consolidated financial statements of dick clark productions, inc.
and subsidiaries (collectively the "Company") have been prepared in accordance
with generally accepted accounting principles for interim financial information.
Interim financial statements do not include all of the information and footnotes
required by generally accepted accounting principles for complete year-end
financial statements. The accompanying financial statements should be read in
conjunction with the more detailed financial statements and related footnotes
for the fiscal year ended June 30, 1995, as included in the Company's 1995
Annual Report on Form 10-K (the "Annual Report") filed with the Securities and
Exchange Commission. A signed independent accountant's report regarding the June
30, 1995 balance sheet is included on page 31 of the Annual Report. Significant
accounting policies used by the Company are summarized in Note 2 to the
financial statements included in the Annual Report.
In the opinion of management, all adjustments (which include only
recurring normal adjustments) required for a fair presentation of the financial
position of the Company as of December 31, 1995, and the results of its
operations and cash flows for the periods ended December 31, 1995 and 1994
respectively, have been made. Operating results for the three-month and
six-month periods ended December 31, 1995, are not necessarily indicative of
the operating results for the entire fiscal year.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
A majority of the Company's revenues are derived from its entertainment
related businesses which primarily involve the production and licensing of
television programming. The Company's television programming is generally
licensed to the major television networks, cable networks, domestic and foreign
syndicators, and advertisers. The Company also receives production fees from
program buyers who retain ownership of the programming. In addition, the Company
derives revenues from the rerun broadcast of its programs on network and cable
television and in foreign markets, as well as the licensing of its media and
film archives for use in feature films, television movies, etc. The Company, on
a limited basis, also develops theatrical films in association with established
studios that can provide financing necessary for production.
<PAGE> 6
The Company's business activities consist of two business segments:
entertainment operations and restaurant operations. The entertainment segment
contributed approximately 85% and 75% of the Company's consolidated revenues for
the three-month and six-month periods ending December 31, 1995, respectively.
License fees for the production of television programming are paid to
the Company pursuant to license agreements during production and upon delivery
of the programs or shortly thereafter. Revenues from network and cable
television license agreements are recognized for financial statement purposes
upon delivery of each program or in the case of a series, each episode. Revenues
from the rerun broadcast of television programming (both domestic and foreign)
are recognized for each program when a particular program becomes contractually
available for broadcast.
Production costs of television programs are capitalized and charged to
operations on an individual basis in the ratio that the current year's gross
revenues bear to management's estimate of the total revenues for each program
from all sources. Substantially all television production costs are amortized in
the initial year of delivery except for television movies where there would be
anticipated future revenues earned from rerun and other exploitation. Successful
television movies can achieve substantial revenues from rerun broadcasts in both
foreign and domestic markets after the initial broadcast, thereby allowing a
portion of the production costs to be amortized against future revenues.
Distribution costs of television programs are expensed in the period incurred.
Depending on the type of contract, revenues for dick clark corporate
productions, inc. are recognized when the services are completed for a live
event, when a tape or film is delivered to a customer, or when services are
completed pursuant to a particular phase of a contract which provides for
periodic payments. Costs for corporate event productions are capitalized and
expensed as revenues are recognized.
RESULTS OF OPERATIONS
Revenues for the three months and six months ended December 31,
1995, were $18,561,000 and $26,946,000, compared to $9,869,000 and $18,320,000
for the comparable periods in the previous fiscal year. The increase in revenues
for the three-month and six-month periods ended December 31, 1995 as compared to
the corresponding periods in the previous fiscal year is primarily attributable
to increased revenue associated with the television series "Tempestt", which
debuted in September 1995, as well as increased revenues associated with the
Company's corporate productions business.
Gross profit for any period is a function of the profitability of the
individual programs and projects delivered during that period. Gross profit as a
percentage of revenues decreased for the three-month and six-month period ended
December 31, 1995, as compared to the corresponding period in the previous
fiscal year, primarily as a result of lower profitability as a percentage of
sales of the television talk show series "Tempestt" as compared to the Company's
other television programming. This syndicated 5-day per week talk show is in its
first year of release. Talk show series in their first year of release typically
earn small gross profits as a percentage of sales. Generally when talk show
series have been broadcast for a number of years they can garner higher
profitability. The decrease in gross profits as a percentage of sales is
<PAGE> 7
further explained by a one time project delivered during the quarter for a
customer of dick clark corporate productions which contributed lower gross
profits as a percentage of the contracted revenues due to the size and nature of
the project. As a general industry rule, projects of this size and nature
generate lower gross profit percentages.
LIQUIDITY AND CAPITAL RESOURCES
The Company has funded its working capital requirements for television
production primarily through installment payments from license fees from the
television networks and minimum guaranteed distribution payments from
independent distributors. The Company has generally been able to cover the costs
of its television programming through license or syndication fees and has
incurred no significant capital expenditure commitments.
The Company intends to continue to accelerate the expansion of its
restaurant business through the opening of additional American Bandstand Grill
restaurants. The Company expects that the opening of additional restaurants will
be financed from available capital and alternative financing methods such as
joint ventures and limited recourse borrowings. The Company plans to open a
restaurant in Cincinnati, Ohio in March of 1996 and it is possible that it will
begin construction of one additional location in fiscal 1996 at a total
estimated capital investment of $4,000,000 which will be funded by the Company.
Capital requirements for the Company's corporate events business are
anticipated to be met by production revenues.
The Company expects that its available capital base and cash generated
from operations will be more than sufficient to meet its cash requirements for
the foreseeable future.
The Company has no outstanding bank borrowings or other borrowed
indebtedness and had cash and marketable securities (principally consisting of
government securities) of approximately $33,811,000 as of December 31, 1995.
<PAGE> 8
PART II. OTHER INFORMATION
Item 1. None
Item 2. None
Item 3. None
Item 4. Not Applicable
Item 5. None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Financial Data Schedule
(b) Reports
No event has occurred during the quarter for
which this report is filed that would
require the filing of a report on Form 8-K
and, therefore, no such report has been
filed.
<PAGE> 9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
dick clark productions, inc.
by: /s/ Kenneth H. Ferguson
--------------------------------------------
Kenneth H. Ferguson
Chief Financial Officer and Treasurer
(Principal Financial Officer and authorized
to sign on behalf of Registrant)
Date: February 12, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> DEC-31-1996
<CASH> 9,330
<SECURITIES> 24,481
<RECEIVABLES> 3,932
<ALLOWANCES> 0
<INVENTORY> 5,287
<CURRENT-ASSETS> 37,743
<PP&E> 11,358
<DEPRECIATION> 2,864
<TOTAL-ASSETS> 57,137
<CURRENT-LIABILITIES> 15,917
<BONDS> 0
0
0
<COMMON> 7,873
<OTHER-SE> 30,488
<TOTAL-LIABILITY-AND-EQUITY> 57,137
<SALES> 26,946
<TOTAL-REVENUES> 26,946
<CGS> 24,695
<TOTAL-COSTS> 24,695
<OTHER-EXPENSES> 2,234
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (860)
<INCOME-PRETAX> 877
<INCOME-TAX> 308
<INCOME-CONTINUING> 569
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 569
<EPS-PRIMARY> 0.07
<EPS-DILUTED> 0.07
</TABLE>
