SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For Quarter Ended March 31, 1996 Commission file number 0-6664
K-TEL INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Minnesota 41-0946588
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2605 Fernbrook Lane North, Minneapolis, Minnesota 55447-4736
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (612) 559-6888
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 ____
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes _____ No ______
APPLICABLE ONLY TO CORPORATE ISSUERS:
At May 6, 1996 there were approximately 3,756,072 common shares outstanding.
K-tel International, Inc. shares are listed on the NASDAQ exchange. For the
quarter ended March 31, 1996, K-tel shares traded within the high and low bid
range of $4.38 to $3.25 compared to a range of $5.38 to $3.75 for the comparable
period in the prior year.
K-TEL INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q
For the quarter ended March 31, 1996
PART I - FINANCIAL INFORMATION PAGE NO.
- ------------------------------ --------
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Operations
- Three and nine month periods ended March 31, 1996 and 1995 3
Consolidated Balance Sheets
- March 31, 1996 and June 30, 1995 4
Consolidated Statements of Cash Flows
- Nine month periods ended March 31, 1996 and 1995 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-11
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
EXHIBITS
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
K-TEL INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
(IN THOUSANDS - EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
-------------------- --------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET SALES $ 18,422 $ 16,425 $ 53,838 $ 49,905
-------- -------- -------- --------
COSTS AND EXPENSES:
Cost of goods sold 8,683 8,514 27,515 26,236
Advertising 3,628 2,979 9,476 8,888
Selling, general & administrative 5,456 5,450 15,583 14,952
-------- -------- -------- --------
Total Costs and Expenses 17,767 16,943 52,574 50,076
-------- -------- -------- --------
OPERATING INCOME (LOSS) 655 (518) 1,264 (171)
-------- -------- -------- --------
NON-OPERATING INCOME (EXPENSE):
Interest income 34 3 109 166
Interest expense (108) (33) (300) (179)
Foreign currency transaction gain (loss) (33) 288 (34) 303
-------- -------- -------- --------
Total Non-operating Income (Expense) (107) 258 (225) 290
-------- -------- -------- --------
INCOME BEFORE PROVISION
FOR INCOME (LOSS) TAXES 548 (260) 1,039 119
PROVISION FOR INCOME TAXES (92) (70) (360) (306)
-------- -------- -------- --------
NET INCOME (LOSS) $ 456 $ (330) $ 679 $ (187)
======== ======== ======== ========
NET INCOME (LOSS) PER COMMON AND
COMMON EQUIVALENT SHARE $ .12 $ (.09) $ .18 $ (.05)
======== ======== ======== ========
WEIGHTED AVERAGE NUMBER OF
COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING 3,796 3,806 3,804 3,711
======== ======== ======== ========
</TABLE>
K-TEL INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1996 AND JUNE 30, 1995
(IN THOUSANDS)
March 31, June 30,
1996 1995
-------- --------
(UNAUDITED)
ASSETS
Current Assets:
Cash and cash equivalents $ 2,617 $ 2,154
Restricted cash -- 536
Accounts receivable, net 16,179 11,971
Inventories 7,533 7,382
Royalty advances 1,785 2,176
Prepaid expenses 1,403 2,108
Income tax refund receivable 31 540
-------- --------
Total Current Assets 29,548 26,867
-------- --------
Property and Equipment 2,949 2,820
Less-Accumulated depreciation and amortization (1,958) (1,797)
-------- --------
Property and Equipment, net 991 1,023
Other Assets 943 747
-------- --------
$ 31,482 $ 28,637
======== ========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Line of credit $ 3,996 $ 2,516
Accounts payable 4,143 4,929
Accrued royalties 10,511 9,047
Reserve for returns 7,335 6,802
Other current liabilities 2,177 2,517
Income taxes payable 320 373
-------- --------
Total Current Liabilities 28,482 26,184
-------- --------
Common stock 37 37
Contributed capital 7,854 7,816
Accumulated deficit (4,242) (4,921)
Cumulative translation adjustment (649) (479)
