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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001
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 NUMBER
0-22582
TBA ENTERTAINMENT CORPORATION
(Exact Name of Registrant as specified in its Charter)
DELAWARE 62-1535897
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
16501 VENTURA BOULEVARD
ENCINO, CALIFORNIA 91436
(Address of principal executive offices) (Zip Code)
(818) 728-2600
(Registrant's telephone number, including area code)
Check 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 [ ]
As of May 9, 2001, the Registrant had outstanding 7,352,300 shares of Common
Stock, par value $0.001 per share.
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TBA ENTERTAINMENT CORPORATION AND SUBSIDIARIES
FORM 10-Q
TABLE OF CONTENTS
PART I - Financial Information
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets................................ 3
Consolidated Statements of Operations...................... 4
Consolidated Statements of Cash Flows...................... 5
Notes to Consolidated Financial Statements................. 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................ 9
PART II - Other Information................................ 12
Signatures................................................. 13
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TBA ENTERTAINMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31,
2001 2000
------------- -------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents ............................... $ 1,208,100 $ 3,751,100
Accounts receivable, net of allowance for doubtful
accounts of $173,000 and $182,400,
respectively ........................................ 3,946,500 3,973,000
Deferred charges and other current assets ............... 2,597,400 2,266,400
Net current assets of discontinued operations ........... -- 91,600
------------ ------------
Total current assets .......................... 7,752,000 10,082,100
Property and equipment, net ................................ 2,419,300 2,441,700
Other assets, net:
Goodwill ................................................ 25,751,400 23,834,800
Other ................................................... 649,400 527,200
Net long-term assets of discontinued operations ............ 2,476,200 2,531,100
------------ ------------
Total assets ................................. $ 39,048,300 $ 39,416,900
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities ................ $ 4,932,900 $ 4,433,900
Deferred revenue ........................................ 2,114,000 2,317,300
Notes payable and current portion of long-term
debt .................................................. 3,028,000 3,049,600
Net current liabilities of discontinued
operations ............................................ 146,100 --
------------ ------------
Total current liabilities ..................... 10,221,000 9,800,800
Long-term debt, net of current portion ..................... 5,446,200 4,373,600
------------ ------------
Total liabilities ............................. 15,667,200 14,174,400
------------ ------------
Stockholders' equity:
Preferred stock, $.001 par value; authorized 1,000,000
shares, 2,200 of Series A convertible
preferred stock issued and outstanding,
liquidation preference $100 ............................ 100 100
Common stock, $.001 par value; authorized 20,000,000
shares, 7,352,300 and 7,507,600 shares
outstanding, respectively; 8,857,100 shares issued ..... 8,900 8,900
Additional paid-in capital ............................... 30,600,700 30,600,700
Retained (deficit) earnings .............................. (1,107,300) 133,500
Less treasury stock, at cost, 1,504,800 and
1,349,500 shares, respectively ......................... (6,121,300) (5,500,700)
------------ ------------
Total stockholders' equity .................... 23,381,100 25,242,500
------------ ------------
Total liabilities and stockholders' equity .... $ 39,048,300 $ 39,416,900
============ ============
See notes to financial statements.
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TBA ENTERTAINMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
-------------------------------
2001 2000
------------ ------------
Revenues ....................................... $ 13,900,400 $ 16,703,800
Costs related to revenue ....................... 9,457,400 11,434,000
------------ ------------
Gross profit margin ................... 4,443,000 5,269,800
Selling, general and administrative expenses ... 5,415,900 4,296,500
Depreciation and amortization expense .......... 676,200 561,100
Other income ................................... (167,700) --
Interest expense, net .......................... 147,200 47,000
------------ ------------
(Loss) income from continuing operations
before income taxes .......................... (1,628,600) 365,200
Income tax benefit (provision) ................. 528,000 (180,000)
------------ ------------
(Loss) income from continuing operations ....... (1,100,600) 185,200
Loss from discontinued operations, net of income
tax benefit of $93,000 and $53,000 for
2001 and 2000, respectively .................. (140,200) (41,300)
------------ ------------
Net (loss) income .............................. $ (1,240,800) $ 143,900
============ ============
Earnings per common share -- basic:
(Loss) income from continuing operations . $ (0.15) $ 0.02
(Loss) from discontinued operations ...... (0.02) --
------------ ------------
Net (loss) income per common share -- basic .... $ (0.17) $ 0.02
============ ============
Earnings per common share -- diluted:
(Loss) income from continuing operations . $ (0.15) $ 0.02
(Loss) from discontinued operations ...... (0.02) --
------------ ------------
Net (loss) income per common share -- diluted .. $ (0.17) $ 0.02
============ ============
See notes to financial statements.
