-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, R6IkB+MN2lB0clk2SvGHuQFjlzecIcGZSdiDHc0t8WCMdbz7U8Q2bNigc6eym65d NHaMTMFq7PS/MlotlNK2sg== 0000868796-96-000005.txt : 19960617 0000868796-96-000005.hdr.sgml : 19960617 ACCESSION NUMBER: 0000868796-96-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: LANCIT MEDIA PRODUCTIONS LTD CENTRAL INDEX KEY: 0000868796 STANDARD INDUSTRIAL CLASSIFICATION: 7812 IRS NUMBER: 133094700 STATE OF INCORPORATION: NY FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-23414 FILM NUMBER: 96565230 BUSINESS ADDRESS: STREET 1: 601 W 50TH ST 6TH FL CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2129779100 MAIL ADDRESS: STREET 1: 601 WEST 50TH ST 6TH FL CITY: NEW YORK STATE: NY ZIP: 10019 10-Q 1 QUARTERLY REPORT FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended March 31, 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: 1-10781 LANCIT MEDIA PRODUCTIONS, LTD. (Exact Name of Registrant as Specified in its Charter) New York 13-3019470 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 601 West 50th Street, New York, New York, 10019 (Address of Principal Executive Office) (Zip Code) (212) 977-9100 (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 The number of shares of registrant's Common Stock, $.001 par value, outstanding as of March 31, 1996 was 6,180,634 shares. LANCIT MEDIA PRODUCTIONS, LTD. AND SUBSIDIARIES INDEX PAGE PART I - FINANCIAL INFORMATION - ITEM 1. FINANCIAL STATEMENTS - CONSOLIDATED BALANCE SHEET - March 31, 1996 and June 30, 1995 1 CONSOLIDATED STATEMENT OF OPERATIONS - For the nine and three months ended March 31, 1996 and 1995 2 CONSOLIDATED STATEMENT OF CASH FLOWS - For the nine months ended March 31, 1996 and 1995 3 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 5 - 8 PART II - OTHER INFORMATION Not Applicable SIGNATURES 9
PART I. FINANCIAL INFORMATION LANCIT MEDIA PRODUCTIONS, LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET March 31, June 30, 1996 1995 -------------- ------------- (UNAUDITED) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 4,620,892 $ 7,395,238 Accounts receivable 3,347,807 5,811,788 Film and program costs, net 7,134,818 4,600,483 Prepaid expenses 126,082 56,589 Income taxes receivable 24,844 25,278 -------------- ------------- TOTAL CURRENT ASSETS 15,254,443 17,889,376 ACCOUNTS RECEIVABLE - NON-CURRENT 2,398,903 3,105,670 FIXED ASSETS, NET 918,118 1,060,878 GOODWILL, NET 283,867 296,206 DEPOSITS 45,228 43,728 -------------- ------------- TOTAL ASSETS $ 18,900,559 $ 22,395,858 ============== ============= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses $ 735,629 $ 373,657 Participation payable 1,534,880 906,363 Deferred revenue 2,422,692 5,131,240 Income taxes payable 23,819 38,000 -------------- ------------- TOTAL CURRENT LIABILITIES 4,717,020 6,449,260 -------------- ------------- PARTICIPATION PAYABLE - NON-CURRENT 506,233 1,220,148 DEFERRED REVENUE - NON-CURRENT 1,106,590 1,767,059 COMMITMENTS AND CONTINGENCIES MINORITY INTEREST 111,413 (11,704) -------------- ------------- STOCKHOLDERS' EQUITY: Common stock, $.001 par value, authorized 15,000,000 shares; issued and outstanding 6,180,634 shares at March 31, 1996 and 6,157,634 shares at June 30, 1995 6,181 6,158 Additional paid-in capital 12,566,486 12,566,306 Retained earnings (accumulated deficit) (113,364) 398,631 -------------- ------------- TOTAL STOCKHOLDERS' EQUITY 12,459,303 12,971,095 -------------- ------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 18,900,559 $ 22,395,858
============== ============= See notes to consolidated financial statements. - 1 -
LANCIT MEDIA PRODUCTIONS, LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS THREE MONTHS ENDED NINE MONTHS ENDED MARCH 31, MARCH 31, ----------------- ------------------- 1996 1995 1996 1995 -------- ------- --------- --------- (UNAUDITED) (UNAUDITED) REVENUES: Production and royalties $ 1,234,926 $ 7,060,312 $ 5,956,892 $ 11,022,244 Licensing agent fees 514,902 1,357,359 1,853,288 1,786,280 ---------- --------- --------- --------- 1,749,828 8,417,671 7,810,180 12,808,524 ---------- --------- --------- --------- OPERATING EXPENSES: Production and royalties 1,297,137 6,231,876 5,557,345 9,323,651 Licensing agent - direct costs 317,359 278,767 901,317 990,674 General and administrative 574,410 763,831 1,931,621 1,770,925 ---------- --------- --------- --------- 2,188,906 7,274,474 8,390,283 12,085,250 ---------- --------- --------- --------- INCOME (LOSS) FROM OPERATIONS (439,078) 1,143,197 (580,103) 723,274 INTEREST INCOME (EXPENSE) - NET 55,870 129,951 229,665 384,629 ---------- --------- --------- --------- INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES AND MINORITY INTEREST (383,208) 1,273,148 (350,438) 1,107,903 PROVISION FOR INCOME TAXES - CURRENT 17,450 38,000 38,440 38,000 MINORITY INTEREST 2,002 (424,368) (123,117) (211,462) ---------- --------- --------- --------- NET INCOME (LOSS) $ (398,656) $ 810,780 $ (511,995) 858,441 ========== ========= ========= ========= NET INCOME (LOSS) PER SHARE $ (0.06) $ 0.13 $ (0.08) $ 0.14 ========== ========= ========= ========= WEIGHTED AVERAGE SHARES 6,180,387 6,355,490 6,180,305 6,356,200 ========== ========= ========= =========