-------- --------
Total Shareholders' Investment 3,000 2,453
-------- --------
$ 31,482 $ 28,637
======== ========
K-TEL INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
FOR THE NINE MONTHS ENDED MARCH 31, 1996 AND 1995
(IN THOUSANDS)
March 31,
1996 1995
------- -------
Cash Flows From Operating Activities:
Net income (loss) $ 679 $ (187)
Adjustments to reconcile net income (loss) to cash
used for operating activities:
Depreciation and amortization 714 434
Changes in current operating items:
Restricted Cash 535 974
Accounts receivable (4,267) (292)
Inventories (215) (3,113)
Royalty advances 356 (1,026)
Prepaid expenses 658 (1,292)
Current liabilities 1,386 2,457
------- -------
Cash used for operating activities (154) (2,045)
------- -------
Cash flows from investing activities:
Property and equipment purchases (197) (389)
Proceeds from sale of property and equipment 27 73
Music catalog additions (651) (350)
Other (43) (20)
------- -------
Cash used for investing activities (864) (686)
------- -------
Cash flows from financing activities:
Proceeds from line of credit, net 1,480 2,312
Payment of note payable to Affiliate -- (1,000)
Proceeds from exercise of stock options 38 14
------- -------
Cash provided by financing activities 1,518 1,326
Effect of exchange rates on cash and cash equivalents (37) (67)
------- -------
Net increase (decrease) in cash and cash equivalents 463 (1,472)
Cash and cash equivalents at beginning of year 2,154 4,171
------- -------
Cash and cash equivalents at period end $ 2,617 $ 2,699
======= =======
K-TEL INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form
10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation have been
included. Operating results for the nine month period ended March 31,
1996 are not necessarily indicative of the results that may be expected
for the year as a whole. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K/A for the year ended June 30,
1995.
2. RECENTLY ISSUED ACCOUNTING STANDARD
Statement of Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of" ("Statement 121"), issued in March 1995 and effective for
fiscal years beginning after December 15, 1995, establishes accounting
standards for the recognition and measurement of impairment of
long-lived assets, and goodwill either to be held or disposed of.
Management believes the adoption of Statement 121 will not have a
material impact on the Company's financial position or results of
operations.
3. SALE OF CONSUMER ENTERTAINMENT BUSINESS
On July 24, 1995, the Board of Directors of the Company approved the
sale of its consumer entertainment business to a corporation controlled
by, Mickey Elfenbein, the Company's President (the Purchaser). The
Company proposed to sell its consumer entertainment business to the
Purchaser by selling to the Purchaser three domestic subsidiaries and
ten foreign subsidiaries (the "Entertainment Subsidiaries") which own
the master recording catalog rights to music recordings and through
which the Company operates its consumer entertainment products business
at a purchase price of $25,000,000, subject to certain adjustments. The
transaction was subject to shareholder approval, Purchaser obtaining
financing and the closing of a related transaction among K-5 Leisure
Products, Inc., a company owned by Philip Kives who is the Chairman of
the Company and owns approximately 66% of the Company's outstanding
shares. Pursuant to the terms of the sale transaction and the related
transaction, any party had the right to terminate if closing did not
occur by November 30, 1995. Subsequent to that date, the parties
continued their efforts to complete the transactions. However, on
January 11, 1996, the Company received written notice from K-5 Leisure
Products that it terminated the related transaction and therefore, the
sale transaction was also terminated.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
A. Results of Operations
The following tables set forth, for the periods indicated, certain
items from the Company's consolidated statements of operations expressed as a
percentage of net sales.
K-TEL INTERNATIONAL, INC.
