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 September 30, 1997
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 7, 1997.
Class Outstanding at November 7, 1997
- --------------------------------------------------------------------------------
Common Stock, $0.01 par value 7,639,000
Class A Common Stock, $0.01 par value 750,000
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dick clark productions, Inc.
CONSOLIDATED BALANCE SHEETS
ITEM 1.
FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, JUNE 30,
1997 1997
----------- -----------
ASSETS
- ------------------------------------------
Cash and cash equivalents $ 6,457,000 $ 3,322,000
Marketable securities 26,382,000 28,432,000
Accounts receivable 3,597,000 4,221,000
Program costs, net 5,012,000 4,615,000
Prepaid royalty 3,128,000 3,128,000
Leasehold improvements and equipment 16,554,000 16,711,000
Goodwill and other assets 2,518,000 2,869,000
----------- -----------
TOTAL ASSETS $63,648,000 $63,298,000
=========== ===========
LIABILITIES & STOCKHOLDERS' EQUITY
- ------------------------------------------
Liabilities:
Accounts payable $ 5,518,000 $ 5,958,000
Accrued residuals and participations 2,356,000 2,410,000
Production advances and deferred revenue 3,407,000 2,768,000
Current and deferred income taxes 1,001,000 936,000
----------- -----------
TOTAL LIABILITIES $12,282,000 $12,072,000
=========== ===========
Commitments and contingencies
Minority interest 932,000 907,000
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
7,631,500 shares outstanding 76,000 76,000
Additional paid-in capital 8,205,000 8,205,000
Retained earnings 42,146,000 42,031,000
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 50,434,000 50,319,000
----------- -----------
TOTAL LIABILITIES & STOCKHOLDERS'EQUITY $63,648,000 $63,298,000
=========== ===========
The accompanying notes are an integral part of these
consolidated balance sheets.
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dick clark productions, inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three Months Ended
September 30,
----------------------------
1997 1996
------------ ------------
Gross revenues $ 14,055,000 $ 10,909,000
Costs related to revenue 13,067,000 9,658,000
------------ ------------
Gross profit 988,000 1,251,000
General and administrative expenses 1,226,000 1,088,000
Minority interest expense 25,000 76,000
Interest and other income (448,000) (404,000)
------------ ------------
Income before provision
for income taxes 185,000 491,000
Provision for income taxes 70,000 188,000
Net income $ 115,000 $ 303,000
============ ============
Net income per share $ 0.01 $ 0.04
============ ============
Weighted average number of shares outstanding 8,382,000 8,322,000
============ ============
The accompanying notes are an integral part of these
consolidated statements.
3
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dick clark productions, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months Ended
September 30,
--------------------------
1997 1996
----------- -----------
<S> <C> <C>
Cash flows from operating activities
Net income $ 115,000 $ 303,000
Adjustments to reconcile net income to net cash
provided by operations
Amortization expense 7,608,000 6,128,000
Depreciation expense 532,000 334,000
Investment in program costs (7,829,000) (5,879,000)
Minority interest, net 25,000 27,000
Disposals of leasehold improvements and equipment 0 0
Changes in assets and liabilities
Accounts receivable 624,000 1,021,000
Goodwill and other assets 175,000 (103,000)
Accounts payable, accrued residuals and participations (494,000) 203,000
Production advances and deferred revenue 639,000 (62,000)
Current and deferred income taxes payable 65,000 182,000
----------- -----------
Net cash provided by operations 1,460,000 2,154,000
----------- -----------
Cash flows from investing activities
Purchases of marketable securities (2,014,000) (3,962,000)
Sales of marketable securities 4,064,000 5,449,000
Capital expenditures (375,000) (1,411,000)
----------- -----------
Net cash provided by investing activities 1,675,000 76,000
----------- -----------
Cash flows from financing activities
Exercise of stock options 0 80,000
----------- -----------
Net cash provided by financing activities 0 80,000
----------- -----------
Net increase in cash and cash equivalents 3,135,000 2,310,000
Cash and cash equivalents at beginning of the period 3,322,000 953,000
----------- -----------
Cash and cash equivalents at end of the period $ 6,457,000 $ 3,263,000
=========== ===========
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for income taxes $ 5,000 $ 6,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated statements.
4
<PAGE>
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, 1997, as included in the Company's 1997
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, 1997 balance sheet is included on page 29 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 September 30, 1997, and the results of its
operations and cash flows for the periods ended September 30, 1997 and 1996,
respectively, have been made. Operating results for the three-month period ended
September 30, 1997 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
- -------
The Company's business activities consist of two business segments:
entertainment operations and restaurant operations. The entertainment segment
contributed approximately 58% of the Company's consolidated revenues for the
three-month period ending September 30, 1997. 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 feature
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
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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 and series where there
would be anticipated future revenues earned from rerun and other exploitation.
Successful television movies and series 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 ended September 30, 1997 were $14,055,000
compared with $10,909,000 for the comparable period in the previous fiscal year.
The increase in revenues for the three months ended September 30, 1997, as
compared to the corresponding period in the previous fiscal year, is primarily
due to increased revenues from the Company's corporate productions business as
well as an increase in revenues from three additional restaurants which were not
operating during the corresponding period in the previous fiscal year.
Gross profit for television and corporate productions 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 period ended September 30, 1997, as compared to the corresponding
period in the previous fiscal year primarily as a result of decreased
profitability recognized from television series and specials programming, offset
in part by increased profits from the Company's corporate productions business.
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 plans to open a restaurant in Dallas, Texas in January of 1998
at a total estimated capital investment of $1,100,000 which will be funded by
the Company.
Working capital requirements for the Company's corporate events business
are anticipated to be met by revenues generated by that business.
6
<PAGE>
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 forseeable 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 $32,839,000 as of September 30, 1997.
GENERAL
- -------
Certain statements in the foregoing Management's Discussion and Analysis
(the "MD&A") are not historical facts or information and certain other
statements in the MD&A are forward looking statements that involve risks and
uncertainties, including, without limitation, the Company's ability to develop
and sell television programming, timely completion of negotiations for new
restaurant sites and the ability to construct, finance and open new restaurants
and to attract new corporate productions clients, and such competitive and other
business risks as from time to time may be detailed in the Company's Securities
and Exchange Commission reports.
7
<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.
8
<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/ William S. Simon
--------------------------------
William S. Simon
Chief Accounting Officer and Treasurer
(Principal Financial Officer and
authorized to sign on behalf of
Registrant)
Date: November ____, 1997
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND INCOME STATEMENT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
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<NAME> dick clark productions, inc.
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<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
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