13
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 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: 0-26902
NIMBUS CD INTERNATIONAL, INC.
(exact name of registrant as specified in its charter)
Delaware 54-1651183
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
State Route 629, Guildford Farm
Ruckersville, Virginia 22968
(Address of principal executive offices)
Telephone Number (804) 985-1100
(Registrant's telephone number, including area code)
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 _____
-----
As of November 11, 1996 there were 20,868,571 shares of the Registrant's
Common Stock outstanding.
<PAGE>
NIMBUS CD INTERNATIONAL, INC.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements:
Condensed Consolidated Balance Sheets
September 30, 1996 and March 31, 1996................3
Condensed Consolidated Statements of Income
Three and six months ended September 30, 1996 and 1995 4
Condensed Consolidated Statements of Cash Flows Six months ended September
30, 1996 and 1995.........5
Notes to Condensed Consolidated Financial Statements.6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations............................8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.............................11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information.............................12
Item 6. Exhibits and Reports on Form 8-K..............12
Signatures..........................................13
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. Condensed Consolidated Financial Statements
NIMBUS CD INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
<TABLE>
ASSETS
<CAPTION>
September 30, March 31,
1996 1996
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,009 $ 3,593
Accounts and notes receivable, less allowances
for doubtful accounts of $2,244 and $2,014 28,944 26,121
Inventories 3,254 2,177
Prepaid expenses 1,371 729
Deferred income taxes 1,784 1,766
--- ----- --- -----
Total current assets 36,362 34,386
------ - ------
Property, plant, and equipment, net 60,256 50,809
Other assets and intangibles 6,403 5,558
--- ----- --- -----
$103,021 $ 90,753
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable 8,178 6,437
Current portion of long-term debt 3,976 1,463
Accrued expenses and other liabilities 8,549 7,297
Income taxes payable 5,332 3,427
--- ----- --- -----
Total current liabilities 26,035 18,624
- ------ - ------
Long-term debt 23,877 24,668
Deferred income taxes 4,420 4,395
Stockholders' equity:
Preferred stock, $0.01 par value; authorized
2,000,000 shares; no shares issued or
outstanding
Common stock, $0.01 par value; 60,000,000
shares authorized; 39,011,782 and 38,973,173
shares issued; 20,868,571 and 20,829,962 390 390
outstanding
Paid-in capital 66,775 66,734
Retained earnings 28,350 22,794
Cumulative foreign currency translation 267 241
------- --- ------- ---
adjustments
95,782 90,159
Treasury stock, at cost, 18,143,211 shares (47,093) (47,093)
Total stockholders' equity 48,689 43,066
$103,021 $ 90,753
========= ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
NIMBUS CD INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts)
(Unaudited)
<TABLE>
Three months Six months
ended September ended
30, September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net sales $31,361 $30,545 $60,590 $51,852
Cost of goods sold 21,960 21,563 43,237 35,659
------ ------ ------ ------
Gross profit 9,401 8,982 17,353 16,193
Selling, general and administrative 3,360 2,909 7,579 6,591
- ----- - ----- - ----- - -----
expenses
Operating income 6,041 6,073 9,774 9,602
Interest expense 671 1,735 1,271 3,506
Other (income) expense, net (110) (23) (190) 91
-- ----- --- ---- -- ----- ----- --
Income before income taxes 5,480 4,361 8,693 6,005
Provision for income taxes 1,933 1,552 3,137 2,202
-- ----- -- ----- -- ----- -- -----
Net income $3,547 $2,809 $5,556 $3,803
====== ====== ====== ======
Net income (1995 is pro forma for the $3,547 $3,451 $5,556 $5,109
====== ====== ====== ======
Offering)
Earnings per share (1995 is pro forma
for the Offering) $ 0.15 $ 0.15 $ 0.24 $ 0.22
======= ======= ======= =======
Weighted average shares outstanding 23,052 22,743 23,037 22,743
====== ====== ====== ======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
NIMBUS CD INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
Six months ended
September 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income $5,556 $3,803
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 4,296 3,694
Deferred income taxes 1,156
Gain on settlement of royalty obligations (1,744)
Other, net 39 25
Change in operating assets and liabilities, (1995 is net of acquisition):
Accounts receivable (2,706) (7,506)
Inventories (1,051) (1,577)
Prepaid expenses (617) 26
Accounts payable 1,735 1,720
Accrued expenses 1,243 451
Income taxes payable 1,812 860
-- ----- ----- ---
Net cash provided by operating activities 10,307 908
------ ----- ---
Cash flows from investing activities:
Purchase of property, plant and equipment (12,940) (6,692)
Acquisition of business, net of cash acquired (2,295)
Expenditures for computer software (1,230)
Other investing activities (12) (293)
----------- --- -----
Net cash used in investing activities (14,182) (9,280)
-------- -------
Cash flows from financing activities:
Proceeds from exercise of stock options 41
Revolving credit borrowings, net 1,250 5,051
Proceeds of debt 2,000
Repayment of debt (500)
Payment of costs related to initial public (132)
offering
Payment of financing fees _____ (301)
--- -----
Net cash provided by financing activities 1,291 6,118
- ----- -- -----
Net increase (decrease) in cash (2,584) (2,254)
------- -------
Cash and cash equivalents, beginning of period 3,593 2,318
-- ----- -- -----
Cash and cash equivalents, end of period $1,009 $ 64
====== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
NIMBUS CD INTERNATIONAL, INC.
