<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended Commission File Number
March 31, 1998 0-10737
Stuart Entertainment, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 84-0402207
---------------------- ---------------------
(State of incorporation) (I.R.S. Employer
Identification Number)
3211 Nebraska Avenue, Council Bluffs, IA 51501
----------------------------------------- -------
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (712) 323-1488
---------------
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 May 11, 1998 there were 6,991,650 shares of the Registrant's common stock,
$.01 par value, outstanding.
<PAGE> 2
STUART ENTERTAINMENT, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I. FINANCIAL INFORMATION:
Item 1:
Consolidated Statements of Operations for the
Three Months Ended March 31, 1998 and 1997 .................................................3
Consolidated Balance Sheets as of March 31, 1998 and
December 31, 1997 ........................................................................4
Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1998 and 1997 ..................................................5
Notes to Consolidated Financial Statements...................................................6-8
Item 2:
Management's Discussion and Analysis of Financial
Condition and Results of Operations........................................................9-12
PART II. OTHER INFORMATION:............................................................................13
Signatures....................................................................................14
Exhibit Index.................................................................................15
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL INFORMATION
STUART ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Dollars in thousands, except per share data)
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
NET SALES $ 31,595 $ 31,870
COST OF GOODS SOLD 20,919 22,512
---------- ----------
GROSS MARGIN 10,676 9,358
OTHER EXPENSES:
Selling, general and administrative expenses 8,955 8,592
Interest expense, net 3,152 3,110
---------- ----------
Other expenses, net 12,107 11,702
---------- ----------
LOSS BEFORE INCOME TAXES (1,431) (2,344)
INCOME TAX PROVISION (BENEFIT) 173 (922)
---------- ----------
NET LOSS $ (1,604) $ (1,422)
========== ==========
LOSS PER SHARE - basic and diluted $ (0.23) $ (0.21)
========== ==========
</TABLE>
Note: No dividends were paid or declared during the three months ended March 31,
1998 and 1997.
See Notes to Consolidated Financial Statements.
3
<PAGE> 4
STUART ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998 AND DECEMBER 31, 1997
(Dollars in thousands)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
MARCH 31, DECEMBER 31,
ASSETS 1998 1997
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 8,123 $ 7,099
Trade receivables, net of allowance for doubtful accounts of $3,220
and $3,091 26,441 23,085
Current portion of notes receivable, less allowance for doubtful
accounts of $234 and $233 2,388 2,269
Inventories 21,591 20,929
Deferred income taxes 3,008 3,008
Prepaid expenses and other current assets 1,581 1,111
----------- -----------
Total Current Assets 63,132 57,501
PROPERTY, PLANT AND EQUIPMENT, net 26,200 26,471
GOODWILL, net of accumulated amortization of $3,639 and $3,244 45,868 45,655
OTHER ASSETS, net 8,334 8,197
----------- -----------
$ 143,534 $ 137,824
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 121 $ 89
Trade payables 13,000 10,929
Accrued payroll and benefits 2,562 2,087
Other accrued liabilities 8,990 3,180
Restructuring charge reserve 1,989 2,841
Income taxes payable 977 797
----------- -----------
Total Current Liabilities 27,639 19,923
LONG-TERM DEBT 100,618 100,665
DEFERRED INCOME TAXES 727 721
DEFERRED INCOME 226 143
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock $.01 par value; 30,000,000 shares authorized;
6,927,488 and 6,920,140 shares outstanding 70 70
Additional paid-in capital 27,756 27,732
Deficit (11,663) (10,059)
Treasury stock (56,260 shares at cost) (189) (189)
Accumulated other comprehensive income (1,650) (1,182)
----------- -----------
Total Stockholders' Equity 14,324 16,372
----------- -----------
$ 143,534 $ 137,824
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
4
<PAGE> 5
STUART ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Dollars in thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $(1,604) $ (1,422)
Adjustments to reconcile net loss to net cash flows from
operating activities:
Depreciation and amortization 1,896 1,634
Provision for doubtful accounts 202 --
Equity in earnings of joint ventures (8) (4)
Payments on restructuring charge (852) (504)
Other non-cash expenses - net (1,115) 435
Change in operating assets and liabilities:
Trade receivables (3,815) (1,178)
Inventories (186) 2,780
Trade payables 1,954 (761)
Other - net 5,992 1,680
------- --------
Net cash flows from operating activities 2,464 2,660
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for property, plant and equipment (1,069) (1,000)
Acquisitions, net of cash acquired (480) --
Capital expenditures for electronic bingo systems (312) --
Other (38) (83)
Payments received on notes receivable 542 406
------- --------
Net cash flows from investing activities (1,357) (677)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cost of debt financing (41) (152)
Payments on long-term debt (15) (38)
------- --------
Net cash flows from financing activities (56) (190)
Effect of currency exchange rate changes on cash of foreign subsidiaries (27) 27
------- --------
NET CHANGE IN CASH AND CASH EQUIVALENTS 1,024 1,820
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 7,099 13,732
------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 8,123 $ 15,552
======= ========
SUPPLEMENTAL CASHFLOW DISCLOSURES:
Interest paid $ 19 $ 60
Income taxes paid $ -- $ 132
</TABLE>
See Notes to Consolidated Financial Statements.
