SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For Quarter Ended: December 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: 0-15159
RENTRAK CORPORATION
(Exact name of registrant as specified in its charter)
OREGON 93-0780536
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification no.)
7700 NE Ambassador Place, Portland, Oregon 97220
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (503) 284-7581
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 ( )
As of January 31, 2002, the Registrant had 9,723,233 shares of Common Stock
outstanding.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of December 31, 2001 and March 31, 2001
Consolidated Statements of Income for the three-month periods ended
December 31, 2001 and December 31, 2000
Consolidated Statements of Income for the nine-month periods ended
December 31, 2001 and December 31, 2000
Consolidated Statements of Cash Flows for the nine-month periods ended
December 31, 2001 and December 31, 2000
Notes to Consolidated Financial Statements
2
RENTRAK CORPORATION
CONSOLIDATED BALANCE SHEETS
ASSETS
(UNAUDITED)
December 31, March 31,
2001 2001
-----------------------------------------
CURRENT ASSETS:
Cash and cash equivalents $ 12,807,203 $ 3,322,917
Accounts receivable, net of allowance for doubtful
accounts of $2,022,596 and $2,090,075 9,215,648 11,151,817
Advances to program suppliers 1,807,162 1,328,165
Inventory 2,767,598 3,514,354
Income tax receivable 317,310 279,160
Deferred tax asset 1,246,874 7,319,266
Other current assets 2,306,746 3,291,915
-----------------------------------------
Total current assets 30,468,541 30,207,594
-----------------------------------------
PROPERTY AND EQUIPMENT, net 4,631,883 4,439,773
DEFERRED TAX ASSET 3,930,869 2,419,634
OTHER ASSETS 1,093,386 2,059,247
-----------------------------------------
TOTAL ASSETS $ 40,124,679 $ 39,126,248
=========================================
The accompanying notes are an
integral part of these consolidated
balance sheets.
3
RENTRAK CORPORATION
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
(UNAUDITED)
December 31, March 31,
2001 2001
--------------------------------------------
CURRENT LIABILITIES:
Line of credit $ - $ 1,917,705
Accounts payable 20,097,411 18,699,289
Accrued liabilities 2,728,302 3,418,043
Accrued compensation 1,493,879 1,127,785
Current portion of deferred revenue 409,086 1,245,643
Net current liabilities of discontinued operations 44,985 156,046
--------------------------------------------
Total current liabilities 24,773,663 26,564,511
--------------------------------------------
LONG-TERM LIABILITIES:
Deferred Revenue 94,778 379,104
Other 518,510 795,875
--------------------------------------------
Total long-term liabilities 613,288 1,174,979
--------------------------------------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value;
Authorized: 10,000,000 shares - -
Common stock, $.001 par value;
Authorized: 30,000,000 shares
Issued and outstanding: 9,695,185 shares
at December 31, 2001 and 12,235,621 shares at
March 31, 2001 9,696 12,236
Capital in excess of par value 41,048,198 52,471,599
Notes receivable (377,565) (7,728,189)
Cumulative other comprehensive income (loss) - (49,572)
Accumulated deficit (25,572,601) (32,904,316)
Less - Deferred charge - warrants (370,000) (415,000)
--------------------------------------------
14,737,728 11,386,758
--------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 40,124,679 $ 39,126,248
============================================
The accompanying notes are an
integral part of these consolidated
balance sheets.
4
RENTRAK CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended December 31,
2001 2000
---------------------------------------------------
REVENUES:
PPT $ 17,945,185 $ 22,006,428
Other 8,487,101 10,778,201
---------------------------------------------------
26,432,286 32,784,629
---------------------------------------------------
OPERATING COSTS AND EXPENSES:
Cost of sales 21,182,170 26,153,235
Selling, general, and administrative 4,017,915 6,112,165
---------------------------------------------------
Net (gain) expense from litigation settlement - -
---------------------------------------------------
25,200,085 32,265,400
---------------------------------------------------
INCOME FROM OPERATIONS 1,232,201 519,229
---------------------------------------------------
OTHER INCOME (EXPENSE):
Interest income (24,538) 16,939
Interest expense (1,896) (191,752)
Gain (loss) on Investment Securities - -
Other 2,366,496 -
---------------------------------------------------
2,340,062 (174,813)
---------------------------------------------------
INCOME BEFORE INCOME TAX
PROVISION 3,572,263 344,416
INCOME TAX PROVISION 1,333,575 114,906
---------------------------------------------------
NET INCOME $ 2,238,688 $ 229,510
===================================================
EARNINGS PER SHARE:
---------------------------------------------------
Basic: $ 0.23 $ 0.02
---------------------------------------------------
Diluted: $ 0.23 $ 0.02
===================================================
The accompanying notes are an integral part of
these consolidated statements.
5
RENTRAK CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Nine Months Ended December 31,
2001 2000
----------------------------------------------------
REVENUES:
PPT $ 53,258,147 $ 61,877,737
Other 25,884,959 25,277,071
----------------------------------------------------
79,143,106 87,154,808
----------------------------------------------------
OPERATING COSTS AND EXPENSES:
Cost of sales 57,847,770 71,970,164
Selling, general, and administrative 17,245,635 29,731,378
Net gain from litigation settlement - (225,000)
----------------------------------------------------
75,093,405 101,476,542
----------------------------------------------------
INCOME (LOSS) FROM OPERATIONS 4,049,701 (14,321,734)
----------------------------------------------------
OTHER INCOME (EXPENSE):
Interest income 165,425 273,145
Interest expense (10,872) (541,273)
Gain (loss) on Investment Securities -
Other 7,717,233 -
----------------------------------------------------
7,871,786 (268,128)
----------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAX
PROVISION (BENEFIT) 11,921,487 (14,589,862)
INCOME TAX PROVISION (BENEFIT) 4,589,772 (5,500,378)
----------------------------------------------------
NET INCOME (LOSS) $ 7,331,715 $ (9,089,484)
====================================================
EARNINGS (LOSS) PER SHARE:
----------------------------------------------------
Basic: $ 0.69 $ (0.76)
----------------------------------------------------
Diluted: $ 0.68 $ (0.76)
====================================================
The accompanying notes are an integral part of
these consolidated statements.