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands)
(Unaudited)
1. Preparation of Interim Financial Statements
The condensed consolidated financial statements of Nimbus CD
International, Inc. (referred to as "Nimbus" or the "Company") have been
prepared in accordance with the rules and regulations of the Securities
and Exchange Commission ("SEC"). In the opinion of management, these
statements include all adjustments necessary for a fair presentation of
the financial position, operating results and cash flows of all interim
reporting periods reported herein. All such adjustments are of a normal
recurring nature. Certain information and footnote disclosures prepared in
accordance with generally accepted accounting principles have been either
condensed or omitted pursuant to SEC rules and regulations. However,
management believes that the disclosures made are adequate for a fair
presentation of results of operations and financial position. It is
suggested that these financial statements be read in conjunction with the
Company's audited financial statements and notes thereto, together with
management's discussion and analysis of financial condition and results of
operations, contained in the Company's Annual Report to Stockholders
incorporated by reference in the Company's Annual Report on Form 10-K for
the fiscal year ended March 31, 1996. The results of operations for the
three and six month periods ended September 30, 1996 are not necessarily
indicative of the results for the entire fiscal year ending March 31,
1997.
2. Inventories
Inventories consisted of the following:
<TABLE>
September 30, March 31,
1996 1996
<S> <C> <C>
Raw materials $ 2,362 $ 1,849
Work-in-process 530 263
Finished goods 362
----- ---
65
--
$ 3,254 $ 2,177
======== =======
</TABLE>
3. Property, Plant and Equipment
Property, plant and equipment consisted of the following:
<TABLE>
September 30, March 31,
1996 1996
<S> <C> <C>
Land, buildings, and improvements $ 18,783 $ 18,652
Machinery and equipment 50,831 46,986
Construction in progress 11,096
------
1,549
80,710 67,187
Less accumulated depreciation (20,454) (16,378)
-------- --------
Net property, plant and equipment $ 60,256 $ 50,809
========= ========
</TABLE>
<PAGE>
4. Commitments and Contingencies
a) Capital Expenditures: At September 30, 1996, commitments for capital
expenditures amounted to approximately $5,759.
b) Royalties: The Company is party to various licensing agreements for
technology associated with its product and the related manufacturing
process under which the Company is obligated to pay royalties ranging from
$.019 to $.048 per disc manufactured. In June 1995, the Company reached a
settlement with one licensing company and reduced its accrued liability
for this and certain other prior year royalties by $1,744. This royalty
fee adjustment is reflected in cost of goods sold.
c) Litigation and related matters: On March 18, 1996, the Company received
notification from the United States Environmental Protection Agency
("EPA") alleging that the Company is a Potentially Responsible Party
("PRP") for the cleanup of surface water contamination at the Cherokee Oil
Company Site (the "Site") in Charlotte, North Carolina which was used by
the Company for the disposal of certain byproducts of its manufacturing
processes. Subsequently, the U.S. Department of Justice notified the
Company that it intends to seek recovery of the approximately $6.4 million
environmental cleanup cost incurred at the Site from the Company and the
other PRPs, each of which is considered jointly and severally liable. The
EPA has preliminarily determined that the Company's share of the cleanup
costs, based on the volume of material contributed by the Company to the
Site, will be approximately 5% of the overall cost. The Company is
challenging the EPA's basis of allocation, but has recorded a $300
provision for settlement costs associated with the cleanup of the Site.