5
<PAGE> 6
STUART ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(COLUMNAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- -------------------------------------------------------------------------------
1. NATURE OF BUSINESS - Stuart Entertainment, Inc. and its wholly-owned
subsidiaries (collectively, the "Company") are primarily engaged in the
manufacture and distribution of a full line of bingo and bingo-related
products throughout the United States and Canada. Products include
disposable bingo paper, pulltab tickets, ink dabbers, bingo hall
equipment, electronic bingo systems, general merchandise and accessories.
2. BASIS OF PRESENTATION - The accompanying unaudited consolidated financial
statements of Stuart Entertainment, Inc. have been prepared in accordance
with generally accepted accounting principles for interim financial
statements and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information
and notes required by generally accepted accounting principles for annual
financial statements.
In the opinion of the Company's management, the foregoing unaudited
consolidated financial statements reflect all adjustments necessary for a
fair presentation of the results of the Company for the periods shown.
Operating results for the three months ended March 31, 1998 and 1997 are
not necessarily indicative of the results that may be expected for the
full year ending December 31, 1998. These financial statements should be
read in conjunction with the audited consolidated financial statements and
notes thereto for the year ended December 31, 1997, filed with the
Securities and Exchange Commission on the Company's Annual Report on Form
10-K.
Certain reclassifications have been made to the 1997 financial statements
to conform to those classifications used in 1998.
3. EARNINGS PER SHARE - The Company has adopted Statement of Financial
Accounting Standard Board No. 128, Earning Per Share ("SFAS 128"). Basic
earnings (loss) per share is computed based upon net income (loss) divided
by the weighted average number of shares of common stock outstanding
during the period. Diluted earnings (loss) per share is computed based
upon net income (loss) divided by the weighted average number of shares of
common stock outstanding during the period after giving effect to stock
options and warrants considered to be dilutive common stock equivalents.
4. REPORTING COMPREHENSIVE INCOME - The Company has adopted Statement of
Financial Accounting Standards No. 130 - Reporting Comprehensive Income
("SFAS 130") in the first quarter of 1998. This statement requires the
reporting of comprehensive income in addition to net income from
operations in annual statements of operations. Comprehensive income is a
more inclusive financial reporting methodology that includes disclosure of
certain financial information that historically has not been recognized in
the calculation of net income. Comprehensive loss for the three months
ended March 31, 1998 and 1997 were $2,072,000 and $1,760,000,
respectively.
6
<PAGE> 7
5. INVENTORIES - Inventories consisted of the following:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
<S> <C> <C>
Raw materials $ 6,249 $ 5,159
Work-in-process 1,654 2,038
Finished goods 13,688 13,732
------- -------
$21,591 $20,929
======= =======
</TABLE>
6. RESTRUCTURING CHARGE - During the fourth quarter of 1996, management
authorized and committed the Company to undertake consolidation of its
United States manufacturing operations producing pulltab tickets, bingo
paper and ink dabbers. This restructuring plan involves closing or
substantially closing five facilities and transferring operations to other
manufacturing facilities. The consolidation decision was made to improve
customer service, improve productivity and asset utilization and reduce
costs. The restructuring charge included approximately $1,511,000 of
recognized severance and termination benefits for approximately 400
employees and $1,769,000 of facility closure and consolidation costs.