6
RENTRAK CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended December 31,
--------------------------------------------
2001 2000
--------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ 7,331,715 $ (9,089,484)
Adjustments to reconcile income (loss) to net cash
provided by (used in) operating activities
(Gain) loss on investments (3,720,613) 597,124
Depreciation and amortization 945,930 946,238
Amortization of warrants 45,000 353,493
Provision (recovery) for doubtful accounts and other assets (415,247) 8,710,275
Reserves on advances to program suppliers 1,488,601 -
Deferred income taxes 4,531,149 (6,363,658)
Change in specific accounts:
Accounts receivable 2,351,416 (1,713,010)
Advances to program suppliers (1,967,598) (302,990)
Inventory 746,756 (338,629)
Income tax receivable (38,150) (491,083)
Notes receivable - 4,061,618
Other current assets 985,169 (719,467)
Accounts payable 1,398,122 (1,263,109)
Accrued liabilities & compensation (323,647) 537,388
Deferred revenue and other liabilities (1,398,248) 1,468,829
Notes payable - (500,000)
Net current liabilities of discontinued operations (111,061) (253,932)
--------------------------------------------
Net cash provided by (used in) operations 11,849,294 (4,360,397)
--------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (1,141,520) (1,924,917)
Proceeds from sale of investments 4,377 1,594,812
Reduction (addition) of other assets and investments 874,657 (609,740)
--------------------------------------------
Net cash used in investing activities (262,486) (939,845)
--------------------------------------------
7
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (payments) under line of credit (1,917,705) 3,999,114
Repurchase of common stock (598,857) -
Issuance of common stock 277,480 314,550
Issuance of common stock to non-employees 136,560 -
----------------------------------------
Net cash provided by (used in) financing activities (2,102,522) 4,313,664
----------------------------------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 9,484,286 (986,578)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 3,322,917 4,028,271
----------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 12,807,203 $ 3,041,693
========================================
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid during the period for -
Interest $28,929 $111,829
Income taxes paid, net of refunds received 86,829 769,084
NON-CASH TRANSACTIONS
Change in unrealized gain (loss) on investment
securities, net of tax 49,572 (197,105)
Notes issued, net of cancellation for common stock (7,350,624) 7,728,189
Repurchase of common stock from sale of asset 3,890,500 -
The accompanying notes are an integral
part of these consolidated statements.
8
RENTRAK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A: Basis of Presentation
The accompanying unaudited Consolidated Financial Statements of RENTRAK
CORPORATION (the "Company"), have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission (SEC). Certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. The results of operations for
the three-month and nine- month periods ended December 31, 2001 are not
necessarily indicative of the results to be expected for the entire fiscal year
ending March 31, 2002. The Condensed Consolidated Financial Statements should be
read in conjunction with the Consolidated Financial Statements and footnotes
thereto included in the Company's 2001 Annual Report to Shareholders. Certain
prior year information has been reclassified to conform to current year
presentation.
The Consolidated Financial Statements reflect, in the opinion of management, all
material adjustments (which, except as disclosed, include only normal and
recurring adjustments) necessary to present fairly the Company's financial
position and results of operations.
The Consolidated Financial Statements include the accounts of the Company, its
majority owned subsidiaries, and those subsidiaries in which the Company has a
controlling interest after elimination of all inter-company accounts and
transactions. Investments in affiliated companies owned 20 to 50 percent are
accounted for by the equity method.
During the nine-month period ended December 31, 2001, the FASB issued Statement
of Financial Accounting Standard No. 141 "Business Combinations" (SFAS 141),
effective July 1, 2001, Statement of Financial Accounting Standard No. 142
"Goodwill and Other Intangibles" (SFAS 142), effective for fiscal year ending
March 31, 2003, Statement of Financial Accounting Standard No. 143 "Accounting
for Asset Retirement Obligations" (SFAS 143), effective for fiscal year ending
March 31, 2004, and Statement of Financial Accounting Standard No. 144
"Accounting for the Impairment or Disposal of Long-Lived Assets" (SFAS 144),
effective fiscal year ending March 31, 2003. The Company expects that adoption
of SFAS 141, SFAS 142, and SFAS 143 will not have a material impact on the
Company's financial condition or results of operations. The Company is in the
process of evaluating the financial statement impact of SFAS 144.
NOTE B: Net Income (Loss) Per Share
Basic earnings (loss) per common share is computed by dividing net income (loss)
by the weighted average number of shares of common stock outstanding during the
periods. Diluted earnings (loss) per common share is computed on the basis of
the weighted average shares of common stock outstanding plus common equivalent
shares arising from dilutive stock options and warrants.