See notes to consolidated financial statements. - 2 -
LANCIT MEDIA PRODUCTIONS, LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS NINE MONTHS ENDED MARCH 31, -------------------------------------- 1996 1995 ------------------ ----------------- (UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ (511,995) $ 858,441 ------------------ ----------------- Adjustments to reconcile net income (loss) to net cash from operating activities: Amortization of film and program costs 3,295,761 5,565,265 Depreciation and other amortization 314,120 251,608 Minority interest 123,117 211,462 Changes in operating assets and liabilities: (Increase) decrease in accounts receivable - current 2,463,981 (1,913,629) (Increase) decrease in accounts receivable - non-current 706,767 -- Additions to film and program costs (5,830,096) (7,334,673) (Increase) decrease in prepaid expenses (69,493) (49,264) (Increase) decrease in income taxes receivable 434 22,265 (Increase) decrease in deposits receivable (1,500) 2,184 Increase (decrease) in accounts payable and accrued expenses 361,972 1,728,770 Increase (decrease) in participation payable - current 628,517 -- Increase (decrease) in participation payable - non-current (713,915) -- Increase (decrease) in deferred revenue - current (2,708,548) (1,096,365) Increase (decrease) in deferred revenue - non-current (660,469) 235,786 Increase (decrease) in income taxes payable (14,181) 18,583 ------------------ ----------------- (2,103,533) (2,358,008) ------------------ ----------------- CASH PROVIDED (USED) IN OPERATING ACTIVITIES (2,615,528) (1,499,567) ------------------ ----------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of fixed assets (159,021) (227,049) ------------------ ----------------- CASH PROVIDED (USED) IN INVESTING ACTIVITIES (159,021) (227,049) ------------------ ----------------- CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of common stock 203 153,871 ------------------ ----------------- CASH PROVIDED (USED) IN FINANCING ACTIVITIES 203 153,871 ------------------ ----------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,774,346) (1,572,745) CASH AND CASH EQUIVALENTS - beginning of period 7,395,238 11,060,206 ------------------ ----------------- CASH AND CASH EQUIVALENTS - end of period $ 4,620,892 $ 9,487,461 ================== ================= CASH PAID DURING THE YEAR FOR: Interest $ -- -- ================== ================= Income taxes $ 56,526 $ -- ================== =================
See notes to consolidated financial statements. - 3 - LANCIT MEDIA PRODUCTIONS, LTD. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1996 (UNAUDITED) 1. BASIS OF PRESENTATION Reference is made to the Company's annual report on Form 10-K dated September 21, 1995 for the year ended June 30, 1995. The accompanying financial statements reflect all adjustments which, in the opinion of management, are necessary for a fair presentation of the financial position and results of operations for the interim periods presented. All such adjustments are of a normal and recurring nature. The results of operations for any interim period are not necessarily indicative of the results of a full fiscal year. 2. NET INCOME (LOSS) PER SHARE Net income (loss) per share is computed on the basis of the weighted average number common shares and common share equivalents outstanding for the respective period. Common share equivalents include dilutive stock options and warrants using the treasury stock method. - 4 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations - Three months ended March 31, 1996 as compared to three months ended March 31, 1995 Production and royalty related revenues for the three month period ended March 31, 1996 decreased to $1,234,926 from $7,060,312 in the comparable 1995 quarter. This decrease is primarily the result of reduced royalty revenue on THE PUZZLE PLACE. The series premiered during last fiscal year's third quarter and, as a result, the Company recognized approximately $5.6 million of initial royalty revenues in that period. During the current fiscal year's third quarter, most of the licensees were still in the process of recouping those initial royalties recognized. Licensing agent fee revenues for the three month period ended March 31, 1996 decreased to $514,902 from $1,357,359 in the comparable 1995 quarter. This decrease is primarily the result of the prior fiscal year quarter including a retroactive adjustment to record the portion of earned agent fees, which became effective upon the commencement of the airing of THE PUZZLE PLACE, on certain licensing contracts which reflected the period of service between inception and December 31, 1994. Production and royalty related expenses for the three month period ended March 31, 1996 decreased to $1,297,137 from $6,231,876 in the comparable 1995 quarter reflecting primarily the reduction in royalty revenue and accompanying