UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of August, 2000
NELVANA LIMITED
32 Atlantic Avenue
Toronto, Ontario
M6K 1X8
[Indicate by check mark whether the registrant files or will file
annual reports under cover of Form 20-F or Form 40-F.]
Form 20-F Form 40-F X
------- ------
[Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934.]
Yes No X
--- ---
[If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2 (b): 82- ]
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<PAGE>
SIGNATURES
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.
Date: August 15, 2000 By: /s/ Harriet Reisman
-------------------------
Name: Harriet F. Reisman
Title: Senior Vice President,
General Counsel
and Corporate Secretary
<PAGE>
Schedule of Information Contained in this Report:
------------------------------------------------
1. The English language press release of the Registrant announcing its
financial results for the second quarter and six months ended June
30, 2000.
2. The Registrant's unaudited consolidated balance sheets as of June
30, 2000.
<PAGE>
Schedule 1
[NELVANA LOGO]
FOR IMMEDIATE RELEASE
NELVANA REPORTS SECOND QUARTER AND YTD 2000 RESULTS
Revenue and EBITDA Increase 95% and 35% in Quarter
On Track for Strong Performance in Second Half of Year
TORONTO, August 10, 2000 - NELVANA Limited ("NELVANA") (TSE: NTV and NASDAQ:
NELV) today announced financial results for the second quarter and six months
ended June 30, 2000. All figures are in Canadian dollars, unless otherwise
indicated.
Q2 Highlights
-------------
. Completed acquisition of Klutz for US$74 million
. Raised net proceeds of $54.8 million through equity offering of 2.71
. million subordinate voting shares
. Commenced trading on NASDAQ
. Announced one-year sponsorship by Hasbro for PBS KIDS Bookworm Bunch
. Revenue up 95% for the quarter and 65% for YTD
. EBITDA up 35% for the quarter and 16% for YTD
. Strong gains in revenue offset planned increases in SG&A costs and by
non-recurring financing charges for the Klutz acquisition
. EPS of $0.01 for the quarter and $0.13 for YTD
. On track for profitable growth in balance of 2000.
Consolidated Performance
------------------------
Total revenue for the six months ended June 30, 2000 increased 65% to $40.7
million, compared to $24.7 million for the first half of 1999. Total revenue
for the three months ended June 30, 2000 nearly doubled to $25.7 million,
compared to $13.2 million for the second quarter of 1999. The increase
reflects strong growth in Production and Distribution revenue, resulting from
higher revenue per episode delivered, sharp increases in Branded Consumer
Products, with strong merchandising performance and the inclusion of six weeks
of revenue from Klutz.
more...
<PAGE>
EBITDA for the first half of 2000 increased 16% to $5.7 million compared to
$4.9 million in the same period last year. EBITDA for the second quarter
increased 35% to $3.6 million from $2.7 million for the second quarter of
1999. These increases reflect higher EBITDA from Branded Consumer Products,
offset by declines in Production and Distribution EBITDA due to planned
increases in selling, general and administrative expenses.
"The acquisition of Klutz has significantly broadened our product mix and
demographic focus and will provide us with greater balance between our
Production and Distribution and Branded Consumer Products businesses" said
Michael Hirsh, Co-Chief Executive Officer. "At this time, we are on target to
post strong gains in EBITDA and earnings for the year, as our first half
earnings trends sharply reverse in the second half of the year, when the
majority of our revenue is earned."
Despite the increase in EBITDA for the quarter and year-to-date, net earnings
declined from the prior year due to increased goodwill related to the Klutz
and Little Bear acquisitions ($630K), non-recurring costs for bridge financing
related to the Klutz acquisition ($600K) and interest expense on outstanding
borrowings. Net earnings for the year-to-date declined to $1.0 million ($0.13
per share) from $2.3 million ($0.32 per share) for the same period last year.
In the second quarter, net earnings were $0.1 million ($0.01 per share),
compared to $1.4 million ($.20 per share) in the prior year.
Production and Distribution
---------------------------
Production and Distribution revenue for the first half of 2000 increased 43%
to $23.4 million from $16.3 million the previous year. For the second quarter,
Production and Distribution revenue increased 34% to $13.2 million from $9.9
million in 1999. These results reflect a sharp increase in revenue from
current productions and a moderate increase in library sales over the previous
year. During the second quarter, the Company delivered 34 proprietary half-
hour episodes (YTD: 56 episodes), compared to 44 episodes (YTD: 72 episodes)
the previous year.
"Our strong Production and Distribution revenue reflects the strength of our
2000 production slate, which is one of the strongest in Nelvana's history,"
said Patrick Loubert, Co-Chief Executive Officer. "Our revenue per episode has
more than doubled with strong presales on new and renewed series and strong
international sales of our current production slate. We are also in a strong
position for next year, with over 75% of the 2001 production slate already
confirmed."
more...