9
The weighted average number of shares of common stock and equivalents and net
income (loss) used to compute basic and diluted earnings per share for the three
and nine-month periods ended December 31, 2001 and 2000 were as follows:
3-Months Ended 9-Months Ended
December 31, 2001 December 31, 2001
------------------------------- --------------------------
Basic Diluted Basic Diluted
----- ------- ----- -------
Weighted average number of shares
of common stock outstanding used
to compute basic earnings (loss)
per common share 9,676,636 9,676,636 10,632,555 10,632,555
Dilutive effect of exercise of stock
options and warrants -- 167,305 -- 45,517
----------- ------------ ----------- ------------
Weighted average number of shares
of common stock used to compute diluted
earnings (loss) per common share
outstanding and common
stock equivalents 9,676,636 9,843,941 10,632,555 10,718,668
=========== ============ =========== ============
Net Income (loss) used in basic and
diluted earnings (loss) per common
share $ 2,238,688 $ 2,238,688 $ 7,331,715 $ 7,331,715
=========== ============ =========== ============
Earnings (loss) per common share $ 0.23 $ 0.23 $ 0.69 $ 0.68
=========== ============ =========== ============
3-Months Ended 9-Months Ended
December 31, 2000 December 31, 2000
-------------------------------- --------------------------
Basic Diluted Basic Diluted
----- ------- ----- -------
Weighted average number of shares
of common stock outstanding used
to compute basic earnings (loss)
per common share 12,519,199 12,519,199 11,903,240 11,903,240
Dilutive effect of exercise of stock
options and warrants -- -- -- --
---------- ---------- ---------- ------------
Weighted average number of shares
of common stock used to compute diluted
earnings (loss) per common share
outstanding and common
stock equivalents 12,519,199 12,519,199 11,903,240 11,903,240
========== ========== =========== ============
Net Income (loss) used in basic and
diluted earnings (loss) per common
share $ 229,510 $ 229,510 $(9,089,484) $(9,089,484)
=========== ========== =========== ============
Earnings (loss) per common share $ 0.02 $ 0.02 ($ 0.76) ($ 0.76)
=========== ========== =========== ============
Options and warrants to purchase 2,180,708 and 3,416,615 shares of common stock
for the quarters ended December 31, 2001 and 2000, respectively, and 2,615,144
shares for the nine-month period ended December 31, 2001, were outstanding but
were not included in the computation of diluted EPS because the exercise prices
of the options and warrants were greater than the average market price of the
common shares. Options and warrants to purchase 3,196,641 shares for the
nine-month period ended December 31, 2000, were outstanding but were not
included in the computation of diluted EPS because their effect would be
antidilutive due to a loss for the period.
NOTE C: Business Segments, Significant Suppliers and Major Customer
The Company classifies its services in three segments, PPT, 3PF.COM, Inc.
("3PF") and Other. Under its Pay-Per-Transaction (PPT) revenue sharing program,
the Company enters into contracts to lease videocassettes from program suppliers
(producers of motion pictures and licensees and distributors of home video
cassettes) which are then leased to retailers for a percentage of the rentals
charged by the retailers. 3PF is a subsidiary of the Company which provides
order processing, fulfillment and inventory management services. Other includes
the operations of BlowOut Video, a video retail subsidiary, ForMovies.Com, an
internet service, and amounts received pursuant to royalty agreements, primarily
from a previous agreement with Rentrak Japan (See Note H.).
10
Business Segments
-----------------
Following are the revenues, income (loss) from operations and identifiable
assets of the Company's business segments for the periods indicated (unaudited):
RENTRAK CORPORATION
BUSINESS SEGMENTS - CONTINUING OPERATIONS
FOR THE PERIOD ENDING DECEMBER 31, 2001 VS. DECEMBER 31, 2000
(UNAUDITED)
Nine Months Ended December Nine Months Ended December Three Months Ended Three Months Ended
31, 2001 31, 2000 December 31, 2001 December 31, 2000
------------------------------------------------------------------------------------------------------
REVENUES: (1)
PPT $53,582,282 $62,431,467 $18,051,116 $22,147,747
3PF.COM, Inc. (2) 13,629,350 16,474,335 6,353,023 7,510,716
OTHER 14,072,070 10,217,126 2,742,768 3,432,694
-----------------------------------------------------------------------------------------------
$81,283,702 $89,122,928 $27,146,907 $33,091,157
===============================================================================================
INCOME (LOSS) FROM
OPERATIONS: (1)
PPT $1,650,677 ($11,938,326) ($455,630) ($100,144)
3PF.COM, Inc. (3,600,959) (3,351,127) 819,070 (911,298)
OTHER 5,999,983 1,268,292 868,760 1,831,244
-----------------------------------------------------------------------------------------------
$4,049,701 ($14,021,161) $1,232,200 $819,802
===============================================================================================
IDENTIFIABLE ASSETS:
(1)
PPT $40,596,396 $44,377,347
3PF.COM, Inc. 7,857,397 9,153,162
OTHER 5,105,181 6,830,542
-------------------------------------------
$53,558,974 $60,361,051
===========================================
(1) Total amounts differ from those reported on the consolidated financial
statements, as intercompany transactions are not eliminated for segment
reporting purposes.
(2) 3PF's revenues related to the shipment of cassettes to PPT customers
were $608,690 and $1,109,680 for the three month periods ended December
31, 2001 and 2000, respectively, and $1,816,461 and $2,555,796 for the
nine-month periods ended December 31, 2001 and 2000, respectively.
For the three-month period ended December 31, 2001, the Company had one program
supplier whose product generated 20 percent and a second that generated 16
percent of Rentrak revenue. No other program supplier provided product that
generated more than 10 percent of revenue for the three-month period ended
December 31, 2001. One customer accounted for 11 percent of the Company's
revenue in the three-month period ended December 31, 2001. No other customer
accounted for more than 10 percent of the Company's revenue in the three-month
period ended December 31, 2001. For the nine-month period ended December 31,
2001, the Company had one program supplier whose product generated 18 percent, a
second that generated 14 percent, and a third that generated
11
11 percent of Rentrak revenue. No other program supplier provided product that
generated more than 10 percent of revenue for the nine-month period ended
December 31, 2001.
For the three-month period ended December 31, 2000, the Company had one program
supplier whose product generated 20 percent, a second that generated 16 percent,
and a third that generated 12 percent of Rentrak revenue. For the nine-month
period ended December 31, 2000, the Company had one program supplier whose
product generated 18 percent, a second that generated 17 percent, and a third
that generated 14 percent of Rentrak revenue. No other program supplier provided
product that generated more than 10 percent of revenue for the three or
nine-month periods ended December 31, 2000. No customer accounted for more than
10 percent of the Company's revenue in the three and nine-month periods ended
December 31, 2000.
NOTE D: Discontinued Operations
On November 26, 1996, the Company made a distribution to its shareholders of
1,457,343 shares of common stock of BlowOut Entertainment, Inc. ("BlowOut"). The
operations of BlowOut were reflected as discontinued operations in the March 31,
1996 consolidated financial statements.
