SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: Commission File Number: 0-8508
June 30, 1995
NORTHWEST TELEPRODUCTIONS, INC.
(Exact Name of Small Business Issuer as Specified in its Charter)
Minnesota 41-0641789
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification
Number)
4455 West 77th Street
Minneapolis, MN 55435
(Address of Principal Executive Offices)
Issuer's telephone number including Area Code: 612-835-4455
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past twelve months (or for
such shorter period that the issuer was required to file such reports) and (2)
has been subject to such filing requirements for the past 90 days.
Yes x No
1,356,425 shares of $.01 par value common stock were outstanding at July 31,
1995.
Transitional Small Business Disclosure Format (Check one):
Yes No x
<PAGE>
PART 1
NORTHWEST TELEPRODUCTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, 1995 March 31,
(Unaudited) 1995 (1)
<S> <C> <C>
ASSETS:
CURRENT ASSETS:
Cash $ 37,127 $ 271,258
Trade accounts receivable less doubtful accounts 2,895,534 2,663,586
reserve of $106,000 and $101,000 respectively
Inventory 220,847 212,886
Refundable income taxes 336,066 199,565
Deferred income taxes 75,000 75,000
Current portion of note receivable 99,831 99,831
Other assets 156,043 107,992
----------- -----------
TOTAL CURRENT ASSETS:
PROPERTY, PLANT AND EQUIPMENT: 3,820,448 3,630,118
Land, buildings and improvements 3,612,620 3,507,677
Machinery and equipment 20,736,685 20,554,284
----------- -----------
24,349,305 24,061,961
Less accumulated depreciation 16,207,215 15,671,779
----------- -----------
8,142,090 8,390,182
GOODWILL, less accumulated amortization of $585,959 1,102,252 1,116,226
and $571,985 respectively
NOTE RECEIVABLE, less current portion 168,226 200,475
OTHER ASSETS 421,356 175,782
----------- -----------
1,691,834 1,492,483
----------- -----------
$13,654,372 $13,512,783
=========== ===========
LIABILITIES AND STOCKHOLDERS EQUITY:
CURRENT LIABILITIES:
Notes payable $ 1,255,000 $ 800,000
Accounts payable 413,915 281,131
Commissions, salaries and withholding 393,964 429,319
Miscellaneous accounts payable and accrued 578,426 208,731
expenses
Other liabilities 136,745 138,539
Payments due within one year on term obligations 1,771,584 1,806,914
----------- -----------
TOTAL CURRENT LIABILITIES 4,549,634 3,664,634
DEFERRED INCOME TAXES 813,000 813,000
LONG TERM DEBT AND CAPITAL LEASES, less 1,958,238 2,202,437
current portion
OTHER LONG TERM LIABILITIES, less current 109,465
portion
STOCKHOLDERS' EQUITY:
Common stock 13,564 15,545
Additional paid-in capital 577,123 680,596
Retained earnings 5,633,348 6,136,571
----------- -----------
6,224,035 6,832,712
----------- -----------
$13,654,372 $13,512,783
=========== ===========
<FN>
(1)The balance sheet at March 31, 1995 has been taken from the audited financial
statements at that date.
