<PAGE> 1
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 Quarterly Period Ended September 30, 1996
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 0-23000
-------
The Harvey Entertainment Company
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 95-4217605
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1999 Avenue of the Stars, Suite 2050, Los Angeles, California 90067-6055
- -------------------------------------------------------------------------------
(Address of principal executive offices)
Registrant's phone number, including area code (310) 789-1990
------------------------------
100 Wilshire Boulevard, Suite 1460, Santa Monica, California 90401-1115
- -------------------------------------------------------------------------------
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 Securities Exchange Act of
1934 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.
<TABLE>
<CAPTION>
Class Outstanding at September 30, 1996
- ------- ---------------------------------
<S> <C>
Common 3,641,600
</TABLE>
<PAGE> 2
THE HARVEY ENTERTAINMENT COMPANY AND SUBSIDIARY
INDEX
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<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I
FINANCIAL INFORMATION
Consolidated Balance Sheets - September 30, 1996 and December 31, 1995 1-2
Consolidated Income Statements - Three and Nine Months Ended September 30, 1996 and 1995 3
Consolidated Statements of Cash Flows - Nine Months Ended September 30, 1996 and 1995 4
Notes to Consolidated Financial Statements 5
Management's Discussion and Analysis of Financial Condition and Results of Operations 6-10
PART II
OTHER INFORMATION 11
</TABLE>
<PAGE> 3
THE HARVEY ENTERTAINMENT COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
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<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
ASSETS 1996 1995
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 7,200,000 $ 4,367,000
Accounts receivable, net of allowance for doubtful accounts
of $628,000 and $622,000 in 1996 and 1995, respectively 2,037,000 3,465,000
Prepaid expenses 193,000 171,000
Other current assets 98,000 128,000
----------- -----------
Total current assets 9,528,000 8,131,000
LONG-TERM ACCOUNTS RECEIVABLE 373,000 642,000
FILM LIBRARY, Net of accumulated amortization of $2,738,000
and $2,295,000 in 1996 and 1995, respectively 9,676,000 8,656,000
GOODWILL, Net of accumulated amortization of $930,000
and $833,000 in 1996 and 1995, respectively 1,665,000 1,762,000
TRADEMARKS AND COPYRIGHTS, Net of accumulated
amortization of $149,000 and $181,000 in 1996 and 1995,
respectively 489,000 374,000
FURNITURE AND EQUIPMENT, Net of accumulated
depreciation of $246,000 and $207,000 in 1996 and 1995,
respectively 245,000 170,000
OTHER ASSETS 109,000 87,000
----------- -----------
TOTAL $22,085,000 $19,822,000
=========== ===========
</TABLE>
See notes to consolidated financial statements.
(Continued)
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<PAGE> 4
THE HARVEY ENTERTAINMENT COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
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<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1995
(UNAUDITED)
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 828,000 $ 789,000
Income taxes payable 39,000 87,000
----------- -----------
Total current liabilities 867,000 876,000
DEFERRED INCOME TAXES 2,259,000 1,724,000
ACCRUED RENT 47,000 63,000
----------- -----------
Total liabilities 3,173,000 2,663,000
----------- -----------
STOCKHOLDERS' EQUITY:
Preferred stock $1 par value, authorized 3,000,000, none issued
Common stock, no par value, 10,000,000 shares authorized,
3,641,600 issued and outstanding at September 30, 1996 and
3,629,400 at December 31, 1995 18,946,000 18,844,000
Accumulated deficit (34,000) (1,685,000)
----------- -----------
Total stockholders' equity 18,912,000 17,159,000
----------- -----------
TOTAL $22,085,000 $19,822,000
=========== ===========
</TABLE>
See notes to consolidated financial statements. (Concluded)
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<PAGE> 5
THE HARVEY ENTERTAINMENT COMPANY AND SUBSIDIARY
<TABLE>
<CAPTION>
CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
