SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarter ended September 30, 1994
Commission File No. 0-17342
LIVE ENTERTAINMENT INC.
(Exact name of Registrant as specified in its charter)
Delaware 95-4178252
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
15400 Sherman Way, Van Nuys, California 91406
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (818) 988-5060
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
Indicate by check mark whether the Registrant has filed all
documents and reports required to be filed by Section 12, 13 or 15(d) of
the Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court.
Yes X No
As of November 3, 1994, there were 12,093,610 shares of the
Registrant's Common Stock, 6,000,000 shares of the Registrant's Series
B Cumulative Convertible Preferred Stock and 15,000 shares of the
Registrant's Series C Convertible Preferred Stock outstanding.
<PAGE>
LIVE ENTERTAINMENT INC. AND SUBSIDIARIES
INDEX
PART I - FINANCIAL INFORMATION Page
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED):
Condensed Consolidated Balance Sheets at
December 31, 1993 and September 30, 1994 . . . . . . . 1-2
Condensed Consolidated Statements of
Operations for the Three and Nine months ended
September 30, 1993 and 1994. . . . . . . . . . . . . . 3
Condensed Consolidated Statements of
Cash Flows for the Nine months ended
September 30, 1993 and 1994. . . . . . . . . . . . . . 4
Notes to Condensed Consolidated Financial
Statements . . . . . . . . . . . . . . . . . . . . . . 5-11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS. . . . . . . . . . . . . . . . . . . . . 11-16
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . 17-18
ITEM 3(b).DEFAULTS UPON SENIOR SECURITIES - DIVIDEND
ARREARAGE ON PREFERRED STOCK . . . . . . . . . . . . . 19
ITEM 5. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . 19
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. . . . . . . . . . . . 19
<PAGE>
PART I - FINANCIAL INFORMATION
LIVE ENTERTAINMENT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Amounts in Thousands)
December 31, September 30,
1993 1994
ASSETS
CURRENT ASSETS:
Cash and cash equivalents, including restricted
cash of $17,173 (1993) and $40,618 (1994). . . . . $ 42,358 $ 53,546
Accounts receivable, less allowances of $25,440
(1993) and $19,055 (1994). . . . . . . . . . . . . 2,432 7,172
Officer and employee receivables. . . . . . . . . . 407 213
Inventories . . . . . . . . . . . . . . . . . . . . 10,124 10,603
Film rights . . . . . . . . . . . . . . . . . . . . 29,839 47,343
Deferred income taxes . . . . . . . . . . . . . . . 4,176 3,876
Other . . . . . . . . . . . . . . . . . . . . . . . 1,136 1,001
Assets held for sale. . . . . . . . . . . . . . . . 86,000 9,887
TOTAL CURRENT ASSETS 176,472 133,641
PROPERTY AND EQUIPMENT, net. . . . . . . . . . . . . 1,686 1,537
RECEIVABLE FROM AFFILIATE. . . . . . . . . . . . . . 8,047 --
FILM RIGHTS, net of accumulated amortization
of $429,881 (1993) and $465,640 (1994). . . . . . . 32,228 16,132
OTHER ASSETS . . . . . . . . . . . . . . . . . . . . 1,320 1,516
GOODWILL, net of accumulated amortization of
$32,193 (1993) and $35,136 (1994) . . . . . . . . . 33,796 30,853
$ 253,549 $ 183,679
(Continued)<PAGE>
LIVE ENTERTAINMENT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Continued)
(Unaudited)
(Amounts in Thousands)
(Except Share Amounts)
December 31, September 30,
1993 1994
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
12% Subordinated Secured Notes due 1994 . . . . . . $ 36,707 $ 31,250
Current maturities of long-term obligations . . . . 8,043 6,619
Current maturities of Increasing Rate Senior
Subordinated Notes . . . . . . . . . . . . . . . . 3,791 3,712
Film rights obligations . . . . . . . . . . . . . . 15,850 11,896
Accounts payable, deferred revenue and accrued
expenses . . . . . . . . . . . . . . . . . . . . . 18,343 21,245
Liabilities related to assets held for sale . . . . 46,601 5,579
Series B Cumulative Convertible Preferred Stock
(5,000,000 shares 1993). . . . . . . . . . . . . . 40,000 --
Dividends payable . . . . . . . . . . . . . . . . . 1,340 1,909
TOTAL CURRENT LIABILITIES . . . . . . . . . . . . 170,675 82,210
LONG-TERM OBLIGATIONS, less current maturities . . . 3,333 --
INCREASING RATE SENIOR SUBORDINATED NOTES DUE
1999, including capitalized interest of
$20,662 (1993) and $16,896 (1994), less current
maturities . . . . . . . . . . . . . . . . . . . . 56,871 53,184
DEFERRED REVENUE AND ACCRUED EXPENSES, less
current portion . . . . . . . . . . . . . . . . . . 1,740 1,008
DEFERRED INCOME TAXES. . . . . . . . . . . . . . . . 10,188 10,188
STOCKHOLDERS' EQUITY:
Series B Cumulative Convertible Preferred Stock--
authorized 9,000,000 shares; $1.00 par value;
$60,000 liquidation preference ($52,200
redemption value 1994); 1,000,000 (1993) and
6,000,000 (1994) shares outstanding. . . . . . . . 1,000 6,000
Series C Convertible Preferred Stock-- 15,000 shares
authorized and outstanding; $1.00 par value;
liquidation preference of $15,589 (1993) and
$15,978 (1994) . . . . . . . . . . . . . . . . . . 15 15
Common Stock--authorized 120,000,000 shares; $0.01
par value; 12,090,016 (1993) and 12,093,610 (1994)
shares outstanding . . . . . . . . . . . . . . . . 121 121
Additional paid-in capital. . . . . . . . . . . . . 106,507 138,688
Retained deficit. . . . . . . . . . . . . . . . . . (96,901) (107,735)
10,742 37,089
$ 253,549 $ 183,679
See notes to consolidated financial statements.<PAGE>
LIVE ENTERTAINMENT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Amounts in Thousands, Except Per Share Data)
Three Months Ended Nine Months Ended
