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
December 31, 1999
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)
4455 West 77th Street
Minneapolis, MN 55435
Address of Principal (Zip Code)
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 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 February 10,
2000.
Transitional Small Business Disclosure Format (Check One):
Yes____ No___X___
<PAGE>
NORTHWEST TELEPRODUCTIONS, INC.
AND SUBSIDIARIES
INDEX
FORM 10-QSB
December 31, 1999
PART I Financial Information
Item 1. Financial Statements Page No.
Condensed Consolidated Balance Sheets:
December 31, 1999 and March 31, 1999 3
Condensed Consolidated Statements of Operations:
Three and Nine Months Ended December 31, 1999 and 1998 4
Condensed Consolidated Statements of Cash Flow:
Nine Months Ended December 31, 1999 and 1998 5
Notes to Condensed Consolidated Financial Statements 6
Item 2.Management Discussion and Analysis 7 & 8
PART II Other Information
Item 6. Exhibits and Reports on Form 8K 9
<PAGE>
Part I
Northwest Teleproductions, Inc. and Subsidiaries
Consolidated Balance Sheet
(Unaudited)
<TABLE>
<CAPTION>
December 31 March 31
1999 1999
Assets (Unaudited) *
<S> <C> <C>
Current Assets
Cash 457,265 316,153
Cash Restricted 27,281 124,117
Trade accounts receivable less doubtful accounts
reserve of $65,513 and $58,663, respectively 1,516,083 2,248,691
Inventory 12,517 24,571
Refundable income taxes 18,216 18,217
Deferred Rent 60,180 60,180
Other assets 189,665 177,889
---------- ----------
Total Current Assets 2,281,207 2,969,818
Property, Plant and Equipment
Building improvements 732,068 1,471,093
Machinery and equipment 16,565,681 19,055,026
---------- ----------
17,297,749 20,526,119
Less: accumulated depreciation 15,138,615 17,649,003
---------- ----------
2,159,134 2,877,116
Deposits 35,137 37,137
Deferred Rent 88,100 135,760
Building Escrow 90,464
---------- ----------
123,237 263,361
---------- ----------
4,563,578 6,110,295
========== ==========
Liabilities and Stockholders' Equity
Current Liabilities
Notes payable 190,400 515,806
Current maturities of long term debt 822,149 670,026
Trade accounts payable 375,672 725,515
Commissions, salaries and withholding 194,692 423,420
Miscellaneous payables and accrued expenses 110,209 202,572
Deferred Gain-Short Term 123,996 123,996
Customer deposits 550,473 395,101
Other liabilities
---------- ----------
Total Current Liabilities 2,367,591 3,056,436
Deferred Gain-Long Term 35,732 122,528
Long Term Debt and Capital Leases, less current portion 747,993 1,881,525
Stockholders' Equity
Common stock 13,564 13,564
Additional paid-in capital 577,124 577,123
Retained earnings 821,574 459,119
---------- ----------
1,412,262 1,049,806
---------- ----------
4,563,578 6,110,295
========== ==========
</TABLE>
*The balance sheet at March 31, 1999 has been taken from the audited financial
statements at that date. See notes to unaudited condensed consolidated
financial statements.
<PAGE>
Northwest Teleproductions, Inc. and Subsidiaries
Consolidated Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 31 December 31
1999 1998 1999 1998
----------------------------- -----------------------------
<S> <C> <C> <C> <C>
Net Sales $ 2,265,798 $ 3,017,733 $ 7,509,348 $ 8,048,987
Cost of products and services sold 1,750,229 2,365,522 5,913,635 6,487,873
----------- ----------- ----------- -----------
Gross Profit 515,569 652,211 1,595,713 1,561,114
Selling, general and administrative 284,979 429,039 1,034,983 1,258,720
----------- ----------- ----------- -----------
Operating Income 230,590 223,172 560,730 302,394
Other income(expense)
Miscellaneous income (expense) 257,367 22,608 272,876 109,057
Severance charge (25,742) (69,515)
Interest expense (122,460) (140,841) (397,886) (426,658)
----------- ----------- ----------- -----------
Total other income(expense), net 109,165 (118,233) (194,525) (317,601)
Income (Loss) Before Income Taxes 339,755 104,939 366,205 (15,207)
Income tax benefit (expense) (1,250) (3,750) (9,993)
----------- ----------- ----------- -----------
Net Income (Loss) 338,505 104,939 362,455 (25,200)
=========== =========== =========== ===========
BASIC INCOME (LOSS) PER SHARE $ .25 $ .08 $ .27 $ (0.02)
=========== =========== =========== ===========
DILUTIVE INCOME (LOSS) PER SHARE $ .24 $ .08 $ .26 $ (0.02)
=========== =========== =========== ===========
</TABLE>
(1) Net earnings(loss) per share data are based on the weighted average
number of common shares outstanding during the periods as follows:
Basic Dilutive
Nine months ended December 31, 1999 1,356,425 1,385,680
Nine months ended December 31, 1998 1,356,425 1,356,425
Three months ended December 31, 1999 1,356,425 1,385,680
Three months ended December 31, 1998 1,356,425 1,356,425
See notes to unaudited condensed consolidated financial statements.