In the fourth quarter of 1997, the company recorded a restructuring charge
of $2,261,000 for a program related to workforce reductions and to
complete the consolidation of United States consumables manufacturing
operations. The Company evaluated competitive market conditions in its
markets, reviewed future costs in line with anticipated levels of business
in 1998 and beyond, and determined that a restructuring charge was
required to cover the costs of reducing certain sectors of its workforce
to levels more appropriate to meet current business requirements, thereby
eliminating approximately 50 positions. As result, a charge of $1,229,000
for severance costs and the buyout of certain employment contracts was
recorded. The Company also aggressively continued its plan to consolidate
its United States consumables manufacturing operations during 1997.
Certain modifications to the original consolidations plan and
unanticipated costs resulted in costs that were not originally charged.
Management estimated that $1,032,000 of such additional costs will be
incurred in the future and accordingly recorded an additional charge in
1997.
At March 31, 1998, $1,989,000 of restructuring charges remained in accrued
liabilities. The balance was comprised of $1,301,000 for severance,
termination benefits and contract buyout and $688,000 of facility closure
and consolidation costs to be completed in 1998. A summary of the
restructuring activity is presented below:
7
<PAGE> 8
<TABLE>
<S> <C>
Balance at December 31, 1997 $ 2,841
Consolidation of U.S. Manufacturing Operations:
- Severance and termination costs (580)
- Facility closure and consolidation costs (272)
-------
Balance at March 31, 1998 $ 1,989
=======
</TABLE>
7. LONG-TERM DEBT - In November 1996, the Company completed a private
placement in reliance on Rule 144A of the Securities Act of 1933, as
amended, of $100 million aggregate principal amount of 12.5% Senior
Subordinated Notes due November 15, 2004 (the Notes). Interest on the
Notes are payable semi-annually on each May 15 and November 15.
In November 1997, the Company entered into a credit facility which
consists of two loan and security agreements, one between the Company and
Congress Financial Corporation (the "US Facility") and one between Bingo
Press & Specialty Limited, a wholly-owned subsidiary of the Company (the
"Canadian Borrower") and Congress Financial Corporation (the "Canadian
Facility") (collectively, the "Credit Facility"). The Credit Facility
provides for maximum borrowings of up to $30.0 million, of which up to
$20.0 million may be borrowed under the US Facility and up to US$10.0
million may be borrowed under the Canadian Facility.
The Company, and the Canadian Borrower (sometimes referred to collectively
herein as the "Borrowers") are entitled to draw amounts under the Credit
Facility, subject to availability pursuant to a borrowing base
certificate. The borrowing base is based on the eligible accounts
receivable, eligible inventory and equipment value levels of the Company
and the Borrowers, respectively. At March 31, 1998 and December 31, 1997,
$26.4 and $27.7 million, respectively, was available for borrowing under
the Credit Facility. At March 31, 1998 and December 31, 1997, the Company
had not yet drawn any amounts under the Credit Facility.
The Company was not in violation of any covenants at March 31, 1998.
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
<S> <C> <C>
Senior Subordinated Notes $100,000 $100,000
Notes payable to others 739 754
-------- --------
100,739 100,754
Less current portion 121 89
-------- --------
$100,618 $100,665
======== ========
</TABLE>
8
<PAGE> 9
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The statements contained in this report that are not historical fact are
forward-looking statements (as such term is defined in the Private Securities
Litigation Reform Act of 1995), which can be identified by the use of
forward-looking terminology such as "believes," "expects," "may," "will,"
"should," or "anticipates," or the negative thereof or other variations thereon
or comparable terminology, or by discussions of strategy that involve risks and
uncertainties. Management wishes to caution the reader that these
forward-looking statements such as the timing, costs and scope of its
acquisition of, or investments in, the bingo industry and new product
development, and other matters contained in this report or the documents
incorporated by reference regarding matters that are not historical facts, are
only predictions. No assurances can be given that the future results indicated,
whether expressed or implied, will be achieved. While sometimes presented with
numerical specificity, these projections and other forward-looking statements
are based upon a variety of assumptions relating to the business of the Company,
which, although considered reasonable by the Company, may not be realized.