On March 22, 1999, BlowOut filed for Chapter 11 of the Federal Bankruptcy Code
in the United States Bankruptcy Court for the District of Delaware. At that same
time BlowOut filed a motion to sell substantially all the assets of BlowOut. The
sale to a third party video retailer was approved by the Bankruptcy Court on May
10, 1999, and closed on May 17, 1999. The Company was the principal creditor of
BlowOut. In 1996, the Company had agreed to guarantee up to $7 million of
indebtedness of BlowOut ("Guarantee"). Pursuant to the terms of the Guarantee,
the Company agreed to guarantee any amounts outstanding under BlowOut's credit
facility. As the proceeds from the sale of the BlowOut assets were not
sufficient to cover the amounts due under this facility, the Company, pursuant
to the Guarantee, agreed to a payment plan to fulfill BlowOut's obligation under
its credit facility. The amount remaining payable at December 31, 2001 is
approximately $75,000. Net current liabilities of discontinued operations at
December 31, 2001 and March 31, 2001, relate to amounts to be paid pursuant to
the Guarantee, net of tax benefit.
NOTE E: Customer Agreement
In June 2000, the Company entered into an agreement with one of its customers,
modifying an existing contract. Under terms of the agreement the customer made a
payment to the Company in the amount of $2.5 million, subject to the resolution
of certain issues. On March 31, 2001, the Company entered into a settlement
agreement with the customer whereby $1.6 million of the $2.5 million payment was
determined to be consideration for cancellation of certain rights of the Company
under the existing contract, while the balance of $0.9 million was to be held by
the Company as a deposit to be applied to future receivables generated by the
customer. The $0.9 million deposit is being allocated towards future receivables
at the rate of $75,000 per quarter, beginning
12
with the quarter ended March 31, 2001. The long-term portion of this credit has
been included in other long-term liabilities on the Company's balance sheet.
NOTE F: Related Party Transactions
On June 16, 2000, the Company loaned a total of $8,097,636 to two of its
officers (including a now former officer described below) to purchase 1,663,526
shares of common stock upon exercise of their employee stock options. During the
three-month period ended December 31, 2000, the Company and one of these
officers terminated the stock exercise agreement for 301,518 shares of stock and
corresponding loan in the amount of $1,468,250. At various times during the
three-month period ended September 30, 2000, the Company loaned an additional
$1,343,743 to some of its officers to purchase 283,277 shares of stock upon
exercise of their employee stock options. During the three-month period ended
December 31, 2000, the Company and one of these officers terminated the stock
exercise agreement for 50,535 shares of stock and corresponding loan in the
amount of $244,940. The loans bear interest at the federal funds rate in effect
on the date of the loan (6.5%) and interest is payable annually. The principal
amount of the loans is due on the earliest to occur of: (1) one year prior to
the expiration of the term of the borrower's current employment agreement with
Rentrak, (2) one year after the borrower leaves Rentrak's employment unless such
departure follows a "change of control" (as defined in the loan agreements), (3)
five years from the date of the loan, or (4) one year from the date of the
borrower's death. The loans are secured by the stock purchased. The loans are
without recourse (except as to the stock securing the loans) as to principal and
are with full recourse against the borrower as to interest. As a result, the
Company is not accruing interest on these loans. In accordance with generally
accepted accounting principles, the notes receivable arising from these
transactions are presented as deductions from stockholders' equity. During the
three-month period ended September 30, 2001, a former officer of the Company,
who was loaned, on June 16, 2000, $6,629,386 to purchase 1,362,008 shares of
stock upon exercise of his employee stock options and, during the quarter ended
September 30, 2000, was loaned $721,238 to purchase 133,742 shares of stock upon
exercise of his employee stock options, terminated his agreements with the
Company. Accordingly, the common stock and related notes receivable totaling
$7,350,624 were reversed in a non-cash transaction.
NOTE G: Line of Credit
In May 2000 the Company obtained a new line of credit with a lender in an amount
not to exceed the lesser of (a) $12 million or (b) the sum of 85% of the net
amount of eligible accounts receivable. Interest under the line is payable
monthly at the bank's prime rate plus 1/4 percent (5.00 percent at December 31,
2001). The line is secured by substantially all of the Company's assets. The
terms of the credit agreement include financial covenants requiring: (1) $15
million of tangible net worth to be maintained at all times; (2) a consolidated
net profit to be achieved each fiscal year equal to or exceeding $1.00 and (3)
$5 million of working capital to be maintained at all times. The agreement also
restricts the amount of loans and indebtedness and limits the payment of
dividends on the Company's stock, among other requirements. This agreement
expires in May 2005.
13
Based upon the financial results reported as of December 31, 2001 and for the
three-month period then ended, the Company has determined it is out of
compliance with one financial covenant as of December 31, 2001. The Company is
in the process of obtaining waivers of non-compliance for this financial
covenant as of December 31, 2001 and for the three-month period then ended. The
Company previously obtained waivers of non-compliance with this financial
covenant for each of the preceding four quarters. The Company has initiated
discussions of these covenants with its lender and is seeking covenant
modifications, as necessary. Based upon discussions between the Company and its
lender, the Company believes it will successfully receive current and future
waivers and/or covenant modifications and will have sufficient cash resources to
repay any outstanding borrowings as due. At December 31, 2001 and February 13,
2002, the Company had no outstanding borrowings under this agreement.
NOTE H: Rentrak Japan Agreement
Effective April 2, 2001, the Company and Rentrak Japan entered into a
restructuring of their business relationship as evidenced by execution of an
Agreement Concerning Changes to the Business Cooperation Agreement. Pursuant to
this agreement, the Company transferred exclusive rights to implement its
Pay-Per-Transaction (PPT) system within specified countries in the Far East,
including related trademark and other intellectual property rights, to Rentrak
Japan. In exchange for the transfer, Rentrak Japan made a lump sum cash payment
of $5.65 million to the Company and released certain of the Company's payment
obligations totaling $2.1 million in April 2001. As part of the transaction,
Rentrak Japan's obligation to pay annual royalties to Rentrak in connection with
use of its PPT system was terminated. $6.4 million of the above amounts was
recorded as revenue consistent with the historical treatment of royalty
payments. The remaining balance of $5.6 million was recorded as a gain and is
included in other income for the nine months ended December 31, 2001.