- -------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------------- -----------------------------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Filmed entertainment $ 392,000 $ 1,002,000 $ 5,348,000 $ 2,824,000
Merchandising 943,000 869,000 2,487,000 3,543,000
----------- ----------- ----------- -----------
Net operating revenues 1,335,000 1,871,000 7,835,000 6,367,000
----------- ----------- ----------- -----------
Cost of sales 563,000 731,000 1,998,000 2,400,000
Selling, general and administrative expenses 711,000 617,000 2,643,000 2,009,000
Amortization of film library, goodwill,
trademarks, copyrights and other 123,000 194,000 578,000 650,000
Depreciation expense 15,000 15,000 39,000 46,000
----------- ----------- ----------- -----------
Total operating expenses 1,412,000 1,557,000 5,258,000 5,105,000
----------- ----------- ----------- -----------
INCOME (LOSS) FROM OPERATIONS (77,000) 314,000 2,577,000 1,262,000
OTHER INCOME 139,000 64,000 292,000 167,000
----------- ----------- ----------- -----------
INCOME BEFORE PROVISION
FOR INCOME TAXES 62,000 378,000 2,869,000 1,429,000
PROVISION FOR INCOME TAXES (39,000) (164,000) (1,216,000) (612,000)
----------- ----------- ----------- -----------
NET INCOME $ 23,000 $ 214,000 $ 1,653,000 $ 817,000
=========== =========== =========== ===========
WEIGHTED AVERAGE SHARES
OUTSTANDING 3,862,000 4,016,000 3,869,000 3,975,000
=========== =========== =========== ===========
NET INCOME PER SHARE $ 0.01 $ 0.05 $ 0.43 $ 0.21
=========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
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<PAGE> 6
THE HARVEY ENTERTAINMENT COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
---------------------------
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,653,000 $ 817,000
Adjustment to reconcile net income to net cash provided by
operating activities:
Depreciation 39,000 46,000
Amortization on film library, goodwill, trademarks and
copyrights and other 578,000 650,000
Warrants issued for services 45,000
Changes in operating assets and liabilities:
Accounts receivable 1,697,000 (1,436,000)
Inventories - 58,000
Prepaid expenses and other assets (14,000) 15,000
Accounts payable and accrued expenses 19,000 (123,000)
Income tax liabilities 487,000 614,000
------------ -----------
Net cash provided by operating activities 4,504,000 641,000
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of marketable securities - 1,435,000
Purchase of furniture and equipment (114,000) (90,000)
Investments in trademarks and copyrights and film library (1,614,000) (19,000)
------------ -----------
Net cash (used in) provided by investing activities (1,728,000) 1,326,000
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock and warrants 57,000 835,000
Deferred offering costs - (257,000)
------------ -----------
Net cash provided by financing activities 57,000 578,000
------------ -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 2,833,000 2,545,000
CASH AND CASH EQUIVALENTS, Beginning of period 4,367,000 605,000
------------ -----------
CASH AND CASH EQUIVALENTS, End of period $ 7,200,000 $ 3,150,000
============ ===========
</TABLE>
See notes to consolidated financial statements.
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<PAGE> 7
THE HARVEY ENTERTAINMENT COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
SUMMARY OF ACCOUNTING POLICIES
The consolidated financial statements of The Harvey Entertainment Company and
Subsidiary (the "Company") have been prepared in accordance with generally
accepted accounting principles for interim financial information. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. The
accompanying financial statements should be read in conjunction with the more
detailed 1995 financial statements and related footnotes included in the
Company's Form 10-KSB filed with the Securities and Exchange Commission on
March 29, 1996.
In the opinion of the Company, the accompanying unaudited financial statements
as of September 30, 1996 and for the three and nine months ended September 30,
1996 and 1995 contain all adjustments, which include normal recurring accruals,
necessary to present fairly the financial position of the Company as of
September 30, 1996 and the results of operations and cash flows for the nine
months ended September 30, 1996 and 1995.