Because of the number and range of the assumptions underlying the Company's
projections and forward-looking statements, many of which are subject to
significant uncertainties and contingencies that are beyond the reasonable
control of the Company, some of the assumptions inevitably will not materialize,
and unanticipated events and circumstances may occur subsequent to the date of
this report or the documents incorporated by reference. These forward-looking
statements are based on current expectations and the Company assumes no
obligation to update this information. Therefore, the actual experience of the
Company and results achieved during the period covered by any particular
projections or forward-looking statements may differ substantially from those
projected. Consequently, the inclusion of projections and other forward-looking
statements should not be regarded as a representation by the Company or any
other person that these estimates and projections will be realized, and actual
results may vary materially. There can be no assurance that any of these
expectations will be realized or that any of the forward-looking statements
contained herein will prove to be accurate.
RESULTS OF OPERATIONS
Comparison of Three Months Ended March 31, 1998 and 1997
Net Sales - Net sales were $31.6 million for the three months ended March 31,
1998, a decrease of $0.3 million or 0.9% from $31.9 million for the three months
ended March 31, 1997. The sales decrease is attributable to lower sales volumes
in the United States offset in part by increased sales in Canada. Domestically,
lower sales were experienced primarily in bingo paper and pulltab tickets.
However, the decrease was offset in part by sales generated from the Power Bingo
King(TM) hand-held electronic bingo systems. In Canada, a substantial increase
in pulltab ticket sales was offset in part by a decrease in bingo paper.
The Company expects weakness in consumable sales to continue in 1998 in the
United States due to the growth of electronics combined with continuing
competitive pressures from other sources of gaming and entertainment. At the
same time, the Company expects sales from its hand-held electronic bingo systems
to continue to increase, which the Company expects will partially offset the
decline in consumable products. Management expects pulltab ticket sales to
continue to increase modestly in Canada as a result of being awarded a five year
contract from the Ontario Gaming Commission to be the sole supplier of pulltab
tickets to all charity licensed retail locations in the Province of Ontario.
9
<PAGE> 10
Beginning in the second half of 1998, the Company may also benefit from new
products, such as a new line of ink dabbers and its Gold Crown video enhanced
pulltab ticket dispenser. The Gold Crown machine is a self-contained pulltab
dispenser with real pulltab tickets and on-screen, interactive play. The Company
believes this machine is an innovative combination of a traditional ticket
dispenser and a video machine. The Company is licensed to manufacture and sell
the dispenser only in the state of Washington, a major market for pulltab ticket
sales.
Cost of Goods Sold - Cost of goods sold, as a percentage of sales, was 66.2% for
the three months ended March 31, 1998 compared to 70.6% for the three months
ended March 31, 1997. Excluding the application of a $1.5 million purchase
accounting adjustment recorded in the first quarter of 1997 to the finished
goods inventory of Trade Products, cost of goods sold, as a percentage of sales,
was 66.1% for the three months ended March 31, 1997.
In Canada, the Company experienced an increase in the cost of goods sold, as a
percentage of sales, in the first quarter of 1998 compared to the first quarter
of 1997 due primarily to two factors i) higher manufacturing labor costs, and
ii) an increase in demand for higher cost products. Domestically, the Company
experienced lower cost of goods sold primarily due to lower pulltab production
costs resulting from the consolidation of its manufacturing operations completed
in the second quarter of 1997 (the "Consolidation") and the impact of the
acquisition of substantially all of the assets of Power Bingo Corp. ("Power
Bingo") in July 1997. These decreases were partly offset by higher paper and ink
production variances attributable to the consolidation of these operations at
the Texas border facilities.
