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, 1998
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
August 12, 1998.
Transitional Small Business Disclosure Format (Check One):
Yes____ No X
<PAGE>
NORTHWEST TELEPRODUCTIONS, INC
AND SUBSIDIARIES
INDEX
FORM 10-QSB
June 30, 1998
PART 1
Page No.
Consolidated Balance Sheets:
June 30, 1998 and March 31, 1998 3
Consolidated Statements of Operations:
Three Months Ended June 30, 1998 and 1997 4
Condensed Consolidated Statements of Cash Flow:
Three Months Ended June 30, 1998 and 1997 5
Notes to Condensed Consolidated Financial Statements 6
Management Discussion and Analysis 7
Other Information 8
Exhibit Index 9
<PAGE>
PART I
NORTHWEST TELEPRODUCTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
June 30 MARCH 31
1998 1998
(Unaudited) *
------------- -------------
<S> <C> <C>
ASSETS:
CURRENT ASSETS:
Cash $ 517,478 $ 330,055
Cash-restricted $ 118,993 $ 1,825
Trade accounts receivable less doubtful accounts
reserve of $148,543 and $133,323 respectively 1,491,813 1,850,187
Inventory 153,714 155,892
Refundable income taxes 13,624 16,886
Deferred income taxes
Other assets 155,241 49,783
Land and buildings held for sale 1,158,063
----------- -----------
TOTAL CURRENT ASSETS 2,450,863 3,562,691
----------- -----------
PROPERTY, PLANT AND EQUIPMENT:
Land, buildings and improvements 1,243,507 1,263,572
Machinery and equipment 19,349,779 19,299,785
----------- -----------
20,593,286 20,563,357
Less accumulated depreciation 17,516,309 17,253,517
----------- -----------
3,076,977 3,309,840
DEPOSITS 383,039 14,262
DEFERRED RENT 241,075 256,120
CAPITALIZED FINANCING COSTS 224,338 264,837
----------- -----------
848,452 535,219
----------- -----------
$ 6,376,292 $ 7,407,750
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Notes payable $ 36,561 $ 423,284
Accounts payable 943,485 $ 826,860
Commissions, salaries and withholding 315,746 359,086
Miscellaneous accounts payable and accrued expenses 122,173 296,633
Deferred Gain-Short Term 136,008
Other liabilities 525,398 427,142
Payments due within one year on term obligations 996,007 1,679,282
----------- -----------
TOTAL CURRENT LIABILITIES 3,075,378 4,012,287
DEFERRED INCOME TAXES
DEFERRED GAIN-LONG TERM 272,006
LONG TERM DEBT AND CAPITAL LEASES, less current portion 1,880,843 2,188,747
STOCKHOLDERS' EQUITY:
Common stock 13,564 13,564
Additional paid-in capital 577,123 577,123
Retained earnings 557,378 616,029
----------- -----------
1,148,065 1,206,716
----------- -----------
$ 6,376,292 $ 7,407,750
=========== ===========
</TABLE>
*The balance sheet at March 31,1998 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>
<CAPTION>
THREE MONTHS ENDED
JUNE 30
1998 1997
------------------- -------------------
<S> <C> <C>
NET SALES $2,388,350 $2,886,840
COSTS AND EXPENSES:
Costs of products and services sold 1,928,932 2,782,046
Selling, general and administrative 451,101 493,306
Interest 122,065 135,979
------------------- -------------------
2,502,098 3,411,331
------------------- -------------------
(113,748) (524,491)
OTHER INCOME 55,097 48,662
------------------- -------------------
LOSS BEFORE TAXES ON INCOME (58,651) (475,829)
TAXES ON INCOME (INCOME TAX CREDIT)
=================== ===================
NET LOSS ($58,651) ($475,829)
=================== ===================
BASIC AND DILUTIVE LOSS PER SHARE ($0.04) ($0.35)
=================== ===================
</TABLE>
(1) Net earnings per share are based on the weighted average number of
common shares outstanding during the periods as follows:
June 30, 1998 1,356,425
June 30, 1997 1,356,425
See notes to condensed consolidated financial statements.
<PAGE>
NORTHWEST TELEPRODUCTIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30
1998 1997
-------------- ---------------
<S> <C> <C>
CASH FLOW-OPERATING ACTIVITIES:
Net Loss ($ 58,651) ($ 475,829)
Adjustments:
Depreciation 262,792 436,905
Other 55,544 25,009
Gain on sale of assets (37,000)
(Increase) Decrease in trade receivables 358,374 (55,976)
Other-net (505,637) (567,885)
------------ -----------
Net cash provided (utilized) by operating activities 75,422 (637,776)
CASH FLOW - INVESTING ACTIVITIES:
Property, plant and equipment additions (29,929) (197,671)
Net Proceeds from Sale of Building and other assets 1,637,000
------------ -----------
Net cash provided (used) by investing activities 1,607,071 (197,671)
CASH FLOW - FINANCING ACTIVITIES:
Advances (payments)-Line of credit (386,723) (963,669)
Advances (payments)-Long term borrowing (991,179) 1,266,499
------------ -----------
Net cash provided (used) by financing activities (1,377,902) 302,830
------------ -----------
NET INCREASE (DECREASE) IN CASH $ 304,591 ($ 532,617)
============ ===========
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE>
NORTHWEST TELEPRODUCTIONS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The consolidated balance sheet as of June 30, 1998, the consolidated statement
of operations for the three month periods ended June 30, 1998 and 1997, 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, 1998 and for
all periods presented have been made.
