<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the Period ended JUNE 30, 1997
-------------
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from to
------------ -------------
Commission file number 0-18102
-------
MATTHEWS STUDIO EQUIPMENT GROUP
-------------------------------
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-1447751
-------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3111 NORTH KENWOOD STREET, BURBANK, CA 91505
---------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(818) 525-5200
--------------
(Registrant's telephone number, including area code)
2405 EMPIRE AVENUE, BURBANK, CA 91504-3399
------------------------------------------
(Former name, former address and former
fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. COMMON STOCK, NO PAR VALUE
--------------------------
10,624,706 SHARES AS OF JULY 31, 1997.
- --------------------------------------
<PAGE>
INDEX
MATTHEWS STUDIO EQUIPMENT GROUP AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets - June 30, 1997 and September 30,
1996
Condensed consolidated statements of income - Three months ended June
30, 1997 and 1996; Nine months ended June 30, 1997 and 1996
Condensed consolidated statements of cash flows - Nine months ended
June 30, 1997 and 1996
Notes to condensed consolidated financial statements - June 30, 1997
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Change in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
<PAGE>
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
MATTHEWS STUDIO EQUIPMENT GROUP AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
($ in thousands)
<TABLE>
<CAPTION>
June 30, September 30,
1997 1996
------------ ----------------
(Unaudited) (Note)
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ 475 $ 462
Accounts receivable, less allowance of $782 at June 30,
1997 and $480 at September 30, 1996 7,708 5,145
Current portion of net investment in leases 857 794
Inventories 7,170 4,961
Prepaid expenses and other current assets 1,039 945
------- -------
Total current assets 17,249 12,307
Property and equipment, less accumulated depreciation
and amortization of $19,248 at June 30, 1997
and $17,214 at September 30, 1996 31,899 20,339
Investment in leases, less current portion 502 865
Goodwill 2,776 85
Other assets 1,116 888
------- -------
Total assets $53,542 $34,484
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 4,926 $ 2,603
Accrued liabilities 1,961 1,626
Current portion of long-term debt and capital
lease obligations 3,534 125
------- -------
Total current liabilities 10,421 4,354
Long-term debt and capital leases 30,625 18,914
Deferred income taxes 1,917 2,142
Shareholders' equity:
Preferred stock - -
Common stock 5,875 5,584
Retained earnings 4,704 3,490
------- -------
Total shareholders' equity 10,579 9,074
------- -------
------- -------
Total liabilities and shareholders' equity $53,542 $34,484
======= =======
</TABLE>
Note: The balance sheet at September 30, 1996 has been derived from the audited
financial statements at that date.
See accompanying notes
<PAGE>
MATTHEWS STUDIO EQUIPMENT GROUP AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Unaudited)
($ in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
1997 1996 1997 1996
--------- -------- -------- --------
<S> <C> <C> <C> <C>
Net product sales $ 5,479 $ 4,721 $14,182 $11,418
Revenue from rental operations 5,901 3,376 17,295 9,810
--------- -------- --------- --------
11,380 8,097 31,477 21,228
Costs and expenses:
Cost of sales 3,674 3,065 9,543 7,261
Cost of rental operations 3,377 1,878 9,757 5,605
Selling, general and administrative 3,180 2,337 8,414 6,191
Interest 809 519 1,940 1,518
--------- --------- --------- ---------
11,040 7,799 29,654 20,575
Income before income taxes 340 298 1,823 653
Provision for income taxes 16 54 609 125
--------- ---------- --------- ---------
Net income $ 324 $ 244 $ 1,214 $ 528
========= ========== ========= =========
Earnings per common share $ 0.03 $ 0.02 $ 0.11 $ 0.05
========= ========== ========= =========
Weighted average number of
common and common equivalent
shares outstanding 12,557 10,330 12,454 10,324
</TABLE>
<PAGE>
MATTHEWS STUDIO EQUIPMENT GROUP AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
($ in thousands)
<TABLE>
<CAPTION>
Nine Months Ended June 30,
1997 1996
----------- -----------
<S> <C> <C>
Operating activities:
Net income $ 1,214 $ 528
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Provision for doubtful accounts 224 136
Depreciation & amortization 2,890 2,307
Gain on sale of assets (188) (157)
Changes in operating assets and liabilities net of
effects from purchases of Media Lighting Supply, Inc.
