SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report Pursuant To Section 13 or 15 (D) of
The Securities Act of 1934
Date of Report (Date of Earliest Event Reported ): November 14, 1996
ALLIANCE ENTERTAINMENT CORP.
(Exact name of registrant as specified in its charter)
Delaware 1-13054 13-3645913
(State or other (Commission (I.R.S. Employer
jurisdiction of incorporation) File Number) Identification No.)
110 East 59th Street, New York, New York 10022
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (212) 935-6662
Exhibit Index on Page 4
<PAGE>
Item 5. Other Events
On November 14, 1996, Alliance Entertainment Corp. (the
"Company") announced a major consolidation aimed primarily at
reducing operating redundancies. The consolidation plan
includes among other things, reducing the Company's domestic
warehouses from eight to three and its workforce by as much as
20%. The consolidation plan is expected to be completed by
March 1998. The Company expects to take a charge in the fourth
quarter of 1996 of approximately $28 to $32 million to account
for these changes.
The press release dated November 14, 1996, set forth in
Exhibit 99.1 hereto contains forward-looking statements as
defined in Section 21E of the Securities Exchange Act of 1934,
as amended, that involve risks and uncertainties, including,
without limitation, the effect of economic and market
conditions in markets served by the Company, demand for
recorded music product generally, demand for the Company's
proprietary product, returns of inventory, currency
fluctuations, changes in distribution methodology and
technology, and the effects of laws governing rights with
respect to intellectual property, as well as other risks
detailed from time to time in the Company's reports filed with
the Securities and Exchange Commission.
Item 7. Financial Statements and Exhibits
(c) Exhibits:
Exhibit 99.1 Press Release dated November 14, 1996
<PAGE>
SIGNATURE
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.
ALLIANCE ENTERTAINMENT CORP.
By: /s/ Timothy Dahltorp
----------------------
Name: Timothy Dahltorp
Title: Executive Vice President, Chief
Financial Officer and Treasurer
Date: November 14, 1996
<PAGE>
EXHIBIT INDEX
Page
Exhibit 99.1 Press Release dated November 14, 1996. 6
Stern & Co.
Media Communications - Investor Relations
215 Park Avenue South, New York, NY 10003
Tel: (212) 777-7722 Fax: (212) 777-9025
FROM: STERN & COMPANY CONTACT: Jeffrey Goldberger
215 Park Avenue South, Ste. 2013 (212) 777-7722
New York, NY 10003
FOR RELEASE- 11/14/96 - 4:00 pm EST
FOR: ALLIANCE ENTERTAINMENT CORP. CONTACT: Timothy Dahltorp
110 East 59th Street, 18th Floor CFO
New York, NY 10022 (212) 935-6662
ALLIANCE ENTERTAINMENT REPORTS THIRD QUARTER 1996 RESULTS
ANNOUNCES MAJOR CONSOLIDATED TO REDUCE COSTS, INCREASE MARGINS
NEW YORK, November 14, 1996, Alliance Entertainment Corp. (NYSE: CDS) today
reported third quarter 1996 results and announced a consolidation of its
business units. The Company reported sales of $160.6 million for the third
quarter ended September 30, 1996, compared to the $182.5 million posted for the
same period last year. The Company reported a net loss for the period of $9.4
million or ($0.23) per share, versus net income of $1 million or $0.03 per share
reported for the comparable period last year.
Al Teller, Co-Chairman and CEO, stated, "Since I joined Alliance in August, I
have formulated a plan to more sharply focus Alliance's business strategy, which
includes a reduction in existing redundancies resulting from the acquisition of
15 companies in a five-year period. I believe that the completion of this plan
will significantly enhance the Company's competitive position within the music
industry." The Company said that it would reduce its domestic warehouses from
eight to three and reduce its workforce by as much as 20%, resulting in expected
annual costs savings of approximately $20 to $22 million once the plan is
completed. The Company expects the plan to be completed by March 1998. The plan
also includes increasing the percentage of revenue generated from higher margin,
proprietary product. In order to streamline day to day communications, Mr.
Teller has eliminated the COO position and established direct reporting by the
Company's senior operating officers to him as CEO. Mr. Teller also announced the
appointment of Larry Stessel, formerly of Capitol-EMI, to head the Company's
independent distribution operations and implement the integration of INDI,
Passport and Alliance Label Development operations.
