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 September 30, 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
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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 [_]
Below are indicated the number of shares outstanding of each of the registrant's
classes of common stock as of November 8, 1996.
Class Outstanding at November 8, 1996
- ---------------------------------- -------------------------------
Common Stock, $0.01 par value 7,571,500
Class A Common Stock, $0.01 par value 750,000
ITEM 1. dick clark productions, inc.
FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, June 30,
1996 1996
Assets ----------- -----------
- ------------------------------------------------------------
Cash and cash equivalents $ 3,263,000 $ 953,000
Marketable securities 27,432,000 28,919,000
Accounts receivables 3,692,000 4,713,000
Program costs, net 1,626,000 1,741,000
Prepaid royalty 3,128,000 3,128,000
Leasehold improvements and equipment 12,026,000 10,949,000
Goodwill and other assets 2,277,000 2,308,000
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Total Assets $53,444,000 $52,711,000
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Liabilities & Stockholders' Equity
- ------------------------------------------------------------
Accounts payable $ 5,092,000 $ 5,012,000
Accrued residuals and participations 2,383,000 2,260,000
Production advances and deferred revenue 664,000 726,000
Current and deferred income taxes 784,000 602,000
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Total Liabilities 8,923,000 8,600,000
Commitments and contingencies
Minority interest 644,000 617,000
Stocholder's equity:
Class A common stock, $.01 par value,
2,000,000 shares authorized
750,000 shares outstanding 7,000 7,000
Common stock, $.01 par vlue,
20,000,000 shares authorized
7,571,500 shares outstanding at September 30, 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 35,820,000 35,517,000
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Total stockholder's equity 43,877,000 43,494,000
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Total liabilities & stockholders' equity $53,444,000 $52,711,000
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The accompanying notes are an integral part of these consolidated balance
sheets.
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dick clark productions, inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three Months Ended
September 30,
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1996 1995
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Gross revenues $ 10,909,000 8,384,000
Costs related to revenue 9,658,000 7,683,000
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Gross profit 1,251,000 701,000
General and administrative expenses 1,088,000 996,000
Minority interest expense 76,000 46,000
Interest and other income (404,000) (433,000)
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Income before provision for income taxes 491,000 92,000
Provision for income taxes 188,000 32,000
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Net income $ 303,000 $ 60,000
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Net income per share $ 0.04 $ 0.01
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Weighted average number of shares outstanding 8,322,000 8,279,000
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The accompanying notes are an integral part of these consolidated statements.
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dick clark productions, inc.
CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
For the Three Months Ended
September 30,
--------------------------
1996 1995
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Cash flows from operating activities
Net income $ 303,000 $ 60,000
Adjustments to reconcile net income to net cash provided by
operations
Amortization expense 6,128,000 4,734,000
Depreciation expense 334,000 249,000
Investment in program costs (5,879,000) (6,720,000)
Minority interest,net 27,000 46,000
Disposals of leasehold improvements and equipment 0 15,000
Changes in assets and liabilities
Accounts receivable 1,021,000 435,000
Goodwill and other assets (103,000) (36,000)
Accounts payable, accrued residuals and participations 203,000 (1,260,000)
Production advances and deferred revenue (62,000) 1,840,000
Current and deferred income taxes payable 182,000 (12,000)
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Net cash provided by (used for) operations 2,154,000 (649,000)
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Cash flows from investing activities
Purchases of marketable securities (3,962,000) (1,435,000)
Sales of marketable securities 5,449,000 1,952,000
Capital expenditures (1,411,000) (402,000)
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Net cash provided by investing activities 76,000 115,000
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Cash flows from financing activities
Exercise of stock options 80,000 0
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Net cash provided by financing activities 80,000 0
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Net increase (decrease) in cash and cash equivalents 2,310,000 (534,000)
Cash and cash equivalents at beginning of the period 953,000 3,297,000
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Cash and cash equivalents at end of the period $ 3,263,000 $ 2,763,000
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Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for income taxes $ 6,000 $ 44,000
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The accompanying notes are an integral part of these consolidated statements.
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dick clark productions, inc.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Financial Statement Presentation
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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 consolidated 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 September 30, 1996, and the results of its
operations and cash flows for the periods ended September 30, 1996 and 1995
respectively, have been made. Operating results for the three-month period ended
September 30, 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
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The Company's business activities consist of two business segments:
entertainment operations and restaurant operations. The entertainment segment
contributed approximately 65% of the Company's consolidated revenues for the
three month period ending September 30, 1996.
The revenues from the Company's entertainment related businesses are
primarily derived from the production and licensing of television programming.
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. The Company's entertainment business also is engaged in the
licensing of its media and film archives for use in feature films, television
movies, etc. The Company, on a limited basis, also develops theatrical films in
association with established studios that can provide financing necessary for
production.
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.
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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
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Revenues for the three months ended September 30, 1996 were
$10,909,000 compared with $8,384,000, for the comparable period in the previous
fiscal year. The revenues increased for the three months ended September 30,
1996, as compared to the corresponding period in the previous fiscal year, is
primarily due to increased revenues from the Company's corporate productions
business as well as an increase in the number of television specials delivered
during the quarter. The increase in revenues is further explained by the
inclusion of revenues from an additional restaurant which was not operating
during the corresponding period in the previous fiscal year.
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 period ended September 30,
1996, as compared to the corresponding period in the previous fiscal year
primarily as a result of increased profitability recognized from the
aforementioned increased number of television specials delivered as well as an
increase in profitability of the Company's television series production.
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 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.
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The Company intends to continue to accelerate 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 plans to open restaurants in St. Louis, Missouri in
November of 1996, Austin, Texas in March of 1997, Philadelphia, Pennsylvania in
April of 1997, and another potential location in late fiscal 1997 at a total
estimated capital investment of $10,000,000 which will be funded by the Company.
Working 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 $30,695,000 as of September 30, 1996.
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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.
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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.
by: /s/ Kenneth H. Ferguson
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Kenneth H. Ferguson
Chief Financial Officer and Treasurer
(Principal Financial Officer and
authorized to sign on behalf of
Registrant)
Date: November 13, 1996
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