<PAGE>
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 March 31, 1996
OR
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
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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
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(Address of principal executive offices, including zip code)
(818) 841-3003
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(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
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Below are indicated the number of shares outstanding of each of the registrant's
classes of common stock as of May 13, 1996.
Class Outstanding at May 13, 1996
- ----------------------------------- ---------------------------
Common Stock, $0.01 par value 7,531,500
Class A Common Stock, $0.01 par value 750,000
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ITEM 1. dick clark productions, inc.
FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
March 31, June 30,
1996 1995
----------- -----------
<S> <C> <C>
ASSETS
- ------
Cash and cash equivalents $ 6,293,000 $ 3,297,000
Marketable securities 31,008,000 25,769,000
Accounts receivable 2,262,000 2,303,000
Program costs, net 3,250,000 4,306,000
Prepaid royalty 3,128,000 3,128,000
Leasehold improvements and equipment 9,573,000 7,152,000
Goodwill and other assets 1,825,000 2,353,000
----------- -----------
Total assets $57,339,000 $48,308,000
=========== ===========
LIABILITIES & STOCKHOLDERS' EQUITY
- ----------------------------------
Accounts payable $ 4,600,000 $ 4,109,000
Accrued residuals and participants 2,708,000 1,438,000
Production advances and deferred revenues 4,200,000 4,097,000
Current and deferred income taxes 2,677,000 348,000
----------- -----------
Total liabilities 14,185,000 9,992,000
Commitments and contingencies 0 0
Minority interest 412,000 542,000
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 34,869,000 29,919,000
----------- -----------
Total stockholders' equity 42,742,000 37,792,000
=========== ===========
Total liabilities & stockholders' equity $57,339,000 $48,308,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
<PAGE>
dick clark productions, inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
March 31, March 31,
-------------------------- -------------------------
1996 1995 1996 1995
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Gross revenues $28,113,000 $16,190,000 $55,059,000 $34,510,000
Costs related to revenue 21,016,000 10,861,000 45,711,000 27,031,000
----------- ----------- ----------- -----------
Gross profit 7,097,000 5,329,000 9,348,000 7,479,000
General and administrative expenses 1,007,000 1,163,000 3,195,000 3,252,000
Minority interest expense 51,000 26,000 97,000 77,000
Interest and other income (527,000) (366,000) (1,387,000) (1,156,000)
----------- ----------- ----------- -----------
Income before provision
for income taxes 6,566,000 4,506,000 7,443,000 5,306,000
Provision for income taxes 2,186,000 1,577,000 2,493,000 1,857,000
----------- ----------- ----------- -----------
Net income $ 4,380,000 $ 2,929,000 $ 4,950,000 $ 3,449,000
=========== =========== =========== ===========
Net income per share $ 0.53 $ 0.35 $ 0.60 $ 0.42
=========== ============ ============ ===========
Weighted average number of shares outstanding 8,278,500 8,278,000 8,278,500 8,277,000
=========== ============ ============ ===========
</TABLE>
The accompanying note is an integral part of these consolidated statements.
<PAGE>
dick clark productions, inc.
CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
March 31,
1996 1995
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<S> <C> <C>
Cash flows from operating activities
Net income $ 4,950,000 $ 3,449,000
Adjustments to reconcile net income to net cash
provided by operations
Amortization expense 35,912,000 16,194,000
Depreciation expense 784,000 734,000
Investment in program costs (34,744,000) (17,023,000)
Minority interest, net (112,000) (472,000)
Disposals of leasehold improvements and equipment 64,000 3,000
Changes in assets and liabilities
Accounts receivable 41,000 908,000
Prepaid Royalty 0 (3,128,000)
Goodwill and other assets 416,000 (84,000)
Accounts payable, accrued residuals and participations 1,761,000 (2,171,000)
Production advances and deferred revenue 103,000 1,285,000
Current and deferred income taxes payable 2,329,000 1,552,000
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Net cash provided by operations 11,504,000 1,247,000
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Cash flows from investing activities
Purchases of marketable securities (12,496,000) (6,948,000)
Sales of marketable securities 7,257,000 7,315,000
Capital expenditures (3,269,000) (475,000)
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Net cash used for investing activities (8,508,000) (108,000)
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Cash flows from financing activities
Exercise of stock options 0 7,000
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Net cash provided from financing activities 0 7,000
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Net increase (decrease) in cash and cash equivalents 2,996,000 1,146,000
Cash and cash equivalents at beginning of the year 3,297,000 4,336,000
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Cash and cash equivalents at end of the period $ 6,293,000 $ 5,482,000
============ ============
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for income taxes $ 134,000 $ 305,000
============ ============
</TABLE>
The accompanying note is an integral part of these consolidated statements.
<PAGE>
DICK CLARK PRODUCTIONS, INC.
NOTE TO FINANCIAL STATEMENTS
----------------------------
(Unaudited)
1. Basis of Financial Statement Presentation
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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 March 31, 1996, and the results of its operations and cash
flows for the periods ended March 31, 1996 and 1995 respectively, have been
made. Operating results for the three-month and nine-month periods ended March
31, 1996, 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
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The Company's business activities consist of two business segments:
entertainment operations and restaurant operations. The entertainment segment
contributed approximately 89% and 83% of the Company's consolidated revenues for
the three-month and nine-month periods ending March 31, 1996, respectively.
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
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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.
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 nine months ended March 31, 1996, were
$28,113,000 and $55,059,000, compared to $16,190,000 and $34,510,000 for the
comparable periods in the previous fiscal year. The increase in revenues for the
three-month period ended March 31, 1996 is primarily attributable to the
delivery of a movie for television, which did not occur in the corresponding
quarter last year. The Company also recognized increased revenue associated with
the television series "Tempestt" (which debuted in September 1995), as well as
increased revenues associated with the Company's specials productions business
due in part to an improved contract for one of the Company's annual television
specials.
The increase in revenues for the nine-month period ended March 31, 1996 is
primarily attributable to increased revenue associated with the television
series "Tempestt" as well as increased revenues associated with the Company's
corporate productions business. The increase is further explained by the
delivery during the year of a movie for television which did not occur in the
corresponding period last year.
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
<PAGE>
revenues decreased for the three-month and nine-month period ended March 31,
1996, 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 further explained by
one project 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 opened a restaurant
in Cincinnati, Ohio in March of 1996 at a total capital investment of $3,180,000
which has been funded by the Company. Additional locations will be constructed
and opened in fiscal 1997.
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 $37,301,000 as of March 31, 1996.
<PAGE>
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>
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: May 3, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 6,293
<SECURITIES> 31,008
<RECEIVABLES> 2,262
<ALLOWANCES> 0
<INVENTORY> 3,250
<CURRENT-ASSETS> 39,563
<PP&E> 12,698
<DEPRECIATION> 3,125
<TOTAL-ASSETS> 57,339
<CURRENT-LIABILITIES> 8,800
<BONDS> 0
0
0
<COMMON> 7,873
<OTHER-SE> 34,869
<TOTAL-LIABILITY-AND-EQUITY> 57,339
<SALES> 55,059
<TOTAL-REVENUES> 55,059
<CGS> 45,711
<TOTAL-COSTS> 45,711
<OTHER-EXPENSES> 3,292
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1,387)
<INCOME-PRETAX> 7,443
<INCOME-TAX> 2,493
<INCOME-CONTINUING> 4,950
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,950
<EPS-PRIMARY> 0.60
<EPS-DILUTED> 0.60
</TABLE>
