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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): NOVEMBER 11, 1996
CAPITOL MULTIMEDIA, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-20102 52-1283993
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
7315 WISCONSIN AVENUE, SUITE 800 E.
BETHESDA, MD 20814
(Address of principal executive offices) (Zip Code)
(301) 907-7000
(Issuer's telephone number, including area code)
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Exhibit Index Located on Page 3
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ITEM 5. OTHER EVENTS
The registrant hereby incorporates by reference hereto the information
contained in Exhibit 20.13 - Press Release "Capitol Multimedia, Inc. Reports
2nd Fiscal Quarter Results" dated November 11, 1996 in response to Item 5.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits:
20.13 - Press Release "Capitol Multimedia, Inc. Reports 2nd Fiscal
Quarter Results" dated November 11, 1996.
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 hereunto duly authorized.
CAPITOL MULTIMEDIA, INC.
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(Registrant)
Date: November 20, 1996 By: /s/ Catherine K. Hoopes
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Catherine K. Hoopes
Chief Financial Officer &
Secretary / Treasurer
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS PAGE
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<S> <C> <C>
20.13 Press Release "Capitol Multimedia, Inc. Reports 2nd Fiscal 4
Quarter Results" dated November 11, 1996
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EXHIBIT 20.13
NEWS FROM CAPITOL MULTIMEDIA, INC.
FOR RELEASE: UPON RECEIPT
For more information contact:
Igor Razboff, Chairman & CEO
(301) 907-7000 ext. 804
E-mail: [email protected]
CAPITOL MULTIMEDIA, INC. REPORTS 2ND FISCAL QUARTER RESULTS
BETHESDA, MARYLAND, NOVEMBER 11, 1996 -- Capitol Multimedia, Inc. (Nasdaq:
CDIM, CDIMW, or "the Company"), today reported that excluding one-time
consolidation charges, losses for the three and six months ended September 30,
1996 amounted to $564,000 and $482,500 or $0.12 and $0.10 per share. Including
the one-time consolidation charges, losses for the three and six months ended
September 30, 1996 were $1,027,000 and $945,000 or $0.21 and $0.20 per share on
revenues of $327,000 and $1,340,000. On a comparative pro forma basis, the
Company generated net income of $253,000 and $404,500 or $0.05 and $0.08 per
share on revenues of $1,029,500 and $2,073,500 for the three and six months
ended September 30, 1995. Actual earnings for the three and six months ended
September 30, 1995 were $2,661,000 and $2,691,500 or $0.48 and $0.49 per share.
In September 1996, the Company announced that it would be consolidating its
Bethesda, Maryland headquarters with current operations in Massachusetts by the
end of the calendar year. $462,500 in charges, consisting of severance benefits
and fees relating to subleasing its facilities in Maryland, were recognized
during the quarter ended September 1996. The Company expects to incur an
additional $100,000 in expenses, the majority of which will be recognized
during the quarter ended December 1996, relating to its move to Massachusetts.
According to the Company's new Chairman and CEO, Igor Razboff: "The
quarterly results cannot be attributed to a lack of performance by the Company.
Its five new titles were commercially released by our licensing partners during
the quarter. The poor operating results are directly attributable to widely
reported problems in our industry, including a glut of CD-ROM titles and the
resulting intense competition for children's animated story and adventure
titles. Even though the Company's titles are distributed by Broderbund and
Davidson, leading children's CD-ROM publishers, actual sales did not meet sales
projections. In addition, software development revenues suffered as publishers
cut back on 1997 title development. Fortunately, the Company has a very strong
balance sheet and a low cost production infrastructure which should allow us to
withstand what we hope are short term adverse conditions in our industry. In
the near term we will concentrate our efforts on securing development contracts
utilizing our excellent record of top quality production and on-time delivery."
In July 1996, the Company announced the release of Gregory and the Hot Air
Balloon and Darby The Dragon, two of its interactive animated adventures, by
Broderbund Software, Inc. (Nasdaq: BROD), a leading publisher and distributor
of interactive children's entertainment and educational software for both the
home and school markets. These titles are part of a Broderbund line of
products known as StoryQuests(TM). In September 1996, three of the Company's
international folk tale titles -- Liam Finds a Story, an Irish folk tale;
Sleeping Cub's Test of Courage, a Native American folk tale; and The Princess
and the Crab, an Italian folk tale, were released for distribution by Davidson
& Associates, Inc., a subsidiary of CUC International, Inc. (NYSE: CU), another
industry leader, under its Magic Tales(TM) product line.
Capitol Multimedia, Inc. with offices in Bethesda, MD; Concord, MA; and
St. Petersburg, Russia is a high end producer of children's animated story and
adventure CD-ROM titles. The Company employs more than 150 professionals,
including animators, artists, producers, software and audio engineers, writers
and game designers.
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CAPITOL MULTIMEDIA, INC.