The results of operations for the interim periods of the Company's fiscal year
are not necessarily indicative of the results to be expected for the entire
year.
* * * * * *
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<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Results of Operations - The Company's net operating revenues in the 1996 and
1995 three month periods were $1,335,000 and $1,871,000 respectively, a
decrease of $536,000. The decrease in revenues from 1995 to 1996 includes and
a decrease of $610,000 in filmed entertainment revenues which is offset by an
increase of $74,000 in merchandising revenues.
Revenues - Net merchandising revenues were $943,000 and $869,000 in 1996 and
1995, respectively, an increase of $74,000. The increase in merchandising
revenue was due to new activity related to the Company's Casper licensing
program. Although merchandising licenses are generally granted for a period of
one to three years, all minimum guaranteed license revenues are recognized when
the license period begins, provided certain conditions have been met. Due to
this accounting treatment, revenue fluctuations from the Company's
merchandising activities will likely recur in the future on a quarterly and
annual basis. A number of the licensees participating in the Company's
worldwide Casper merchandising program have generated revenues which exceed
minimum guaranteed amounts, resulting in additional revenue to the Company.
The Company cannot accurately project future revenues derived from Casper or
any other merchandising revenues because the ongoing success of the
merchandising program is in part dependent upon anticipated enhancements to the
attractiveness and marketability of the Harvey Classic Characters. In
addition, there can be no assurance that merchandising revenues will increase
or continue at the same level in the future because many of the Casper licenses
were entered into in connection with the initial release of the Casper motion
picture and expire in the next 12 months, and it is not known whether or how
many of such licenses will be renewed.
Net filmed entertainment revenues were $392,000 and $1,002,000 in 1996 and
1995, respectively, a decrease of $610,000. Foreign broadcast license revenues
from the Harvey Classic Film Library and The Baby Huey Show accounted for
$251,000 in 1996 and $560,000 in 1995, a decrease of $309,000. Although
foreign broadcasting licenses are generally granted for a period of one to five
years, all revenues are recognized when the license period begins, provided
certain conditions have been met. Due to this accounting treatment, revenue
fluctuations will likely recur in the future on a quarterly and annual basis.
Revenues associated with the domestic barter sales of the Richie Rich animated
series accounted for $74,000. Richie Rich premiered in September 1996 and airs
weekly in syndication throughout the country. There were no such revenues in
1995. Casper animation license fees were $65,000 and $270,000 in 1996 and 1995
respectively. The decrease in Casper animation license fees is due to fewer
shows being produced in the period. Revenues associated with the domestic
barter sales of The Baby Huey Show were $147,000 in 1995. There were no such
revenues in the 1996 comparable period as the show's season ended. The balance
of 1996 revenues consist of residuals from the Casper and Friends animated
series. The balance of 1995 revenues consist of residuals from the Casper and
Friends animated series and Richie Rich cartoon royalties from Hanna-Barbera.
Cost of Sales - Merchandising costs of sales were $227,000 and $316,000 in 1996
and 1995, respectively. The decrease in cost of sales is due to MCA not
receiving a commission on certain licenses. As a percentage of merchandising
revenues, cost of sales were 24% and 36%, respectively.
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<PAGE> 9
Costs of sales relating to filmed entertainment revenues were $336,000 and
$415,000 in 1996 and 1995, respectively. The decrease in cost of sales is due
to a decrease in filmed entertainment activity for the period.
Selling, General and Administrative Expenses - Selling, general and
administrative expenses (SG&A) were $711,000 and $617,000 for 1996 and 1995,
respectively, an increase of $94,000. The increase in SG&A is due to an
increase in legal expenses related to the Company's litigation.