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TBA ENTERTAINMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
-------------------------------
2001 2000
------------ ------------
Cash flows from operating activities:
Net (loss) income ................................. $ (1,240,800) $ 143,900
------------ ------------
Adjustments to reconcile net (loss) income to net
cash (used in) provided by continuing operations:
Loss from discontinued operations ............. 140,200 41,300
Depreciation and amortization ................. 676,200 561,100
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 41,700 (147,200)
(Increase) in deferred charges and other
current assets ........................ (258,200) (988,700)
(Increase) decrease in other assets ...... (134,200) 43,500
Increase in accounts payable and
accrued liabilities ................... 298,800 397,500
(Decrease) increase in advance deposits
and deferred revenue ................... (187,100) 2,132,100
------------ ------------
Total adjustments ...................... 577,400 2,039,600
------------ ------------
Net cash (used in) provided by
continuing operations ............... (663,400) 2,183,500
------------ ------------
Cash flows from investing activities:
Acquisition of businesses, net of cash acquired ... (985,700) (3,476,900)
Expenditures for property and equipment ........... (164,200) (221,900)
------------ ------------
Net cash used in investing activities . (1,149,900) (3,698,800)
------------ ------------
Cash flows from financing activities:
Net borrowings on credit lines .................. 310,000 190,000
Repurchase of common stock ...................... (620,600) (236,500)
Repayments of long-term debt .................... (419,100) (929,600)
------------ ------------
Net cash used in financing activities ... (729,700) (976,100)
------------ ------------
Net decrease in cash and cash equivalents ............. (2,543,000) (2,491,400)
Cash and cash equivalents - beginning of period ....... 3,751,100 12,847,600
------------ ------------
Cash and cash equivalents - end of period ............. $ 1,208,100 $ 10,356,200
============ ============
Cash paid for interest ................................ $ 105,100 $ 83,400
------------ ------------
Cash paid for income taxes ............................ $ 179,600 $ 56,700
------------ ------------
See notes to financial statements.
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TBA ENTERTAINMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. THE COMPANY AND BASIS OF PRESENTATION:
TBA Entertainment Corporation and its subsidiaries (collectively, the
"Company") is a strategic communications and entertainment company that
creates, develops and produces comprehensive programs to reach and engage
its clients' target audiences. The Company produces a broad range of
innovative business communications programs, develops and produces
integrated entertainment marketing and special events programs, develops
content and entertainment programs for a nationwide network of fairs and
festivals and develops and implements career strategies and corporate
partnerships for our artist clients. The Company was incorporated in
Tennessee in June 1993 and reincorporated in Delaware in September 1997.
The accompanying unaudited consolidated financial statements of the Company
have been prepared in accordance with accounting principles generally
accepted in the United States for interim financial information.
Accordingly, they do not include all of the information and footnotes
required by accounting principles generally accepted in the United States
for complete year-end financial statements. The accompanying consolidated
financial statements should be read in conjunction with the more detailed
financial statements and related footnotes included in the Company's Form
10-K for the year ended December 31, 2000.
In the opinion of management, all adjustments (consisting of only normal
recurring adjustments) considered necessary for a fair presentation of the
financial position of the Company as of March 31, 2001, and the results of
its operations and cash flows for the three-month periods ended March 31,
2001 and 2000, respectively, have been included. Operating results for the
three months ended March 31, 2001, are not necessarily indicative of the
results that may be expected for the fiscal year ending December 31, 2001.
