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:
December 31, 1995 0-8508
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)(Zip Code)
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 January
31,1996
Transitional Small Business Disclosure Format (Check one):
Yes________ No___X______
<PAGE>
NORTHWEST TELEPRODUCTIONS, INC. AND SUBSIDIARES
INDEX
FORM 10-QSB
DECEMBER 31, 1995
PART 1
Consolidated Balance Sheets:
December 31, 1995 and March 31, 1995
Consolidated Statements of Operations:
Three Months Ended December 31, 1995 and 1994
Nine Months Ended December 31, 1995 and 1994
Condensed Consolidated Statements of Cash Flow:
Nine Months Ended December 31, 1995 and 1994
Notes to Condensed Consolidated Financial Statements
Management's Discussion and Analysis
Other Information
Exhibit Index
<PAGE>
NORTHWEST TELEPRODUCTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<S> <C> <C>
DECEMBER 31 MARCH 31
1995 1995
ASSETS: (Unaudited) *
CURRENT ASSETS:
===================== =========================
Cash $ 142,334 $271,258
Accounts receivable less doubtful accounts reserve
of $128,000 and $101,000 respectively 2,655,450 2,663,586
Inventory 221,713 212,886
Refundable income taxes 301,708 199,565
Deferred income taxes 75,000 75,000
Current portion of note receivable 99,830 99,831
Other assets 82,475 107,992
--------------------- -------------------------
TOTAL CURRENT ASSETS 3,578,510 3,630,118
PROPERTY, PLANT AND EQUIPMENT:
Land, buildings and improvements 3,591,760 3,507,677
Machinery and equipment 21,653,494 20,554,284
--------------------- -------------------------
25,245,254 24,061,961
Less accumulated depreciation 17,283,482 15,671,779
--------------------- -------------------------
7,961,772 8,390,182
GOODWILL, less accumulated amortization of $613,907
and $571,985 respectively 1,074,304 1,116,226
NOTE RECEIVABLE, less current portion 106,157 200,475
OTHER ASSETS 447,598 175,782
--------------------- -------------------------
1,628,059 1,492,483
--------------------- -------------------------
$13,168,341 $13,512,783
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Notes payable $950,000 800,000
Accounts payable 320,416 $281,131
Commissions, salaries and withholding 418,918 429,319
Miscellaneous accounts payable and accrued expenses 96,898 208,731
Other liabilities 138,539
Payments due within one year on term obligations 1,844,200 1,806,914
--------------------- -------------------------
TOTAL CURRENT LIABILITIES 3,630,432 3,664,634
DEFERRED INCOME TAXES 813,000 813,000
LONG TERM DEBT AND CAPITAL LEASES, less current portion 2,464,929 2,202,437
OTHER LONG TERM LIABILITIES, less current portion
STOCKHOLDERS' EQUITY:
Common stock 13,564 15,545
Additional paid-in capital 577,126 680,596
Retained earnings 5,669,290 6,136,571
--------------------- -------------------------
6,259,980 6,832,712
--------------------- -------------------------
$13,168,341 $13,512,783
</TABLE>
*The balance sheet at March 31, 1995 has been taken from the audited
financial statements at that date. See notes to condensed consolidated financial
statements.
<PAGE>
NORTHWEST TELEPRODUCTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31 DECEMBER 31
1995 1994 1995 1994
====================== ================== =================== ======================
<S> <C> <C> <C> <C>
NET SALES $3,277,590 $3,579,307 $9,822,118 $9,998,650
COSTS AND EXPENSES:
Costs of products and services sold 2,547,413 2,447,797 7,863,063 7,385,076
Selling, general and administrative 586,685 682,104 1,815,718 1,910,942
Litigation settlement 100,000 247,600 100,000 281,852
Interest 132,681 104,449 364,497 279,058
----------------------- --------------------- --------------------- --------------------
3,366,779 3,481,950 10,143,278 9,856,928
----------------------- --------------------- --------------------- --------------------
(89,189) 97,357 (321,160) 141,722
OTHER INCOME 14,484 28,484 47,356 58,227
----------------------- --------------------- --------------------- --------------------
EARNINGS (LOSS) BEFORE TAXES ON INCOME (74,705) 125,841 (273,804) 199,949
TAXES ON INCOME (INCOME TAX CREDIT) (30,000) 61,000 (110,000) 83,000
----------------------- --------------------- --------------------- --------------------
NET EARNINGS(LOSS) ($44,705) $64,841 ($163,804) $116,949
======================= ===================== ==================== ===================
NET EARNINGS (LOSS) PER SHARE (1) ($.03) $.04 ( $.12) $.07
======================= ===================== ===================== ====================
</TABLE>
(1) Net earnings (loss) per share are based on the weighted average number
of common shares outstanding during the periods as follows:
THREE MONTHS: DECEMBER 31, 1995 1,356,425
DECEMBER 31, 1994 1,573,358
NINE MONTHS: DECEMBER 31, 1995 1,412,092
DECEMBER 31, 1994 1,574,136
See notes to condensed consolidated financial statements.