third party participations on THE PUZZLE PLACE. Direct costs of licensing activities for the three month period ended March 31, 1996 increased to $317,359 from $278,767 in the comparable 1995 quarter primarily as a result of increased personnel and trade show expenses. General and administrative expenses for the three month period ended March 31, 1996 decreased to $574,410 from $763,831 in the comparable 1995 quarter. This decrease is due primarily to certain marketing-related costs being re-allocated to Company projects. Interest income for the three month period ended March 31, 1996 decreased to $55,870 from $129,951 in the comparable 1995 quarter. This decrease is primarily due to a reduced level of cash invested resulting from the Company's utilization of cash for production and development activities and corporate overhead. Provision for income taxes - current for the three month period ended March 31, 1996 decreased to $17,450 from $38,000 in the comparable 1995 quarter. The current fiscal year's quarter amount represents additional state and local tax liability from the prior fiscal year's activity. - 5 - Minority interest in licensing activities for the three month period ended March 31, 1996 resulted in a benefit in the amount of $2,002 compared to an expense in the amount of $424,368 in the comparable 1995 quarter. This change is a direct result of the decreased profitability of licensing activities in the current fiscal year's third quarter. Net loss for the three month period ended March 31, 1996 was $398,656 ($.06 per share) compared to net income of $810,780 ($.13 per share) in the unusually strong fiscal 1995 third quarter, due primarily to the combination of factors discussed above. Weighted average shares outstanding for the three month period ended March 31, 1996 decreased to 6,180,387 from 6,355,490 in the comparable 1995 quarter primarily as a result of the exclusion of outstanding stock options during a loss period, which was partially offset by the exercise of stock options during the twelve month period since March 31, 1995. Results of Operations - Nine months ended March 31, 1996 as compared to nine months ended March 31, 1995 Production and royalty related revenues for the nine month period ended March 31, 1996 decreased to $5,956,892 from $11,022,244 in the comparable 1995 nine month period. This decrease is primarily the result of reduced royalty revenue on THE PUZZLE PLACE during the current fiscal year nine month period, as most of the licensees were still in the process of recouping the initial royalties recognized by the Company in the prior fiscal year. Licensing agent fee revenues for the nine month period ended March 31, 1996 increased to $1,853,288 from $1,786,280 in the comparable 1995 nine month period. This increase is primarily the result of greater licensing activity on the SONIC THE HEDGEHOG property, and a net increase in fees earned on THE PUZZLE PLACE property as a result of servicing a greater number of license agreements, for a longer period of time than in the prior year's nine month period. Production and royalty related expenses for the nine month period ended March 31, 1996 decreased to $5,557,345 from $9,323,651 in the comparable 1995 nine month period reflecting primarily the reduction in royalty revenue and accompanying third party participations on THE PUZZLE PLACE. Direct costs of licensing activities for the nine month period ended March 31, 1996 decreased to $901,317 from $990,674 in the comparable 1995 nine month period primarily as a result of reduced professional and management fees as well as reduced marketing and trade show expenses, all which was partially offset by increased personnel expenses. - 6 - General and administrative expenses for the nine month period ended March 31, 1996 remained essentially unchanged at $1,931,621 compared to $1,770,925 in the comparable 1995 nine month period, as increased personnel costs during the 1996 period were offset by certain marketing-related costs being re-allocated to projects during this period. Interest income for the nine month period ended March 31, 1996 decreased to $229,665 from $384,629 in the comparable 1995 nine month period. This decrease is primarily due to a reduced level of cash invested resulting from the Company's utilization of cash for production and development activities and corporate overhead. Provision for income taxes - current for the nine month period ended March 31, 1996 remained essentially unchanged at $38,440 compared to $38,000 in the comparable 1995 nine month period. Reduced state and local income tax liability on licensing agent activities in the current fiscal year's nine month period was offset by additional state and local tax liability for the prior fiscal year's activity. Minority interest in licensing activities for the nine month period ended March 31, 1996 decreased to $123,117 from $211,462 in the comparable 1995 nine month period. This decrease is a direct result of the decreased profitability of the licensing activities in the current fiscal