September 30, September 30,
1993 1994 1993 1994
Net Sales. . . . . . . . . . . . . . . . . $38,629 $33,845 $103,328 $81,261
Cost of goods sold . . . . . . . . . . . . 33,622 32,481 85,289 71,248
GROSS PROFIT. . . . . . . . . . . . . . 5,007 1,364 18,039 10,013
Operating Expenses:
Selling, general and
administrative expenses . . . . . . . . 4,281 5,647 12,095 13,813
Amortization of goodwill. . . . . . . . . 981 981 2,943 2,943
5,262 6,628 15,038 16,756
(255) (5,264) 3,001 (6,743)
Disposal of VCL/Carolco
Communications GmbH:
Net Sales . . . . . . . . . . . . . . . . 5,494 -- 20,347 --
Costs and Expenses. . . . . . . . . . . . 6,465 -- 23,244 --
(971) -- (2,897) --
OPERATING PROFIT (LOSS) . . . . . . . . (1,226) (5,264) 104 (6,743)
Interest expense, net . . . . . . . . . . (1,722) (1,362) (3,808) (3,791)
LOSS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES . . . . . . . . . (2,948) (6,626) (3,704) (10,534)
Income tax expense. . . . . . . . . . . . -- -- -- 300
LOSS FROM CONTINUING OPERATIONS . . . . (2,948) (6,626) (3,704) (10,834)
Discontinued Operations:
Loss from discontinued operations
net of income taxes . . . . . . . . . . (330) -- (1,843) --
LOSS FROM DISCONTINUED OPERATIONS . . (330) -- (1,843) --
NET LOSS. . . . . . . . . . . . . . . $(3,278)$(6,626) $(5,547)$(10,834)
Loss per common share:
Continuing operations . . . . . . . . . . $ (.32) $ (.77) $ (.53) $ (1.48)
Discontinued operations . . . . . . . . . (.03) (.--) (.15) --
Net loss. . . . . . . . . . . . . . . . . $ (.35) $ (.77) $ (.68) $ (1.48)
Weighted average number of
shares outstanding. . . . . . . . . . . 12,090 12,094 12,089 12,094
See notes to condensed consolidated financial statements.<PAGE>
LIVE ENTERTAINMENT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in Thousands)
Nine Months Ended
September 30,
1993 1994
OPERATING ACTIVITIES:
Loss from continuing operations . . . . . . . . . . $ (3,704) $ (10,834)
Adjustments to reconcile net loss to
net cash provided by (used for) continuing
operating activities:
Depreciation and amortization of property
and equipment. . . . . . . . . . . . . . . . . . 937 458
Amortization of goodwill. . . . . . . . . . . . . 3,234 2,943
Amortization of and adjustments to film rights. . 52,750 34,491
Income taxes payable and deferred income taxes. . (1,066) 300
Utilization of pre-acquisition net operating
loss carryforwards . . . . . . . . . . . . . . . (6) --
(Increase) decrease in operating assets, net of
acquisitions:
Accounts receivable . . . . . . . . . . . . . . . (8,636) (4,740)
Officer and employee receivables. . . . . . . . . 90 194
Inventories . . . . . . . . . . . . . . . . . . . 558 (479)
Assets held for sale. . . . . . . . . . . . . . . 2,870 76,113
Receivable from stockholder . . . . . . . . . . . (456) 8,047
Other assets. . . . . . . . . . . . . . . . . . . (1,460) (61)
Increase (decrease) in operating liabilities,
net of acquisitions:
Accounts payable and accrued expenses . . . . . . (11,308) 2,170
Liabilities related to assets held for sale . . . (2,268) (41,022)
Acquisition of and adjustment to film rights. . . (47,334) (35,899)
Film rights obligations incurred. . . . . . . . . 47,334 35,899
Payments on film rights obligations . . . . . . . (60,128) (39,853)
Cash provided by (used for) continuing
operating activities . . . . . . . . . . . . . (28,593) 27,727
Cash provided by (used for) discontinued
operations . . . . . . . . . . . . . . . . . . (3,209) --
Cash provided by (used for) operating
activities . . . . . . . . . . . . . . . . . . (31,802) 27,727
INVESTING ACTIVITIES:
Acquisition of property and equipment . . . . . . . (2,861) (309)
Cash used for investing activities. . . . . . . (2,861) (309)
FINANCING ACTIVITIES:
Issuance of bank debt and long-term obligations . . 176,679 536
Payments on bank debt and long-term obligations . . (153,353) (17,335)
Payment of debt restructuring expenses. . . . . . . (987) --
Dividends accrued but not paid. . . . . . . . . . . -- 569
Issuance of Series C Preferred Stock. . . . . . . . 14,550 --
Cash provided by (used for) financing
activities . . . . . . . . . . . . . . . . . . 36,889 (16,230)
Effect of exchange rate changes . . . . . . . . 630 --
Increase (decrease) in cash and cash
equivalents. . . . . . . . . . . . . . . . . . 2,856 11,188
Cash and cash equivalents at beginning
of period. . . . . . . . . . . . . . . . . . . 18,847 42,358
Cash and cash equivalents at end of period. . . $ 21,703 $ 53,546
See notes to consolidated financial statements.<PAGE>
LIVE ENTERTAINMENT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 30, 1994
Note 1 - Going Concern
In its report on the consolidated financial statements of LIVE
Entertainment Inc. and its subsidiaries ("LIVE") for the fiscal
year ended December 31, 1993, LIVE's auditors noted that there was
substantial doubt concerning LIVE's ability to continue as a going
concern for the following reasons:
a. LIVE was in default under its credit facility from a group
of banks headed by Chemical Bank (the "Previous Facility") and the
Previous Facility was scheduled to expire during 1994;
b. LIVE's $37,000,000 of 12% Senior Secured Subordinated Notes
due September 15, 1994 (the "12% Notes") became due and payable in
1994; and
c. At the time of the issuance of that report, LIVE had not
arranged for the repayment and/or replacement of those debts.
Since the issuance of that report, LIVE has accomplished the
following:
1. On November 16, 1994 LIVE replaced the Previous Facility by
entering into a three-year $30,000,000 revolving credit facility
with Foothill Capital Corporation (the "Foothill Credit Facility").