<PAGE>
NORTHWEST TELEPRODUCTIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
<TABLE>
NINE MONTHS ENDED
DECEMBER 31
1995 1994
--------------------- -------------------------
<S> <C> <C>
CASH FLOW-OPERATING ACTIVITIES:
Net (loss) earnings ($163,804) $116,949
Adjustments:
Depreciation 1,611,702 1,609,394
Amortization of goodwill 41,922 41,705
Decrease ( Increase) in trade receivables 8,136 (98,159)
Other - net (493,445) 69,965
--------------------- -------------------------
Net cash provided by operating activities 1,004,511 1,739,854
CASH FLOW - INVESTING ACTIVITIES:
Property, plant and equipment additions (1,183,293) (1,985,709)
CASH FLOW - FINANCING ACTIVITIES:
Advances on line of credit 150,000 200,000
Payments on long term borrowing (1,320,190) (1,418,801)
Long Term Borrowing 1,620,000 1,400,000
Repurchase of common stock (399,950)
--------------------- -------------------------
Net cash provided by financing activities 49,860 181,199
NET DECREASE IN CASH $128,922 $64,656
===================== =========================
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE>
NORTHWEST TELEPRODUCTIONS, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS
The consoliated balance sheet as of December 31, 1995, the consolidated
statement of operations for the three and nine month periods ended December 31,
1995 and 1994 and the condensed consolidated statements of cash flow for the
nine 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
December 31, 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 December
31, 1995 are not necessarily indicative of the results for the full year.
<PAGE>
NORTHWEST TELEPRODUCTIONS, INC.
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL REQUIREMENTS
Operating cash requirements for the first nine months of fiscal 1996 were
met from cash available at March 31, 1995, cash flow from operations and
$150,000 of short term borrowing. During the period the Company repurchased
common stock costing $400,000, acquired $1,183,000 of capital assets, borrowed
$1,620,000 through amendment of the Company's term debt agreement and made
payments of $1,227,000 on term debt obligations.
In the opinion of management, the Company's present financial position is
such that sufficient funds from operations will be available to meet operating
requirements and fund debt maturities.
RESULTS OF OPERATIONS - NINE MONTHS ENDED DECEMBER 31, 1995
COMPARED WITH CORRESPONDING PERIOD OF PRIOR YEAR.
SALES
Sales for the nine months ended December 31, 1995 of $9,822,118 compare
with sales of $9,998,650 for the corresponding period of the prior year, a 2%
decrease. The minor decrease in sales experienced in the first nine months of
fiscal 1996 reflects a decrease in Department of Defense contract production
which was partially offset by increased non contract sales.
COSTS OF PRODUCTS AND SERVICES SOLD
Cost of products and services sold for the nine months ended December 31,
1995 equaled 78% of sales as compared to a cost of sales rate of 74% in the
corresponding period of the prior year. The unusually high rate of 87% in the
first quarter resulting from decreased sales dropped to 76% in the second
quarter. Variation in sales volume along with shifts in the sales mix explain
the flucuations in the cost of sales rate.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the first nine months of
fiscal 1996 totaled $1,815,718, a decrease of $95,424, or 5%, over the prior
year, continuing the trend set in the first two quarters.
INTEREST EXPENSE
Interest expense for the nine months ended December 31, 1995 totaled
$364,497 compared with expense of $279,058 in the prior year. Increased overall
borrowing in the current year along with an increase in rates on the Company's
variable rate debt explains the increased expense.
INCOME TAX CREDIT/TAXES ON INCOME
The 40% income tax credit for the first nine months of fiscal 1996 reflects
the availability of a loss carryback. The tax provision for the first nine
months of the prior year reflect the Company's historical effective tax rates.
<PAGE>
RESULTS OF OPERATIONS - THREE MONTHS ENDED DECEMBER 31, 1995
COMPARED WITH CORRESPONDING PERIOD OF PRIOR YEAR.