Reclassification
Certain prior period amounts have been reclassified to conform to the
current period presentation.
2. NET INCOME (LOSS) PER COMMON SHARE
The following table sets forth the computation of basic and diluted
earnings (loss) per common share from continuing operations:
THREE MONTHS ENDED
MARCH 31,
-----------------------------
2001 2000
----------- -----------
Basic earnings per common share:
(Loss) income from continuing operations............ $(1,100,600) $ 185,200
Weighted average common stock outstanding........... 7,375,100 8,340,300
----------- -----------
Basic (loss) earnings per common share ............. $ (0.15) $ 0.02
=========== ===========
Diluted earnings per common share:
(Loss) income from continuing operations............ $(1,100,600) $ 185,200
----------- -----------
Weighted average common stock outstanding........... 7,375,100 8,340,300
Additional common stock resulting from
dilutive securities:
Preferred stock .................................. -- 2,600
Shares issuable for stock options and
warrants ..................................... -- 41,000
----------- -----------
Weighted average common stock and
dilutive ........................................... 7,375,100 8,383,900
----------- -----------
securities outstanding
Diluted (loss) earnings per common share............ $ (0.15) $ 0.02
=========== ===========
Options and warrants to purchase 3,282,200 and 1,961,500 shares of common
stock in 2001 and 2000, respectively, were not considered in calculating
diluted earnings per share as their inclusion would have been
anti-dilutive.
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3. 2001 ACQUISITION
On February 6, 2001, the Company acquired 100% of the common stock of Moore
Entertainment, Inc. ("Moore"), for a maximum purchase price of $2,200,000
plus acquisition costs, totaling approximately $47,500. The purchase price
paid at closing included a cash payment of $1,100,000 and the issuance of a
promissory note totaling $1,100,000. The principal amount of the promissory
note is subject to reduction based on the earnings of Moore during each of
the years 2001 through 2004. The promissory note accrues interest at 8% and
is payable in four equal annual installments of principal plus accrued
interest, commencing May 1, 2002.
The acquisition of Moore was accounted for using the purchase method of
accounting and, accordingly, the purchase price was allocated to the assets
acquired and liabilities assumed based on their estimated fair values on
the date of acquisition. Substantially the entire aggregate purchase price
has been allocated to goodwill, as the net tangible assets of Moore were
not significant at the date of acquisition. The goodwill is being amortized
over 10 years.
4 DISCONTINUED OPERATIONS
During the first quarter of 2001, the Company approved a formal plan to
sell its merchandising operations in order to better focus on its core
business as a strategic communications and entertainment company. The
disposition of the merchandising operations represents the disposal of a
business segment under Accounting Principles Board ("APB") Opinion No. 30.
Accordingly, this segment is accounted for as a discontinued operation and
amounts in the financial statements and related notes for all periods shown
have been restated to reflect discontinued operations accounting.
Management currently believes that it will be able to recover its net
investment in discontinued operations and that it will not experience a
loss on discontinued operations between the measurement date and the
disposal date, which is not expected to exceed twelve months.
The operating results of discontinued operations are as follows:
THREE MONTHS ENDED
MARCH 31,
-----------------------------
2001 2000
----------- -----------
Revenues ................................... $ 1,873,100 $ 3,598,200
Net loss from discontinued operations before
income taxes ............................ (233,200) (94,300)
Income tax benefit ......................... 93,000 53,000
----------- -----------
Net loss from discontinued operations ...... $ (140,200) $ (41,300)
=========== ===========
The components of assets and liabilities of discontinued operations are as
follows:
MARCH 31, DECEMBER 31,
2001 2000
----------- -----------
Current assets:
Cash and cash equivalents .......................... $ 567,800 $ --
Accounts receivable ................................ 390,300 504,000
Inventories ........................................ 270,000 401,000
Other current assets ............................... 107,200 47,300
Current liabilities:
Accounts payable and accrued liabilities ........... (956,300) (486,800)
Current portion of long-term debt and line of credit (525,100) (373,900)
----------- -----------
Net current (liabilities) assets ...................... $ (146,100) $ 91,600
=========== ===========
Long-term assets:
Property and equipment, net ........................ $ 633,600 $ 671,200
Other assets, net .................................. 1,879,600 1,915,700
Long-term liabilities:
Long-term debt, net of current portion ............. (37,000) (55,800)
----------- -----------
Net long-term assets .................................. $ 2,476,200 $ 2,531,100
=========== -----------
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5. BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION
Segment information has been prepared in accordance with SFAS No. 131,
"Disclosure about Segments of an Enterprise and Related Information." The
Company classifies its continuing operations according to four major client
groups within the entertainment services industry: corporate clients,
entertainment marketing clients, artist clients and fairs & festivals
clients. For corporate clients, the Company creates innovative business
communications programs delivered via a broad range of business
communications, meeting production, entertainment and event production
services. For entertainment marketing clients, the Company develops and
executes integrated entertainment marketing and special event initiatives
including music tours, television broadcasts and syndicated radio specials.