2. On August 31, 1994, LIVE sold its entire interest in its
"Specialty Retail Division," consisting of its wholly owned
subsidiary, Strawberries Inc. ("Strawberries") and Strawberries'
wholly owned subsidiary, Waxie Maxie Quality Music Co. for a cash
price of $35,000,000. The net proceeds of the sale, together with
other cash on hand, were used to repay the full amount of the 12%
Notes - $5,750,000, plus accrued interest, on September 15, 1994,
and the remaining $31,250,000, plus accrued interest, on October
17, 1994.
3. LIVE has received the consent of the holders of a majority
of the principal amount of its $40,000,000 of Increasing Rate
Senior Subordinated Notes Due 1999 (the "LIVE Increasing Rate
Notes") to remove from the Indenture governing those notes (the
"Indenture") a covenant relating to the maintenance of a minimum
consolidated net worth (as defined) with which LIVE may not have
been able to comply at December 31, 1994, thereby removing the
possibility that the Trustee under the Indenture or the holders of
the LIVE Increasing Rate Notes could have accelerated the maturity
of the Increasing Rate Notes.
Based upon the effectiveness of the Foothill Credit Facility,
the repayment in full of the 12% Notes and the elimination of net
worth covenant from the Indenture, management believes that its
existing funding resources and anticipated cash flows from
operations will be sufficient to fund its cash requirements for at
least the next twelve months. Management also believes this should
remove any doubt about LIVE's ability to continue as a going
concern.
Note 2 - Foothill Credit Facility
On November 16, 1994 LIVE replaced the Previous Facility by
entering into the Foothill Credit Facility. Borrowings available
under the Foothill Credit Facility are limited to $20,000,000 until
additional participant lenders are added to the Facility, at which
time the borrowings available will be increased to a maximum
$30,000,000. Management of LIVE expects to be able to draw on the
Facility by November 30, 1994. Borrowings under the Foothill
Credit Facility are secured by substantially all of the assets of
LIVE and its subsidiaries. Outstanding borrowings under the
Foothill Credit Facility bear interest at the rate of 2% per annum
above the highest of the Bank of America, Mellon Bank or Citibank
prime rate, payable monthly. In no event will interest under the
Foothill Credit Facility be less than 7% per annum. The Foothill
Credit Facility provides for a closing fee of $500,000, an annual
facility fee of 1/4 of 1% and a commitment fee of 1/4 of 1% on any
unused amount. The Foothill Credit Facility also requires LIVE to
meet certain financial ratios.
Note 3 - Removal of Net Worth Covenant from Indenture
LIVE believed that at the end of 1994 it may have been in
violation of the minimum consolidated net worth covenant contained
in the Indenture. Such default would have permitted the trustee
thereunder or holders of 25% in aggregate principal amount of the
LIVE Increasing Rate Notes to give notice and accelerate maturity
of the indebtedness represented by the LIVE Increasing Rate Notes.
In November 1994, a majority of the holders of the LIVE
Increasing Rate Notes agreed to eliminate the minimum net worth
covenant contained in the Indenture, thereby removing the
possibility that LIVE might have defaulted under that covenant in
1995. As part of the amendment of the Indenture, LIVE agreed to
increase the interest rate on the LIVE Increasing Rate Notes from
10% per annum to 12% per annum effective October 18, 1994. The
interest rate on the LIVE Increasing Rate Notes was scheduled to
increase to 12% in March 1996.
<PAGE>
Note 4 - Termination of Agreement on Business Combination with
Carolco
In March 1994, LIVE and Carolco reached agreement in principle
on a business combination (the "Merger"), and executed a Merger
Agreement with respect thereto on August 11, 1994. On October 13,
1994 LIVE and Carolco jointly announced that they had agreed to
terminate the Merger Agreement between the two companies and end
all discussions regarding a possible business combination. In
1994, LIVE incurred approximately $1,000,000 in expenses in
connection with the Merger. In addition, due to the announced
financial condition of Carolco, LIVE provided a reserve for the
remaining outstanding net receivable balance due from Carolco of
approximately $1,560,000 at September 30, 1994. LIVE had
previously reserved for approximately $4,057,000 of the Carolco
receivable and had also received payment on account and other
credits from Carolco, which totaled approximately $2,430,000.
Note 5 - Sale of Specialty Retail Division; Use of Proceeds
On August 31, 1994, LIVE sold its entire interest in its
Specialty Retail Division to a group including Castle Harlan, Inc.,
Ivan R. Lipton, the President of the Specialty Retail Division, and
other senior managers of the Specialty Retail Division. The
purchaser group also included Jefferson Capital Group, Ltd.; R.
Timothy O'Donnell, the President of Jefferson Capital Group, Ltd.,
is a Director of LIVE. The total purchase price paid to LIVE for
the Specialty Retail Division was $35,000,000 in cash.
LIVE's Series B Cumulative Convertible Preferred Stock (the
"LIVE Series B Preferred") was mandatorily redeemable from the net
proceeds of any sale of the Specialty Retail Division remaining
after the payment of transaction costs and the payment of any debt
secured by the Specialty Retail Division. Repayment of the 12%
Notes was secured by the stock of the Specialty Retail Division.
As a result of LIVE's early 1994 decision to dispose of its
interest in the Specialty Retail Division, a total of $40,000,000
of LIVE Series B Preferred had been re-classified from equity to
current liabilities as of December 31, 1993 reflecting LIVE's then
expectation to sell the Specialty Retail Division for $40,000,000.
LIVE at that time had also expected that the holders of the 12%
Notes would extend the maturity date of the 12% Notes on a long
term basis beyond September 15, 1994. Due to the demand for
payment made by the holders of all $37,000,000 in principal amount
of the 12% Notes, LIVE used all of the net proceeds from the sale
of the Specialty Retail Division to repay the 12% Notes and no net
proceeds remained from the sale to redeem any of the LIVE Series B
Preferred. Although LIVE has no obligation to redeem any LIVE
Series B Preferred, LIVE from time to time intends to acquire $4
million in liquidation value of the LIVE Series B Preferred
(400,000 shares) in the open market. As of September 30, 1994, the
aggregate redemption price for the LIVE Series B Preferred was
$52,200,000 and that redemption price increases by an additional
$600,000 per month through October 1995, when the redemption price
reaches $60,000,000 and remains at that price thereafter.