To account for these changes the Company expects a charge in the fourth quarter
1996 of approximately $28 to $32 million. Mr. Teller announced that Eric
Weisman, Senior Executive Vice President - Corporate Development has been
appointed to head the consolidation efforts. Additionally, Mr. Teller said, "As
part of the refocusing of the Company's operations, Alliance is also considering
divesting itself of its Brazilian operations and its artist management
operation. Depending on the results of this evaluation, such divestitures might
result in additional charges with respect to such operations." As of September
30, 1996, the aggregate total investment in and advances to the operations
subject to evaluation was $32.2 million.
For the nine months ended September 30, 1996, the Company reported sales of $500
million versus $491.5 million for the same nine months last year. The net loss
was approximately $36 million or ($0.95) per share compared to net income of
$5.3 million or $0.14 per share in 1995's first nine months. In the first six
months of 1996, the Company incurred $20.4 million of non-recurring charges,
including one-time charges of $2.5 million related to the termination of the
Company's merger agreement with Metromedia, expenses relating to the
consolidation of One-Stop administrative functions, as well as charges relating
to the current industry climate. During the period the Company experienced lower
than anticipated sales and higher than anticipated returns in a weak retail
music environment, particularly affecting the independent label side of the
business, which is more sensitive to the lack of hit product releases.
This release contains forward-looking statements that are subject to risks and
uncertainties, including, but no limited to, the impact of competitive products,
product demand and market acceptance risks, reliance on key strategic alliances,
fluctuations in operating results and other risks detailed from time to time in
the Company's filings with the Securities and Exchange Commission. These risks
could cause the Company's actual results for the current fiscal year and beyond
to differ materially from those expressed in any forward-looking statements made
by, or on behalf of, the Company.
Alliance Entertainment Corp. is the largest full service distributor of
pre-recorded music and music-related products in the United States and is also
actively engaged in the acquisition and exploitation of proprietary content
rights with respect to recorded music, video and video CDs.
-more-
<PAGE>
<TABLE>
<CAPTION>
ALLIANCE ENTERTAINMENT CORP.
OPERATING RESULTS FOR THE THIRD QUARTER
AND NINE MONTHS ENDED SEPTEMBER 30, 1996
(In millions except per share)
- ------------------------------- ----------------------------- -------------------------------
Third Quarter Ended Nine Months Ended
September 30, September 30
- ------------------------------- ------------- --------------- -------------- ----------------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
- ------------------------------- ------------- --------------- -------------- ----------------
Net Sales $160.6 $182.5 $500.0 $491.5
- ------------------------------- ------------- --------------- -------------- ----------------
Depreciation and Amortization $ 4.6 $ 4.4 $ 14.1 $ 11.7
- ------------------------------- ------------- --------------- -------------- ----------------
EBITDA (before non-recurring
charges)* $ (2.4) $ 13.0 $ 7.2 $ 35.2
- ------------------------------- ------------- --------------- -------------- ----------------
EBITDA* $ (2.4) $ 13.0 $ (13.2) $ 35.2
- ------------------------------- ------------- --------------- -------------- ----------------
Pre-tax income (loss) $ (15.8) $ 2.1 $ (53.7) $ 9.6
- ------------------------------- ------------- --------------- -------------- ----------------
Net income (loss) $ (9.4) $ 1.0 $ (36.0) $ 5.3
- ------------------------------- ------------- --------------- -------------- ----------------
Earnings (loss) per share $(0.23) $ 0.03 $ (0.95) $0.14
- ------------------------------- ------------- --------------- -------------- ----------------
Weighted avg. shares
outstanding and equivalents 40,562,141 38,466,650 37,798,670 36,704,040
- ------------------------------- ------------- --------------- -------------- ----------------
<FN>
*Earnings before interest, taxes, depreciation and amortization includes
non-recurring charges of $20.4 million for the nine months ended September 30,
1996. Included in the $20.4 million is $17.9 million of non-recurring charges
relating to the consolidation and restructuring of certain of the Company's
One-Stop distribution operations as well as charges relating to the current
industry climate. The additional $2.5 million relates to the termination of the
Company's merger agreement with Metromedia.
</FN>
# # #
</TABLE>