RESULTS OF OPERATIONS BY GEOGRAPHIC REGION
(IN 000'S)
<TABLE>
<CAPTION>
Quarter Ended March 31, 1996 Quarter Ended March 31, 1995
-------------------------------------------------- ---------------------------------------------------
North America Europe Total North America Europe Total
--------------- --------------- -------------- ------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales $12,973 100% $ 5,449 100% $18,422 100% $ 8,508 100% $ 7,917 100% $16,425 100%
Costs and expenses
Cost of goods sold 6,339 49% 2,344 43% 8,683 47% 5,346 63% 3,168 40% 8,514 52%
Advertising 2,338 18% 1,290 24% 3,628 20% 791 9% 2,188 28% 2,979 18%
Selling, general &
administrative 3,025 23% 1,893 35% 4,918 27% 2,310 27% 2,782 35% 5,092 31%
------- ---- ------- ---- ------- ---- ------- ---- ------- ---- ------- ----
Operating Income (Loss) $ 1,271 10% $ (78) (1)% $ 1,193 6% $ 61 1% $ (221) (3)% $ (160) (1)%
======= ==== ======= ==== ======= ==== ======= ==== ======= ==== ======= ====
</TABLE>
In addition to the operating amounts above for the quarter ended March 31, 1996,
the parent holding company recorded $538,000 in expenses. For the quarter ended
March 31, 1995 the parent holding company recorded $358,000 in expenses. The
increase in costs was mainly due to increased legal and professional fees
associated with the proposed sale of the consumer entertainment business (see
Note 3 to consolidated financial statements).
K-TEL INTERNATIONAL, INC.
RESULTS OF OPERATIONS BY GEOGRAPHIC REGION
(IN 000'S)
<TABLE>
<CAPTION>
Nine Months Ended March 31, 1996 Nine Months Ended March 31, 1995
-------------------------------------------------- ---------------------------------------------------
North America Europe Total North America Europe Total
--------------- --------------- -------------- ------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales $36,220 100% $17,618 100% $53,838 100% $25,601 100% $ 24,304 100% $49,905 100%
Costs and expenses
Cost of goods sold 19,285 53% 8,230 47% 27,515 51% 15,621 61% 10,615 44% 26,236 53%
Advertising 5,749 16% 3,727 21% 9,476 18% 2,286 9% 6,602 27% 8,888 18%
Selling, general &
administrative 8,832 24% 5,430 31% 14,262 26% 6,442 25% 7,610 31% 14,052 28%
------- ---- ------- ---- ------- ---- ------- ---- -------- ---- ------- ----
Operating Income (Loss) $ 2,354 6% $ 231 1% $ 2,585 5% $ 1,252 5% $ (523) (2)% $ 729 1%
======= ==== ======= ==== ======= ==== ======= ==== ======== ==== ======= ====
</TABLE>
In addition to the operating amounts above for the nine months ended March 31,
1996, the parent holding company recorded $1,321,000 in expenses. For the nine
months ended March 31, 1995 the parent holding company recorded $900,000 in
expenses. The increase in costs was mainly due to increased legal and
professional fees associated with the proposed sale of the consumer
entertainment business (see Note 3 to consolidated financial statements).
A. Results of Operations
For the nine months ended March 31, 1996 consolidated net sales were
$53,838,000 with operating income of $1,264,000 and net income of
$679,000 or $.18 per share. Consolidated net sales for the same period
last year were $49,905,000 with an operating loss of $171,000 and a net
loss of $187,000 or $.05 per share.
For the quarter ended March 31, 1996 consolidated net sales were
$18,422,000 with operating income of $655,000 and net income of
$456,000 or $.12 per share. For the same period last year, sales were
$16,425,000 with an operating loss of $518,000 and net loss of $330,000
or $.09 per share.
Consolidated net sales increased $3,933,000 or 6% for the nine months
ended March 31, 1996 over the previous year comparable period. North
American net sales were up 42% over the prior year comparable period
due primarily to U.S. music sales success in most of its widely diverse
and expanding product offerings covering nearly all genres of music,
with specific success in a recent line of new Club/Dance music
releases, as well as a currently successful direct response television
music infomercial. North American consumer convenience product sales
have also shown an increase over prior year due mainly to a successful
third quarter promotion of a new microwave cooking product. European
sales were down from the prior year comparable period due mainly to the
discontinuance of operations by the Spanish entity at the end of fiscal
1995. The North American sales increase more than offset the European
sales decrease for the nine month period.
Consolidated net sales increased $1,997,000 for the quarter ended March
31, 1996 from the previous year comparable period. North American sales
increased and European sales decreased over the prior year comparable
period for the same reasons as described above. For the quarter ended
March 31, 1996, the North American sales increase more than offset the
European sales decrease.