Note 6 - Summary of Significant Accounting Policies
Background and Operations: LIVE was formed in 1988 and its
largest ongoing businesses are LHV and LIVE Entertainment
International Inc. (formerly LEI-IVE Entertainment N.V.) ("LEI"),
which acquire rights to theatrical motion pictures, children's
films and special interest programs (including CD-ROM) which they
market and distribute in all media worldwide. LIVE's primary
activities are in the distribution of product on videocassettes to
wholesalers, retailers and consumers in the United States and
Canada (LHV) and internationally (LEI). As described above, in
August 1994 LIVE completed the sale of the Specialty Retail
Division. LIVE owns an 81% interest in VCL/Carolco Communications
GmbH ("VCL"), a home video distribution and marketing company
headquartered in Munich, Germany. VCL's fiscal year-end is
November 30. As discussed below, LIVE also intends to dispose of
its interest in VCL. LIVE expects the sale of VCL to be effected
in such a manner whereby the buyer assumes all liabilities. LIVE's
continuing operations are primarily in a single business segment,
the distribution and retail sale of a broad variety of
entertainment software products.
Basis of Presentation: The accompanying consolidated financial
statements and footnotes are unaudited and are condensed, as
contemplated by the Securities and Exchange Commission under Rule
10-01 of Regulation S-X. Accordingly, they do not contain all
disclosures required by generally accepted accounting principles,
but in the opinion of management of LIVE include all adjustments
(consisting only of normal recurring accruals) necessary to fairly
state the financial position and results of operations of LIVE.
The financial statements include the accounts of LIVE and its
subsidiaries - LHV, the Specialty Retail Division, LEI and VCL.
The financial statements reflect LIVE's interests in the Specialty
Retail Division at December 31, 1993 and VCL at December 31, 1993
and September 30, 1994 as "Assets Held For Sale" and "Liabilities
Related To Assets Held For Sale" and have been restated to account
for the Specialty Retail Division as a discontinued operation and
VCL as a disposal of a portion of a line of business. All
significant intercompany balances and transactions have been
eliminated.
LIVE suggests that these condensed consolidated financial
statements be read in conjunction with its consolidated financial
statements for the year ended December 31, 1993 and related notes
thereto included on Form 10-K filed with the Securities and
Exchange Commission.
Net Loss Per Common Share: Per share information has been
determined on the basis of 12,094,000 weighted average shares
outstanding for the three and nine months ended September 30, 1994
and 12,090,000 and 12,089,000 weighted average shares outstanding
for the three and nine months ended September 30, 1993,
respectively. The net loss per common share for the three and nine
months ended September 30, 1994 gives effect to the accretion of
the redemption value of the LIVE Series B Preferred of $1,800,000
and $4,200,000 respectively. The net loss per common share for the
three months ended September 30, 1993 and September 30, 1994 gives
effect to dividends on both the LIVE Series B Preferred and the
LIVE Series C Preferred of $938,000 and $942,000, respectively.
The net loss per common share for the nine months ended September
30, 1993 and September 30, 1994 gives effect to dividends on both
the LIVE Series B Preferred and the LIVE Series C Preferred of
$2,642,000 and $2,819,000, respectively.
Note 7 - Reverse Stock Split
Management of LIVE intends to apply for listing of LIVE's Common
Stock on the NASDAQ Small Cap Market, which requires, among other
things, a minimum bid price of $3.00 per share. In connection with
LIVE's intent to apply for NASDAQ listing, LIVE's Board of
Directors has approved an amendment to LIVE's Restated Certificate
of Incorporation to provide for a one for five reverse stock
split. At the closing of the market on November 16, 1994, the bid
and asked prices of LIVE's Common Stock on the OTC Bulletin Board
were $0.50 and $1.00, respectively, per share.
LIVE must receive the consent of the holders of a majority of
its Common Stock, voting together with the holders of LIVE's Series
C Preferred, in order for the reverse stock split to become
effective. Pioneer LDCA, Inc., the holder of over 50% of the
combined voting interest of LIVE's Common Stock and LIVE Series C
Preferred, has indicated its intent to consent to the reverse
split, and if such consent is granted LIVE will have received
sufficient consents to approve the reverse split.
Even if the reverse stock split is accomplished, there is no
assurance that LIVE's application for NASDAQ listing will be
accepted.
Note 8 - Litigation
On January 9, 1992, a purported class action lawsuit was filed
in the U.S. District Court, Central District of California, by
alleged stockholders of LIVE against LIVE, Carolco and certain of
LIVE's past and present directors and executive officers. The
complaint alleges, among other things, that the defendants violated
Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange
Act") and Rule 10b-5 promulgated thereunder (a) by concealing the
true value of certain of LIVE's assets, and overstating goodwill,
stockholders' equity, operating profits and net income in LIVE's
Form 10-K for the year ended December 31, 1990, in its 1990 Annual
Report and in its Forms 10-Q for the quarters ended March 31, 1991
and June 30, 1991, and (b) by materially understating the true
extent of the write off of goodwill in connection with the sale of
substantially all of the assets of LIVE's wholly owned subsidiary,
Lieberman Enterprises Incorporated ("Lieberman"), to Handleman
Company ("Handleman") in July 1991. In addition, the complaint
alleges that certain of the defendants are liable as controlling
persons under Section 20 of the Exchange Act and alleges that
certain other defendants are liable for aiding and abetting the
primary violations. Subsequently, two additional lawsuits were
filed in the U.S. District Court, Central District of California,
by alleged stockholders of LIVE against the same persons and
entities who were defendants in the original actions, making
substantially the same allegations as were made in the first
lawsuit. On March 30, 1992, these lawsuits were consolidated.
Further, in April 1992, an amended complaint was filed in the
consolidated action, lengthening the alleged class period and
adding as defendants certain additional officers, directors and
affiliates of LIVE and Carolco, including Pioneer LDCA, Inc.