Management of the Company believes that the ultimate settlement of this
matter will not have a material adverse effect on the Company's financial
position or results of operations.
5. Earnings Per Share
Earnings per share is based on the weighted average number of outstanding
common shares and dilutive options and warrants, determined by the
treasury stock method using the average trading price of the Company's
common stock during the three and six months ended September 30, 1996.
6. Pro Forma Earnings Per Share
The pro forma net income per share data presented in the accompanying
condensed consolidated statement of income for the three and six month
periods ended September 30, 1995 has been computed based upon the total
number of shares issued and outstanding, net of treasury shares, at
September 30, 1995, as adjusted for the following assumptions as if they
had occurred on April 1, 1995: (i) the assumed exercise of then
outstanding warrants and stock options, determined by the treasury stock
method using the initial public offering price of $7.00 per share for
options and warrants granted within one year prior to the October 31, 1995
Offering; (ii) the issuance by the Company of 6,350,000 shares of common
stock in the Offering and 500,000 shares in a private placement; (iii) the
application by the Company of the net proceeds of the Offerings to repay
$41.7 million of outstanding debt; (iv) an assumed average outstanding
borrowing of $28,300 at an average interest rate of 9.2%, resulting in a
reduction of interest expense of $1,035 ($642 net of tax) and $2,106
($1,306 net of tax) for the fiscal quarter and six month period ended
September 30, 1995.
Historical net income per share data for the fiscal 1995 periods has been
omitted as the historical capitalization of the Company prior to the
Offering and Private Placement is not indicative of its capital structure
following such events.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
Three Months Ended June 30, 1996 Compared to Three Months Ended June 30, 1995
Net Sales. Total discs sold increased 11.1% to 36.9 million discs in the three
months ended September 30, 1996 from 33.2 million discs in the same period of
1995. The increase was primarily due to a 23.1% increase in CD-ROM unit sales to
19.7 million discs in the three months ended September 30, 1996 from 16.0
million discs in the same period of 1995. CD-Audio unit sales decreased 0.5% to
17.2 million units in the three months ended September 30, 1996 from 17.3
million units in the same period of 1995. In the United States, CD-ROM volume
increased 20.9% to 15.6 million discs in the second fiscal quarter of 1997 from
12.9 million discs in the same period of fiscal 1996. United Kingdom CD-ROM
volume increased 35.5% to 4.2 million discs from 3.1 million discs. CD-Audio
volume decreased in the United States by 2.4% to 8.1 million discs in the three
months ended September 30, 1996 from 8.3 million discs while the United Kingdom
experienced a 1.1% increase in CD-Audio sales units to 9.0 million discs during
the second quarter of fiscal 1997 from 8.9 million units in the same period of
fiscal 1996. Net sales increased 2.9% to $31.4 million in the three months ended
September 30, 1996 from $30.5 million in the same period of 1995. CD revenues
increased 3.1% to $29.8 million in the three months ended September 30, 1996
from $28.9 million in the second quarter of fiscal 1996, while turnkey and other
related services of Nimbus Software Services, Inc. ("NSS"), acquired in August
1995, contributed $1.5 million and $1.3 million of revenues for the three month
periods ended September 30, 1996 and 1995, respectively. The increase in net
sales is due to the disc volume described above, offset by a decline in the
average disc selling price from $0.87 to $0.81 for the three month periods ended
September 30, 1995 and 1996, respectively, or 6.9%. The price decline reflects
an industry increase in production capacity in both North America and Europe, as
well as the increased number of unpackaged discs sold to equipment manufacturers
which are included with the sales of CD-ROM drives. In addition, the Company has
realized lower disc prices under a vendor supply agreement, under which cost
efficiencies resulting from increased production volumes are reflected in the
disc sales price.
The Company believes that disc sales in its third fiscal quarter ending December
31, 1996 will continue to reflect growth in its CD-ROM volume. While the Company
expects continued strong demand for CD-ROM and CD-Audio products, net revenues
in its third fiscal quarter continue to be dependent on product sales and
packaging mix, and may be impacted by the effect of changes in demand for
CD-Audio and CD-ROM products in the marketplace.