and Duke City Video, Inc.:
Accounts receivable (916) (664)
Inventories (1,728) 44
Net investment in leases 310 537
Prepaids/other assets (254) (78)
Income tax refund receivable 252
Accounts payable and accrued liabilities (71) 1,309
Income taxes payable (245) 108
------- -------
Net cash provided by operating activities 1,236 4,322
Investing activities:
Payment for acquisitions
less amount paid by assumption of debt (200) -
Purchase of other property and equipment (5,457) (5,405)
Proceeds from sale of property and equipment 464 553
-------- -------
Cash used in investing activities (5,193) (4,852)
Financing activities:
Proceeds from exercise of stock options 5 18
Proceeds from borrowings 3,965 480
------- -------
Net cash provided by financing activities 3,970 498
Net increase (decrease) in cash and cash equivalents 13 (32)
Cash and cash equivalents at beginning of period 462 438
-------- ------
Cash and cash equivalents at end of period $ 475 $ 406
======== =======
</TABLE>
See accompanying notes.
<PAGE>
MATTHEWS STUDIO EQUIPMENT GROUP AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited) - Continued
($ in thousands)
Supplementary Schedule of Noncash Investing and
Financing Activities
The Company issued 285,715 restricted shares of its common stock, valued at
$286, in exchange for all of the common stock of Duke City Video, Inc. In
addition, the Company purchased the operations of Media Lighting Supply, Inc.,
for $425 in cash, with only $200 of the purchase price being due on closing.
The remaining portion will be due in installments of $100, $100 and $25 over
each of the next three years, respectively. In connection with the
acquisitions, assets acquired and liabilities assumed were as follows:
<TABLE>
<S> <C>
Fair value of assets $14,441
acquired
Cash paid (200)
Common stock issued for
acquired company (286)
--------
Liabilities assumed $13,955
========
</TABLE>
See accompanying notes.
<PAGE>
MATTHEWS STUDIO EQUIPMENT GROUP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Presentation
The accompanying unaudited condensed consolidated financial statements of
Matthews Studio Equipment Group and Subsidiaries (the "Company") have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and nine month periods ended
June 30, 1997 are not necessarily indicative of the results that may be expected
for the year ending September 30, 1997, due to fluctuations in film production
activities. For further information refer to the consolidated financial
statements and footnotes thereto included in the Matthews Studio Equipment Group
annual report on Form 10-K for the year ended September 30, 1996.
2. Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Long-Lived Assets
Long-lived assets used in operations are reviewed periodically to determine that
the carrying values are not impaired and if indicators of impairment are
present, or if long-lived assets are expected to be disposed of, impairment
losses are recorded.
Stock Based Compensation
The Company accounts for its stock compensation arrangements under the
provisions of APB 25, "Accounting for Stock Issued to Employees," and intends to
continue to do so. In October 1995, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 123, "Accounting for
Stock Based Compensation" ("FAS 123"). FAS 123 established a fair value-based
method of accounting for compensation cost related to stock options and other
stock-based compensation awards. However, FAS 123 allows an entity to continue
to measure compensation costs using the principles of APB 25 if certain proforma
disclosures are made. FAS 123 is effective for fiscal years beginning after
December 15, 1995 (the Company's 1997 fiscal year). The Company intends to
disclose the information required by FAS 123 beginning with its financial
statements for fiscal year end 1997.
<PAGE>
MATTHEWS STUDIO EQUIPMENT GROUP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)-Continued
2. Accounting Policies (continued)
Per Share Data
The computation of earnings per common and common equivalent shares is based
upon the weighted average number of common shares outstanding during the period
plus (in periods in which they have a dilutive effect) the effect of common
shares contingently issuable, primarily from the assumed exercise of stock
options and warrants to purchase common stock.
