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, 1996
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.
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(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 [_]
Below are indicated the number of shares outstanding of each of the registrant's
classes of common stock as of February 12, 1997.
Class Outstanding at February 12, 1997
- --------------------------------------------------------------------------------
Common Stock, $0.01 par value 7,571,500
Class A Common Stock, $0.01 par value 750,000
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
dick clark productions, inc.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
December 31, June 30,
1996 1996
---------------- ----------------
Assets
- ----------------------------------------------
<S> <C> <C>
Cash and cash equivalents $ 7,567,000 953,000
Marketable securities 30,966,000 28,919,000
Accounts receivable 4,225,000 4,713,000
Program costs, net 3,313,000 1,741,000
Prepaid royalty 3,128,000 3,128,000
Leasehold improvements and equipment 12,796,000 10,949,000
Goodwill and other assets 2,116,000 2,308,000
---------------- ----------------
Total Assets $ 64,111,000 $ 52,711,000
================ ================
Liabilities & Stockholders' Equity
- ----------------------------------------------
Accounts payable $ 5,192,000 $ 5,012,000
Accrued residuals and participations 1,894,000 2,260,000
Production advances and deferred revenue 10,236,000 726,000
Current and deferred income taxes 1,215,000 602,000
---------------- ----------------
Total Liabilities 18,537,000 8,600,000
Commitments and contingencies
Minority interest 999,000 617,000
Stockholders' Equity:
Class A common stock, $0.01 par value,
2,000,000 shares authorized
750,000 shares outstanding 7,000 7,000
Common stock, $0.01 par value,
20,000,000 shares authorized
7,571,500 shares outstanding at
December 31, 1996 and 7,551,500 shares
outstanding at June 30, 1996 76,000 76,000
Additional paid-in capital 7,974,000 7,894,000
Retained earnings 36,518,000 35,517,000
---------------- ----------------
Total Stockholders' Equity 44,575,000 43,494,000
---------------- ----------------
Total Liabilities & Stockholders' Equity $ 64,111,000 $ 52,711,000
================ ================
</TABLE>
The accompanying notes are an integral part of these
consolidated balance sheets.
-2-
<PAGE>
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,
--------------------------------- ------------------------------------
1996 1995 1996 1995
-------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Gross Revenues $ 9,907,000 $ 18,561,000 $ 20,816,000 $26,946,000
Costs related to revenue 7,876,000 17,012,000 17,534,000 24,695,000
---------- ---------- ---------- ----------
Gross profit 2,031,000 1,549,000 3,282,000 2,251,000
General and administrative
expenses 1,084,000 1,189,000 2,172,000 2,188,000
Minority interest expense 354,000 -- 430,000 46,000
Interest and other income (538,000) (428,000) (942,000) (860,000)
---------- ---------- ---------- ----------
Income before provision
for income taxes 1,131,000 788,000 1,622,000 877,000
Provision for income taxes 433,000 276,000 621,000 308,000
---------- ---------- ---------- ----------
Net Income $ 698,000 $ 512,000 $ 1,001,000 $ 569,000
========== ========== ========== ==========
Net income per share 0.08 0.06 0.12 0.07
========== ========== ========== ==========
Weighted average number of shares 8,322,000 8,279,000 8,322,000 8,279,000
========== ========== ========== ==========
outstanding
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
-3-
<PAGE>
dick clark productions, inc.
CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
<TABLE>
<CAPTION>
For the Six Months Ended
December 31,
--------------------------------------
1996 1995
------------- ------------
<S> <C> <C>
Cash flows from operating activities
Net income $ 1,001,000 $ 569,000
Adjustments to reconcile net income to net cash
provided by operations
Amortization expense 10,586,000 18,878,000
Depreciation expense 696,000 503,000
Investment in program costs (11,861,000) (19,806,000)
Minority interest, net 382,000 (3,000)
Disposals of leasehold improvements and equipment 77,000 16,000
Change in assets and liabilities
Accounts receivable 488,000 (1,629,000)
Goodwill and other assets (105,000) (185,000)
Accounts payable, accrued residuals and participations (186,000) 1,212,000
Production advances and deferred revenue 9,510,000 6,587,000
Current and deferred income taxes payable 613,000 464,000
------------- -----------
Net cash provided by operations 11,201,000 6,606,000
------------- -----------
Cash flows from investing activities
Purchases of marketable securities (17,235,000) (4,674,000)
Sales of marketable securities 15,188,000 5,962,000
Capital expenditures (2,620,000) (1,861,000)
------------- -----------
Net cash used in investing activities (4,667,000) (573,000)
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Cash flows from financing activities
Exercise of stock options 80,000 -
------------- -----------
Net cash provided by financing activities 80,000 -
------------- -----------
Net increase in cash and cash equivalents 6,614,000 6,033,000
Cash and cash equivalents at beginning of the period 953,000 3,297,000
------------- -------------
Cash and cash equivalents at end of the period $ 7,567,000 9,330,000
============= =============
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for income taxes $ 6,000 $ 44,000
=========== ============
</TABLE>
The accompanying notes are an integral part of
these consolidated balance sheets.
-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, 1996, as included in the Company's 1996
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, 1996 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 December 31, 1996, and the results of its
operations and cash flows for the periods ended December 31, 1996 and 1995
respectively, have been made. Operating results for the three-month and
six-month periods ended December 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
The Company's business activities consist of two business segments:
entertainment operations and restaurant operations. The entertainment segment
contributed approximately 66% of the Company's consolidated revenues for the
three-month and six-month periods ending December 31, 1996. 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
5
<PAGE>
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 six-months ended December 31, 1996, were
$9,907,000 and $20,816,000, compared to $18,561,000 and $26,946,000 for the
comparable periods in the previous fiscal year. The decrease in revenues for the
three-month and six-month periods ended December 31, 1996 as compared to the
corresponding periods in the previous fiscal year is primarily attributable to
decreased revenue associated with the television series "Tempestt" which was
canceled in June 1996, as well as decreased 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 increased for the three-month and six-month period ended
December 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" delivered during the
corresponding periods last year. The increase in profitability is further
explained by the licensing of certain programs from the company's film library
to a cable network during the quarter ended December 31, 1996.
6
<PAGE>
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 expand 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 St. Louis,
Missouri in November of 1996 at a total capital investment of $994,000 which has
been funded by the Company. The Company plans to open a restaurant in Austin,
Texas in April of 1997, and Philadelphia, Pennsylvania in May of 1997, at a
total estimated capital investment of $6,600,000 (not taking into consideration
the St. Louis location) which will be funded by the Company. The Company has
decided at this time not to pursue the Louisville location.
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 $38,533,000 as of December 31, 1996.
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/ 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, 1997
9
<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>
<CIK> 0000805370
<NAME> dick clark productions, inc.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 7,567
<SECURITIES> 30,966
<RECEIVABLES> 4,225
<ALLOWANCES> 0
<INVENTORY> 3,313
<CURRENT-ASSETS> 42,758
<PP&E> 16,884
<DEPRECIATION> 4,087
<TOTAL-ASSETS> 64,111
<CURRENT-LIABILITIES> 15,428
<BONDS> 0
0
0
<COMMON> 8,057
<OTHER-SE> 36,518
<TOTAL-LIABILITY-AND-EQUITY> 64,111
<SALES> 9,907
<TOTAL-REVENUES> 9,907
<CGS> 7,876
<TOTAL-COSTS> 7,876
<OTHER-EXPENSES> 1,438
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (538)
<INCOME-PRETAX> 1,131
<INCOME-TAX> 433
<INCOME-CONTINUING> 698
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 698
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0.08
</TABLE>