Gross Profit. Gross profit increased 4.4% to $9.4 million in the three months
ended September 30, 1996 from $9.0 million in the same period of 1995. Gross
profit as a percent of net sales increased to 30.0% in the three months ended
September 30, 1996 from 29.4% in the same period of 1995. The Company's gross
profit margin during the second quarter of fiscal 1997 was unfavorably impacted
by the absorption of factory overhead charges at the Sunnyvale facility
resulting from increases in labor and equipment to achieve full CD capacity
capability, which was not supported by disc volumes. Exclusive of the Sunnyvale
facility, gross profit as a percent of sales was 33.8% and 30.2% for the
quarters ended September 30, 1996 and 1995, respectively. The improved gross
margin on CD replication sales was attributable to reduced raw material costs
and increased per unit overhead efficiencies resulting from higher unit volumes.
The Company anticipates improvement in gross margin as production volumes at the
Sunnyvale facility increase in the third fiscal quarter.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 17.2% to $3.4 million in the three months
ended September 30, 1996 from $2.9 million in the same period of 1995. As a
percentage of net sales, selling, general and administrative expenses increased
to 10.7% in the three months ended September 30, 1996 from 9.5% in the same
period of the prior year. The increase in selling, general and administrative
expenses is attributable to the addition of NSS, higher personnel costs
associated with the installation of CD production capacity at the Sunnyvale
facility, increased sales and marketing efforts in the United States, and
expanded administrative support associated with the greater number of production
facilities.
Operating Income. Operating income decreased 1.6% to $6.0 million in the three
months ended September 30, 1996 from $6.1 million in the same period of 1995.
The decrease in operating income primarily reflects the higher level of selling,
general and administrative expenses mentioned above. Operating income as a
percentage of net sales decreased 19.3% in the three months ended September 30,
1996 from 19.9% in the same period of 1995.
Interest Expenses. Interest expense decreased to $0.7 million in the three
months ended September 30, 1996 from $1.7 million in the same period of 1995.
The decrease in interest expense reflects the application of the proceeds of the
Company's initial public offering in October 1995 to repay outstanding debt.
Income Taxes. Income taxes increased to $1.9 million in the three months ended
September 30, 1996 from $1.6 million in the same period of 1995. The increase in
income tax expense is attributable to the increase in income before taxes. The
effective tax rate was 35.3% for the three months ended September 30, 1996 as
compared with 35.6% for the three month period ended September 30, 1995.
Six Months Ended September 30, 1996 and 1995
Net Sales. Total discs sold increased 27.3% to 69.9 million discs in the six
months ended September 30, 1996 from 54.9 million discs in the same period of
1995. The increase resulted primarily from a 65.1% increase in CD-ROM volume to
39.3 million discs from 23.8 million discs for the six month period ended
September 30, 1996 and 1995, respectively. The increase in CD-ROM unit sales was
experienced both in the United States, which increased 66.9% to 31.0 million
discs in fiscal 1997 from 18.6 million discs in fiscal 1996 and in the United
Kingdom which increased 56.6% to 8.3 million discs from 5.3 million discs for
the six months ended September 30, 1996 and 1995, respectively. Overall,
CD-Audio unit volume decreased 1.6% to 30.6 million units for the six months
ended September 30, 1996 from 31.1 million discs in the same period of the prior
fiscal year. The CD-Audio volume decrease was 3.3% to 14.5 million units in the
United States and remained constant at 16.1 million units in the United Kingdom
for the first six months of fiscal 1997. Net sales increased 16.8% to $60.6
million for the six months ended September 30, 1996 from $51.9 million for the
same period of 1995. Approximately $6.2 million of the sales increase is due to
the increase in disc volume offset by a decrease in the average disc selling
price from $0.92 to $0.81, or 12.0%, and $2.5 million of the increased sales is
due to turnkey and other related services of NSS, which was acquired August 31,
1995.
Gross Profit. Gross profit increased 7.4% to $17.4 million for the six month
period ended September 30, 1996 from $16.2 million in the same period of 1995.
The gross profit for the period ended September 30, 1995 included the reversal
of accrued royalties of $1.7 million to reflect a settlement reached with a
licenser of technology regarding prior royalty obligations. See Note 4(b) of
Notes to Condensed Consolidated Financial Statements. This adjustment was
partially offset by a $0.4 million writedown of obsolete production equipment.