</FN>
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE>
NORTHWEST TELEPRODUCTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
1995 1994
---- ----
<S> <C> <C>
NET SALES $ 3,043,656 $ 3,225,371
COSTS AND EXPENSES:
Costs of products and services sold 2,650,681 2,505,705
Selling, general and administrative 645,559 617,110
Interest 110,640 81,356
----------- -----------
3,409,880 3,204,171
----------- -----------
(363,224) 21,200
OTHER INCOME 19,501 13,520
----------- -----------
EARNINGS (LOSS) BEFORE TAXES ON (343,723) 34,720
INCOME
TAXES ON INCOME (INCOME TAX (135,000) 11,000
----------- -----------
CREDIT)
NET EARNINGS (LOSS) ($ 208,723) $ 23,720
=========== ===========
NET EARNINGS (LOSS) PER SHARE (1) ($ .14) $ .02
=========== ===========
<FN>
(1) Net earnings (loss) per share are based on the weighted average number
of common shares outstanding during the periods as follows:
Three months: June 30, 1994 1,574,525
June 30, 1995 1,523,427
</FN>
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE>
NORTHWEST TELEPRODUCTIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30
1995 1994
---- ----
<S> <C> <C>
CASH FLOW-OPERATING ACTIVITIES:
Net (loss) earnings ($ 208,723) $ 23,720
Adjustments:
Depreciation 535,436 537,376
Amortization of goodwill 13,974 13,974
Decrease (Increase) in trade receivables (231,948) 713,530
Other - net 168,955 (104,768)
----------- -----------
Net cash provided by operating activities 277,694 1,183,832
CASH FLOW-INVESTING ACTIVITIES:
Property, plant and equipment additions (287,344) (679,949)
CASH FLOW-FINANCING ACTIVITIES:
Advances on line of credit 455,000 308,000
Payments on long term borrowing (279,529) (940,131)
Repurchase of common stock (399,950)
Net cash used in financing activities (224,479) (632,131)
----------- -----------
NET (DECREASE) INCREASE IN CASH ($ 234,129) ($ 128,248)
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE>
NORTHWEST TELEPRODUCTIONS, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated balance sheet as of June 30, 1995, the consolidated
statements of operations for the three month periods ended June 30, 1995 and
1994 and the condensed consolidated statements of cash flow for the three month
periods then ended have been prepared by the Company without audit. In the
opinion of management, all adjustments necessary to present fairly the financial
position, results of operations and changes in financial position at June 30,
1995 and for all periods presented have been made.
Certain information and footnotes disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these condensed
consolidated financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's March 31, 1995 annual
report to shareholders. The results of operation for the period ended June 30,
1995 are not necessarily indicative of the results for the full year.
NOTES PAYABLE AND LONG TERM DEBT
At June 30, 1995, the Company was not in compliance with certain
financial covenant requirements under the current debt agreement. This results
from the purchase of approximately $600,000 of capital equipment and the
repurchase of 198,100 shares of the Company's common stock at a cost of $400,000
utilizing the Company's short term line of credit. These expenditures were
approved by the lender and will be taken into account at the time of renewal of
the short term line of credit in August 1995 at which time financial covenant
requirements are modified.
<PAGE>
NORTHWEST TELEPRODUCTIONS, INC.
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL REQUIREMENTS
Fiscal 1996 first quarter operating cash requirements were met from cash
available at March 31, 1995, cash flow from operations and short term borrowing.
During the quarter the Company repurchased common stock costing $400,000,
acquired $287,000 of capital equipment and reduced term debt obligations by
$280,000.
In the opinion of management, the Company's present financial position
is such that adequate funds from operations will be available to meet operating
requirements and fund debt maturities.
RESULTS OF OPERATIONS-THREE MONTHS ENDED JUNE 30, 1995 COMPARED
WITH CORRESPONDING PERIOD OF PRIOR YEAR.
SALES
Sales for the quarter ended June 30, 1995 of $3,043,656 compare with
sales of $3,225,371 in the first quarter of the prior year, a 6% decrease.
Reduced revenue resulting from Department of Defense contract production delays
was partially offset by increased revenue from other sources.
COSTS OF PRODUCTS AND SERVICES SOLD
Cost of products and services sold for the quarter ended June 30, 1995
equaled 87% of sales as compared to a cost of sales rate of 78% in the first
quarter of the prior year. Reduced sales along with increased full service
production, which is characterized by higher direct job related costs, explain
this increase in the cost of sales rate.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the first three months
of fiscal 1996 totaled $645,559, an increase of $28,449, or 4% over the prior
year.
INTEREST EXPENSE
Interest for the three months ended June 30, 1995 totaled $110,640 compared
with expense of $81,356 in the first quarter of the prior year. An increase in
the rate of interest on the Company's variable rate debt, resulting form an
increase in the reference rate, along with increased short term borrowing
explains the increased expense.
INCOME TAX CREDIT/TAXES ON INCOME
The 40% income tax credit for the first quarter of fiscal 1996 reflects
the availability of a loss carryback. The tax provision for the first quarter of
the prior year reflects the Company's historical effective tax rates.
<PAGE>
NORTHWEST TELEPRODUCTIONS, INC.