("Pioneer"), as well as a lender to LHV and Carolco. On June 17,
1992, the U.S. District Court, Central District of California,
entered an order conditionally certifying the class, subject to
possible decertification after discovery is completed. On January
27, 1993, a second amended complaint was filed in the consolidated
class action making additional and modified allegations against
certain of the defendants claiming they are liable as controlling
persons under Section 20 of the Exchange Act and claiming that
certain other defendants are liable for aiding and abetting the
primary violations. On April 19, 1993, the court issued a ruling
dismissing defendant Pioneer from this lawsuit.
In February 1992, a purported class action lawsuit was filed in
the U.S. District Court, District of Delaware, by an alleged holder
of Carolco's public debt, against LIVE, Carolco and certain
directors and executive officers of Carolco. The Delaware
complaint alleges, among other things, that the defendants violated
Section 10(b) of the Exchange Act and Rule 10b-5 promulgated
thereunder by concealing the true value of certain of LIVE's
assets, and overstating goodwill, stockholders' equity, operating
profits and net income in LIVE's Form 10-K for the year ended
December 31, 1990 and in its Forms 10-Q for the quarters ended
March 31, 1991 and June 30, 1991. In April of 1992 this lawsuit
was transferred to the U.S. District Court, Central District of
California. The proceedings are being coordinated with the
consolidated action described in the preceding paragraph. On July
17, 1992, the U.S. District Court, Central District of California,
entered an order conditionally certifying the class, subject to
possible decertification after discovery is completed.
Discovery is currently taking place in both lawsuits.
Management and counsel to LIVE are unable to predict the
ultimate outcome of the above-described actions at this time.
However, LIVE and the other defendants believe that all these
lawsuits are without merit and intend to defend them vigorously.
Accordingly, no provision for any liability which may result has
been made in LIVE's consolidated financial statements. In the
opinion of management, these actions, when finally concluded and
determined, will not have a material adverse effect upon LIVE's
financial position or results of operations.
On March 24, 1994, the same day that the signing of a letter of
intent with respect to the Merger was announced, a purported class
action lawsuit was filed in the Court of Chancery of the State of
Delaware in and for New Castle County by an alleged stockholder of
LIVE against LIVE, Carolco, certain of Carolco's and LIVE's past
and present executive officers and directors, Pioneer and Cinepole
Productions B.V., a stockholder of both LIVE and Carolco
("Cinepole"). The complaint alleged, among other things, that the
defendants violated their fiduciary duties owed to LIVE's
stockholders in connection with the Merger. The plaintiff sought
a preliminary and permanent injunction enjoining the Merger under
its announced financial terms; an open market auction of LIVE; to
the extent the Merger was consummated prior to the entry of a final
judgment in the action, rescission of the Merger; repayment of
profits and benefits obtained as a result of the defendants'
alleged conduct; and attorneys fees and expenses. As a result of
the termination of the Merger Agreement between LIVE and Carolco,
the plaintiff agreed to voluntarily dismiss this lawsuit, without
prejudice, in November 1994.
Other than as described above, there are no material legal
proceedings to which LIVE or any of its subsidiaries are a party
other than ordinary routine litigation in the ordinary course of
business. In the opinion of management (which is based in part on
the advice of outside counsel), resolution of these matters will
not have a material adverse impact on LIVE's financial position or
results of operations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Three Months Ended September 30, 1994 Compared to Three Months
Ended September 30, 1993
Continuing Operations
Net sales of LHV decreased to $33,845,000 in the third quarter
of 1994 compared to $38,629,000 during the comparable 1993 quarter.
The decrease of $4,784,000 or 12.4% is primarily attributable to a
weaker release schedule in the third quarter of 1994 compared to
the third quarter of 1993. LHV released only seven rental titles
during the three months ended September 30, 1994 compared to eleven
rental titles during the comparable period in 1993. There was also
a significant decrease in sell-through sales during the third
quarter of 1994 compared to the comparable period in 1993 primarily
due to the release of Tom & Jerry: The Movie in 1993. There was no
comparable sell-through title released in the third quarter of
1994.
Gross profit of LHV decreased $3,643,000, or 72.8%, to
$1,364,000 during the third quarter of 1994 compared to $5,007,000
during the third quarter of 1993. The decrease in gross profit
dollars was primarily related to the decrease in sales noted above
and an increase in amortization of film rights costs related to
adjustments in projected values of certain film properties. As a
percentage of sales, gross profit decreased from 13.0% during 1993
to 4.0% during 1994, primarily due to a combination of the decrease
in sales, and the increase in amortization of film rights costs.
Selling, general and administrative expenses of LHV increased
$1,366,000, or 31.9%, to $5,647,000 during 1994 compared to
$4,281,000 during 1993. As a percentage of sales, the amount
increased from 11.1% during 1993 to 16.7% during 1994. The dollar
increase is primarily a result of the reserve of approximately
$1,560,000 provided for a receivable owed to LIVE by Carolco and
approximately $540,000 in expenses related to the Merger, partially
offset by a reduction in overhead expenses. The percentage
increase is primarily due to the decrease in sales and the increase
in expenses.
Net interest expense of LHV decreased $360,000, or 20.9%, to
$1,362,000 during 1994 compared to $1,722,000 during 1993 resulting
from a reduction in amortization of loan fees in the third quarter
of 1994.
Discontinued Operations
As a result of LIVE's decision to dispose of its interests in
the Specialty Retail Division and VCL, the Specialty Retail
Division's results of operations for the three months ended
September 30, 1993 have been restated and accounted for as a
discontinued operation. VCL's operating results for the same
period have been restated and accounted for as a disposal of a
portion of a line of business. Accordingly, the provision for
losses during the phase-out period totaling $2,024,000 for the
Specialty Retail Division and $3,885,000 for VCL have been accrued
and accounted for at December 31, 1993 and are not included in the
results of operations for the three months ended September 30,
1994. Losses of $534,000 and $1,091,000 have been charged against
the respective provisions during the three months ended
September 30, 1994.