year's nine month period. Net loss for the nine month period ended March 31, 1996 was $511,995 ($.08 per share) compared to net income of $858,441 ($.14 per share) in the fiscal 1995 nine month period due to the combination of factors discussed above. Weighted average shares outstanding for the nine month period ended March 31, 1996 decreased to 6,180,305 from 6,356,200 in the comparable 1995 nine month period primarily as a result of the exclusion of outstanding stock options during a loss period, which was partially offset by the exercise of stock options during the twelve month period since March 31, 1995. Liquidity and Capital Resources The Company's balance sheet remains in healthy condition with cash and cash equivalents as of March 31, 1996 of approximately $4.6 million, a current ratio of 3.2 to 1 and no long-term debt. Cash used in operating activities was approximately $2.6 million for the nine month period ended March 31, 1996, compared to the use of approximately $1.5 million for the same period last year. During the nine month period ended March 31, 1996, net additions to film and program costs of approximately $2.5 million and a decrease in deferred revenues of approximately $3.4 million were partially offset by a decrease in accounts receivable of approximately $3.2 million. - 7 - Cash used in investing activities was approximately $159,000, for the nine month period ended March 31, 1996, compared to the use of approximately $227,000 for the same period last year. This use of cash is primarily the result of the Company's continued expansion of its post-production capabilities. The Company is in the process of completing the remaining elements associated with the airing of and outreach for the first 65 episodes of THE PUZZLE PLACE. As a result of the Company's success in attracting significant corporate underwriting grants to the project and after taking into account the portion of project funding expected to be contributed via such agreements and by the Company's partner on the project, KCET, the Company estimates that its remaining contribution will approximate $0.1 million. With respect to THE PUZZLE PLACE licensing effort, the Company and KCET have agreed to, and may in the future, extend the license term and payment schedule for certain licensees in order to more closely reflect the anticipated royalty stream generated by those particular categories. The Company is in full scale production and post-production on the initial season of 13 episodes of BACKYARD SAFARI, which is being partially funded through a major grant from the National Science Foundation. The Company has been actively pursuing and evaluating additional production funding from potential production partnerships, broadcast license fees, as well as various sources of underwriting. Only in the event the Company were to receive no amounts from these sources of outside production funding (a scenario the Company considers unlikely), the Company estimates that its remaining investment required for this project would be approximately $1.0 million. Management believes that its present cash position and overall liquidity will enable the Company to meet its current commitments and to continue to pursue growth opportunities involving production, post-production and licensing-related activities over the foreseeable future. In December 1995, the Company announced that it had retained Allen & Company as its investment banker to pursue strategic alliances with larger media companies. Should these efforts result in opportunities which the Company believes could significantly enhance the Company's future revenue generation and production output, additional capital could be required to fund such growth opportunities. Citing the business opportunities available to the Company, it is no longer pursuing its previously announced proposed purchase of a minority stake in EPI Ltd. The Company's major production-related customers customarily renew their contracts with the Company on an annual basis, and as such, there always exists the possibility that one or more of such contracts may not be renewed in the future. Since the Company is in the business of developing new projects involving contract production and licensing opportunities, management believes, although cannot assure, that in such event, new production and licensing activities will replace those existing activities. Also, management does not expect inflation to have a significant impact on the business. - 8 - SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. LANCIT MEDIA PRODUCTIONS, LTD. Date: May 10, 1996 By: /s/ Gary Appelbaum Gary Appelbaum Senior Vice President, Chief Financial Officer & Treasurer Date: May 10, 1996 By: /s/ Gary Stein Gary Stein Executive Vice President - 9 - EX-27 2 ART. 5 FDS FOR 3RD QUARTER 10-Q
5 1 9-MOS JUN-30-1996 MAR-31-1996 4620892 0 3347807 0 0 15254443 918118 0 18900559 4717020 0 0 0 6181 12453122 18900559 0 7810180 0 6458662 0 0 0 (350,438) 38440 (511,995) 0 0 0 (511,995) (0.08) 0
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