The Company concurrently sold to So-Tsu Co. Ltd. ("So-Tsu"), which owns a
controlling interest in Rentrak Japan, 300,000 shares of its Rentrak Japan
stock, or approximately 5.6 percent of the outstanding Rentrak Japan shares, for
a price of $4.0 million in April 2001. The Company also repurchased from Rentrak
Japan 614,000 shares of the Company's common stock for a price of $2.4 million,
or $3.875 per share. The Company repurchased an additional 390,000 shares of its
common stock for the same price per share, or a total of $1.5 million, from
Culture Convenience Club Co., Ltd., also under the control of So-Tsu. The
Company received the right, which was exercised in October 2001, to sell its
remaining 180,000 shares of Rentrak Japan stock, representing approximately 3.4
percent of the outstanding Rentrak Japan shares, for approximately $2.4 million
in total. This sale was recorded as a gain and is included in other income.
During fiscal year 2000, Rentrak Japan loaned 120 million yen (approximately
$200,000) to Rentrak UK. The loan was non-interest bearing and was forgiven in
connection with the April 2001 restructuring. During the term of the loan,
Rentrak Japan was entitled to 10 percent of the Company's share in Rentrak UK
royalties. No such share of royalties was earned by or paid to Rentrak Japan
during fiscal year 2001.
14
The Company sold to So-Tsu 1 percent of the Company's equity interest in 3PF for
a cash payment of $1.0 million received in May 2001.
The Company received a total of $6.7 million in net cash payments in April and
May 2001 in connection with the restructuring and it received the remaining $2.4
million in net cash payments in October 2001, as a result of the sale of its
remaining Rentrak Japan stock. At December 31, 2001 all transactions contained
within this agreement have been completed.
NOTE I: Stockholders' Equity
At December 31, 2001, total stockholders' equity was $14.7 million, an increase
of $3.3 million from the $11.4 million at March 31, 2001. Common stock and
capital in excess of par value decreased, on a combined basis, $11.4 million
from $52.5 million at March 31, 2001 to $41.1 million at December 31, 2001
primarily due to: (i) the repurchase of stock from Rentrak Japan (See Note H.);
(ii) the repurchase of additional stock under the Company's stock repurchase
program; and (iii) the termination of loan agreements by a former officer of the
Company for purchase of shares in conjunction with the exercise of employee
stock options (See Note F.). Notes receivable decreased from ($7.7) million at
March 31, 2001 to ($0.4) million at December 31, 2001 in conjunction with the
termination of the loan agreements noted above. Accumulated deficit decreased
$7.3 million from $32.9 million at March 31, 2001 to $25.6 million at December
31, 2001 due to the net income from the nine-month period.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Forward Looking Statements
Certain information included in Management's Discussion and Analysis of
Financial Condition and Results of Operations constitute forward-looking
statements that involve a number of risks and uncertainties. Forward looking
statements are identified by the use of forward-looking words such as "may",
"will", "expects", "intends", "anticipates", "estimates", or "continues" or the
negative thereof or variations thereon or comparable terminology. The following
factors are among the factors that could cause actual results to differ
materially from the forward-looking statements: the Company's ability to
continue to market the Pay Per Transaction ("PPT") System successfully, the
financial stability of participating retailers and their performance of their
obligations under the PPT System, non-renewal of the Company's line of credit,
business conditions and growth in the video industry and general economic
conditions, both domestic and international, competitive factors, including
increased competition, expansion of revenue sharing programs other than the PPT
System by program suppliers, new technology, and the continued availability of
prerecorded videocassettes ("Cassettes") from program
15
suppliers. Such factors are discussed in more detail in the Company's 2001
Annual Report to Shareholders.
Results of Operations
---------------------
For the three-month period ended December 31, 2001, total revenue decreased $6.4
million, or 20 percent, to $26.4 million from $32.8 million for the three-month
period ended December 31, 2000. For the nine-month period ended December 31,
2001, total revenue decreased $8.1 million, or 9 percent, to $79.1 million from
$87.2 million for the nine-month period ended December 31, 2000. Total revenue
includes the following PPT Program fees: application fees generated when
retailers are approved for participation in the PPT System; order processing
fees generated when Cassettes are ordered by and distributed to retailers;
transaction fees generated when retailers rent Cassettes to consumers;
sell-through fees generated when retailers sell Cassettes to consumers; access
usage fees generated when participating retailers use the PPT system; and buy
out fees generated when retailers purchase Cassettes at the end of the lease
term. In addition, total revenue includes the following: (i) charges to
customers of the Company's subsidiary 3PF, which provides order processing,
fulfillment and inventory management services, (ii) sales of Cassettes through
the Company's retail subsidiary BlowOut Video, (iii) charges for internet
services provided by ForMovies.Com, and (iv) royalty payments primarily from
Rentrak Japan (See Note H.).
The decrease in total revenues for the three-month period ended December 31,
2001 is primarily due to: (i) a decrease in PPT revenues due to lower
transaction fees as a result of decreased rentals of Cassettes by retailers to
consumers based upon the quality and timing of the release of titles and due to
lower order processing fees as the result of a reduction in Cassettes shipped
under the PPT System; (ii) program suppliers engaging in direct revenue sharing
with the larger chains; (iii) a decrease in revenues related to 3PF's services,
resulting primarily from the loss of a key customer; (iv) the discontinuance of
royalty revenues from Rentrak Japan (See Note H.); and (v) a decrease in
business activity and revenue from the Company's subsidiary BlowOut Video.
The decrease in total revenues for the nine-month period ended December 31, 2001
is primarily due to: (i) a decrease in revenues related to 3PF's services,
resulting primarily from the loss of a key customer; (ii) program suppliers
engaging in direct revenue sharing with the larger chains; and (iii) the number,
timing and quality of titles released to the PPT System in the initial months of
the nine-month period ended December 31, 2001. PPT revenues for the nine-month
period ended December 31, 2001 decreased to $53.3 million from $61.9 million for
the nine-month period ended December 31, 2000, a decrease of $8.6 million, or 14
percent. 3PF revenues for the nine-month period ended December 31, 2001
decreased to $13.6 million from $16.5 million for the nine-month period ended
December 31, 2000, a decrease of $2.9 million, or 18 percent. The discontinuance
of royalty revenues from Rentrak Japan (See Note H.) in April 2001, as well as a
decrease in business activity and revenue from the Company's subsidiary
16
BlowOut Video, also contributed to the decrease in revenues during the
nine-month period ended December 31, 2001. These reductions in revenue were
partially offset by the recognition of $6.4 million in revenue during the
three-month period ended June 30, 2001 related to an agreement between the
Company and Rentrak Japan (See Note H.).
