SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
(Amendment No. 1)
( X ) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1998.
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
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(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 November 13, 1998.
Class Outstanding at November 13, 1998
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Common Stock, $0.01 par value 8,021,000
Class A Common Stock, $0.01 par value 787,000
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dick clark productions, inc.
Form 10-Q/A
For the Quarter Ended September 30, 1998
PART I. FINANCIAL INFORMATION Page
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................ 3
Part II. OTHER INFORMATION
SIGNATURES....................................................... 6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
INTRODUCTION
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The Company's business activities consist of two business
segments: entertainment operations and restaurant operations. The entertainment
segment contributed approximately 55% of the Company's consolidated revenues for
the three-month period ended September 30, 1998. 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 rerun broadcast of television programming (both domestic and foreign)
are recognized for each program when a particular program becomes contractually
available for broadcast. Depending on the type of contract, revenues for the
Company's corporate projects 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.
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. Costs for corporate projects are capitalized and
expensed as revenues are recognized.
RESULTS OF OPERATIONS
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Revenues for the three-month period ended September 30, 1998,
were $13,138,000, compared to $14,055,000 for the comparable period in the
previous fiscal year. The decrease in revenues for the three months ended
September 30, 1998, as compared to the corresponding period in the previous
fiscal year, is primarily due to decreased revenues from the Company's corporate
projects, offset in part by an increase in revenues from television series
programming.
Gross profit for the Company's 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, 1998, as compared to the corresponding
period in the previous fiscal year, primarily as a result of decreased
profitability associated with the Company's corporate projects.
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LIQUIDITY AND CAPITAL RESOURCES
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The Company has funded its working capital requirements for
television production primarily through installment payments from license fees
from the television and cable networks and minimum guaranteed distribution
payments from independent distributors. The Company has generally been able to
cover the costs of its television programming and corporate projects through
license or syndication fees and production revenues respectively, and has
incurred no significant capital expenditure commitments.
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 $38,755,000 as of September 30, 1998.
YEAR 2000
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The Company has assessed and continues to assess the impact of the Year
2000 Issue on its reporting systems and operations. The Year 2000 Issue exists
because computer systems and applications were historically designed to use two
digit fields to designate a year, and date sensitive systems may not recognize
2000 at all, or if recognized, as 1900.
Information technology systems account for most of the Year 2000 work
and include all computer systems and technology managed by the Company. All core
systems have been assessed and work is being undertaken to test and implement
changes where required. Information Technology vendors and suppliers have been
contacted as to their Year 2000 compliance and their responses have been
factored into the Company's plans. Normal software version upgrades and hardware
replacements, for which budget allocations had been made, have solved a majority
of the Company's Year 2000 Issues. As such, the Year 2000 costs are included in
the Company's normal expenditures for system maintenance and upgrades and not as
a separate Year 2000 cost category. Based on the nature of the Company's
business, it is not expected that any non-financial software applications and
hardware that may be impacted by the Year 2000 Issue would cause any
interruption in operations.
The Company is communicating with its significant customers and vendors
to understand their Year 2000 issues and how they might prepare themselves to
manage those issues as they relate to the Company. To date, no significant
customers or vendors have informed the Company that a material Year 2000 issue
exists which will have a material effect on the Company.
The Company expects to complete any changes required to overcome the
Year 2000 Issue during fiscal 1999. The Company expects that the total cost to
remediate the Year 2000 Issue will not be material to its results of operations,
liquidity or capital resources. The Company does not currently have a Year 2000
contingency plan but intends to create one during fiscal 1999.
GENERAL
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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
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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.
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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.
Date: January 26, 1999 By: /s/ William S. Simon
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William S. Simon
Chief Financial Officer and Treasurer
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