For artist clients, the Company manages the negotiation of recording,
touring, merchandising and performance contracts, and the development of
long-term career strategies for music industry artists. For fairs &
festivals clients, the Company develops content and entertainment programs
for its nationwide network of fairs and festivals. Substantially all
revenues and long-lived assets of the Company as of and for the three month
periods ended March 31, 2001 and 2000, were derived from United States
based companies.
The Company does not internally report separate identifiable assets by
client group. The Company evaluates performance of each segment based on
several factors, of which the primary financial measure is EBITDA,
including other income. EBITDA is defined as earnings before interest,
taxes, depreciation, and amortization. Summarized financial information
concerning the Company's reportable segments (and excluding discontinued
operations discussed in Note 4) is shown in the following table for the
three-month periods ended March 31 (in thousands):
ENTERTAINMENT FAIRS &
CORPORATE MARKETING ARTIST FESTIVALS
CLIENTS CLIENTS CLIENTS CLIENTS CORPORATE TOTAL
--------- ------------- ----------- ---------- --------- ---------
2001:
Revenues $ 13,002 $ 301 $ 541 $ 56 $ -- $ 13,900
======== ======== ======== ======== ======== ========
EBITDA, including other income $ 1,131 $ (322) $ (106) $ (353) $ (1,156) $ (806)
Depreciation and amortization (281) (78) (161) (106) (50) (676)
Net interest income (expense) 7 -- (1) (3) (150) (147)
-------- -------- -------- -------- -------- --------
Income (loss) from continuing
operations before
income taxes $ 857 $ (400) $ (268) $ (462) $ (1,356) $ (1,629)
======== ======== ======== ======== ======== ========
2000:
Revenues $ 14,401 $ 1,446 $ 825 $ 32 $ -- $ 16,704
======== ======== ======== ======== ======== ========
EBITDA $ 1,995 $ (281) $ 310 $ (200) $ (851) $ 973
Depreciation and amortization (292) (58) (132) (52) (27) (561)
Net interest income (expense) 48 24 (5) (2) (112) (47)
-------- -------- -------- -------- -------- --------
Income (loss) from continuing
operations before
income taxes $ 1,751 $ (315) $ 173 $ (254) $ (990) $ 365
======== ======== ======== ======== ======== ========
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ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The purpose of the following discussion and analysis is to explain the major
factors and variances between periods of the Company's financial condition and
results of operations. The following discussion of the Company's financial
condition and results of operations should be read in conjunction with the
historical consolidated financial statements and notes thereto included in the
Company's 2000 Form 10-K for the fiscal year ended December 31, 2000.
Introduction
The Company is a strategic communications and entertainment company that
creates, develops and produces comprehensive programs to reach and engage its
clients' target audiences. The Company produces a broad range of innovative
business communications programs, develops and produces highly integrated
entertainment marketing and special events programs, develops content and
entertainment programs for a nationwide network of fairs and festivals and
develops and implements career strategies and corporate partnerships for our
artist clients.