Nine Months Ended September 30, 1994 Compared to Nine Months
Ended September 30, 1994
Continuing Operations
Net sales of LHV decreased to $81,261,000 during the first nine
months of 1994 compared to $103,328,000 during the first nine
months of 1993. The decrease of $22,067,000, or 21.4%, is
primarily attributable to a weaker release schedule in the first
nine months of 1994 compared to the first nine months of 1993. LHV
released fourteen rental titles during the nine months ended
September 30, 1994 compared to twenty-nine rental titles during the
comparable period in 1993. There was also a decrease in sell-
through sales during the nine months ended September 30, 1994
compared to the comparable period in 1993 primarily due to release
of Tom & Jerry: The Movie in 1993. There was no comparable sell-
through title released in the first nine months of 1994.
Gross profit of LHV decreased $8,026,000, or 44.5%, to
$10,013,000 during the first nine months of 1994 compared to
$18,039,000 during the first nine months of 1993. The decrease in
gross profit dollars was primarily related to the decrease in sales
and an increase in amortization of film rights costs related to
adjustments in projected values of certain film properties. As a
percentage of sales, gross profit decreased from 17.5% during 1993
to 12.3% during 1994, primarily due to a combination of the
decrease in sales, and the increase in amortization of film rights
costs.
Selling, general and administrative expenses of LHV increased
$1,718,000, or 14.2%, to $13,813,000 during 1994 compared to
$12,095,000 during 1993. As a percentage of sales, the amount
increased from 11.7% during 1993 to 17.0% during 1994. The dollar
increase is primarily a result of the reserve of approximately
$1,560,000 million provided for a receivable owed to LIVE by
Carolco and approximately $1,000,000 in expenses related to the
Merger, offset by reduced overhead expenses. The percentage
increase is primarily due to the decrease in sales and the increase
in expenses.
Net interest expense of LHV decreased $17,000, or .5%, to
$3,791,000 during the first nine months 1994 compared to $3,808,000
during the first nine months 1993.
Discontinued Operations
As a result of the Board of Directors' decision to dispose of
LIVE's interests in the Specialty Retail Division and VCL, the
Specialty Retail Division's results of operations for the nine
months ended September 30, 1993 have been restated and accounted
for as a discontinued operation. VCL's operating results for the
same period have been restated and accounted for as a disposal of
a portion of a line of business. Accordingly, the provision for
losses during the phase-out period totaling $2,024,000 for the
Specialty Retail Division and $3,885,000 for VCL have been accrued
and accounted for at December 31, 1993 and are not included in the
results of operations for the nine months ended September 30, 1994.
Losses of $1,858,000 and $3,054,000 have been charged against the
respective provisions during the nine months ended September 30,
1994.
Liquidity and Capital Resources
In the second quarter of 1994, management of LIVE decided to
begin releasing fewer rental titles per month than in prior years
for a number of reasons, among them being: (a) fewer titles being
purchased by LIVE since late 1991 due to the liquidity problems
encountered by LIVE since that time, (b) a shift in rental market
tastes, with a much greater portion of video store purchases being
devoted to theatrically released "A" titles than lower budgeted,
straight to video or television "B" titles that have been the
predominant titles released by LIVE since 1992, and (c) an increase
in the absolute number of "B" titles in the marketplace, resulting
in increased competition for decreasing retailer purchase funds.
Management currently intends to address these issues by (i)
reducing its number of rental titles released per month,
particularly the direct-to-video "B" titles, allowing LIVE's
marketing and sales forces to place increased emphasis on a smaller
number of titles, (ii) acquiring more rights to films than only
domestic video rights (including theatrical, television,
international and CD-ROM) and diversifying its business to license
such additional rights directly rather than through intermediaries,
(iii) continuing LIVE's focus on the sell-through business,
exploiting LIVE's library of over 2,000 titles including children's
and special interest programs, and (iv) attempting to release a
higher percentage of "A" titles by increasing its efforts to
acquire films with greater theatrical release potential. Obtaining
the Foothill Credit Facility was a critical factor in this latter
effort.
Management believes that the decrease in revenues due to fewer
rental releases per month will eventually be compensated for
through a combination of increased ancillary revenues (such as
theatrical, television, international and CD-ROM) and higher
revenues per rental release due to a combination of increased focus
on fewer titles and a higher percentage of "A" title acquisitions.
There is no assurance that this will be the case, however.
At September 30, 1994, LIVE had total current assets of
$133,641,000 and total current liabilities of $82,210,000,
resulting in working capital of $51,431,000, an increase of
$45,634,000 compared to LIVE's working capital at December 31,
1993.
Historically, LIVE has funded its operations through a
combination of cash generated from operations, bank borrowings,
advances from distributors under distribution agreements and the
proceeds from the issuance of the 12% Notes. For the nine months
ending September 30, 1994, LIVE generated positive cash flow from
continuing operations of $27,727,000.
On May 11, 1992, LHV entered into a three-year distribution
agreement with WEA Corp. ("WEA") that became effective on June 1,
1992. Under the terms of the agreement, WEA advanced $20,000,000
to LHV, recoupable from distribution revenues during the three-year
term of the agreement at the rate of $555,555 per month plus
interest at LIBOR (5.06% at September 30, 1994) plus 0.2%, not to
exceed the prime rate. The advance is secured by a first priority
security interest in certain of LHV's FHE catalog titles. The
amount of the advance outstanding as of September 30, 1994 was
$5,000,000.
In 1993, LIVE received a total of $37,000,000 upon issuance of
the 12% Notes. The entire principal amount of the 12% Notes, plus
accrued interest, was repaid in September and October 1994.
Investing activities generated a negative cash flow during the
first nine months of 1994 of $309,000, primarily as a result of the
acquisition of property and equipment at LHV.
On November 16, 1994 LIVE entered into the Foothill Credit
Facility. Borrowings available under the Foothill Credit Facility
are limited to $20,000,000 until additional participant lenders are
added to the Facility, at which time the borrowings available will
be increased to a maximum of $30,000,000. Management of LIVE
expects to be able to draw on the Facility by November 30, 1994.
Borrowings under the Foothill Credit Facility are secured by
substantially all of the assets of LIVE and its subsidiaries.
Outstanding borrowings under the Foothill Credit Facility bear
interest at the rate of 2% per annum above the highest of the Bank
of America, Mellon Bank or Citibank prime rate, payable monthly.