Depreciation and Amortization - Depreciation expense was $15,000 in 1996 and
1995. Amortization of the film library was $78,000 and $150,000 in 1996 and
1995, respectively. The decrease in amortization is due to the decrease in
revenue derived from the film library, which is being amortized in accordance
with the individual film forecast method. Amortization of trademarks,
copyrights and other was $12,000 in 1996 and $11,000 in 1995. Amortization of
goodwill was $33,000 in both 1996 and 1995.
Other Income - Other income, primarily interest income, was $139,000 and
$64,000 in 1996 and 1995, respectively. The increase in other income was due to
higher cash balances for the period, which generated increased interest income.
Income Taxes - Provision for income taxes was $39,000 and $164,000 in 1996 and
1995, respectively. The decrease in provision for income taxes is due to lower
pretax income for the period.
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<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Results of Operations - The Company's net operating revenues in the 1996 and
1995 nine month periods were $7,835,000 and $6,367,000 respectively, an
increase of $1,468,000. The increase in revenues from 1995 to 1996 includes a
decrease of $1,056,000 in merchandising revenues and an increase of $2,524,000
in filmed entertainment revenues.
Revenues - Net merchandising revenues were $2,487,000 and $3,543,000 in 1996
and 1995, respectively, a decrease of $1,056,000. The decrease in
merchandising revenue was due to a decline in minimum license guarantees from
the worldwide merchandising program for Casper. Although merchandising
licenses are generally granted for a period of one to three years, all minimum
guaranteed license revenues are recognized when the license period begins,
provided certain conditions have been met. Due to this accounting treatment,
revenue fluctuations from the Company's merchandising activities will likely
recur in the future on a quarterly and annual basis. A number of the licensees
participating in the Company's worldwide Casper merchandising program have
generated revenues which exceed minimum guaranteed amounts, resulting in
additional revenue to the Company. The Company cannot accurately project
future revenues derived from Casper or any other merchandising revenues because
the ongoing success of the merchandising program is in part dependent upon
anticipated enhancements to the attractiveness and marketability of the Harvey
Classic Characters. In addition, there can be no assurance that merchandising
revenues will increase or continue at the same level in the future because many
of the Casper licenses were entered into in connection with the initial release
of the Casper motion picture and expire in the next 12 months, and it is not
known whether or how many of such licenses will be renewed.
Net filmed entertainment revenues were $5,348,000 and $2,824,000 in 1996 and
1995, respectively, an increase of $2,524,000. The increase in filmed
entertainment revenues was due to the Company entering into an agreement with
Saban Entertainment to co-produce two feature length, live action
direct-to-video films based on the Company's Casper and Richie Rich characters.
The Company received a $3,300,000 non-refundable advance from Saban against 50%
of net receipts after production, marketing and out of pocket third party
distribution expenses are recouped. There were no such revenues in 1995. Also
contributing to the increase in revenues was the distribution agreement entered
into with MCA Television Ltd. wherein MCA has the exclusive right to distribute
for television broadcast, 56 episodes of Casper and Friends in the United
States, until June 1998. The Company was paid a minimum non-refundable
guarantee of $840,000 for the license. There were no such revenues in the 1995
comparable period. Foreign broadcast license revenues from the Harvey Classic
Film Library and The Baby Huey Show accounted for $700,000 in 1996 and
$1,850,000 in 1995, a decrease of $1,150,000. Although foreign broadcasting
licenses are generally granted for a period of one to five years, all revenues
are recognized when the license period begins, provided certain conditions have
been met. Due to this accounting treatment, revenue fluctuations will likely
recur in the future on a quarterly and annual basis. Revenues associated with
the domestic barter sales of The Baby Huey Show accounted for $101,000 in 1996
and $609,000 in 1995. The decrease in revenues is due to the Company receiving
100% of the show's revenues in 1995 versus 25% in 1996. The reduction in
revenues is due to the 1996 show being produced and financed by MCA Inc.'s
Universal Cartoon Studios. The show's season ended in the third quarter of
1996. Revenues associated with the domestic barter sales of the Richie Rich
animated series accounted for $74,000. Richie Rich premiered in September 1996
and airs weekly in syndication throughout the country. There were no such
revenues in 1995. In January 1996, Warner Bros., which produced the Richie
Rich motion picture, exercised its right for the theatrical motion picture
sequel to Richie Rich and paid the Company $200,000. There were no comparable
revenues for 1995. Casper animation license fees were $130,000 and
- 8 -
<PAGE> 11
$330,000 in 1996 and 1995 respectively. The decrease in revenues is due to
fewer shows being produced in the period. The balance of 1996 revenues consist
of residuals from the Casper and Friends animated series. The balance of 1995
revenues consist of residuals from the Casper and Friends animated series and
Richie Rich cartoon royalties from Hanna-Barbera.