The Company has built this comprehensive communications and entertainment
business model through a combination of internal growth and strategic
acquisitions. Since April 1997, the Company has completed 10 strategic
acquisitions and has built a comprehensive network of 14 offices to serve its
growing client base. In 2000, the Company completed the acquisitions of Romeo
Entertainment Group ("Romeo") (January) and EJD Concert Services ("EJD") (April)
(collectively, the "2000 Acquisitions"). In February 2001, the Company completed
the acquisition of Moore Entertainment ("Moore"). The results of operations of
the 2000 Acquisitions and the Moore acquisition are included from the
corresponding acquisition dates.
General
In accordance with SFAS No. 131, "Disclosure about Segments of an Enterprise and
Related Information," the Company classifies its operations according to four
major client groups. The Company currently derives a majority of its revenues
(94% and 86% for the three months ended March 31, 2001 and 2000, respectively)
from the production of innovative business communications programs to help
corporate clients reach and engage their target audiences. The Company helps
businesses effectively communicate their message via a broad range of business
communications, meeting production and entertainment production services. The
Company receives a fee for providing these services, which may include
developing creative content, providing comprehensive project management and
arranging for live entertainment and related production services. Revenue is
recognized when the services are completed for each event. Costs of producing
the events are also deferred until the event occurs.
The remainder of the Company's revenues are generated from its roster of artist
clients (4% and 5% for the three months ended March 31, 2001 and 2000,
respectively), entertainment clients (2% and 9% for the three months ended March
31, 2001 and 2000, respectively) and fairs and festivals clients (less than 1%
for both periods). Revenues from these three client groups are subject to
seasonal variations, with significantly more revenues generated in the second
and third calendar quarters. Commissions received from artists' earnings are
recognized in the period during which the artist earns the revenue. There are
generally only minimal direct costs associated with generating revenue from
artist clients. Entertainment marketing revenues and cost of revenues are
recognized when the services are completed for each program or, for those
programs with multiple events, apportioned to each event and recognized as each
event occurs. Fairs and festivals also recognize revenue and cost of revenues
when the services are completed for each program.
Results of Operations - Comparison of the three months ended March 31, 2001 and
2000.
Results of operations of the Moore acquisition and each of the 2000 Acquisitions
are included from the corresponding acquisition dates.
Revenues decreased $2,803,400, or 17%, to $13,900,400 in the 2001 quarter from
$16,703,800 in the 2000 quarter. Of the decrease, $1,395,000 was attributed to
the corporate communications client group. The number of corporate meeting and
entertainment events decreased to 87 in the 2001 quarter from 115 in the 2000
quarter, as the Company continues to aggressively pursue larger corporate
meeting and entertainment events with Fortune 1000 companies. The revenue
decrease is further due to the production of a major event with revenues in
excess of $4 million in the 2000 period, which event was not repeated by the
client in the 2001 period. The decrease in revenue due to the decrease in the
number of corporate events was partially offset by the increase in the average
revenue per event, to $149,400 in the 2001 period from $125,200 in the 2000
period. In the 2001 period, the Company produced 16 events with revenues in
excess of $250,000 compared to 11 such events in the 2000 period.
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Revenues from artist clients decreased $284,200 for the 2001 period over the
2000 period. Revenues in the 2000 period included a settlement of commissions
from an artist whose relationship with the Company was terminated in January
2000. Revenues from the Company's other artists remained relatively constant
between periods. Entertainment marketing revenues decreased $1,144,800 to
$301,500 in the 2001 period from $1,446,400 in the 2000 period. The decrease is
due primarily to the production, in February 2000, of an entertainment marketing
program as part of its continuing obligations under a joint venture arrangement
that terminated in December 1999. The Company did not pursue this event in 2001.
Revenues from fairs and festivals clients were not significant in the first
quarter of 2001 or 2000. This client group does not begin to generate
significant revenues until the second quarter.
Cost of revenues decreased $1,976,600 or 17%, to $9,457,400 for the 2001 period
from $11,434,000 for the 2000 period. The overall decrease is due to the
decrease in revenues from 2000 to 2001. Cost of revenues, as a percentage of
revenues, remained constant at 68% between periods.