<PAGE>
Branded Consumer Products
-------------------------
Revenue from Branded Consumer Products for the first half of 2000 increased
107% to $17.3 million from $8.4 million the previous year. For the second
quarter, Branded Consumer Products revenue tripled to $12.5 million from $3.3
million in the previous year. The majority of this increase relates to the
addition of Klutz revenue for the six-week period, although strong performance
in merchandising also contributed to the gain. Merchandising revenue gains
were driven by strong performance from Franklin licensed products and from
newly licensed Cardcaptors, Elliott Moose and Maggie and The Ferocious Beast
brands. Management expects that the contribution from Franklin merchandise
will further accelerate in the balance of the year, with the launch of an
exclusive Franklin marketing program with Sears Roebuck & Co., beginning in
August 2000.
Cash Flow and Balance Sheet
---------------------------
In May 2000, Nelvana completed the US$74 million acquisition of Klutz, a
leading U.S. publisher of branded children's books. In early June 2000,
NELVANA raised net proceeds of $54.8 million from the issuance of 2.71 million
subordinate voting shares. Proceeds from this offering were used primarily to
repay debt related to the Klutz transaction. Also during the quarter, Nelvana
acquired additional merchandising and interactive rights to Little Bear for
$4.1 million.
Cash flow from operations in the six months increased 45% to $20.8 million, up
from $14.4 million in the prior year, due to improved operating results and
reduced investment in working capital during the period. At June 30, 2000,
Nelvana had $102.0 million of borrowings, an increase of $53.2 million in
borrowings since year-end. Of this increase, approximately $39 million relates
to the acquisition of Klutz and additional Little Bear merchandising rights,
with the balance required to fund existing business activities.
About Nelvana
-------------
Nelvana is a leading integrated children's entertainment Company which
develops, produces, markets and distributes high quality media content and
related products to children worldwide. The Company operates through two core
businesses: Production and Distribution and Branded Consumer Products. Through
its Production and Distribution business, Nelvana has completed nearly 50
major animated productions and distributed its programming to over 160
countries worldwide. Nelvana's growing program library has nearly 1,450
cumulative half-hour episodes, including such well-known television and
feature film properties as Franklin, Little Bear, Babar and Pippi
Longstocking. Nelvana's Branded Consumer Products business includes operations
in children's book publishing and merchandise licensing of both classic and
contemporary character brands.
more...
<PAGE>
Founded in 1971, Nelvana's head office and leading edge animation facility are
located in Toronto. The Company has sales offices in Los Angeles, London,
Paris and Tokyo and international distribution headquarters in Shannon,
Ireland. Nelvana celebrates its 30th anniversary in 2001. The Company's web
site is www.nelvana.com.
Forward Looking Statements
--------------------------
We have made some statements in this press release, which constitute "forward-
looking statements". These statements involve known and unknown risks,
uncertainties and other factors which may cause our actual results,
performance or achievements to be materially different from any future
results, performance, or achievements expressed or implied by such forward-
looking statements. In some cases, you can identify forward-looking statements
by terminology such as "will", "expects," "intends," "plans," "believes" or
"potential," or the negative of these terms or other comparable terminology.
We undertake no obligations to revise or update any forward-looking statements
in order to reflect events or circumstances that may arise after the date of
this release.
For further information, contact:
Michael Hirsh, Co-chief Executive Officer
(416) 588-5571 x201
Sally Moyer Kent, SVP, Finance and Chief Financial Officer
(416) 588-5571 x103
Margo Raport, Director, Communications
(416) 588-5571 x249
<PAGE>
Schedule 2
NELVANA LIMITED
Consolidated Balance Sheets
As at As at
June 30, December 31,
2000 1999
(in thousands of Canadian dollars) (Unaudited) (Audited)
--------------------------------------------------------------------------
Assets
Accounts receivable $ 51,358 $ 50,158
Tax credits receivable 25,176 27,614
Investment in film and television programs 111,807 92,789
Recoverable distribution costs and other assets 13,139 8,380
Inventory 16,406 2,285
Capital assets 14,265 12,320
Investment in affiliated companies 2,380 1,834
Intangible assets 97,940 7,767
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$ 332,471 $ 203,147
=========================================================================
Liabilities and Shareholders' Equity
Liabilities
Accounts payable $ 4,572 $ 3,281
Accrued liabilities 26,497 18,230
Loans payable 101,966 48,724
Deferred revenue 4,147 2,536
Future income taxes 5,823 9,389
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143,005 82,160
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Shareholders' equity
Capital stock (1) 147,573 80,099
Retained earnings 41,893 40,888
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189,466 120,987
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$ 332,471 $ 203,147
=========================================================================