Cost of Sales - Merchandising costs of sales were $669,000 and $1,027,000 in
1996 and 1995, respectively. The decrease in cost of sales is due to a
decrease in merchandising activity for the period.
Costs of sales relating to filmed entertainment revenues were $1,329,000 and
$1,373,000 in 1996 and 1995, respectively. As a percentage of net filmed
entertainment revenues, cost of sales were 25% and 49% in 1996 and 1995,
respectively. The decrease in costs of sales as a percentage of revenues is
due to there being no cost of sales associated with the MCA domestic television
license or Richie Rich theatrical license fee. The Company paid $550,000 in
connection with the Saban direct-to-video agreement of which $350,000 was paid
to officers of the Company as a producer's fee.
Selling, General and Administrative Expenses - Selling, general and
administrative expenses (SG&A) were $2,643,000 and $2,009,000 for 1996 and
1995, respectively, an increase of $634,000. The increase in SG&A is due to an
increase in legal expenses related to the Company's litigation.
Depreciation and Amortization - Depreciation expense was $39,000 and $46,000 in
1996 and 1995, respectively. Amortization of the film library was $443,000 and
$521,000 in 1996 and 1995, respectively. The decrease in amortization is due to
the decrease in revenue derived from the film library, which is being amortized
in accordance with the individual film forecast method. Amortization of
trademarks, copyrights and other was $38,000 in 1996 and $32,000 in 1995.
Amortization of goodwill was $97,000 in both 1996 and 1995.
Other Income - Other income, primarily interest income, was $292,000 and
$167,000 in 1996 and 1995, respectively. The increase in other income was due
to higher cash balances for the period, which generated increased interest
income.
Income Taxes - Provision for income taxes was $1,216,000 and $612,000 in 1996
and 1995, respectively. The increase in the provision for income taxes is due
to the Company's increased profitability.
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<PAGE> 12
LIQUIDITY AND CAPITAL RESOURCES FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
AND 1995
Net cash provided by operating activities was $4,504,000 and $641,000 in 1996
and 1995, respectively. Cash generated from operations was primarily due to
the Company producing net income for the first three quarters of 1996 and 1995
and proceeds from the collection of receivables.
The Company's long-term accounts receivables are attributable to the portion of
merchandising activity with payment terms greater than one year. The Company
believes that obligors liable on all receivables are of good quality and that
the allowance for doubtful accounts at September 30, 1996 in the amount of
$628,000 is adequate. The Company continually reevaluates its receivables to
reassess its allowance for bad debts.
In April of 1996, the Company entered into an agreement with a third party to
produce 13 animated Richie Rich shorts. The total cost of production is
projected to be $1,920,000. The Company has paid $1,388,000 of that total as
of September 30, 1996 and will fund the balance with its working capital.
The Company has a $2,500,000 revolving credit facility (the "Revolving
Facility") with City National Bank, which expires in May 1997. Interest on
advances made under the Revolving Facility accrues at 1% above the prime rate
as reported by the lender. The credit agreement obligates the Company to
maintain a minimum net worth and current ratio and disallows the payment of
dividends. The Company has not drawn on this facility. The Revolving Facility
is secured by substantially all of the assets of the Company.