Cost of sales for the three-month period ended December 31, 2001 decreased to
$21.2 million from $26.2 million for the three-month period ended December 31,
2000, a decrease of $5.0 million, or 19 percent. This decrease is primarily
attributable to the $6.4 million decrease in total revenue for the three-month
period ended December 31, 2001 offset by increased cost of sales of 3PF as the
result of the addition of more labor intensive customers and the cost of new
warehousing with no additional revenues. Cost of sales as a percent of total
revenues remained constant at 80% for the three-month periods ended December 31,
2001 and December 31, 2000. Cost of sales for the nine-month period ended
December 31, 2001 decreased to $57.9 million from $72.0 million for the
nine-month period ended December 31, 2000, a decrease of $14.1 million, or 20
percent. Cost of sales as a percent of total revenues, excluding the $6.4
million in revenue related to the business restructuring with Rentrak Japan
noted above, was 80% for the nine-month period ended December 31, 2001, compared
to 83% for the nine-month period ended December 31, 2000.
As a result, the gross profit margin remained constant at 20 percent in the
three-month periods ended December 31, 2001 and December 31, 2000. Excluding the
$6.4 million in revenue related to the business restructuring with Rentrak Japan
noted above, the gross profit margin increased to 20 percent in the nine-month
period ended December 31, 2001 from 17 percent in the nine-month period ended
December 31, 2000.
Selling, general and administrative expenses were $4.0 million for the
three-month period ended December 31, 2001, compared to $6.1 million for the
three-month period ended December 31, 2000, a decrease of $2.1 million, or 34
percent. The decrease in selling, general and administrative expenses is
primarily due to: (i) the provision of a specific reserve in the amount of
approximately $0.7 million for the anticipated non-collection of one of 3PF's
trade accounts due the Company as the result of a bankruptcy filing by a
customer during the three-month period ended December 31, 2000; (ii) the
recovery, during the three-month period ended December 31, 2001, of a specific
reserve established during the three-month period ended June 30, 2001 in the
amount of approximately $0.9 million for the anticipated non-collection of one
of 3PF's trade accounts due the Company as the result of a bankruptcy filing by
a customer in May 2001; and (iii) reduced costs as a result of the closure of
3PF's administrative office in Skokie, Illinois in April 2001.
Selling, general and administrative expenses were $17.2 million for the
nine-month period ended December 31, 2001, compared to $29.7 million for the
nine-month period ended December 31, 2000, a decrease of $12.5 million, or 42
percent. The decrease in selling, general and administrative expenses is
primarily due to: (i) approximately $11.3 million in various nonrecurring items
reported in the three-month period ended September 30, 2000; (ii) the provision
of a specific reserve in the amount of approximately $0.7 million for the
anticipated non-collection of one of 3PF's
17
trade accounts due the Company as the result of a bankruptcy filing by a
customer during the three-month period ended December 31, 2000; and (iii) the
reduction of approximately $0.6 million in costs associated with the
restructuring of the operations of Rentrak UK and BlowOut Video during the
nine-month period ended December 31, 2001.
Operating Income for the three-month period ended December 31, 2001, was
approximately $1.2 million compared to $0.5 million for the three-month period
ended December 31, 2000, primarily attributable to the recovery of receivables
due from a customer in bankruptcy (included in SG&A above) during this time
period, offset by the reduction in gross profit margin due to the decline in
total revenue noted above. Operating Income for the nine-month period ended
December 31, 2001, excluding the effect of the $6.4 million in revenue noted
above from the business restructuring with Rentrak Japan, and the selling,
general and administrative expenses associated with this agreement, was a loss
of approximately $2.0 million, compared to an operating loss of approximately
$14.3 million for the nine-month period ended December 31, 2000. This change was
primarily due to the decreased selling, general and administrative expenses for
the nine-month period ended December 31, 2001 noted above.
Other Income (Expense) increased from an expense of approximately $175,000 for
the three-month period ended December 31, 2000 to income of approximately $2.4
million for the three-month period ended December 31, 2001, primarily due to the
$2.4 million net cash payment received by the Company from Rentrak Japan in
October 2001 (See Note H.) and no interest expense on the line of credit for the
three-month period ended December 31, 2001 as the Company has had no outstanding
balance on its line of credit from March 31, 2001 to date. Other Income
(Expense) increased from an expense of approximately $268,000 for the nine-month
period ended December 31, 2000 to income of approximately $7.9 million for the
nine-month period ended December 31, 2001, primarily due to the recognition of
$8.0 million in other income related to an agreement between the Company and
Rentrak Japan (See Note H.) and no interest expense on the line of credit.
The effective tax rate during the three and nine-month periods ended December
31, 2001 was 37% and 39%, respectively, compared to 33% and 38%, respectively,
during the three and nine-month periods ended December 31, 2000.
As a result, for the three-month period ended December 31, 2001, the Company
recorded net income of $2.2 million, or 8 percent of total revenue, compared to
a net income of $0.2 million, or less than 1 percent of total revenue, in the
three-month period ended December 31, 2000. For the nine-month period ended
December 31, 2001, the Company recorded net income of $7.3 million, or 9 percent
of total revenue, compared to a loss of $9.1 million, or 10 percent of total
revenue, in the nine-month period ended December 31, 2000. A significant amount
of the increase in net income during the three-month and nine-month periods
ended December 31, 2001 is attributable to the financial impact of the business
restructuring between the Company and Rentrak Japan (See Note H.).