Gross margin decreased to 28.6% in the six month period ended September 30, 1996
from 31.2% in the same period of 1995. Exclusive of the two non-recurring
adjustments noted above, gross profit as a percent of net sales for the six
month period ended September 30, 1995 was 28.6%. The Company's gross profit
margin during the six month period ended September 30, 1996 was unfavorably
impacted by the additional revenues from the turnkey and collateral related
services of NSS, which have a lower gross margin than CD replication sales, and
the absorption of factory overhead charges related to the start up of CD
capacity at the Sunnyvale facility.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 15.2% to $7.6 million in the six month period
ended September 30, 1996 from $6.6 million in the same period of 1995. The
increase in the current year includes a $0.3 million reserve for environmental
clean-up costs as well as higher administrative support and expanded sales and
marketing costs due to the greater number of production facilities. The prior
year included an increase of $0.5 million in the allowance for doubtful accounts
resulting, in part, from the filing for bankruptcy by one of the Company's
customers. As a percentage of net sales, selling, general and administrative
expenses decreased to 12.5% in the six months ended September 30, 1996 from
12.7% in the same period of 1995.
Operating Income. Operating income increased 2.1% to $9.8 million in the six
month period ended September 30, 1996 from $9.6 million in the same period of
1995. The increase in operating income primarily reflects the higher unit volume
mentioned above. Operating income as a percent of net sales declined to 16.1% in
the six months ended September 30, 1996 from 18.5% in the same period of 1995.
Interest Expense. Interest expense decreased to $1.3 million in the six months
ended September 30, 1996 from $3.5 million in the same period of 1995. The
decrease in interest expense reflects the application of the proceeds of the
Company's initial public offering in October 1995 to repay outstanding debt.
Income Taxes. Income tax expense increased to $3.1 million in the six months
ended September 30, 1996 from $2.2 million in the same period of 1995. The
effective tax rate was 36.1% for the six months ended September 30, 1996 as
compared with 36.7% for the same period of 1995. The decrease in the effective
tax rate reflects the higher percentage of income attributable to United Kingdom
operations, which has a lower statutory rate than the United States.
Liquidity and Capital Resources
Working capital was $10.3 million at September 30, 1996, compared to $15.8
million at March 31, 1996. Accounts receivable increased $2.7 million for the
six month period ended September 30, 1996 due to higher sales volumes and
inventories increased $1.1 million to support the increased level of seasonal
sales. Accounts payable and accrued expenses increased $3.0 million for the six
month period ended September 30, 1996, largely reflecting the remaining amounts
due for equipment purchases.
Capital expenditures were $14.2 million for the six month period ended September
30, 1996. Capital expenditures in fiscal 1997 are related to the installation of
CD manufacturing capacity at the Sunnyvale facility, the expansion of mastering
capacity at the Provo facility, the addition of full Digital Video Disc (DVD)
manufacturing capacity at the Charlottesville facility, and equipment purchases
to increase manufacturing process efficiencies. In addition, the Company expects
to spend approximately $2.1 million on equipment installation and implementation
costs to upgrade its worldwide management information system, and $1.0 million
to manufacture holographic CDs. The Company believes that these capital
expenditures and working capital requirements will be financed through a
combination of funds provided by operating activities and availability under its
borrowing arrangements.
Seasonality and Quarterly Information
The Company's sales are seasonal, with peak sales activity normally occurring in
the third fiscal quarter as retail chains increase inventory before the holiday
season. As a result, operating income is typically higher in the third fiscal
quarter as fixed operating costs are spread over generally higher sales volume.
In addition, in order to provide for capacity demands, long lead time production
equipment is typically ordered for delivery during the first fiscal quarter and,
to a lesser extent, the second fiscal quarter. Equipment installations generally
result in some level of production inefficiency which may have a negative impact
on margins. The effect on margins may be amplified when equipment is installed
in the lower sales volume first and second quarters. Further, pricing and unit
volumes can impact comparative quarterly financial results either positively or
negatively in a manner that may not necessarily be indicative of a full year's
results.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995
The statements included or incorporated by reference into the Company's
Securities and Exchange Commission filings and shareholder communications which
are not historical facts are forward-looking statements that involve risks and
uncertainties, including, but not limited to, the effect of changing CD
technology and the possibility that, over time, CD technology could be replaced
by another form of information storage and retrieval technology, the dependence
of the Company's growth prospects on the development of new technologies that
achieve market acceptance and create new demand for CDs and related services and
the highly competitive nature of the CD manufacturing industry which may
adversely affect prices for CDs and other aspects of the Company's business.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On March 18, 1996, the Company received notification from the United States
Environmental Protection Agency ("EPA") alleging that the Company is a
Potentially Responsible Party ("PRP") for the cleanup of surface water
contamination at the Cherokee Oil Company Site ("the Site") in Charlotte, North
Carolina which was used by the Company for the disposal of certain byproducts of
its manufacturing processes. Subsequently, the U.S. Department of Justice
notified the Company that it intends to seek recovery of the approximately $6.4
million environmental cleanup cost incurred at the Site from the Company and the
other PRPs each of which is considered jointly and severally liable. At a
meeting held June 27, 1996, the EPA indicated that it intends to allocate the
cleanup costs among the PRPs based on volume of product disposed at the site by
each PRP. The EPA has preliminarily determined that the Company's share of the
cleanup costs, based on the EPA's estimate of the volume of material contributed
by the Company to the Site, will be approximately 5% of the overall cost. The
Company has joined a group of major PRPs which has formed the Cherokee Sites
Interim Group ("The Interim Group"), which is currently seeking to reduce the
aggregate settlement costs to the major PRPs. The Company has recorded a
$300,000 provision for settlement costs associated with the cleanup of the Site.