The Company expects that U.S. pulltab production costs will decline throughout
1998 compared to 1997 as the Company more fully realizes the benefits of the
Consolidation. However, bingo paper and ink dabber production inefficiencies are
expected to unfavorably impact the second and third quarters of 1998 as a result
of the consolidation and start up of these operations at the Texas border
facilities. Bingo paper and ink dabber production costs are expected to decline
in the future in conjunction with completion of this consolidation.
Selling, General and Administrative Expenses - Selling, general and
administrative expenses were $9.0 million for the three months ended March 31,
1998 compared to $8.6 million for the three months ended March 31, 1997, an
increase of $0.4 million or 4.2%. Selling, general and administrative expense,
as a percentage of sales, was 28.3% for the three months ended March 31, 1998
compared to 27.0% for the period ended March 31, 1997. The increase is primarily
attributable to the impact of i) increased expenses involved due to the
acquisition of Power Bingo, ii) the acquisition of distributor and marketing
companies in Canada, and iii) the development of the Gold Crown video enhanced
pulltab ticket dispenser. These increases were partially offset with the
benefits realized by the workforce reduction program the Company announced in
the fourth quarter of 1997.
Interest Expense, Net - Interest expense, net was $3.2 million for the three
months ended March 31, 1998 compared to $3.1 million for the three months ended
March 31, 1997, an increase of $0.1 million. Interest expense is primarily
attributable to the Notes.
Income Tax Provision (Benefit) - The Company recorded an income tax provision of
$173,000 pertaining to income generated in Canada for the three months ended
March 31, 1998 compared to an income tax benefit reported on a consolidated
basis of $922,000 for the three months ended March 31, 1997. The effective tax
rate was 12.1% for the three months ended March 31, 1998
10
<PAGE> 11
compared to (39.3%) for the three months ended March 31, 1997. The increase in
the effective tax rate is primarily attributable to the recognition of a
valuation allowance due to the uncertainty regarding realization of certain
long-term future tax benefits. Realization of future tax benefits related to the
deferred tax assets is dependent on many factors, including the Company's
ability to generate taxable income within the net operating loss carryforward
periods.
LIQUIDITY AND CAPITAL RESOURCES
The Company's long-term debt at March 31, 1998, including the current portion
thereof, totaled $100.7 million compared to $100.8 million at December 31, 1997
(see Note 7 of Notes to Consolidated Financial Statements). Cash payments on
long-term debt for the first three months ended March 31, 1998 totaled $15,000
compared to $38,000 for the three months ended March 31, 1997.
In November 1997, the Company entered into the Credit Facility which provides
for maximum borrowings of up to $30.0 million, of which up to $20.0 million may
be borrowed under the US Facility and up to US$10.0 million may be borrowed
under the Canadian Facility. At March 31, 1998 and December 31, 1997, the
Company had not yet drawn any amounts under the Credit Facility and $26.4 and
$27.7 million, respectively, was available for borrowing based on its borrowing
base certificates (see Note 7 to the Consolidated Statements).
The Company's capital expenditures for property, plant and equipment were $1.1
million during the first quarter of 1998 compared with $1.0 million the first
quarter of 1997. Historically, the Company's capital expenditure program has
focused on the purchase of equipment designed to increase production capacity
and improve manufacturing efficiencies. Beginning in 1996, and continuing into
1997 and 1998, however, a greater portion of the Company's capital expenditures
were allocated to the upgrading and development of management information
systems and communication systems. During 1998, the Company's capital
expenditure program will focus on i) the upgrading and development of management
information systems, ii) the purchase of equipment designed to improve
manufacturing efficiency and iii) the consolidation of United States
manufacturing operations.
Capital expenditures for electronic bingo systems consist of Power Bingo
King(TM) and System 12(TM) electronic bingo systems placed in the market on a
lease or revenue sharing basis. The Company's capital expenditures for
electronic bingo systems were $312,000 in the first quarter of 1998 compared to
no capital expenditures in the first quarter of 1997, due to the acquisition of
Power Bingo in July 1997.
The Company believes that with its current operating plan, cash flow from
operations, excess cash on hand and the Credit Facility, it will have sufficient
cash to meet its financial obligations including interest on the Notes,
operating expenses, capital expenditures, expenses related to consolidation of
operations and working capital requirements. In addition, with the acquisition
of Power Bingo, the Company expects the electronics portion of its business to
generate additional cash flow.