- 10 -
<PAGE> 13
OTHER INFORMATION
Item 1 - 1. Fleischer/Betty Boop Litigation. On November 13, 1995, the
Company filed an action against Fleischer Studios, Inc. and
Stanley Handman for breach of contract, fraud, an accounting and
copyright infringement in connection with the copyright to "Betty
Boop." In the action, the Company seeks rescission of the
agreement by which the Company transferred its rights in "Betty
Boop" to Fleischer or alternatively to recover its 10%
participation in the exploitation of "Betty Boop" from 1980 to
the present pursuant to an earlier agreement. Defendants have
answered denying the material allegations of the complaint and
Fleischer filed an amended counterclaim against the Company for
breach of the implied covenant of good faith and fair dealing and
declaratory relief. Discovery is ongoing. Defendants have filed
a summary judgment motion with respect to the Company's claims.
The Company cannot at this time predict the outcome of this
litigation with any certainty.
1. Franklin Litigation. In September 1994, the Company filed suit
against Jeffrey Franklin, a former director, and certain related
entities alleging various claims in connection with an agency
agreement between the Company and Franklin. In addition, the
Company has alleged that Franklin wrongfully usurped corporate
opportunities belonging to the Company. The Company filed a
related claim against Franklin's business partner Stephen
Waterman in May, 1996. Franklin has denied the Company's
allegations and has caused an entity he controls, ATI Equities to
file a cross-complaint against the Company and certain present
and former directors alleging, among other things, breach of
contract. The litigation is still in the discovery stages and
the Company cannot at this time predict the outcome of this
litigation with any certainty.
2. Shareholder Litigation. On August 4, 1995, certain shareholders
of the Company filed a class-action complaint against the
Company. As of November 7, 1996, an Order of Dismissal was
pending signature by the Court. The Company believes that such
order will be signed shortly.
3. Brown Litigation. On July 24, 1995, Gregory Brown filed a
lawsuit against the Company. On or about November 15, 1995, the
District Court granted the Company's motion to dismiss Brown's
complaint in full and subsequently awarded the Company nearly
$70,000 of its attorneys' fees and costs. Brown filed an appeal
with respect to the Court's decision. On or about August 19,
1996, the Court of Appeal for the Ninth Circuit dismissed Brown's
appeal.
Items 2 through 4 are omitted as not applicable.
Item 5 - Other Information
None
Item 6(a)- None
Item 6(b)- Report on Form 8-K
None
- 11 -
<PAGE> 14
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 thereunto duly
authorized.
THE HARVEY ENTERTAINMENT COMPANY
AND SUBSIDIARY (Registrant)
November 13, 1996 /s/Jeffrey A. Montgomery
-------------------------------------
Jeffrey A. Montgomery
President and Chief Executive Officer
November 13, 1996 /s/Gregory M. Yulish
-------------------------------------
Gregory M. Yulish
Executive Vice President and
Chief Financial Officer
- 12 -
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 7,200
<SECURITIES> 0
<RECEIVABLES> 2,665
<ALLOWANCES> 628
<INVENTORY> 0
<CURRENT-ASSETS> 9,528
<PP&E> 491
<DEPRECIATION> 246
<TOTAL-ASSETS> 22,085
<CURRENT-LIABILITIES> 867
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 18,912
<TOTAL-LIABILITY-AND-EQUITY> 22,085
<SALES> 7,835
<TOTAL-REVENUES> 7,835
<CGS> 1,998
<TOTAL-COSTS> 1,998
<OTHER-EXPENSES> 2,643
<LOSS-PROVISION> 340
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,869
<INCOME-TAX> 1,216
<INCOME-CONTINUING> 2,577
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,653
<EPS-PRIMARY> 0.43
<EPS-DILUTED> 0.43
</TABLE>