Cost of goods sold for the nine months ended March 31, 1996 were 51% of
sales compared to 53% for the same period last year, and decreased to
47% for the quarter ended March 31, 1996 compared to 52% for the
previous year comparable period. For the nine months and quarter ended
March 31, 1996, North American cost of goods sold, as a percentage of
sales, were less than the prior year comparable periods due mainly to
strong third quarter sales from a successful new higher margin
Club/Dance music product, sales of a new, higher margin microwave
cooking product, and a successful music television direct response
infomercial. Direct response sales typically carry higher gross margins
before advertising than normal retail sales. European cost of goods
sold as a percentage of net sales for the nine months and quarter ended
March 31, 1996 increased over prior year due mainly to prior year sales
from the Spanish operation which sold mainly high margin, direct
response product. The Spanish operation was discontinued at the end of
fiscal year 1995.
Consolidated advertising costs as a percent of sales were 18% for the
nine months and 20% for the quarter ended March 31, 1996. North
American advertising costs as a percent of net sales for the nine
months and quarter ended March 31, 1996 were greater than the previous
year due mainly to a successful direct response television music
infomercial in the current periods, a successful consumer convenience
product direct response promotion, (direct response television sales
require higher levels of advertising than retail sales) and a Canadian
television promotion supporting certain new music product releases.
European advertising costs as a percentage of net sales for the nine
months and quarter ended March 31, 1996 were less than the previous
year due primarily to the discontinuance of operations by the Spanish
entity at the end of fiscal 1995. The Spanish entity sales were mainly
direct response television sales which require higher levels of
advertising than retail sales. Also contributing to the reduction in
European advertising costs as a percentage of net sales was the German
operations which had more success in direct response television
promotions in the current year than in the previous year.
Selling, general and administrative expenses for the nine month period
ended March 31, 1996 were $15,583,000 or 29% of net sales compared to
$14,952,000 or 30% of net sales in the prior year comparable period.
For the quarter ended March 31, 1996, selling, general and
administrative expenses were $5,456,000 or 30% of net sales compared to
$5,450,000 or 33% of net sales in the prior year comparable period.
North American selling, general and administrative expenses were up
$2,384,000 and $709,000 for the nine months and quarter ended March 31,
1996, respectively, in support of sales growth. European selling,
general and administrative expenses were down $2,180,000 and $889,000
for the nine months and quarter ended March 31, 1996, respectively, due
mainly to the discontinuance of the operations by the Spanish entity
and the restructuring of the German entity in the fourth quarter ended
June 30, 1995. Also contributing to the current year increase in
selling, general and administrative expenses from the previous year
were increased parent holding company legal and professional expenses
associated with the proposed sale of the consumer entertainment
businesses (see Note 3 to the consolidated financial statements).
Operating income increased to $1,264,000, for the nine months ended
March 31, 1996, from an operating loss of $171,000 for the same period
last year. Operating income increased to $655,000 from a loss of
$518,000 for the quarter ended March 31, 1996 as compared to the same
period last year. For the nine months and quarter ended March 31, 1996,
North American operating income increased from the prior year
comparable periods mainly due to improved overall music sales led by
some successful Club/Dance music product releases and profits generated
from a new consumer convenience microwave product introduced in the
third quarter. European operating income increased for the nine months
and quarter ended March 31, 1996 from the previous year comparable
periods due mainly to restructuring of the German operation, which
incurred significant losses in the second half of the prior fiscal
year, and the discontinuance of the operations by the Spanish
subsidiary in the fourth quarter ended June 30, 1995, which also
contributed losses to the prior year. Consolidated operating income was
also impacted in the current year by increased parent holding company
legal and professional expenses associated with the proposed sale of
the consumer entertainment businesses (see Note 3 to the consolidated
financial statements).
The Company provided restructuring/closedown charges of $652,000 in
1995 relating to the Company's restructuring/discontinuance of its
Spanish and German operations. The restructuring/discontinuance was
completed in the first three quarters of fiscal 1996 and the accrued
charge approximately reflected the actual costs incurred to complete
the restructuring/discontinuance.
Interest expense increased to $300,000 for the nine month and $108,000
for the three month periods ended March 31, 1996 as compared to
$179,000 and $33,000 for the prior year comparable period. The increase
in interest expense is due primarily to more current year usage of the
Company's asset based line of credit.
