SEC FILE NUMBER
0-6664
FORM 12B-25 U.S. SECURITES AND EXCHANGE COMMISSION CUSIP NUMBER
WASHINGTON, D.C. 20549 482724200
NOTIFICATION OF LATE FILING
(Check One)
X From 10-K ______ Form 11-K ______ Form 20-F ______ Form 10-Q
For Period Ended: June 30, 1996
If the notification relates to a portion of the filing checked above, identify
the Item(s) to which the notification relates:
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PART I - REGISTRANT INFORMATION
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Full Name Of Registrant
K-tel International, Inc.
Former Name If Applicable
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Address of Principal Executive Office (Street and Number)
2605 Fernbrook Lane North
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City, State and Zip Code
Minneapolis, Minnesota 55447-4736
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PART II - RULES 12B-25 (b) AND (c)
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If the subject report could not be filed without unreasonable effort or
expense and the registrant seeks relief pursuant to Rule 12B-25(b), the
following should be completed. (Check box if appropriate)
(a) The reasons described in reasonable detail in Part III on this
form could not be eliminated without unreasonable effort or
expense;
(b) The Subject annual report/portion thereof will be filed on or
X before the fifteenth calendar day following the prescribed due
date; or the subject quarterly report/portion thereof will be
filed on or before the fifth calendar day following the
prescribed due date; and
(c) The accountant's statement or other exhibit required by Rule
12b-25(c) has been attached if applicable.
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PART III - NARRATIVE
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State below in reasonable detail the reasons why the Form 10-K, 20-F or
10-Q, or portion thereof, could not be filed within the prescribed time
period.
Financial information from material foreign subsidiaries for the year
ended June 30, 1996 were not received in sufficient time to consolidate
the financial results of the Company and file the 10-K by the
prescribed date.
(Attached Extra Sheets if Needed)
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PART IV - OTHER INFORMATION
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(1) Name and telephone number of person to contact in regard to
this notification
Mark Dixon 612 559-6820
(NAME) (AREA CODE) (TELEPHONE NUMBER)
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(2) Have all other periodic reports required (under 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 X YES NO
required to files such reports) been filed? If
answer is no, identify report(s)
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(3) Is it anticipated that any significant change in results of
operations from the corresponding period for the last fiscal
year will be reflected by the earnings statements to be
included in the subject report or portion thereof?
If so, attach an explanation of the anticipated change, X YES NO
both narratively and quantitatively, and, if appropriate,
state the reasons why a reasonable estimate of the results
can not be made.
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K-tel International, Inc.
(NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
has caused this notification to be signed on its behalf by the
undersigned thereunto duly authorized.
Date September 30, 1996 By /S/ Mark Dixon
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ATTENTION
Intentional misstatements or omissions of fact constitute
Federal Criminal Violations (See 18 U.S.C. 1001)
ATTACHMENT TO FORM 12B-25 K-tel International, Inc.
For the Period Ended: June 30, 1996
The Company generated operating income of $4,000 for the year ended June 30,
1996, compared to an operating loss of $2,188,000 for the fiscal year ended June
30, 1995. North American operating income increased from the prior year mainly
due to improved overall music sales led by successful Club/Dance music product
releases. Although the company experienced strong fiscal 1996 sales success for
a new, higher margin North American consumer convenience microwave cooking
product, this success was more than offset by some North American consumer
convenience product inventory carrying cost writedowns to net realizable value
and a $400,000 charge related to a consumer convenience defective product
replacement program. European operating income improved over fiscal 1995 due
mainly to the restructuring of the German operation, which incurred significant
losses in the second half of the prior fiscal year, and the discontinuance of
operations in the Spanish subsidiary in the fourth quarter of fiscal 1995, which
also contributed to losses in 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, which was terminated in January 1996.
Consolidated net sales increased $6,070,000 or 9% for the fiscal year ended June
30, 1996. North American net sales were up 33% over the prior fiscal year 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 line of new Club/Dance music releases, as well as a successful
direct response television infomercial. North American consumer convenience
product sales have also shown an increase over prior year due mainly to a
successful third and fourth quarter promotion of a new microwave cooking
product. European sales were down from the prior fiscal year due mainly to the
discontinuance of operations in the Spanish entity at the end of fiscal 1995.
The North American sales increase more than offset the European sales decrease
for fiscal 1996.
Consolidated cost of goods sold were 54% of sales in both 1996 and 1995. North
American cost of goods sold, as a percentage of sales, were less than the prior
year due mainly to strong sales from a successful new line of 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
retail sales. These positive margin trends more than offset the negative effect
on cost of goods sold caused by some North American consumer convenience product
inventory writedowns to net realizable value and a fourth quarter $400,000
charge for a defective product replacement program (undertaken in coordination
with the United States Consumer Products Safety Commission). (see Note 6 to the
consolidated financial statements). European cost of goods sold as a percentage
of net sales were up slightly over the previous year due mainly to prior year
sales from the Spanish operation which sold mainly high margin (before
advertising), direct response product.
Advertising costs as a percentage of net sales for the fiscal year ended June
30, 1996 were 17% compared to 18% for the previous year. North American
advertising costs as a percent of net sales were greater than the previous year
due mainly to a successful direct response television music infomercial, 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 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 fiscal year ended June 30,
1996 were $20,798,000 or 29% of net sales compared to $20,192,000 or 31% of net
sales in the prior fiscal year. Selling, general and administrative expenses for
the year ended June 30, 1996 were higher than the previous year due to North
American overhead additions necessary to support recent sales growth and planned
future sales growth of retail sales in both entertainment and consumer
convenience product lines. European selling, general and administrative expenses
for the year ended June 30, 1996 were lower due mainly to the discontinuance of
operations in the Spanish entity and the restructuring of the German entity at
the end of fiscal 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 which was not
completed and was terminated in January 1996.
