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IMAGINE FILMS REPORTS RESULTS FOR FISCAL 1991 AND ANNOUNCES SIGNIFICANT DEVELOPMENTS

 IMAGINE FILMS REPORTS RESULTS FOR FISCAL 1991
 AND ANNOUNCES SIGNIFICANT DEVELOPMENTS
 LOS ANGELES, Dec. 20 /PRNewswire/ -- Imagine Films Entertainment, Inc. (NASDAQ: IFEI, IFEIU, IFEIW), today reported revenues and net income for the fourth quarter and fiscal year ended Sept. 30, 1991. Results for both periods were as follows: (All amounts in thousands, except per share data.)
 IMAGINE FILMS ENTERTAINMENT, INC.
 Selected Financial Data
 Fiscal Year Ended Sept. 30 1991 1990
 Net revenues $30,132 $57,292
 Net income 2,980 3,741
 Net income per share
 Primary $.51 $.65
 Fully diluted $.48 $.62
 Fourth Quarter Ended Sept. 30 1991 1990
 Net revenues $ 9,757 $20,549
 Net income 1,607 1,859
 Net income per share
 Primary $.25 $.31
 Fully diluted $.21 $.29
 Commenting on these results, Brian Grazer and Ron Howard, co-chief executive officers of Imagine, said, "Fiscal 1991, while not as profitable as fiscal 1990, was a productive year for the company. The company utilized the services of some of the most creative talent in the motion picture industry during the year. The company was involved in releasing five films, producing four others and developing several promising new projects, two of which have been set for production in fiscal 1992. On the financial front, the company's accumulated deficit was erased and shortly after year end the company's debt was extinguished."
 The results for fiscal 1991 reflect operating income from our first five motion pictures -- "The Burbs," "The Dream Team," "Parenthood," "Opportunity Knocks" and "Cry Baby." Also included are production and development revenues earned in connection with "Backdraft," "Problem Child 2," "My Girl," "Far and Away" (formerly "Irish Story") and "Housesitter." The decrease in net revenue for fiscal 1991 as compared to fiscal 1990 reflects the shift from internally financed films to films financed by third parties.
 The five fiscal 1991 releases with which Imagine was involved ("Kindergarten Cop," "Closet Land," "The Doors," "Backdraft" and "Problem Child 2") generated more than $225 million in domestic box office receipts. "Kindergarten Cop," our Christmas 1990 release, grossed more than $91 million in domestic box office receipts and more than $110 million in international box office receipts (a company record). In addition, the film was the largest grossing rental video in MCA/Universal history. "Backdraft," our summer 1991 release, generated over $77 million in domestic box office receipts and has grossed over $60 million to date in international box office receipts.
 Films scheduled for release in fiscal 1992 by Universal Pictures are "Far and Away," a Ron Howard-directed film starring Tom Cruise and Nicole Kidman, "Housesitter," starring Steve Martin and Goldie Hawn, and "Lorenzo's Oil," starring Nick Nolte and Susan Sarandon. In addition, the company provided production services on two films to be released by other studios in fiscal 1992: "Boomerang," starring Eddie Murphy, to be released by Paramount Pictures, and "My Girl," which was released by Columbia Pictures in November 1991. "My Girl" has grossed more than $31 million in domestic box office receipts in its first 19 days of release.
 The company recently commenced pre-production on "Concierge," to star Michael J. Fox and to be directed by Barry Sonnenfeld ("Addams Family"). This film will be released by Universal Pictures.
 Significant Developments
 The company has entered into employment agreements, which expire Nov. 27, 1992, with Grazer and Howard for their exclusive services. Grazer and Howard are each a co-chief executive officer of the company, and as such make virtually all decisions concerning the conduct of the business of the company, including the properties and rights to be acquired by the company, the arrangements to be made for the development of motion picture projects and for the financing, production and distribution of the resulting motion pictures. Accordingly, the company believes that the continued availability of the services of Grazer and Howard is necessary to conduct its business in its current form and the loss of the services of either of them, without suitable replacements, probably would have a material adverse impact on the company's business as presently conducted and its prospects. A committee of independent directors of the company has been engaged in negotiations to extend the employment contracts of Grazer and Howard. Although numerous discussions have taken place regarding such extensions, no agreement has been reached to date. There can be no assurance that the employment agreements will be renewed, or, if renewed, what the ultimate economic terms of such renewals will be.