<PAGE>
Northwest Teleproductions, Inc. and Subsidiaries
Condensed Consolidated Statement of Cashflows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
December 31
1999 1998
----------- -----------
CASHFLOW-OPERATING ACTIVITIES
<S> <C> <C>
Net Income (Loss) $ 362,455 ($ 25,200)
Adjustments
Depreciation 755,938 816,948
Other 120,736 56,790
(Increase) Decrease in trade receivables 666,330 (42,756)
Other-net (700,245) (727,060)
----------- -----------
Net cash provided(utilized) by operating activities 1,205,214 78,722
CASHFLOW-INVESTING ACTIVITIES
Property, plant and equipment additions (475,620) (721,591)
Net proceeds from Sale of building and other assets 775,889 1,552,834
----------- -----------
Net cash provided(used) by investing activities 300,269 831,243
CASHFLOW-FINANCING ACTIVITIES
Advances (payments)-Line of credit (325,406) 179,533
Advances (payments)-Long term borrowing (1,038,962) (1,148,010)
----------- -----------
Net cash provided (used) by financing activities (1,364,368) (968,477)
----------- -----------
NET INCREASE (DECREASE) IN CASH 141,115 (58,512)
=========== ===========
</TABLE>
See notes to unaudited condensed consolidated financial statements.
<PAGE>
NORTHWEST TELEPRODUCTIONS, INC.AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Interim Financial Statements
The consolidated balance sheet as of December 31, 1999, the consolidated
statement of operations for the three and nine month periods ended December
31, 1999 and 1998, 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, 1999 and for all periods presented have
been made.
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, 1999 annual report to
shareholders. The results of operations for the period ended December 31,
1999 are not necessarily indicative of the results for the full year.
2. Reclassifications
Certain reclassifications have been made to the March 31, 1999 consolidated
financial statements to conform to the classifications used at December 31,
1999. These reclassifications had no effect on the operations or
stockholders' equity as previously reported.
NORTHWEST TELEPRODUCTIONS, INC. AND SUBSIDIARIES
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL REQUIREMENTS
Operating cash requirements for the first nine months of fiscal 1999 were met
from cash flow from operations, utilization of the cash reserves from March 31,
1999 and borrowing from the Company's line of credit.
It is suggested that the Company's annual report to shareholders be read for
more detail as to the Company's overall financial position.
Sale of Land and Building
During the quarter ending December 31, 1999 the Company sold it's building in
Dallas, TX. The sale closed on 11/23/99. The Company also announced that in
conjunction with the sale of its building in Dallas, the Company decided to
close its Dallas television production operation. The decision to close the
Dallas operation was influenced by significant operating losses incurred by this
operation during the last two and a half years.
For the fiscal year ended March 31, 1999, the Dallas subsidiary had sales of
$574,00 and a loss from operations of $442,000. For the nine month period ended
December 31, 1999, the Dallas subsidiary had sales of $324,704 and a loss from
operations of $193,000.
The Company has redistributed some of the equipment of the Dallas operation to
its other facilities, and some of the equipment has been sold. The proceeds from
the building and equipment sales was used to pay down the Company's bank debt.
<PAGE>
RESULTS OF OPERATIONS - NINE MONTHS ENDED DECEMBER 31, 1999 COMPARED WITH
CORRESPONDING PERIOD OF PRIOR YEAR.
SALES
Sales for the nine months ended December 31, 1999 of $7,509,348 compare with
sales of $8,048,987 for the corresponding period of the prior year, a 6.7%
decrease. The decrease in sales is attributable to the completion of the
Department of Defense contract and the closing of the Dallas facility.
COST OF PRODUCTS AND SERVICES SOLD
Cost of products and services sold for the nine months ended December 31, 1999
equaled 78.8% of sales as compared to a cost of sales rate of 80.6% in the
corresponding period of the prior year. This reduction in cost of sales as a
percentage of sales reflects improvements in project budgeting and reductions in
payroll, depreciation and general overhead.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the nine months ended December
31, 1999 totaled $1,034,983, as compared to $1,258,720 in the corresponding
period of the prior year, a decrease of $223,737, or 17.8%. Decreased salary and
related expenses, attributable mainly to the consolidation of administrative
functions, along with reduced occupancy expenses in the Chicago and Minneapolis
operations, account for a majority of the decrease.
OTHER INCOME (EXPENSE)
During the second and third quarters ended December 31, 1999 the Company accrued
a charge of $69,515 to cover severance related expenses in conjunction with a
reduction in workforce due to the completion of its five year Department of
Defense contract and the closing of the Dallas facility.