In no event will interest under the loan be less than 7% per annum.
The Foothill Credit Facility provided for a closing fee of
$500,000, an annual facility fee of 1/4% of 1% and a commitment fee
of 1/4 of 1% on any unused amount. The Foothill Credit Facility
also requires LIVE to meet certain financial ratios.
The Foothill Credit Facility replaced the Previous Facility on
which no amounts were outstanding.
LIVE believed that at the end of 1994 it may have been in
violation of the minimum consolidated net worth covenant contained
in the Indenture. Such default would have permitted the trustee
thereunder or holders of 25% in aggregate principal amount of the
LIVE Increasing Rate Notes to give notice and accelerate the
indebtedness represented by the LIVE Increasing Rate Notes.
In November 1994, a majority of the holders of the LIVE
Increasing Rate Notes have agreed to eliminate the minimum net
worth covenant contained in the Indenture, thereby removing the
possibility that LIVE might have defaulted under that covenant in
1995. As part of the amendment of the Indenture, LIVE agreed to
increase the interest rate on the LIVE Increasing Rate Notes from
10% per annum to 12% per annum effective October 18, 1994. The
interest rate on the LIVE Increasing Rate Notes was scheduled to
increase to 12% in March 1996.
Dividends on the LIVE Series C Preferred, at the rate of 5% per
annum on the unreturned $15,000,000 liquidation value of the LIVE
Series C Preferred, are due on June 30 and December 31 of each
year. Although the dividends scheduled to be paid on June 30,
1993, December 31, 1993 and June 30, 1994 were accrued by LIVE,
those dividends were not paid due to restrictions imposed on LIVE
by the terms of the LIVE Series B Preferred, which prohibit the
payment of dividends on the LIVE Series C Preferred unless the
aggregate amount of such dividends, together with all cash
dividends paid on the LIVE Series B Preferred, does not exceed the
net income of LIVE (adding back specified net worth exclusions)
since the March 23, 1993 date of issuance of the LIVE Series B
Preferred and LIVE Series C Preferred. LIVE has had a consolidated
net loss for the period subsequent to March 23, 1993. Thus,
pursuant to the terms of the LIVE Series B Preferred, LIVE was
prohibited from paying the June 30, 1993, December 31, 1993, and
June 30, 1994 cash dividends on the LIVE Series C Preferred which,
together with accrued and unpaid dividends thereon, totalled
$973,885 as of September 30, 1994.
The unpaid LIVE Series C Preferred dividend itself bears a
dividend of 5% per annum, and is due on the next regularly
scheduled dividend payment date for the LIVE Series C Preferred.
LIVE intends to pay the June 30, 1993, December 31, 1993 and June
30, 1994 dividends, plus the additional dividends thereon, as soon
as it has sufficient net income to permit such payment to occur or
as soon as the LIVE Series B Preferred has been redeemed, provided
that such payment does not impair the capital of LIVE and is
permitted under the Delaware General Corporation Law ("DGCL").
LIVE experienced negative cash flows from financing activities
of $16,230,000 during the first nine months of 1994 primarily due
to interest payments on bank debt, repayment of the 12% Notes and
payments on long term obligations.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On January 9, 1992, a purported class action lawsuit was filed
in the U.S. District Court, Central District of California, by
alleged stockholders of LIVE against LIVE, Carolco and certain of
LIVE's past and present directors and executive officers. The
complaint alleges, among other things, that the defendants violated
Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange
Act") and Rule 10b-5 promulgated thereunder (a) by concealing the
true value of certain of LIVE's assets, and overstating goodwill,
stockholders' equity, operating profits and net income in LIVE's
Form 10-K for the year ended December 31, 1990, in its 1990 Annual
Report and in its Forms 10-Q for the quarters ended March 31, 1991
and June 30, 1991, and (b) by materially understating the true
extent of the write off of goodwill in connection with the sale of
substantially all of the assets of LIVE's wholly owned subsidiary,
Lieberman, to Handleman in July 1991. In addition, the complaint
alleges that certain of the defendants are liable as controlling
persons under Section 20 of the Exchange Act and alleges that
certain other defendants are liable for aiding and abetting the
primary violations. Subsequently, two additional lawsuits were
filed in the U.S. District Court, Central District of California,
by alleged stockholders of LIVE against the same persons and
entities who were defendants in the original actions, making
substantially the same allegations as were made in the first
lawsuit. On March 30, 1992, these lawsuits were consolidated.
Further, in April 1992, an amended complaint was filed in the
consolidated action, lengthening the alleged class period and
adding as defendants certain additional officers, directors and
affiliates of LIVE and Carolco, including Pioneer, as well as a
lender to LHV and Carolco. On June 17, 1992, the U.S. District
Court, Central District of California, entered an order
conditionally certifying the class, subject to possible
decertification after discovery is completed. On January 27, 1993,
a second amended complaint was filed in the consolidated class
action making additional and modified allegations against certain
of the defendants claiming they are liable as controlling persons
under Section 20 of the Exchange Act and claiming that certain
other defendants are liable for aiding and abetting the primary
violations. On April 19, 1993, the court issued a ruling
dismissing defendant Pioneer from this lawsuit.
In February 1992, a purported class action lawsuit was filed in
the U.S. District Court, District of Delaware, by an alleged holder
of Carolco's public debt, against LIVE, Carolco and certain
directors and executive officers of Carolco. The Delaware
complaint alleges, among other things, that the defendants violated
Section 10(b) of the Exchange Act and Rule 10b-5 promulgated
thereunder by concealing the true value of certain of LIVE's
assets, and overstating goodwill, stockholders' equity, operating
profits and net income in LIVE's Form 10-K for the year ended
December 31, 1990 and in its Forms 10-Q for the quarters ended
March 31, 1991 and June 30, 1991. In April of 1992 this lawsuit
was transferred to the U.S. District Court, Central District of
California. The proceedings are being coordinated with the
consolidated action described in the preceding paragraph. On July
17, 1992, the U.S. District Court, Central District of California,
entered an order conditionally certifying the class, subject to
possible decertification after discovery is completed.