 The company is also in the process of negotiating an extension of its distribution agreements with Universal and Showtime, which expire on Nov. 27, 1992, and Dec. 21, 1993, respectively. Universal has indicated that the proposed agreement presently contemplated by the negotiations would he contingent on the extension of exclusive employment agreements with Howard and Grazer. In addition, both Universal and Showtime have rights of termination under certain circumstances if Howard or Grazer cease to render services to the company.
 On Dec. 20, 1991, each of Howard and Grazer individually filed a Schedule 13D with the Securities and Exchange Commission and the company. In their respective filings, each of Howard and Grazer include the following statement:
 "Messrs. Grazer and Howard have significant reservations concerning the renewal of their employment agreements for an extended period with the company. Accordingly, in connection with their evaluation of the long-term extension of their employment agreements, Messrs. Grazer and Howard are also evaluating the feasibility of other alternatives, including extending their employment agreements for a limited term, leaving the employment of the company at the end of the current term or pursuing a sale of the company or other extraordinary transaction (with respect to which representatives of Messrs. Grazer and Howard have had preliminary discussions with a third party) which would result in the company no longer being subject to public reporting requirements. In connection with any such alternatives, Messrs. Grazer and Howard may seek to dispose of some or all of their shares of company stock, or may seek to purchase, or cause the company to purchase, shares not held by them. No decision had been made to pursue any such alternative and no assurance can be given that any alternative proposal will be made."
 Imagine Films Entertainment is an independent producer of feature films. The company was founded in November 1985, by its Co-Chief Executives, producer Brain Grazer and director Ron Howard, and went public in July 1986.
 IMAGINE FILMS ENTERTAINMENT, INC. AND SUBSIDIARIES
 Unaudited Condensed Consolidated Statements of Operations
 (In thousands, except per share data)
 Periods Ended Quarter Year
 Sept. 30 1991 1990 1991 1990
 Net revenues $9,757 $20,549 $30,132 $57,292
 Less: costs and expenses 7,663 18,071 26,217 52,592
 Income before share of
 partnership loss, provision
 for income taxes and
 extraordinary credit 2,094 2,478 3,915 4,700
 Share of partnership loss(A) -- (27) 164 (91)
 Income before income taxes
 and extraordinary credit 2,094 2,451 4,079 4,609
 Provision for income taxes (800) (843) (1,564) (1,759)
 Income before extraordinary
 credit 1,294 1,608 2,515 2,850
 Extraordinary credit(B) 313 251 465 891
 Net income $1,607 $1,859 $2,980 $3,741
 Per common share:
 Primary
 Income before extraordinary
 credit $0.20 $0.27 $0.44 $0.51
 Extraordinary credit(B) 0.05 0.04 0.07 0.14
 Net income $0.25 $0.31 $0.51 $0.65
 Fully diluted
 Income before extraordinary
 credit $0.17 $0.25 $0.42 $0.50
 Extraordinary credit(B) 0.04 0.04 0.06 0.12
 Net income $0.21 $0.29 $0.48 $0.62
 (A) -- Television Limited Partnership
 On March 30, 1988, Imagine entered into a limited partnership with MCA Inc. to develop and produce all types of television programming (network, cable, syndicated). The partnership was terminated in March 1991. All existing television projects will be developed, produced and financed through MCA's infrastructure. Under the terms of the termination agreement, MCA agreed to assume existing liabilities and costs of terminating the partnership. Accordingly, the company reversed its cumulative share of partnership losses during the year ended Sept. 30, 1991.
 (B) -- Extraordinary Credit
 Extraordinary credit is due to the utilization of tax loss carryforwards for income tax purposes.
 -0- 12/20/91
 /CONTACT: Michael Meltzer, chief financial officer of Imagine Films Entertainment, 310-277-1665, or Diana Brainerd or Christian Plunkett of The Abernathy/MacGregor Group, 212-371-5999, for Imagine Films Entertainment/
 (IFEI) CO: Imagine Films Entertainment, Inc. ST: California IN: ENT SU: ERN


PS -- NY091 -- 4632 12/20/91 19:28 EST
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