SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 28, 1998
IWERKS ENTERTAINMENT, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 0-22558 95-4439361
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
4540 West Valerio Street
Burbank, California 91505-1045
(Address of Principal Executive Offices)
(818) 841-7766
(Registrant's Telephone Number)
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ITEM 5. OTHER EVENTS
Reference is made to the press release of Registrant, issued on October 28,
1998, which contains information meeting the requirements of this Item 5, and
which is incorporated herein by this reference. A copy of this press release is
attached to this Form 8-K as Exhibit 99.1.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
October 30, 1998 IWERKS ENTERTAINMENT, INC.
By: /s/ BRUCE HINCKLEY
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Bruce Hinckley
Chief Financial Officer
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EXHIBIT INDEX
EXHIBITS PAGE NUMBER
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99.1 Press Release dated October 28, 1998.
Exhibit 99.1
IWERKS ENTERTAINMENT ANNOUNCES FISCAL FIRST-QUARTER 1999 RESULTS
BURBANK, Calif.--(BUSINESS WIRE)--Oct. 28, 1998--Iwerks Entertainment Inc.
(Nasdaq NM:IWRK - news) reported financial results for its fiscal 1999 first
quarter ended Sept. 30, 1998.
The company reported a net loss of $990,000, or $0.08 per share, on
revenues of $7.4 million for the quarter. This compares to a fiscal 1998
first-quarter net loss of $506,000, or $0.04 per share, on revenues of $8.1
million. Earnings before interest, taxes, depreciation and amortization (EBITDA)
was $41,000 for the three months ended Sept. 30, 1998, compared to $596,000 for
the corresponding prior-year period.
"Iwerks achieved positive EBITDA this quarter for the first time since the
first quarter of last year," said Charles Goldwater, Iwerks president and chief
executive officer. "Our improved EBITDA and cash flow compared to the most
recent three quarters are a notable and significant initial signal that our
strategic and operational initiatives are taking root. We have also
substantially reduced the net loss experienced in the prior three fiscal
quarters, and bookings for both of our major product lines were up fairly
significantly over last year's quarter, representing revenue that will be
recorded primarily in fiscal 1999.
"In addition, the company's cash position of over $9.3 million, combined
with less than $0.9 million of long-term debt and stockholders' equity in excess
of $35.8 million, position the company for recovery and, ultimately, growth."
Goldwater continued: "This quarter has also seen some other very
encouraging signs. During the quarter, Iwerks signed contracts for three new
TurboRide installations in Scotland, Austria and Italy, as well as two
large-format theater installations in Scotland and Italy. An Iwerks theater
became the first large-format theater to open in South America, and an Iwerks
theater scheduled to open later this year will be South America's second
large-format theater. These developments demonstrate the success of our
increased sales efforts around the world.
"During the first quarter we also announced an important alliance with
Media Technology Source (MTS), the largest independent full-service cinema
equipment dealer in the world. This partnership makes Iwerks and MTS the
ultimate one-stop shop for theater developers and gives us a competitive
advantage in the services and pricing we can offer our clients in building their
large-format, ride simulation and other unique attractions."
Goldwater added: "Iwerks also participated in the opening of two more Dave
and Buster's establishments this quarter, our fourth and fifth joint ventures
with D&B, including the first 3-D installation at their Palisades, N.Y.
facility."
Revenues for the three months ended Sept. 30, 1998 were lower than the same
period last year primarily as a result of lower sales from the touring division
as well as lower sales of simulation and large-format theaters, particularly in
Asia and South America. Lower hardware sales in those regions were partially
offset by increases in sales in North America and Europe. Gross profit
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percentage was 27% in the first quarter of fiscal 1999 compared with 41% in the
same period in 1998. The decrease in gross profit percentage was due primarily
to lower margins in the touring division, which experienced a decline in
revenues while costs remained relatively stable, and a change in the overall
sales product mix.
Selling, General and Administrative expenses were lower by $868,000 in the
current quarter, primarily as a result of reduced employee-related expense due
to lower staffing levels; lower marketing expenses for trade shows; and higher
legal and professional fees recorded in the first quarter of the prior fiscal
year associated with a proposed merger, which was defeated by shareholders in
March 1998.
Iwerks Entertainment is one of the world's leading full-service providers
of high-tech entertainment systems, support services and film-based software in
large-format, ride simulation and specialty venue attractions. More than 250
Iwerks attractions can be found worldwide at location-based entertainment
centers, amusement parks, movie theaters, family entertainment centers, shopping
centers, casinos, resorts, nightclubs, restaurants, museums, fairs, festivals
and more. Visit Iwerks Entertainment on the World Wide Web at www.iwerks.com.
Forward-Looking Statements Disclosure
With the exception of the historical information, the matters discussed
above include forward-looking statements that involve risks and uncertainties.
Among the important factors that could cause actual results to differ from those
indicated in the forward-looking statements are the ongoing economic conditions
and situation in the Asia Pacific region, the level of available sales in the
rest of the world, costs of sales and the ability of the company to maintain
pricing levels necessary to maintain gross profit margins, the level of selling,
general and administrative costs, the performance by the company under existing
purchase contracts and the ability to obtain new contracts, the success of the
company's owned and operating strategy, the success of the company's film
software and the effects of competition.
IWERKS ENTERTAINMENT INC.
Financial Highlights
Fiscal 1999 First Quarter
(in 000s, except per-share data)
Condensed Consolidated Statements of Operations
Three Months Ended
(unaudited)
Sept. 30, 1998 Sept. 30, 1997
Revenue $ 7,373 $ 8,052
Cost and expenses:
Cost of Sales 5,378 4,789
Selling, General
& Administrative 3,050 3,918
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Total costs 8,428 8,707
Interest income,
net 65 149
Net loss $ (990) $ (506)
Basic and diluted
net loss per common
share $ (0.08) $ (0.04)
Weighted avg shares
outstanding - basic and
diluted 12,346 12,160
Condensed Consolidated Balance Sheets
Sept 30., 1998 June 30, 1998
(unaudited) (audited)
ASSETS
Cash and short-term investments $ 9,307 $ 10,464
Other current assets 10,028 9,167
Properties and film inventory, net 13,161 13,050
Goodwill 14,585 14,742
Other assets 3,513 3,380
Total assets $ 50,594 $ 50,803
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities $ 13,854 $ 12,887
Long-term liabilities 892 1,082
Stockholders' equity 35,848 36,834
Total liabilities &
stockholders' equity $ 50,594 $ 50,803
CONTACT:
Iwerks Entertainment Inc., Burbank
Bruce Hinckley, 818/955-7800
or
BSMG Worldwide
Joe Kessler, 310/966-5510
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