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
June 30, 1997
Commission File Number
0-8508
NORTHWEST TELEPRODUCTIONS, INC.
(Exact Name of Small Business Issuer as Specified in its Charter)
Minnesota 41-0641789
(State or other Jurisdiction of (IRS Employer Identification
Incorporation or Organization) Number)
4000 West 76th Street
Minneapolis, MN 55435
Address of Principal (Zip Code)
Executive Offices)
Issuer's telephone number including Area Code: 612-835-6450
Check whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15 of 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 25, 1997.
Transitional Small Business Disclosure Format (Check One):
Yes____ No___X___
<PAGE>
NORTHWEST TELEPRODUCTIONS, INC
AND SUBSIDIARIES
INDEX
FORM 10-QSB
June 30, 1997
PART 1
Page No.
Consolidated Balance Sheets:
June 30, 1997 and March 31, 1997 3
Consolidated Statements of Operations:
Three Months Ended June 30, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flow:
Three Months Ended June 30, 1997 and 1996 5
Notes to Condensed Consolidated Financial Statements 6
Management Discussion and Analysis 7 & 8
Other Information 9 & 10
Exhibit Index 11
<PAGE>
NORTHWEST TELEPRODUCTIONS,INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
June 30 MARCH 31
1997 1997
(Unaudited) *
---------------- ----------------
<S> <C> <C>
ASSETS:
CURRENT ASSETS:
Cash $0 $532,617
Cash-restricted $144,241 $435,662
Trade accounts receivable less doubtful accounts
reserve$133,323 and $120,622 respectively 2,013,809 1,957,833
Inventory 185,473 196,238
Refundable income taxes 326,593 367,000
Deferred income taxes 64,000 64,000
Other assets 211,197 75,512
---------------- ----------------
TOTAL CURRENT ASSETS 2,945,313 3,628,862
---------------- ----------------
PROPERTY,PLANT AND EQUIPMENT:
Land,buildings and improvements 3,662,702 3,662,702
Machinery and equipment 22,162,858 21,965,186
---------------- ----------------
25,825,560 25,627,888
Less accumulated depreciation 20,163,677 19,726,772
---------------- ----------------
5,661,883 5,901,116
INFOMERCIALS
DEFERRED RENT 301,255 304,240
CAPITALIZED FINANCING COSTS 293,173
---------------- ----------------
594,428 304,240
---------------- ----------------
$9,201,624 $9,834,218
================ ================
LIABILITIES AND STOCKHOLDERS'EQUITY:
CURRENT LIABILITIES:
Notes payable $163,530 $1,127,199
Accounts payable 905,018 $1,072,820
Commissions,salaries and withholding 367,277 510,488
Miscellaneous accounts payable and accrued expenses 12,273 179,793
Other liabilities 629,283 987,877
Payments due within one year on term obligations 912,274 851,610
---------------- ----------------
TOTAL CURRENT LIABILITIES 2,989,655 4,729,787
DEFERRED INCOME TAXES 64,000 64,000
LONG TERM DEBT AND CAPITAL LEASES, less current portion 4,062,834 2,479,466
STOCKHOLDERS' EQUITY:
Common stock 13,564 13,564
Additional paid-in capital 577,123 577,123
Retained earnings 1,494,448 1,970,278
---------------- ----------------
2,085,135 2,560,965
---------------- ----------------
$9,201,624 $9,834,218
================ ================
*The balance sheet at March 31,1997 has been taken from the audited financial statements
at that date. See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
NORTHWEST TELEPRODUCTIONS,INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30
1997 1996
---------------- ----------------
<S> <C> <C>
NET SALES $2,886,840 $2,580,515
COSTS AND EXPENSES:
Costs of products and services sold 2,782,046 2,458,448
Selling,general and administrative 493,306 518,829
Interest 135,979 114,622
---------------- ----------------
3,411,331 3,091,899
---------------- ----------------
(524,491) (511,384)
OTHER INCOME 48,662 639
---------------- ----------------
EARNINGS BEFORE TAXES ON INCOME (475,829) (510,745)
TAXES ON INCOME (INCOME TAX CREDIT) (100,000)
================ ================
NET EARNINGS ($475,829) ($410,745)
================ ================
NET EARNINGS PER SHARE (1) ($0.35) ($0.30)
================ ================
</TABLE>
(1) Net earnings per share are based on the weighted average number of common
shares outstanding during the periods as follows:
June 30, 1997 1,356,425
June 30, 1996 1,356,425
See notes to condensed consolidated financial statements.
<PAGE>
NORTHWEST TELEPRODUCTIONS,INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30
1997 1996
---------------- ----------------
<S> <C> <C>
CASH FLOW-OPERATING ACTIVITIES:
Net earnings ($475,829) ($410,745)
Adjustments:
Depreciation 436,905 480,293
Other 25,009
(Increase) Decrease in trade receivables (55,976) (70,802)
Increase - current assets (120,586)
Decrease -liabilities (447,299) 282,768
----------------- ----------------
Net cash provided (utilized) by operating activities (637,776) (281,514)
CASH FLOW - INVESTING ACTIVITIES:
Property,plant and equipment additions (197,671) (116,165)
CASH FLOW - FINANCING ACTIVITIES:
Advances(payments)-Line of credit (963,669) 330,000
Advances(payments)-Long term borrowing 1,266,499 (499,369)
--------------- ---------------
Net cash provided (utilized) by financing activities 302,830 (169,369)
================ ================
NET (DECREASE) IN CASH ($532,617) ($4,020)
================ ================
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
NORTHWEST TELEPRODUCTIONS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The consolidated balance sheet as of June 30, 1997, the consolidated statement
of operations for the three month periods ended June 30, 1997 and 1996, 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, 1997 and for
all periods presented have been made.