As noted above under Business Segments, 3PF has generated a $3.6 million loss
from operations for the nine-month period ended December 31, 2001. Management is
in
18
the process of evaluating alternatives for excess warehouse capacity and
intensifying efforts to increase revenue and improve cash flow. These
alternatives may include, but not be limited to, sublease of warehouse capacity
as well as disposal of related operating equipment. No assurance can be given
that the results of actions taken will result in improvements in earnings
sufficient to yield positive cash flow. As of December 31, 2001 no decisions
have been made as to the ultimate course of action the Company will take.
Management expects to have a plan of action in place no later than fiscal
year-end 2002, including an assessment of the effect of its decisions on results
of operations, if any.
Financial Condition
-------------------
At December 31, 2001, total assets were $40.1 million, an increase of $1.0
million from $39.1 million at March 31, 2001. As of December 31, 2001, cash
increased $9.5 million to $12.8 million from $3.3 million at March 31, 2001 (See
Consolidated Statements of Cash Flows). Accounts receivable decreased $2.0
million from $11.2 million at March 31, 2001 to $9.2 million at December 31,
2001, primarily due to: (i) collections from customer accounts; and (ii) a
decline in total revenue for the nine-month period ended December 31, 2001.
Deferred tax assets decreased $4.5 million from $9.7 million at March 31, 2001
to $5.2 million at December 31, 2001, primarily due to the application of this
tax benefit to the $4.6 million tax provision relating to the pre-tax income for
the nine-month period ended December 31, 2001.
At December 31, 2001, total liabilities were $25.4 million, a decrease of $2.3
million from $27.7 million at March 31, 2001. Outstanding borrowings under the
line of credit decreased $1.9 million from $1.9 million at March 31, 2001 to $0
at December 31, 2001, primarily due to additional working capital available to
the Company from trade receivable collections and the $9.1 million in cash
payments received from Rentrak Japan during the nine-month period ending
December 31, 2001 (See Note H.). Accounts payable increased $1.4 million from
$18.7 million at March 31, 2001 to $20.1 million at December 31, 2001, primarily
due to the timing of studio and other vendor payments. Accrued compensation
increased $0.4 million from $1.1 million at March 31, 2001 to $1.5 million at
December 31, 2001, primarily due to a bonus accrual related to the pre-tax
financial results for the nine-month period offset by bonuses awarded and paid
for the prior fiscal year during the three-month period ended September 30,
2001. Deferred revenue decreased $1.1 million from $1.6 million at March 31,
2001 to $0.5 million at December 31, 2001, primarily due to the forgiveness of
the remaining unearned prepaid royalty income credit by Rentrak Japan (See Note
H.).
Accordingly, at December 31, 2001, total stockholders' equity was $14.7 million,
an increase of $3.3 million from the $11.4 million at March 31, 2001. Common
stock and capital in excess of par value decreased, on a combined basis, $11.4
million from $52.5 million at March 31, 2001 to $41.1 million at December 31,
2001 primarily due to: (i) the repurchase of stock from Rentrak Japan (See Note
H.); (ii) the repurchase of additional stock under the Company's stock
repurchase program; and (iii) the termination of loan agreements by a former
officer of the Company for purchase of shares in conjunction with the exercise
of employee stock options (See Note F.). Notes receivable decreased from ($7.7)
million at March 31, 2001 to ($0.4) million at December 31, 2001 in conjunction
with the termination of the loan agreements noted above. Accumulated
19
deficit decreased $7.3 million from $32.9 million at March 31, 2001 to $25.6
million at December 31, 2001 due to the net income from the nine-month period.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 2001, the Company had cash of $12.8 million compared to $3.3
million at March 31, 2001. At December 31, 2001, the Company's current ratio
(current assets/current liabilities) increased to 1.23 from 1.14 at March 31,
2001.
As discussed in Note G of the accompanying financial statements, in May 2000 the
Company obtained a new line of credit with a lender in an amount not to exceed
the lesser of (a) $12 million or (b) the sum of 85% of the net amount of
eligible accounts receivable. The terms of the credit agreement include
financial covenants requiring: (1) $15 million of tangible net worth to be
maintained at all times; (2) a consolidated net profit to be achieved each
fiscal year equal to or exceeding $1.00 and (3) $5 million of working capital to
be maintained at all times. The agreement also restricts the amount of loans and
indebtedness and limits the payment of dividends on the Company's stock, among
other requirements. This agreement expires in May 2005. Based upon the financial
results reported as of December 31, 2001 and for the three-month period then
ended, the Company has determined it is out of compliance with one of the
financial covenants as of December 31, 2001. The Company is in process of
obtaining waivers of non-compliance for the one financial covenant as of
December 31, 2001 and for the three-month period then ended. The Company
previously obtained waivers of non-compliance with this financial covenant for
each of the preceding four quarters. The Company has initiated discussions of
these covenants with its lender and is seeking covenant modifications, as
necessary. Based upon discussions between the Company and its lender, the
Company believes it will successfully receive current and future waivers and/or
covenant modifications and will have sufficient cash resources to repay all
outstanding borrowings as due. At December 31, 2001 and February 13, 2002, the
Company had no outstanding borrowings under this agreement.
In 1992, the Company established a Retailer Loan Program whereby, on a selective
basis, it provided financing to participating retailers that the Company
believed had potential for substantial growth in the industry. The underlying
rationale for this program was the belief that the Company could expand its
business and at the same time participate in the rapid growth experienced by the
video retailers in which it invested. During fiscal 2001, the Company
discontinued new financings under this program and provided reserves of $6.6
million representing the entire outstanding balance of the program loans. The
Company continues to seek to enforce agreements entered into in connection with
this program in accordance with their terms to the extent practicable.
On March 22, 1999, BlowOut Entertainment, Inc. ("BlowOut"), a former subsidiary
of the Company, filed a petition under Chapter 11 of the Federal Bankruptcy Code
in March 1999. In 1996, the Company agreed to guarantee any amounts outstanding
under BlowOut's credit facility. As of December 31, 2001, the balance remaining
payable under this obligation was approximately $75,000. The payments, as made,
will be
20
recorded as a reduction of "net current liabilities of discontinued operations"
on the Company's balance sheet.