The Company's business plan includes pursuing selective business acquisitions
and strategic alliances. The Company will continue to evaluate additional
opportunities and, as attractive opportunities develop, the Company will
consider additional acquisitions. The Company expects to
11
<PAGE> 12
meet additional capital needs with the proceeds from sales or issuance of equity
securities, the Credit Facility and other borrowings. There can be no assurance,
however, that the Company will be successful in raising sufficient additional
capital on terms acceptable to the Company, if at all. In addition, the
Company's ability to raise additional funds through the issuance of equity
securities could be adversely effected if the Company's common stock is delisted
from the Nasdaq SmallCap Market. Moreover, the Company is restricted in its
ability to incur additional indebtedness pursuant to the terms of the Indenture.
The failure to raise and generate sufficient funds may require the Company to
delay or abandon some of its planned future expansion, which could have a
material adverse effect on the future growth of the Company.
Management does not believe that inflation has had or is expected to have any
significant adverse impact on the Company's financial condition or results of
operations for the periods indicated.
12
<PAGE> 13
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K:
a. EXHIBITS:
Exhibit 11 Statement Regarding Computation of Per Share
Earnings
Exhibit 27 Financial Data Schedule
b. Reports on Form 8-K:
There were no reports on Form 8-K filed during the period
covered by this report.
13
<PAGE> 14
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.
STUART ENTERTAINMENT, INC.
Date: May 15, 1998 /s/ Timothy R. Stuart
------------------------------------
Timothy R. Stuart
President and Chief Operating Officer
Date: May 15, 1998 /s/ Paul C. Tunink
------------------------------------
Paul C. Tunink
Vice President and Chief Financial Officer
14
<PAGE> 15
EXHIBIT INDEX
The following Exhibits are filed herewith.
Exhibit No. Description
- ----------- -----------
11 Statements Regarding Computation
of Per Share Earnings
27 Financial Data Schedule
15
<PAGE> 1
EXHIBIT NO. 11
STUART ENTERTAINMENT, INC. AND SUBSIDIARIES
STATEMENTS REGARDING COMPUTATION OF PER SHARE EARNINGS
(Amounts In Thousands, Except Per Share Amounts)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
------- --------
<S> <C> <C>
Shares of common stock outstanding at
beginning of period (1) 6,920 6,828
Weighted-average shares issued during the period 7 --
------- -------
Actual weighted average share outstanding
for the period 6,927 6,828
Dilutive stock options and warrants using
average market price -- --
------- -------
Dilutive shares outstanding 6,927 6,828
======= =======
Net loss $(1,604) $(1,422)
======= =======
Loss per share - basic and dilutive $ (0.23) $ (0.21)
======= =======
</TABLE>
(1) This represents total outstanding shares of common stock less treasury
shares.
See Notes Consolidated Financial Statements.
16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENTS OF OPERATIONS AND CASH FLOWS FOR THE THREE MONTHS ENDED
MARCH 31, 1998 AND THE CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH QUARTERLY REPORT FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 8,123
<SECURITIES> 0
<RECEIVABLES> 32,283
<ALLOWANCES> 3,454
<INVENTORY> 21,591
<CURRENT-ASSETS> 63,132
<PP&E> 46,414
<DEPRECIATION> 20,214
<TOTAL-ASSETS> 143,534
<CURRENT-LIABILITIES> 27,639
<BONDS> 100,618
0
0
<COMMON> 70
<OTHER-SE> 14,254
<TOTAL-LIABILITY-AND-EQUITY> 143,534
<SALES> 31,595
<TOTAL-REVENUES> 31,595
<CGS> 20,919
<TOTAL-COSTS> 20,919
<OTHER-EXPENSES> 8,783
<LOSS-PROVISION> 172
<INTEREST-EXPENSE> 3,152
<INCOME-PRETAX> (1,431)
<INCOME-TAX> 173
<INCOME-CONTINUING> (1,604)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,604)
<EPS-PRIMARY> (0.23)
<EPS-DILUTED> (0.23)
</TABLE>