INTEREST EXPENSE
Interest expense for the nine months ended December 31, 1999 totaled $397,886
compared with expense of $426,658 in the corresponding period of the prior year,
a decrease of $28,772, or 6.7%. The decrease in interest expense is the result
of a reduction in the amount of outstanding debt.
INCOME TAX EXPENSE (CREDIT)
During the year ended March 31, 1999, the Company had a valuation allowance of
$957,000 on the deferred tax assets. For the nine months ended December 31, 1999
the Company made no adjustment to the valuation allowance. Income tax expense of
$3,750 for the period reflects minimum tax fees imposed by the State of
Minnesota.
RESULTS OF OPERATIONS - THREE MONTHS ENDED DECEMBER 31, 1999 COMPARED WITH
CORRESPONDING PERIOD OF PRIOR YEAR.
SALES
Sales for the three months ended December 31, 1999 of $2,265,798 compare with
sales of $3,017,733 for the corresponding period of the prior year, a 24.9%
decrease. The net reduction in sales for the quarter is attributable to
decreased billings associated with the Department of Defense contract and the
closing of the Dallas facility. The requirements of the Department of Defense
contract were substantially completed in August of 1999.
<PAGE>
COST OF PRODUCTS AND SERVICES SOLD
Cost of products and services sold for the three months ended December 31, 1999
equaled 77.2% of sales as compared to a cost of sales rate of 78.4% 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 three months ended December
31, 1999 totaled $284,979 as compared to $429,039 in the corresponding period of
the prior year, a decrease of $144,060, or 33.6%. Decreased salary and related
expenses, attributable mainly to the consolidation of administrative functions,
along with reduced occupancy expenses in the Chicago and Minneapolis operations,
account for a majority of the decrease.
OTHER INCOME (EXPENSE)
During the quarter ended December 31, 1999 the Company accrued a charge of
$25,743 to cover severance related expenses in conjunction with the sale and
closing of the Dallas facility.
INTEREST EXPENSE
Interest expense for the three months ended December 31, 1999 totaled $122,460
compared with expense of $140,841 in the corresponding period of the prior year,
a decrease of $18,381, or 13%. The decrease in interest expense on a comparative
basis is attributable to a reduction in outstanding debt.
INCOME TAX EXPENSE (CREDIT)
During the year ended March 31, 1999, the Company had a valuation allowance of
$957,000 on the deferred tax assets. For the three months ended December 31,
1999 the Company made no adjustment to the valuation allowance. Income tax
expense of $1,250 for the period reflects minimum tax fees imposed by the State
of Minnesota.
FORWARD LOOKING INFORMATION
This section contains disclosures which are forward-looking statements.
Forward-looking statements include all statements that do not relate solely to
historical or current facts, and can be identified by the use of words such as
"may," "will," "expect," "project," "estimate," "anticipate," "envision,"
"plan," or "continue." These forward-looking statements are based upon the
Company's current plans or expectations and are subject to a number of
uncertainties and risks that could significantly affect current plans and
anticipated actions and the Company's future financial condition and results.
The uncertainties and risks include, but are not limited to, general economic
and business conditions; loss of significant customers; changes in levels of
client advertising; and the impact of competition. As a consequence, current
plans, anticipated actions and future financial condition and results may differ
from those expressed in any forward-looking statements made by or on behalf of
the Company.
<PAGE>
PART II
Item 6. Exhibits and Reports on Form 8-K
a)Exhibits
27. Financial Data Schedule
b) Reports on form 8-K
A report on Form 8-K was filed on December 9, 1999 reporting under Item 2
the sale of the Company's Dallas, Texas production facility.
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: February 14, 2000 Northwest Teleproductions, Inc.
(Registrant)
By: /s/ Phillip A. Staden
.
Phillip A. Staden
President
<PAGE>
NORTHWEST TELEPRODUCTIONS, INC.
FORM 10-QSB
EXHIBIT INDEX
Exhibit Number Description
27 Financial Data Schedule (filed in electronic format only)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 457,265
<SECURITIES> 0
<RECEIVABLES> 1,581,596
<ALLOWANCES> 65,513
<INVENTORY> 12,517
<CURRENT-ASSETS> 2,281,207
<PP&E> 17,297,749
<DEPRECIATION> 15,138,615
<TOTAL-ASSETS> 4,563,578
<CURRENT-LIABILITIES> 2,637,591
<BONDS> 747,993
0
0
<COMMON> 13,564
<OTHER-SE> 1,398,698
<TOTAL-LIABILITY-AND-EQUITY> 4,563,578
<SALES> 7,509,348
<TOTAL-REVENUES> 7,509,348
<CGS> 5,913,635
<TOTAL-COSTS> 6,948,618
<OTHER-EXPENSES> (203,361)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 397,886
<INCOME-PRETAX> 366,205
<INCOME-TAX> 3,750
<INCOME-CONTINUING> 362,455
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 362,455
<EPS-BASIC> .27
<EPS-DILUTED> .26
</TABLE>