The Company's sources of liquidity include its cash balance, cash generated from
operations and available credit resources. Based on the Company's current
budgets and projected cash needs, the Company believes that its available
sources of liquidity will be sufficient to fund the Company's operations for the
fiscal year ending March 31, 2002.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
None.
21
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In June 1998, Video Update, Inc. ("Video Update") filed a complaint (the "Video
Update Complaint") against the Company entitled Video Update, Inc. v. Rentrak
Corp., Civil Action No. 98-286, in the United States District Court for the
District of Delaware. The Video Update Complaint alleged various violations of
the antitrust laws, including that the Company's negotiation and execution of an
exclusive, long-term revenue sharing agreement with Video Update violated
Section 1 of the Sherman Act and Section 3 of the Clayton Act. Video Update
sought unspecified monetary relief, including treble damages and attorney fees,
and equitable relief, including an injunction prohibiting the Company from
enforcing its agreement with Video Update or any exclusivity provision against
videocassette suppliers and video retailers. In August 1998, the Court granted
the Company's motion to dismiss the Video Update Complaint pursuant to Federal
Rules of Civil Procedure Rule 12(b)(3) on the basis of improper venue.
In August 1998, Video Update filed a new complaint against the Company in the
United States District Court for the District of Oregon (the "Re-Filed
Complaint"), Case No. 98-1013HA. The Re-Filed Complaint was substantially the
same as the previous complaint. The Company answered the Re-Filed Complaint
denying its material allegations and asserting several affirmative defenses. The
Company also filed a countercomplaint against Video Update alleging, among other
things, breach of contract, breach of the covenant of good faith and fair
dealing, intentional interference with business advantage, and trade secret
misappropriation, seeking damages and equitable relief.
On September 18, 2000, Video Update filed a voluntary petition under Chapter 11
of the federal Bankruptcy Code. In light of the bankruptcy case, the District
Court dismissed the Re-Filed Complaint and counterclaims on its own motion in
January 2001. The Company filed a proof of claim in the bankruptcy case
asserting the claims that the Company asserted in its countercomplaint in the
District Court action. In February 2002, Video Update and the Company entered
into a settlement agreement whereby the litigation between them will be
dismissed and each party has released all claims against the other.
On November 15, 2000, 3PF.COM, Inc., a subsidiary of the Company, filed a
proceeding with the American Arbitration Association against Reel.com, Inc., a
subsidiary of Hollywood Entertainment Corporation ("Hollywood"), for breach of a
servicing, warehousing, and distribution agreement, and against Hollywood in
connection with its guarantee of the obligations of Reel.com, Inc., under the
agreement. 3PF.COM, Inc., is seeking damages in excess of $3.3 million, together
with prejudgment interest and attorney fees. Hollywood and Reel.com, Inc., have
filed a counterclaim for attorney fees. The arbitration is scheduled to conclude
by March 1, 2002.
On August 6, 2001, Hollywood filed a proceeding with the American Arbitration
Association against the Company for the alleged breach of a settlement agreement
among the Company, Hollywood, and two individuals dated January 23, 2000,
relating to the
22
Company's obligation to provide Hollywood with documents and data with regard to
Hollywood's obligation to indemnify the Company against claims by a movie
studio. Hollywood is seeking damages in the amount of $2,000,000. The
arbitration is scheduled to commence June 3, 2002.
On February 20, 2001, the Company filed a complaint against Ron Berger, Chairman
and Chief Executive Officer and a director of Rentrak until September 2000, in
the Circuit Court of the State of Oregon for the County of Multnomah (No.
0102-01814), seeking cancellation of shares of Rentrak common stock acquired by
Mr. Berger through an option loan program offered to the Company's officers in
June 2000 and damages for the conversion of an automobile and computer equipment
plus an over-advance payment of business expenses less setoffs. On or about
March 29, 2001, Mr. Berger filed a counterclaim seeking damages of approximately
$1.76 million plus attorney fees from Rentrak for conversion of Mr. Berger's
director's fees and dividends from Rentrak Japan, breach of an agreement to
compensate Mr. Berger for cancellation of options to purchase Rentrak stock,
failure to pay accumulated wages and compensation, breach of an agreement to
provide options to purchase stock in Rentrak's subsidiary 3PF.COM, Inc., and
failure to reimburse Mr. Berger for life insurance premiums and cancellation of
family health insurance. The claim for breach of an agreement to provide options
to purchase stock in the subsidiary is also asserted against counterclaim
defendant 3PF.COM, Inc. The Company has denied liability for the counterclaims
and intends to contest the case vigorously. On June 15, 2001, the Company filed
an amended complaint alleging claims for breach of duty of care and breach of
fiduciary duty against Mr. Berger arising out of his activities as an officer
and director of the Company involving Video City, Inc., and seeking damages with
respect to those claims in an amount to be proved at trial but not less than
$6.0 million. In his answer to the amended complaint, Mr. Berger has denied
these new allegations and renewed his primary counterclaims against the Company
and 3PF.COM, Inc., which have been denied by the Company. The case is presently
in the discovery phase. Mr. Berger has recently informed the Company of his
intent to apply for court-ordered indemnification of his defense costs and
attorney fees. The Company has rejected Mr. Berger's claim for indemnity and
will oppose his application in court. Trial is scheduled for April 9, 2002.
The Company is also subject to legal proceedings and claims that arise in the
ordinary course of its business. In the opinion of management, the amount of any
ultimate liability with respect to these actions is not expected to materially
affect the financial position or results of operations of the Company as a
whole.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits -
Exhibit 10.1 - Employment Agreement with Paul A. Rosenbaum dated
October 1, 2001.
(b) Reports on Form 8-K - None filed during the quarter ended December 31,
2001.
23
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 thereunto duly authorized.
Dated this 13th day of February, 2002
RENTRAK CORPORATION
By /s/ Mark L. Thoenes
------------------------------------------
Mark L. Thoenes
Vice President and Chief Financial Officer
Signing on behalf of the registrant
24