Discovery is currently taking place in both lawsuits.
Management and counsel to LIVE are unable to predict the
ultimate outcome of the above-described actions at this time.
However, LIVE and the other defendants believe that all these
lawsuits are without merit and intend to defend them vigorously.
Accordingly, no provision for any liability which may result has
been made in LIVE's consolidated financial statements. In the
opinion of management, these actions, when finally concluded and
determined, will not have a material adverse effect upon LIVE's
financial position or results of operations.
On March 24, 1994, the same day that the signing of a letter of
intent with respect to the Merger was announced, a purported class
action lawsuit was filed in the Court of Chancery of the State of
Delaware in and for New Castle County by an alleged stockholder of
LIVE against LIVE, Carolco, certain of Carolco's and LIVE's past
and present executive officers and directors, Pioneer and Cinepole.
The complaint alleged, among other things, that the defendants
violated their fiduciary duties owed to LIVE's stockholders in
connection with the Merger. The plaintiff sought a preliminary and
permanent injunction enjoining the Merger under its announced
financial terms; an open market auction of LIVE; to the extent the
Merger was consummated prior to the entry of a final judgment in
the action, rescission of the Merger; repayment of profits and
benefits obtained as a result of the defendants' alleged conduct;
and attorneys fees and expenses. As a result of the termination of
the Merger Agreement between LIVE and Carolco, the plaintiff agreed
to voluntarily dismiss this lawsuit, without prejudice, in November
1994.
Other than as described above, there are no material legal
proceedings to which LIVE or any of its subsidiaries are a party
other than ordinary routine litigation in the ordinary course of
business. In the opinion of management (which is based in part on
the advice of outside counsel), resolution of these matters will
not have a material adverse impact on LIVE's financial position or
results of operations.
<PAGE>
ITEM 3(b). DEFAULTS UPON SENIOR SECURITIES - DIVIDEND ARREARAGE
ON PREFERRED STOCK
Dividends under the LIVE Series C Preferred, at the rate of 5%
per annum on the unreturned $15,000,000 liquidation value of the
LIVE Series C Preferred, are due on June 30 and December 31 of each
year. Although the $208,333 dividend scheduled to be paid on June
30, 1993, the $380,208 dividend scheduled to be paid on December
31, 1993 and the $389,844 dividend scheduled to be paid on June 30,
1994 all were accrued by LIVE, those dividends were not paid due to
restrictions imposed on LIVE by the terms of the LIVE Series B
Preferred, which prohibit the payment of dividends on the LIVE
Series C Preferred unless the aggregate amount of such dividends,
together with all cash dividends paid on the LIVE Series B
Preferred, does not exceed the net income of LIVE (adding back
specified net worth exclusions) since the March 23, 1993 date of
issuance of the LIVE Series C Preferred and the LIVE Series B
Preferred. LIVE has had a consolidated net loss since March 23,
1993. Thus, pursuant to the terms of the LIVE Series B Preferred,
LIVE was prohibited from paying the June 30, 1993, December 31,
1993 and June 30, 1994 cash dividends on the LIVE Series C
Preferred.
The unpaid dividends themselves bear a dividend of 5% per annum,
and are due on the next regularly scheduled dividend payment date
for the LIVE Series C Preferred. LIVE intends to pay the unpaid
dividends, plus the additional dividends thereon, as soon as it has
generated sufficient net income to permit such payment to occur or
as soon as the LIVE Series B Preferred has been redeemed, provided
that such payment does not impair the capital of LIVE and is
permitted under the DGCL.
ITEM 5. OTHER INFORMATION
In March 1994, LIVE and Carolco reached agreement in principle
on a business combination (the "Merger"), and executed a Merger
Agreement with respect thereto on August 11, 1994. On October 13,
1994 LIVE and Carolco jointly announced that they had agreed to
terminate the Merger Agreement between the two companies and end
all discussion regarding a possible business combination.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits: 11 - Computation of Loss Per Common
Share (Unaudited).
Reports on Form 8-K: On September 15, 1994 LIVE filed a Form
8-K regarding the sale of the Specialty
Retail Division and the proposed Merger
with Carolco.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto
duly authorized.
LIVE ENTERTAINMENT INC.
Dated: November 18, 1994 By: /s/ MICHAEL J. WHITE
Michael J. White
Acting Chief Financial Officer<PAGE>
EXHIBIT 11
LIVE ENTERTAINMENT INC. AND SUBSIDIARIES
COMPUTATION OF LOSS PER COMMON SHARE
(Unaudited)
(Amounts in Thousands, Except Per Share Data)
Three Months Ended Nine Months Ended
September 30, September 30,
1993 1994 1993 1994
PRIMARY AND FULLY DILUTED
Weighted average shares outstanding . . .12,090 12,094 12,089 12,094
Net loss from continuing operations . . $(2,948) $(6,626) $ (3,704) $(10,834)
Net loss from discontinued operations .. .(330) -- (1,843) --
Less preferred dividends. . . . . . . .. 938 942 2,642 2,819
Less accretion in redemption value of
LIVE Series B Cumulative Convertible
Preferred Stock. . . . . . . . . . . . -- 1,800 -- 4,200
Net loss attributable to common stock . $(4,216) $(9,368) $(8,189) $(17,853)
Net loss per common share
Continuing operations. . . . . . . . .$ (0.32) $ (0.77) $ (0.53) $ (1.48)
Discontinued operations. . . . . . . .( 0.03) -- (0.15) --
Net loss. . . . . . . . . . . . . . .. .$ (0.35) $ (0.77) $(0.68) $(1.48)
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<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<EXCHANGE-RATE> 1
<CASH> 53,546
<SECURITIES> 0
<RECEIVABLES> 26,227
<ALLOWANCES> (19,055)
<INVENTORY> 10,603
<CURRENT-ASSETS> 133,641
<PP&E> 7,156
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<TOTAL-ASSETS> 183,679
<CURRENT-LIABILITIES> 82,210
<BONDS> 53,184
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0
6,015
<OTHER-SE> 30,953
<TOTAL-LIABILITY-AND-EQUITY> 183,679
<SALES> 81,261
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<INCOME-PRETAX> (10,534)
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