Earnings per share is computed under the modified treasury stock method which
assumes the exercise of all outstanding stock options and warrants to purchase
common stock, and the use of the assumed proceeds thereof to purchase up to a
maximum of 20% of the then outstanding common stock of the Company. Excess
proceeds derived from the assumed purchase of such shares are assumed to be
utilized to reduce the outstanding balances of notes payable. As a result, for
purposes of determining earnings per share, net income is adjusted for the
hypothetical reduction in interest expense of $52,000 and $205,000, for the
three and nine months ended June 30, 1997, respectively, such adjustments being
made net of income taxes.
Prior to the quarter ended June 30, 1997, per share data had been computed based
on the weighted average number of shares of common stock outstanding as dilutive
options and warrants accounted for less than 3% of the outstanding common
shares, as a result of exercise prices of options and warrants in excess of the
existing market prices.
As a result of the increase in the market price of the Company's common stock in
the third quarter of fiscal year 1997, the earnings per share under the modified
treasury stock method were $0.03 per share for the quarter ended June 30, 1997,
and $0.11 for the nine months ended June 30, 1997. The earnings per share for
the six months ended March 31, 1997 was $0.09 because dilutive options and
warrants were immaterial to the earnings per share calculation under the
modified treasury stock method.
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Accounting for Earnings Per Share"
("FAS 128"). The Company will adopt this new standard in fiscal year 1998, and
has not yet determined the potential impact on the financial statements.
Inventories
Inventories are principally stated at the lower of first-in, first-out cost or
market.
Goodwill
Goodwill is amortized over a period of 25 years.
Income Taxes
Deferred tax assets and liabilities are determined based on differences between
the financial reporting and tax bases of assets and liabilities and are measured
using the enacted tax rates and laws that will be in effect when the differences
are expected to reverse. During the quarter ended June 30, 1997, the tax
provision calculated at a 40% effective rate was reduced by $120,000 as a result
of an analysis of the Company's income tax valuation allowance. The reduction
(benefit) was recognized based on current circumstances relating to expected
utilization of net operating loss carryforwards. The lower effective income tax
rate for the nine months ended June 30, 1996, was primarily attributable to the
utilization of net operating loss and alternative minimum tax carryforwards.
3. Stock Options
During the nine months ended June 30, 1997, 5,000 shares of common stock were
issued upon exercise of stock options.
<PAGE>
MATTHEWS STUDIO EQUIPMENT GROUP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)-Continued
4. Acquisitions
On May 2, 1997, the Company acquired Duke City Video, Inc. ("Duke City"),
pursuant to stock exchange agreements dated as of May 2, 1997, among the
shareholders of Duke City and Duke City Holdings Inc., a wholly-owned subsidiary
of the Company. Pursuant to the stock exchange agreements the Duke City
shareholders received 285,715 restricted shares of the Company's common stock in
exchange for all of the common stock of Duke City, in a transaction exempt from
registration under the Securities Act of 1933.
On February 21, 1997, the Company purchased the assets and business of Media
Lighting Supply, Inc., a lighting supply company in Miami, Florida. The
acquisition was made for cash of $425,000. In addition, the Company incurred
debt of $1,505,000 related to the transaction. Only $200,000 of cash was paid on
closing, with the remaining portion of the purchase price becoming due in
installments of $100,000, $100,000 and $25,000 on the first, second and third
anniversaries of the closing.
The pro forma unaudited results of operations for the nine months ended June 30,
1997 and 1996, assuming consummation of the purchases as of October 1, 1995, are
as follows:
<TABLE>
<CAPTION>
Nine Months Ended June 30
1997 1996
---- ----
($ in thousands, except per share data)
<S> <C> <C>
Net revenue $37,433 $29,363
Net income 679 86
Net income per common share $0.05 $0.01
</TABLE>
5. Subsequent event
On August 14, 1997, the Company amended its credit facility with Chase Manhattan
Bank. The amended and restated facility provides for borrowings up to a maximum
of $50,000,000 and extends the facility to mature in five years. The proceeds
shall be used (i) to repay in full certain subordinated indebtedness owed by the
Company (ii) for general working capital purposes, (iii) to finance the
repayment of certain capitalized lease obligations, (iv) for the financing of
future acquisitions within limits permitted in the agreement and (v) to
repurchase the Company's common stock within the limits permitted under the
agreement.