On June 24, 1998, the Company closed a three-year sale-leaseback transaction
involving the two parcels of land and buildings located at 4000 West 76th Street
and 4455 West 77th Street. After a three-year period, the Company has the option
of renewing the lease for an additional five years. The monthly rental expense
for the first three years will be as follows: $16,615 in year 1, $17,030 in year
2 and $17,456 in year 3.
The land and buildings were sold for $1.6 million in cash. The proceeds from
sale were used as follows:
Pay off mortgage $ 560,000
Pay down term debt 275,000
Reserve for building improvements 260,000
Reduce other liabilities 450,000
Payment of fees and security deposits 55,000
--------------
Total $ 1,600,000
==============
The transaction will be accounted for as an operating lease, wherein the
property and related mortgage will no longer remain on the Company's books, and
of which no additional depreciation will be taken.
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, 1998 annual report to
shareholders. The results of operations for the period ended June 30, 1998 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 1998 were met
from cash flow from operations, utilization of the cash reserves from March 31,
1998, borrowing from the Company's line of credit and cash proceeds from the
sale of the Company's Edina, MN facilities.
Subsequent to the year-end the Company sold and subsequently leased back its
facilities in Minneapolis. This transaction generated cash proceeds of
$1,600,000. The proceeds were utilized as follows:
Pay off mortgage $ 560,000
Pay down term debt 275,000
Reduce other liabilities 450,000
Reserve for building improvements 260,000
Payment of fees and security deposits 55,000
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, 1998 COMPARED WITH
CORRESPONDING PERIOD OF PRIOR YEAR.
SALES
Sales for the three months ended June 30, 1998 of $2,388,500 compare with sales
of $2,886,840 for the corresponding period of the prior year, a 17.2 % decrease.
A significant portion of the decrease results from the closing of the Company's
Minneapolis based Post and Transfer facility and its NW Film Production Office.
COST OF PRODUCTS AND SERVICES SOLD
Cost of products and services sold for the three months ended June 30, 1998
equaled 80% of sales as compared to a cost of sales rate of 96% in the
corresponding period of the prior year. This reduction in cost of sales reflects
the improvements in project budgeting, reductions in payroll, depreciation and
general overhead.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the first quarter of fiscal
1998 totaled $451,101, a decrease of $42,205, or 8.5% over the prior years first
quarter. Decreased salary and related expenses, attributable mainly to the
consolidation of administrative functions, along with reduced rent expenses in
the Chicago and Minneapolis operations, account for a majority of the decrease.
INTEREST EXPENSE
Interest expense for the first quarter, totaled $122,065 compared with expense
of $135,979 in the prior year's first quarter, a decrease of 10%. The decrease
in interest expense from June 1998 to June 1997 is the result a reduction in the
amount of outstanding term debt.
INCOME TAX CREDIT
During the year ended March 31, 1998, the Company had a valuation allowance of
$957,000 on the deferred tax assets. For the quarter ended June 30, 1998 the
Company added $24,600 to the valuation allowance.
<PAGE>
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: August 13, 1998 Northwest Teleproductions, Inc.
(Registrant)
By: /s/ Phillip A. Staden
Phillip A. Staden
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, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 073048
<NAME> Northwest Teleproductions, Inc.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 636,471
<SECURITIES> 0
<RECEIVABLES> 1,640,356
<ALLOWANCES> 148,543
<INVENTORY> 153,714
<CURRENT-ASSETS> 2,450,863
<PP&E> 20,593,286
<DEPRECIATION> 17,516,309
<TOTAL-ASSETS> 6,376,292
<CURRENT-LIABILITIES> 3,075,378
<BONDS> 1,880,843
0
0
<COMMON> 13,564
<OTHER-SE> 577,123
<TOTAL-LIABILITY-AND-EQUITY> 1,148,065
<SALES> 2,388,350
<TOTAL-REVENUES> 2,388,350
<CGS> 1,928,932
<TOTAL-COSTS> 1,928,932
<OTHER-EXPENSES> 451,101
<LOSS-PROVISION> 8,250
<INTEREST-EXPENSE> 122,065
<INCOME-PRETAX> (58,651)
<INCOME-TAX> 0
<INCOME-CONTINUING> (58,651)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (58,651)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