AND SUBSIDIARIES
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
On September 17, 1993, an action (the "Shaw Litigation") was filed
against the Registrant's wholly-owned subsidiary, Northwest
Teleproductions/Kansas City, Inc. (the "Kansas City Subsidiary"), in the Circuit
Court of Jackson County, Missouri at Kansas City by plaintiffs, Kansas City
Post, Inc. and James L. Shaw. On February 10, 1994 the plaintiffs amended their
complaint and added the Registrant as a defendant. The plaintiffs alleged breach
of an alleged contract, promissory estoppel and misrepresentation relating to
the April 1993 sales to other parties of the assets of the Kansas City
Subsidiary. The plaintiffs sought recovery from the Registrant of the
unspecified amount of damages alleged to be in excess of $15,000 plus punitive
damages of at least $2 million. On December 31, 1994, without admitting
liability, the Registrant paid the plaintiffs $175,000 in settlement of the Shaw
Litigation and received releases from the plaintiffs.
January 30, 1995, an action (the "McCone Litigation") was filed against
the Registrant and its wholly-owned subsidiary, Northwest Teleproductions/Kansas
City, Inc. (the "Kansas City Subsidiary"), in the Circuit Court of Jackson
County, Missouri at Kansas City by Plaintiffs, Mark D. McCone, Daniel L.
Nussbeck and Midwest Teleproductions, Inc. (the "Buyers"). In April 1993, the
Buyers purchased the assets of the Registrant's Kansas City Subsidiary. A
plaintiff in the McCone Litigation was also named as defendant along with the
Registrant, in the Shaw Litigation described above. The plaintiffs in the McCone
Litigation allege breach of contract and misrepresentation by the Registrant in
connection with the April 1993 sale and seek recovery of damages alleged to be
$141,629 (an amount the plaintiffs allege represents revenue lost by the Buyers
as a result of the Shaw Litigation, costs and expenses incurred by the Buyers in
defending against the Shaw Litigation and amounts paid by the Buyers to settle
the Shaw Litigation). The plaintiffs in the McCone Litigation also have
requested punitive damages, attorneys' fees, costs and interest. The Registrant
has not yet filed an answer but believes the plaintiffs' claims are without
merit and presently intends to defend its position vigorously.
<PAGE>
NORTHWEST TELEPRODUCTIONS, INC.
AND SUBSIDIARIES
Item 6. Exhibits and Reports on Form 8-K
Exhibits:
27 - Financial Data Schedule
Reports on Form 8-K
There were no reports on Form 8-K filed for the three months
ended June 30, 1995.
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 14, 1995 NORTHWEST TELEPRODUCTIONS, INC.
(Registrant)
By /s/ Robert Mitchell
Robert Mitchell
President
By /s/ James Steffen
James Steffen
Treasurer
<PAGE>
NORTHWEST TELEPRODUCTIONS, INC.
AND SUBSIDIARIES
EXHIBIT INDEX TO FORM 10-QSB
FOR QUARTER ENDED JUNE 30, 1995
Exhibit No. Description
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> JUN-30-1995
<EXCHANGE-RATE> 1
<CASH> 37,127
<SECURITIES> 0
<RECEIVABLES> 3,001,282
<ALLOWANCES> (105,748)
<INVENTORY> 220,847
<CURRENT-ASSETS> 3,820,448
<PP&E> 24,349,305
<DEPRECIATION> 16,207,215
<TOTAL-ASSETS> 13,654,372
<CURRENT-LIABILITIES> 4,549,633
<BONDS> 1,958,239
<COMMON> 13,564
0
0
<OTHER-SE> 6,210,471
<TOTAL-LIABILITY-AND-EQUITY> 13,654,372
<SALES> 3,043,656
<TOTAL-REVENUES> 3,063,157
<CGS> 2,650,681
<TOTAL-COSTS> 2,650,681
<OTHER-EXPENSES> 645,559
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 110,640
<INCOME-PRETAX> (343,723)
<INCOME-TAX> (135,000)
<INCOME-CONTINUING> (343,723)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (208,723)
<EPS-PRIMARY> (.14)
<EPS-DILUTED> (.14)
</TABLE>