The financial covenants in the amended facility are similar to those of the
original facility; however, the ratios and limits were adjusted to accommodate
increased levels of operations. In addition, interest rates charged on
borrowings have been reduced.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
- ---------------------
Overview
- --------
In the first, second and third quarters of fiscal 1997, the Company continued
the trends from fiscal 1996 of growth and improved operating results. The
first, second and third quarters of fiscal 1997 showed improvements in sales,
net income, and earnings per share over the comparable periods of fiscal 1996.
Revenues increased by $10,249,000 or 48% to $31,477,000 for the first nine
months of fiscal 1997, from $21,228,000 for the first nine months of fiscal
1996. Net income increased by $686,000 or 130% to $1,214,000 for the first nine
months of fiscal 1997, from $528,000 for the first nine months of fiscal 1996
while income before income taxes increased by $1,170,000 or 179% during the same
period.
Three-Month Period ended June 30, 1997 and June 30, 1996
- --------------------------------------------------------
Contributing to the improved operating results in the third quarter was the
acquisition of Duke City. Duke City has operations in Albuquerque, New Mexico,
Burbank, California and Dallas, Texas. Duke City provides rental services of
audio, video, film and professional grip equipment, as well as various levels of
production expertise, crews and expendable supplies to the film and production
industry.
Net Product Sales
- -----------------
Net equipment and supply sales were $5,479,000 for the third quarter of fiscal
1997, an increase of $758,000 or 16%, from $4,721,000 for the third quarter of
fiscal 1996. Sales of expendable supply products increased in the third quarter
of fiscal 1997 to $2,053,000 from $1,032,000, an increase of $1,021,000 or 99%
over the same period last year. The increase in sales of expendable supply
products resulted principally from revenue relating to Media Lighting Supply,
Inc., which was acquired during the second quarter of fiscal year 1997. Sales
of production equipment and accessories for lighting support, camera support,
lighting control and equipment sales to the retail industry ("Equipment sales")
decreased by $263,000 to $3,426,000 from $3,689,000 in fiscal 1996.
Revenues From Rental Operations
- -------------------------------
Revenues from rental operations were $5,901,000 for the third quarter of fiscal
1997, compared to $3,376,000 for the same period last year, an increase of
$2,525,000 or 75%. Production equipment rentals, primarily of video cameras,
lighting, grip, power generators and trucks, increased to approximately
$5,779,000, an increase of $2,490,000 or 76% from approximately $3,289,000, for
the same period last year. Approximately 34% of the total rental revenue in the
third quarter of fiscal year 1997 was from video camera rentals by Duke City, a
company acquired during the quarter ended June 30, 1997. Also contributing to
the increase in the Company's rental revenues was the addition of equipment to
the Company's rental inventory base, including equipment added for the new
marketing centers opened in fiscal 1996.
Gross Profit - Sales
- --------------------
Gross profit as a percentage of sales was approximately 33% for the third
quarter of fiscal 1997, compared to approximately 35% for the same period in
fiscal 1996. The lower gross profit percentage realized by the Company on
higher revenues was primarily attributable to the increase in expendable supply
product sales, which carry lower gross profit margins than the Company's other
products.
<PAGE>
Gross Profit - Rental
- ---------------------
Gross profit as a percentage of rental revenues was approximately 43% for the
third quarter of fiscal 1997 compared to 44% in fiscal 1996. Gross profit from
rental revenues increased by $1,026,000 for the third quarter of fiscal 1997 as
compared to fiscal 1996, mainly due to the increase in revenues. The slight
decrease in the gross profit percentage despite the substantial increase in
revenues is primarily due to the increase in sub-rental costs. Sub-rental costs
as a percentage of revenues were 13% for the third quarter of fiscal 1997,
compared to 9% for the same period last year.
Selling, General and Administrative
- -----------------------------------
Selling, general and administrative expenses were $3,180,000 in the third
quarter of fiscal 1997 compared to $2,337,000 for the same period in fiscal
1996. As a percentage of sales, selling, general and administrative expenses
were 28% for the third quarter of fiscal 1997 compared to 29% for the same
period in fiscal 1996. The dollar increase was required to support the increase
in operations and was due mainly to higher payroll and related costs, as well as
higher advertising and sales commission expenses. In addition, acquisition and
the relocation of certain operations contributed to the increase in selling,
general and administrative costs.