On April 24, 1997, the Company and NationsCredit entered into a credit
agreement, which consists of a $8,500,000 revolving credit facility with a
three-year term expiring in April 2000. This credit facility includes a
$3,750,000 term note that is to be repaid in 36 monthly installments, based on a
five-year amortization, with the balance due April 2000. Interest on loans
outstanding under the credit agreement is based on prime plus 2.25%. The
agreement includes certain non-financial covenants. Proceeds from the new credit
agreement were used to pay off the line of credit and the term note payable
outstanding at March 31, 1997.
On June 27, 1997 the Company obtained mortgage financing on its two facilities
in Edina, Minnesota. The company borrowed $700,000 using the facilities as
collateral. The mortgage financing has an interest rate of prime plus 2.25%,
amortization over 60 months with a three-year term.
Certain information and footnotes 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, 1997 annual report to
shareholders. The results of operations for the period ended June 30, 1997 are
not necessarily indicative of the results for the full year.
<PAGE>
NORTHWEST TELEPRODUCTIONS, INC.
AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL REQUIREMENTS
Operating cash requirements for the first three months of fiscal 1997 were met
from cash flow from operations, utilization of the cash reserves from March 31,
1997, borrowing from the Company's line of credit and cash proceeds from a
mortgage secured by the Company's Edina, MN facilities.
On April 24, 1997, the Company and NationsCredit entered into a credit
agreement, which consists of a $8,500,000 revolving credit facility with a
three-year term expiring in April 2000. This credit facility includes a
$3,750,000 term note that is to be repaid in 36 monthly installments, based on a
five-year amortization, with the balance due April 2000. Interest on loans
outstanding under the credit agreement is based on prime plus 2.25%. The
agreement includes certain non-financial covenants. Proceeds from the new credit
agreement were used to pay off the line of credit and the term note payable
outstanding at March 31, 1997.
On June 27, 1997 the Company obtained mortgage financing on its two facilities
in Edina, Minnesota. The company borrowed $700,000 using the facilities as
collateral. The mortgage financing has an interest rate of prime plus 2.25%,
amortization over 60 months with a three-year term.
It is suggested that the Company's annual report to shareholders be read for
more detail as to the Company's overall financial position.
RESULTS OF OPERATIONS - THREE MONTHS ENDED JUNE 30, 1997 COMPARED WITH
CORRESPONDING PERIOD OF PRIOR YEAR.
SALES
Sales for the three months ended June 30, 1997 of $2,886,840 compare with sales
of $2,580,515 for the corresponding period of the prior year, an 11.8 %
increase. A significant portion of the increase results from an increase in Show
production for the cable industry.
COST OF PRODUCTS AND SERVICES SOLD
Cost of products and services sold for the three months ended June 30, 1997
equaled 96% of sales as compared to a cost of sales rate of 95% in the
corresponding period of the prior year. These unusually high rates reflect the
lower margins associated with the production phase of the cable programs
produced by the Company's Show Group.
As discussed in the Company's annual report, the Company has made reductions in
fixed overhead. Management believes these changes will begin to be realized in
the Company's second fiscal quarter.
<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the first quarter of fiscal
1998 totaled $493,306, a decrease of $25,523, or 4.9% over the prior years first
quarter. Decreased salary and related expenses, attributable mainly to the
consolidation of administrative functions, along with reduced rent expenses
associated with the Chicago operation, account for a majority of the decrease.
INTEREST EXPENSE
Interest expense for the first quarter, totaled $135,979 compared with expense
of $114,622 in the prior year's first quarter, an increase of 18%. The increase
in interest expense from June 1997 to June 1996 is the result of increased
borrowings from the line of credit facility, issuance in August 1996 of
subordinated debt and an increase in the interest rate on outstanding
indebtedness.
INCOME TAX CREDIT
During the year ended March 31, 1997, the Company established a valuation
allowance of $97,000 on the deferred tax assets. For the quarter ended June 30,
1997 the Company added $202,250 to the valuation allowance.
PART II
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
27. Financial Data Schedule
b) Reports on form 8-K
None
Signatures
Pursuant to the requirements of he 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.
August 13, 1997
(Registrant)
By: /s/ John C. McGrath
John C. McGrath
President
By: /s/ Phillip A. Staden
Phillip A. Staden
Treasurer
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS CONTAINED IN THE REGISTRANT'S FORM 10-QSB FOR THE
QUARTER ENDED JUNE 30, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 144,241
<SECURITIES> 0
<RECEIVABLES> 2,147,132
<ALLOWANCES> 133,323
<INVENTORY> 185,473
<CURRENT-ASSETS> 2,945,313
<PP&E> 25,825,560
<DEPRECIATION> 20,163,677
<TOTAL-ASSETS> 9,201,624
<CURRENT-LIABILITIES> 2,989,655
<BONDS> 4,062,834
0
0
<COMMON> 13,564
<OTHER-SE> 577,123
<TOTAL-LIABILITY-AND-EQUITY> 9,201,624
<SALES> 2,886,840
<TOTAL-REVENUES> 2,886,840
<CGS> 2,782,046
<TOTAL-COSTS> 2,782,046
<OTHER-EXPENSES> 493,306
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 135,979
<INCOME-PRETAX> (475,829)
<INCOME-TAX> 0
<INCOME-CONTINUING> (475,829)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (475,829)
<EPS-PRIMARY> (.35)
<EPS-DILUTED> (.35)
</TABLE>