SALES
Sales for the quarter ended December 31, 1995 of $3,277,590 compare with
sales of $3,579,307 in the third quarter of the prior year. This 8% decrease in
sales results from overall reduced production both in Department of Defense
contract production and other areas of revenue production.
COSTS OF PRODUCTS AND SERVICES SOLD
Cost of products and services sold for the quarter ended December 31, 1995
equaled 78% of sales as compared with a rate of 69%for the third quarter of the
prior year. Greater sales, which provide for increased utilization of facilities
and personnel, explain the more favorable rate in the prior year.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the third quarter of
fiscal 1996 totaled $586,685, a decrease of $95,419, or 14%, under the prior
year. Completion of the amortization of organizational costs and non compete
agreements applicable to the Chicago acquisition in 1990 account for the major
portion of this decrease.
INTEREST EXPENSE
Interest for the three months ended December 31, 1995 totaled $132,681
compared with expense of $104,449 in the third quarter of the prior year. An
increase in the rate of interest on the company's variable rate debt, resulting
from an increase in the reference rate, along with increased borrowing explains
the increased expense.
INCOME TAX CREDIT/TAXES ON INCOME
The 40% income tax credit for the third quarter of fiscal 1996 reflects the
availability of a loss carryback. The tax provision for the second quarter of
the prior year reflects the Company's historical effective tax rates.
<PAGE>
NORTHWEST TELEPRODUCTIONS, INC.
AND SUBSIDIARIES
PART II
OTHER INFORMATION
Item 3. Legal Proceedings
On September 17, 1993 an action was filed against the Registrant's wholly
owned subsidiary, Northwest Teleproductions/Kansas City, Inc. in the Circuit
Court of Jackson County Missouri at Kansas City by plaintiffs Kansas City Post,
Inc. and James Shaw. On February 10, 1994 the plaintiffs amended their complaint
and added the Registrant as a defendent. The plaintiffs alleged breach of an
alleged contract, prommissory estoppel and misrepresentation relating to the
April 1993 sale to other parties of the assets of the Kansas City Subsidiary.
The plaintiffs sought recovery of unspecified damages alleged to be in excess of
$15,000 and punitive damages in excess of $2,000,000. On December 31, 1994,
without admitting liability, the Registrant paid the plaintiffs $175,000 in
settlement of the litigation and received releases from the plaintiffs.
On January 30, 1995 an action was filed against the Registrant in the
Circuit Court of Jackson County Missiouri at Kansas City by plaintiffs Mark
McCone, Daniel Nussbeck and Midwest Teleproductions, Inc. The plaintiffs had
purchased the assets of the Registrant's Kansas City Subsidiary and one of the
plaintiffs had been a defendent in the earlier litigation. The plaintiffs
alleged breach of contract and misrepresentation in connection with the sale and
sought recovery of damages alleged to be $141,629 as well as attorneys fees,
costs and interest. On November 20, 1995, without admitting liability, the
Registrant paid the plaintiffs $10,000 in settlement of the litigation and
received releases from the plaintiffs.
<PAGE>
NORTHWEST TELEPRODUCTIONS, INC.
AND SUBSIDIARIES
Item 6. Exhibits and Reports on Form 8-K
-------------------------------
Exhibits.
- -------------------
See exhibit index on page following signatures.
Reports on Form 8-K.
- -------------------
There were no reports on Form 8-K filed for the three months ended December
31, 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: NORTHWEST TELEPRODUCTIONS, INC.
February 13, 1996 (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 December 31,1995
-------------------------------
Exhibit
Number
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
THIRD QUARTER 10QSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<CASH> 142,234
<SECURITIES> 0
<RECEIVABLES> 2,655,450
<ALLOWANCES> (128,000)
<INVENTORY> 221,713
<CURRENT-ASSETS> 3,578,510
<PP&E> 25,245,254
<DEPRECIATION> 17,283,482
<TOTAL-ASSETS> 13,168,341
<CURRENT-LIABILITIES> 3,630,432
<BONDS> 0
0
0
<COMMON> 13,564
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 13,168,341
<SALES> 0
<TOTAL-REVENUES> 3,277,590
<CGS> 2,547,413
<TOTAL-COSTS> 2,547,413
<OTHER-EXPENSES> 686,685
<LOSS-PROVISION> 13,000
<INTEREST-EXPENSE> 132,681
<INCOME-PRETAX> (74,705)
<INCOME-TAX> (30,000)
<INCOME-CONTINUING> (44,705)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (44,705)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