During the nine month period ended March 31, 1996, the Company
experienced a foreign currency transaction loss of $34,000 compared to
a gain of $303,000 experienced in the comparable period in the prior
year. For the quarter ended March 31, 1996, the Company experienced a
foreign currency translation loss of $33,000 compared to a previous
year third quarter gain of $288,000. Prior year gain was a result of
favorable currency fluctuations effecting a large intercompany balance
between North American entities and the German entity. Restructuring of
the German entity at the end of fiscal year 1995 reduced much of this
intercompany balance. The Company has a policy to reduce its foreign
currency exchange exposure by hedging its exposure through the use of
forward contracts. Most of the Company's foreign currency transaction
exposure is due to certain European subsidiaries liabilities which are
payable to the Company's U.S. parent or U.S. subsidiaries. In
accordance with generally accepted accounting principles the payable
balances are adjusted quarterly to the local currency equivalent of the
U.S. dollar. Gains or losses resulting from these intercompany
liabilities remain unrealized until such time the underlying
liabilities are settled.
The provision for income taxes was $360,000 and $92,000 for the nine
months and quarter ended March 31, 1996, respectively, compared to
$306,000 and $70,000 for the comparable periods last year. Variations
in the Company's tax provision are a factor of the country of origin of
profits and the availability of net operating loss carryforwards.
Operating results for the nine month period ended March 31, 1996 are
not necessarily indicative of the results that may be expected for the
year as a whole.
B. Liquidity and Capital Resources
During the nine months ended March 31, 1996, cash and cash equivalents
increased approximately $463,000 to $2,617,000. There was a net cash
use in operating and investing activities which was primarily due to
net increases in nearly all current operating items which continued to
be driven by sales growth continuing through the third quarter of
fiscal 1996. This was offset by proceeds received under the Company's
working capital line of credit. The related collections and payments
are expected to occur in the fourth quarter of this fiscal year and
into the beginning of fiscal 1997.
During the first nine months of fiscal 1996 the Company purchased
approximately $962,000 of consumer convenience product from K-tel
International Ltd., a company owned by Mr. Philip Kives, the Chairman
of the Board. The Company owed approximately $673,000 to K-tel
International Ltd. at March 31, 1996. Also, K-tel International Ltd.
purchased approximately $145,000 from the Company during the first nine
months ended March 31, 1996 and owed the Company $372,000 at March 31,
1996. No interest will be charged on the related outstanding balances
during fiscal 1996.
Three of the Company's United States subsidiaries, K-tel International
(USA), Inc., Dominion Entertainment, Inc. and K-tel, Inc. (the
"Subsidiaries") have revolving credit agreements maturing November 30,
1996. The agreements provide for an asset based line of credit not to
exceed $5,500,000 in total, with availability based on a monthly
borrowing base derived from the Subsidiaries' accounts receivable and
inventory. Borrowings are collateralized by the assets of the
Subsidiaries, including accounts receivable, inventories, equipment and
Dominion Entertainment, Inc.'s owned music master recordings. The
Company has also guaranteed all borrowings of the Subsidiaries. The
amounts outstanding under these lines of credit were $3,996,000 at
March 31, 1996. The Subsidiaries are required to maintain minimum
levels of tangible net worth and certain other financial ratios. As of
March 31, 1996 the Subsidiaries were in compliance or have obtained
waivers for these covenants. On December 31, 1995, the Company renewed
its lines of credit through November 30, 1996. It is the Company's
intention to renew its lines of credit for at least an additional year
when they mature on November 30, 1996. The Company has initiated
discussions and believes the lines of credit will be renewed.
Management considers its cash needs for the current fiscal year to be
adequately covered by its operations, borrowings under the lines of
credit or by funding from a company owned by Mr. Kives, the Chairman of
the Board of Directors of the Company. Although management is not privy
to the financial statements of the Chairman's other companies, he has
assured K-tel International, Inc. that he will fund its operations on
an as needed basis consistent with his past practices which have mainly
been by way of giving the Company open ended payment terms on product
purchased from his affiliate companies.
On July 24, 1995, the Board of Directors of the Company approved the
sale of its consumer entertainment business to a corporation controlled
by the Company's President and Chief Executive Officer (the Purchaser).