(1) As at July 31, 2000 the following were outstanding:
Number of Multiple Voting Shares 1,865,929
Number of Subordinate Voting Shares 8,337,226
Number of Subordinate Voting Shares reserved
for issuance under the Nelvana Employee Stock
Option Plan 848,616
<PAGE>
NELVANA LIMITED
Consolidated Statements of Earnings and Retained Earnings
(Unaudited)
Three Months Six Months
Ended June 30 Ended June 30
(in thousands of Canadian dollars 2000 1999 2000 1999
except earnings per share)
------------------------------------------------------------------------------
Revenue $ 25,725 $ 13,201 $ 40,733 $ 24,693
Expenses
Cost of sales 15,544 8,505 24,504 15,733
Selling, general and administrative 6,545 2,010 10,561 4,064
Amortization of intangible, capital
and other assets 1,378 588 1,982 1,117
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23,467 11,103 37,047 20,914
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Operating earnings before undernoted 2,258 2,098 3,686 3,779
Interest, net (2,503) (329) (3,075) (865)
Equity earnings from affiliated company 373 377 846 644
------------------------------------------------------------------------------
Earnings before income taxes 128 2,146 1,457 3,558
Provision for income taxes 13 703 452 1,231
------------------------------------------------------------------------------
Net earnings for the period $ 115 $ 1,443 $ 1,005 $ 2,327
==============================================================================
Retained earnings, beginning of period 41,778 31,866 40,888 30,982
Retained earnings, end of period $ 41,893 $ 33,309 $ 41,893 $ 33,309
==============================================================================
Basic earnings per share $ 0.01 $ 0.20 $ 0.13 $ 0.32
Fully diluted earnings per share 0.01 0.20 0.13 0.32
==============================================================================
Weighted average number of shares
outstanding (000's) 8,129 7,259 7,695 7,259
==============================================================================
<PAGE>
NELVANA LIMITED
Consolidated Statements of Cash Flows
(Unaudited)
Six Months
Ended June 30
(in thousands of Canadian dollars) 2000 1999
------------------------------------------------------------------------------
Cash provided by (used in):
Operating Activities
Net earnings for the period $ 1,005 $ 2,327
Charges to income not affecting cash:
Amortization of film and television programs 15,745 11,245
Amortization of intangible, capital and
other assets 1,982 1,117
Equity earnings from affiliated company (846) (644)
Future income taxes (1,131) 738
Net changes in non-cash working capital
balances related to operations 4,022 (401)
------------------------------------------------------------------------------
20,777 14,382
------------------------------------------------------------------------------
Financing Activities
Increase in loans payable 53,242 8,257
Issuance of capital stock, net of share
issue costs 57,571 -
------------------------------------------------------------------------------
110,813 8,257
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Investing Activities
Net additions to capital assets (1,077) (2,000)
Dividends received 300 -
Investment in film and television programs (34,737) (28,707)
Acquisition of business (91,957) -
Acquisition of merchandising rights (4,119) -
------------------------------------------------------------------------------
(131,590) (30,707)
------------------------------------------------------------------------------
Decrease in cash and cash equivalents - (8,068)
Cash and cash equivalents, beginning of period - 8,068
------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ - $ -
==============================================================================
<PAGE>
<TABLE>
<CAPTION>
NELVANA LIMITED
Segmented Information
<C> <C> <C> <C> <C> <C> <C>
Three Months Six Months
(in thousands of Canadian dollars Ended June 30 Ended June 30
except earnings per share) (Unaudited) (Audited)
------------------------------------- --------------------------------------
Branded Branded
Production Consumer Production Consumer
2000 & Distribution Products Consolidated & Distribution Products Consolidated
-------------------------------------- --------------------------------------
Revenue $13,227 $12,498 $25,725 $23,401 $17,332 $40,733
Cost of sales (9,306) (6,238) (15,544) (16,518) (7,986) (24,504)
Selling, general and
administrative (1,965) (4,580) (6,545) (3,877) (6,684) (10,561)
Amortization of intangible,
capital and other assets (605) (773) (1,378) (1,142) (840) (1,982)
------------------------------------------------------------------------------
Operating earnings $1,351 $907 $2,258 $1,864 $1,822 $3,686
==============================================================================
Branded Branded
Production Consumer Production Consumer
1999 & Distribution Products Consolidated & Distribution Products Consolidated
-------------------------------------- --------------------------------------
Revenue $9,904 $3,297 $13,201 $16,340 $8,353 $24,693
Cost of sales (7,005) (1,500) (8,505) (12,096) (3,637) (15,733)
Selling, general and
administrative (226) (1,784) (2,010) (532) (3,532) (4,064)
Amortization of intangible,
capital and other assets (524) (64) (588) (995) (122) (1,117)
------------------------------------------------------------------------------
Operating earnings $2,149 ($ 51) $2,098 $2,717 $1,062 $3,779
==============================================================================
</TABLE>