Interest
- --------
Interest increased to $809,000 in the third quarter of fiscal 1997 from $519,000
in the third quarter of fiscal 1996. The increase in interest costs is
primarily due to an increase in the outstanding principal amount of debt, a
portion of which is attributable to the assumption of debt related to the
acquisitions of Media Lighting Supply, Inc., and Duke City.
Nine-Month Period ended June 30, 1997 and June 30, 1996
- -------------------------------------------------------
Net Product Sales
- -----------------
Net equipment and supply sales increased to $14,182,000 for the first nine
months of fiscal 1997, compared to $11,418,000 for the first nine months of
fiscal 1996, an increase of $2,764,000 or 24%. Equipment sales increased to
$9,116,000 for the first nine months of fiscal 1997, an increase of $570,000 or
7% from $8,546,000 for the same period last year. The increase in Equipment
sales is attributable to concentrated marketing efforts. Sales of expendable
supplies increased by approximately $2,683,000 compared to the first nine months
of 1996 with approximately $2,123,000 of the increase relating to Media Lighting
Supply, Inc., which was acquired during the second quarter of fiscal year 1997.
Sales and long-term lease revenues from camera support systems partially offset
the above increases.
Revenues From Rental Operations
- -------------------------------
Revenues from rental operations were $17,295,000 for the first nine months of
fiscal 1997, compared to $9,810,000 for the same period last year, an increase
of $7,485,000 or 76%. Approximately 34% of the total revenue of the first nine
months of fiscal 1997 was from large budget film projects which were completed
during the second quarter. In addition, approximately 12% of the total revenue
of the first nine months of fiscal year 1997 was from video camera rental by
Duke City, a company acquired during the third quarter of fiscal year 1997.
Also contributing to the increase in the Company's rental revenues was the
addition of equipment to the Company's rental inventory base, including
equipment added for the new marketing centers opened in fiscal year 1996.
Gross Profit - Sales
- --------------------
Gross profit as a percentage of sales was approximately 33% for the first nine
months of fiscal 1997, compared to approximately 36% for the same period in
fiscal 1996. The decrease was primarily attributable to the increase in
expendable supply product sales, which carry lower gross profit margins than the
Company's other products.
Gross Profit - Rental
- ---------------------
Gross profit as a percentage of rental revenues was approximately 44% for the
first nine months of fiscal 1997, compared to 43% in fiscal 1996. The small
increase in gross profit despite a more significant increase in rental revenues
is due to an increase of $2,409,000 in sub-rental costs as a result of higher
rental activities during the current period. Sub-rental costs as a percentage of
revenues were 19% for the first nine months of fiscal year 1997, compared to 9%
for the same period in fiscal year 1996.
<PAGE>
Selling, General and Administrative
- -----------------------------------
Selling, general and administrative expenses were $8,414,000 for the first nine
months of fiscal 1997, compared to $6,191,000 for the same period in fiscal year
1996. As a percentage of sales, selling, general and administrative expenses
were 27% for the first nine months of fiscal 1997, compared to 29% for the same
period in fiscal 1996. The dollar increase was required to support the increase
in operations and was due mainly to higher payroll and related costs, as well as
higher advertising and sales commission expenses. In addition, acquisition and
the relocation of certain operations contributed to the increase in selling,
general and administrative costs.
Interest
- --------
Interest increased to $1,940,000 for the first nine months of fiscal 1997,
compared to $1,518,000 for the first nine months of fiscal 1996. The increase
in interest costs is primarily due to an increase in the outstanding principal
amount of debt.
Liquidity and Capital Resources
- -------------------------------
During the nine months ended June 30, 1997, the Company financed its operations
primarily from internally generated cash flow and bank borrowings.
Working capital was $6,828,000 at June 30, 1997 compared to $7,953,000 at
September 30, 1996.
During the first nine months of fiscal 1997, the Company generated cash from
operating activities of $1,236,000. The major contributor to cash from
operating activities was earnings before depreciation and amortization of
$4,104,000. Operating cash flow was somewhat lower for the first nine months of
fiscal 1997 compared to the same period last year, due to increased working
capital requirements to support the increase in business activity.