The Company proposed to sell its consumer entertainment business to the
Purchaser by selling to the Purchaser three domestic subsidiaries and
ten foreign subsidiaries (the "Entertainment Subsidiaries") which own
the master recording catalog rights to music recordings and through
which the Company operates its consumer entertainment products business
at a purchase price of $25,000,000. The transaction was subject to
shareholder approval, Purchaser obtaining financing and the closing of
a related transaction among K-5 Leisure Products, Inc., a company owned
by Philip Kives who is the Chairman of the Company and owns
approximately 66% of the Company's outstanding shares. Pursuant to the
terms of the sale transaction and the related transaction, any party
had the right to terminate if closing did not occur by November 30,
1995. Subsequent to that date, the parties continued their efforts to
complete the transactions. However, on January 11, 1996, the Company
received written notice from K-5 Leisure Products that it terminated
the related transaction and therefore, the sale transaction was also
terminated.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBIT INDEX
11 Statement Regarding Computation of Earnings Per Share
27 Financial Data Schedule (SEC use)
(b) REPORTS ON FORM 8-K
The Company did not file any reports on Form 8-K during the quarter ended March
31, 1996.
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.
K-TEL INTERNATIONAL, INC.
REGISTRANT
/S/ PHILIP KIVES
PHILIP KIVES
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
/S/ MARK DIXON
MARK DIXON
CHIEF FINANCIAL OFFICER
(principal accounting officer)
Exhibit 11
K-TEL INTERNATIONAL, INC. AND SUBSIDIARIES
STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
(In Thousands, Except Per Share Amounts)
For the Quarters ended March 31, 1996 and 1995
1996 1995
------- -------
Primary earnings per share --
Weighted average number of issued shares outstanding 3,730 3,711
Effect of:
Stock Incentive Plan 66 95
------- -------
Shares outstanding used to compute primary
earnings per share 3,796 3,806
======= =======
Net Income (Loss) $ 456 $ (330)
======= =======
Primary earnings (loss) per share $ .12 $ (.09)
======= =======
Fully diluted earnings per share --
Weighted average number of shares used for
primary earnings per share 3,796 3,806
Effect of:
Stock Incentive Plan -- --
------- -------
Shares outstanding used to compute fully
diluted earnings per share 3,796 3,806
======= =======
Net Income (Loss) $ 456 $ (330)
======= =======
Fully diluted earnings (loss) per share $ .12 $ (.09)
======= =======
Exhibit 11
K-TEL INTERNATIONAL, INC. AND SUBSIDIARIES
STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
(In Thousands, Except Per Share Amounts)
For the nine months ended March 31, 1996 and 1995
1996 1995
------- -------
Primary earnings per share --
Weighted average number of issued shares outstanding 3,725 3,711
Effect of:
Stock Incentive Plan 79 --
------- -------
Shares outstanding used to compute primary
earnings per share 3,804 3,711
======= =======
Net Income (Loss) $ 679 $ (187)
======= =======
Primary earnings (loss) per share $ .18 $ (.05)
======= =======
Fully diluted earnings per share --
Weighted average number of shares used for
primary earnings per share 3,804 3,711
Effect of:
Stock Incentive Plan -- --
------- -------
Shares outstanding used to compute fully
diluted earnings per share 3,804 3,711
======= =======
Net Income (Loss) $ 679 $ (187)
======= =======
Fully diluted earnings (loss) per share $ .18 $ (.05)
======= =======
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 2,617
<SECURITIES> 0
<RECEIVABLES> 16,179
<ALLOWANCES> 0
<INVENTORY> 7,533
<CURRENT-ASSETS> 29,548
<PP&E> 2,949
<DEPRECIATION> (1,958)
<TOTAL-ASSETS> 31,482
<CURRENT-LIABILITIES> 28,482
<BONDS> 0
0
0
<COMMON> 3,804
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 31,482
<SALES> 53,838
<TOTAL-REVENUES> 679
<CGS> 27,515
<TOTAL-COSTS> 52,574
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (300)
<INCOME-PRETAX> 1,039
<INCOME-TAX> (360)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 679
<EPS-PRIMARY> 0.18
<EPS-DILUTED> 0.18
</TABLE>