Selling, general and administrative expenses increased $1,119,400, or 26%, to
$5,415,900 for the 2001 period from $4,296,500 for the 2000 period. The increase
results primarily from increased personnel and related operating expenses during
the second half of 2000 associated with the increased levels of corporate
communications business, as well as selling, general and administrative expenses
associated with the EJD and Moore Acquisitions. On a sequential basis, selling,
general and administrative expenses have remained relatively constant from the
levels incurred during the third and fourth quarters of fiscal 2000.
Depreciation and amortization expense increased $115,100, or 21%, to $676,200
for the 2001 period from $561,100 for the 2000 period. The increase results
primarily from the amortization of goodwill associated with the EJD acquisition
and the Moore acquisition.
In April 2000, the Company entered into a limited liability company agreement,
Earth Escapes LLC, which provided for the Company to receive a percentage of the
gross revenues, as defined, of the limited liability company. For the 2001
period, the Company recognized $167,700 of income from this arrangement, which
amount is included in other income.
Net interest expense increased $100,200, to $147,200 for the 2001 quarter
compared to $47,000 for the 2000 quarter. The change is mainly attributable to
increased interest expense associated with additional outstanding debt related
to the 2000 Acquisitions and the Moore acquisition as well as lower interest
income on decreased average cash balances in the 2001 period.
The current period reflects a tax benefit, which as a percentage of loss before
income taxes, is 32% for the 2001 period compared to a tax provision of 49% for
the 2000 period, which reflect statutory tax rates adjusted for estimated
book/tax differences. In addition, the 2001 tax benefit and 2000 tax provision
have been adjusted to reflect nondeductible amortization of goodwill for certain
of the Company's acquisitions.
Net income (loss) decreased $1,384,700, to a $1,240,800 net loss for the 2001
quarter from $143,900 net income for the 2000 period due to the reasons
described above.
Discontinued Operations
During the first quarter of 2001, the Company approved a formal plan to sell its
merchandising operations in order to better focus on its core business as a
strategic communications and entertainment company. The disposition of the
merchandising operations represents the disposal of a business segment under
Accounting Principles Board ("APB") Opinion No. 30. Accordingly, this segment is
accounted for as a discontinued operation and amounts in the financial
statements and related notes for all periods shown have been restated to reflect
discontinued operations accounting. Management currently believes that it will
be able to recover its net investment in discontinued operations and that it
will not experience a loss on discontinued operations between the measurement
date and the disposal date, which is not expected to exceed twelve months.
LIQUIDITY AND CAPITAL RESOURCES
The Company continues to fund acquisitions and working capital needs out of
operating cash flow. At March 31, 2001, the Company had cash and cash
equivalents of $1,208,100 and negative working capital of $2,469,000, which
included $3,028,000 of short-term borrowings and current portion of long-term
debt. Cash used in continuing operations was $663,400 for the first quarter of
2001 compared to cash provided by continuing operations of $2,183,500 for the
first quarter of 2000. The fluctuation in cash flows from operating activities
between the 2001 and 2000 periods primarily reflects the net loss generated in
the 2001 period and the decrease in advance deposits and deferred revenue due to
the timing of receipt of these funds from clients. As of March 31, 2001, one
major client
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had not yet funded two large programs occurring in the second quarter of 2001.
In the 2000 period, advance deposits and deferred revenue increased due to the
receipt, as of March 31, 2000, of funds from clients for programs occurring in
the second quarter of 2000.
Cash used in investing activities for the first quarter of 2001 was $1,149,900
resulting primarily from cashed used for the acquisition of Moore. Cash used in
investing activities for the first quarter of 2000 was $3,698,800 and resulted
primarily from cash used for the Romeo acquisition.
Cash used in financing activities for the first quarter of 2001 was $729,700,
resulting primarily from the repurchase of the Company's common stock and
repayment of long-term debt. Cash used in financing activities for the first
quarter of 2000 was $976,100, resulting primarily from the repayment of
long-term debt and the repurchase of the Company's common stock. For both
periods, cash used in financing was offset in part by working capital borrowings
on bank lines of credit.