The Company utilized the cash from operating activities augmented by additional
borrowings from the Company's bank line of $4,573,000, to finance the
acquisition of capital equipment and to retire debt assumed in acquisitions
during the nine months ended June 30, 1997. The major components of the asset
additions were equipment for the Company's equipment rental operations of
approximately $4,648,000.
During the next twelve months, the Company expects to purchase new capital
equipment to allow its operations to be more efficient, support growth and to
minimize the sub-rental of equipment necessary to meet customer orders. The
Company expects to finance its capital acquisition program through a combination
of cash generated from operations and additional borrowings under its bank line
of credit. The Company believes it will have sufficient funds from operations
and bank borrowings to meet its anticipated requirements for working capital
during the next twelve months.
<PAGE>
PART II. OTHER INFORMATION
Items 1,2,3, and 5 are not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed herewith:
11 Statement Re: Computation of Earnings Per Share
27 Financial Data Schedule
(b) Form 8-K dated May 12, 1997 and Form 8-K/A dated July 10,
1997 (both relating to the acquisition of Duke City
Video, Inc.)
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this quarterly report on Form 10-Q for the period
ending June 30, 1997, to be signed on its behalf by the undersigned hereunto
duly authorized.
MATTHEWS STUDIO EQUIPMENT GROUP
(Registrant)
Date: August 13, 1997 By: /s/Gary Borman
---------------------------------------------------
Gary Borman
Vice President, Corporate Controller
By: /s/Carlos DeMattos
---------------------------------------------------
Carlos DeMattos
Chairman of the Board, President,
Chief Executive Officer and Chief Financial Officer
<PAGE>
EXHIBIT 11
MATTHEWS STUDIO EQUIPMENT GROUP AND SUBSIDIARIES
Computation of Primary and Fully Diluted Per Share Earnings
(Unaudited)
($ in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
1997 1997
------------------ -----------------
<S> <C> <C>
PRIMARY PER SHARE EARNINGS:
Weighted average shares outstanding..................... 10,527 10,398
Net effect of dilutive stock options and warrants....... 2,030 2,056
------- -------
Total................................................... 12,557 12,454
Net income.............................................. $ 324 $ 1,214
Reduction in interest expense resulting from the
assumed exercise of stock options and warrants to
purchase common stock and the assumed reduction
of outstanding notes payable, net of income taxes...... 52 205
------- -------
Net income, as adjusted................................. $ 376 $ 1,419
======= =======
Per Share amount........................................ $ 0.03 $ 0.11
======= =======
FULLY DILUTED PER SHARE EARNINGS:
Weighted average shares outstanding..................... 10,527 10,398
Net effect of dilutive stock options and warrants....... 2,030 2,056
------- -------
Total................................................... 12,557 12,454
Net income.............................................. $ 324 $ 1,214
Reduction in interest expense resulting from the
assumed exercise of stock options and warrants to
purchase common stock and the assumed reduction
of outstanding notes payable, net of income taxes...... 46 140
------- -------
Net income, as adjusted................................. 370 1,354
======= =======
Per Share amount........................................ $ 0.03 $ 0.11
======= =======
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
FOR PERIOD ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> JUN-30-1997
<CASH> 475
<SECURITIES> 0
<RECEIVABLES> 8,490
<ALLOWANCES> 782
<INVENTORY> 7,170
<CURRENT-ASSETS> 17,249
<PP&E> 51,147
<DEPRECIATION> 19,248
<TOTAL-ASSETS> 53,542
<CURRENT-LIABILITIES> 10,421
<BONDS> 0
0
0
<COMMON> 5,875
<OTHER-SE> 4,704
<TOTAL-LIABILITY-AND-EQUITY> 53,542
<SALES> 14,182
<TOTAL-REVENUES> 31,477
<CGS> 9,543
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<INCOME-TAX> 609
<INCOME-CONTINUING> 1,214
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,214
<EPS-PRIMARY> 0.11
<EPS-DILUTED> 0.11
</TABLE>