Management of the Company believes that the ultimate settlement of this matter
will not have a material adverse effect on the Company's financial position or
results of operations.
From time to time, the Company is involved in litigation that it considers to be
in the normal course of business.
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's Annual Meeting of Shareholders held on August 6, 1996, the
following individuals were elected to the Board of Directors:
Votes For Votes Withheld
Charles Ayres 18,345,403 7,628
Darryl G. Behrman 18,345,403 7,628
Grant G. Behrman 18,345,403 7,628
Robert H. Davidson 18,345,403 7,628
David E. De Leeuw 18,345,403 7,628
Anthony V. Dub 18,345,403 7,628
Lyndon J. Faulkner 18,345,403 7,628
Robert B. Hellman, 18,345,403 7,628
Jr.
David E. King 18,345,403 7,628
George E. McCown 18,345,403 7,628
Glenn S. McKenzie 18,345,403 7,628
David B. Wilson 18,345,403 7,628
The following proposals were approved at the Company's Annual Meeting:
Affirmative Negative Votes Votes Withheld
Votes
Ratify the appointment of
Coopers & Lybrand L.L.P. as 18,344,423 4,683 3,925
independent auditors for the
fiscal year ending March 31, 1997
Item 5. Other Information
On September 1, 1996, David B. Wilson resigned from the Company's Board of
Directors.
Item 6. Exhibits and Reports on Form 8-K
A. Exhibit 11 - Computation of Net Income Per Share of Common Stock
B. Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended September
30, 1996.
<PAGE>
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.
Dated: November 12, 1996
...... NIMBUS CD INTERNATIONAL, INC.
...... (Registrant)
...... /s/ L. Steven Minkel
--------------------
L. Steven Minkel
...... Executive Vice President and
...... Chief Financial Officer
...... /s/ Gary E. Krutul
------------------
...... Gary E. Krutul
...... Corporate Controller
...... (Principal Accounting Officer)
<PAGE>
Exhibit 11
<TABLE>
NIMBUS CD INTERNATIONAL, INC.
COMPUTATION OF NET INCOME PER SHARE OF COMMON STOCK
(Dollars in thousands, except per share data)
(Unaudited)
<CAPTION>
Three months ended Six months ended
September 30, September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Primary and Fully Diluted (A):
Weighted average common shares 20,869 13,805 20,854 13,805
outstanding
Net additional common shares issuable upon exercise of dilutive warrants and
stock options, determined by the treasury stock method using the estimated
initial public offering price for options and warrants granted within one year
prior to the Offering and Private Placement and
the average market price for options 2,183 2,088 2,183 2,088
and warrants outstanding in periods
after the Offering and Private
Placement
Issuance of common shares by the
Company in the Offering and Private ______ 6,850 _____ 6,850
------ -- ----- ----- -- -----
Placement
Common shares and equivalents - 1995
is pro forma for the Offering and 23,052 22,743 23,037 22,743
= ====== = ====== = ====== = ======
Private Placement
Net income - 1995 is pro forma for the
Offering and Private Placement $ 3,546 $ 3,451 $ 5,556 $ 5,109
======= ======= ======= =======
Earnings per share - 1995 is pro forma
for the Offering and Private $ 0.15 $ 0.15 $ 0.24 $ 0.22
======== ======== ======== ========
Placement
</TABLE>
(A) See Notes 5 and 6 of Notes to Condensed Consolidated Financial Statements.
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<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> SEP-30-1996
<CASH> 1,009
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<CURRENT-ASSETS> 36,362
<PP&E> 80,710
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0
0
<COMMON> 390
<OTHER-SE> 48,299
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<SALES> 60,590
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<CGS> 43,237
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