The Company has pursued an aggressive growth strategy since its formation in
1993. From the Company's inception through December 31, 1997, the Company
acquired and operated certain businesses that were sold in 1998. The Company
relied on external sources of funds, including public offerings of its common
stock and bank borrowings, to finance the acquisition of these businesses and to
fund the general operations of the Company. In 1998, the Company realized net
proceeds of $19,393,800 from the sale of discontinued operations, after
repayment of borrowings associated with these businesses and applicable
transaction costs. In 1999, the Company received the final $3,000,000 of net
proceeds from the sale of such discontinued operations.
The Company has used the proceeds from the sale of these operations to fund part
of the 10 strategic acquisitions completed since 1997, excluding discontinued
operations. The remainder of the purchase prices of these acquisitions was
funded through the issuance of common stock of the Company and the issuance of
acquisition notes payable. The acquisition notes are payable in various
installments of principal plus accrued interest at 8% through May 2005.
The Company expects to continue its aggressive growth strategy in certain
sectors of the entertainment industry. The Company anticipates that future
business acquisitions made by the Company will be completed through a
combination of cash, notes payable issued to the sellers and the issuance of
common stock of the Company to the sellers.
The Company recognizes that its artist management, entertainment marketing and
fairs and festivals operations are subject to seasonal variations, with
significantly more revenues and cash provided by such operations typically
generated during the second and third calendar quarters. Accordingly, although
the Company incurred a net loss, utilized cash in its continuing operations
during the first quarter of 2001, and has negative working capital at March 31,
2001, management believes that cash flow from future operations and current cash
reserves are adequate to meet its current and future working capital
requirements. In addition, to provide any additional funds necessary for the
continued pursuit of the Company's growth strategies, the Company may issue
additional equity and debt securities and may incur, from time to time,
additional short- and long-term bank indebtedness. The availability and
attractiveness of any outside sources of financing will depend on a number of
factors, some of which relate to the financial condition and performance of the
Company, and some of which will be beyond the Company's control, such as
prevailing interest rates and general economic conditions. There can be no
assurance that such additional financing will be available or, if available,
will be on terms acceptable to the Company. To the extent that the Company is
able to finance its growth through internal and external sources of capital, the
Company intends to continue to grow its operations through additional
acquisitions. There can be no assurance that the Company will be able to acquire
any additional businesses, that any businesses that are acquired will be or will
become profitable or that the Company will be able to effectively integrate any
such businesses into its existing operations.
Forward Looking Statements
The foregoing discussion may contain certain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Such statements are intended to be covered by
the safe harbors created by such provisions. These statements include the plans
and objectives of management for future growth of the Company, including plans
and objectives related to the acquisition of certain businesses and the
consummation of future private and public issuances of the Company's equity and
debt securities. The forward-looking statements included herein are based on
current expectations that involve numerous risks and uncertainties. Assumptions
relating to the foregoing involve judgments with respect to, among other things,
future economic, competitive and market conditions and future business
decisions, all of which are difficult or impossible to predict accurately and
many of which are beyond the control of the Company. Although the Company
believes that the assumptions underlying the forward-looking statements are
reasonable, any of the assumptions could be inaccurate and, therefore, there can
be no assurance that the forward-looking statements included in this Form 10-Q
will prove to be accurate. In light of the significant uncertainties inherent in
the forward-looking statements included herein, the inclusion of such
information should not be regarded as a representation by the Company or any
other person that the objectives of the Company will be achieved.
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PART II
OTHER INFORMATION
TBA ENTERTAINMENT CORPORATION AND SUBSIDIARIES
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
None
b) Reports on Form 8 - K
None for the quarterly period ended March 31, 2001
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SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the Registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized in the cities of Hickory Valley,
Tennessee and Encino, California, on the 15th day of May, 2001.
TBA ENTERTAINMENT CORPORATION
By: /s/ Thomas Jackson Weaver III
---------------------------------------------------------
Thomas Jackson Weaver III
Chairman of the Board and Chief Executive Officer
By: /s/ Bryan J. Cusworth
---------------------------------------------------------
Bryan J. Cusworth
Executive Vice President, Chief Financial Officer and
Treasurer (Principal Accounting and Financial Officer)
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