FINANCIAL SUMMARY
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1996 1995 1996 1995
------------------------------------ ------------------------------------
----- (unaudited)----- ----- (unaudited)-----
<S> <C> <C> <C> <C>
Net sales 327,161 1,059,162 1,339,710 2,455,343
Consolidation charges 462,566 -- 462,566 --
Operating income (loss) (1,102,438) 75,130 (1,066,301) (9,494)
Gain on sale of assets -- 2,539,820 -- 2,539,820
Net income (loss) (1,026,772) 2,660,915 (945,032) 2,691,414
Net income (loss) per share (.21) .48 (.20) .49
Weighted average shares outstanding 4,832,065 5,650,842 4,832,065 5,645,442
<CAPTION>
SEPT 30 MARCH 31
1996 1996
----------------------------------------
-- (unaudited) --
<S> <C> <C>
Current assets 4,913,785 5,502,115
Total assets 6,632,246 7,145,485
Total liabilities (including $462,566
accrual for consolidation charges at
September 30, 1996) 768,087 336,294
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
PRO FORMA FINANCIAL SUMMARY
(EXCLUDING PROFESSIONAL CD-i OPERATIONS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1996 1995 1996 1995
------------------------------------- ----------------------------------
----- (unaudited)----- ----- (unaudited)-----
<S> <C> <C> <C> <C>
Net sales 327,161 1,029,467 1,339,710 2,073,598
Consolidation Charges 462,566 -- 462,566 --
Operating income (loss) (1,102,438) 178,887 (1,066,301) 268,352
Net income (loss) (1,026,772) 253,153 (945,032) 404,650
Net income (loss) per share (.21) .05 (.20) .08
Weighted average shares outstanding 4,832,065 4,821,677 4,832,065 4,818,316
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
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CAPITOL MULTIEMEDIA, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30 MARCH 31
1996 1996
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(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,341,216 $ 1,961,393
Short-term investments 2,440,930 2,362,975
Accounts receivable, less allowance for doubtful accounts of $6,000 and
$12,500 at September 30, 1996 and March 31, 1996 570,913 503,306
Notes and guaranteed royalties receivable 500,000 500,000
Prepaid expenses and other current assets 60,726 174,441
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Total current assets 4,913,785 5,502,115
Property and equipment:
Technical equipment 1,157,150 1,070,337
Leasehold Improvements 24,956 --
Furniture and fixtures 44,163 44,163
Other equipment 110,501 94,176
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1,336,770 1,208,676
Less: accumulated depreciation and amortization (933,876) (841,861)
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402,894 366,815
Notes and guaranteed royalties receivable 1,283,086 1,244,074
Other long-term assets 32,481 32,481
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Total assets $ 6,632,246 $ 7,145,485
=======================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 656,523 $ 173,019
Unearned revenue and deferred rent 21,343 66,160
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Total current liabilities 677,866 239,179
Other long-term liabilities 90,221 97,115
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Total liabilities 768,087 336,294
Commitments -- --
Shareholders' equity:
Common stock, $.10 par value; 25,000,000 and 10,000,000 shares
authorized and 5,657,153 shares issued at September 30, 1996 and
March 31, 1996 565,715 565,715
Additional paid-in capital 15,817,202 15,817,202
Accumulated deficit (8,468,414) (7,523,382)
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7,914,503 8,859,535
Less treasury stock, at cost, 825,088 shares at
September 30, 1996 and March 31, 1996 (2,050,344) (2,050,344)
---------------------------------------
Total shareholders' equity 5,864,159 6,809,191
---------------------------------------
Total liabilities and shareholders' equity $ 6,632,246 $ 7,145,485
=======================================
</TABLE>
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CAPITOL MULTIMEDIA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMEBER 30 SEPTEMBER 30
1996 1995 1996 1995
------------------------------------- -------------------------------------
-----(Unaudited)----- -----(Unaudited)-----
<S> <C> <C> <C> <C>
Net sales $ 327,161 $1,059,162 $ 1,339,710 $2,455,343
Operating expenses:
Research and development 619,042 521,823 1,168,194 1,318,091
Depreciation and amortization 48,389 80,552 92,015 266,709
General and administrative 299,602 381,657 683,236 880,037
Consolidation charges 462,566 -- 462,566 --
------------------------------------- -------------------------------------
Total operating expenses 1,429,599 984,032 2,406,011 2,464,837
Operating income (loss) (1,102,438) 75,130 (1,066,301) (9,494)
Other income:
Interest and other income, net 75,666 99,205 135,669 214,328
Gain on sale of assets -- 2,539,820 -- 2,539,820
------------------------------------- -------------------------------------
Income (loss) before income taxes (1,026,772) 2,714,155 (930,632) 2,744,654
Income taxes -- 53,240 14,400 53,240
------------------------------------- -------------------------------------
Net income (loss) $(1,026,772) $2,660,915 $ (945,032) $2,691,414
===================================== =====================================
Net income (loss) per share (.21) .48 (.20) .49
Weighted average shares outstanding 4,832,065 5,650,842 4,832,065 5,645,442
</TABLE>
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(EXCLUDING PROFESSIONAL CD-i OPERATIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1996 1995 1996 1995
--------------------------------------- -----------------------------------
-----(Unaudited)----- -----(Unaudited)-----
<S> <C> <C> <C> <C>
Software development revenues 100,409 498,445 723,909 1,279,595
Consumer software sales & royalties 226,752 375,347 615,801 561,387
CD-i licensing & distribution fees -- 155,675 -- 232,616
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Net sales $ 327,161 $1,029,467 $ 1,339,710 $2,073,598
Operating expenses:
Research and development 619,042 468,400 1,168,194 980,382
Depreciation and amortization 48,389 29,968 92,015 63,982
General and administrative 299,602 352,212 683,236 760,882
Consolidation charges 462,566 -- 462,566 --
--------------------------------------- -----------------------------------
Total operating expenses 1,429,599 850,580 2,406,011 1,805,246
Operating income (loss) (1,102,438) 178,887 (1,066,301) 268,352
Other income:
Interest and other income, net 75,666 79,432 135,669 144,556
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Income (loss) before income taxes (1,026,772) 258,319 (930,632) 412,908
Income taxes -- 5,166 14,400 8,258
--------------------------------------- -----------------------------------
Net income (loss) $ 1,026,772) $ 253,153 $ (945,032) $ 404,650
Net income (loss) per share (.21) .05 (.20) .08
Weighted average shares outstanding 4,832,065 4,821,677 4,832,065 4,818,316
</TABLE>
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