-----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, DngsGW9jZ+rUFUF7ZbFcLICwfmaD4ekBLewDx6bJRbygUVnE+pI/RSbtRdjlzmqM wlkMh9gmtT2p1tij2wzzow== 0000891618-97-000459.txt : 19970222 0000891618-97-000459.hdr.sgml : 19970222 ACCESSION NUMBER: 0000891618-97-000459 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970212 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDIA ARTS GROUP INC CENTRAL INDEX KEY: 0000924645 STANDARD INDUSTRIAL CLASSIFICATION: COMMERCIAL PRINTING [2750] IRS NUMBER: 770354419 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-24294 FILM NUMBER: 97527033 BUSINESS ADDRESS: STREET 1: TEN ALMADEN BLVD STREET 2: 9TH FL CITY: SAN JOSE STATE: CA ZIP: 95113 BUSINESS PHONE: 4089474680 10-Q 1 FORM 10-Q FOR THE PERIOD ENDED DECEMBER 31,1996 1 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 December 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: 0-24294 MEDIA ARTS GROUP, INC. (Exact name of registrant as specified in its charter) Delaware 77-0354419 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 521 Charcot Ave, San Jose, California 95131 (Address of principal executive offices and zip code) Registrant's telephone number: (408) 324-2020 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 outstanding of the Registrant's Common Stock, $0.01 par value, was 9,867,032 at January 31, 1997. This report consists of 14 pages of which this page is number 1. 2 MEDIA ARTS GROUP, INC. FORM 10-Q INDEX
Page No. ------------------- Part I: Financial Information Item 1: Financial Statements (unaudited) Condensed Consolidated Balance Sheet as of December 31, 1996 and March 31, 1996 3 Condensed Consolidated Statement of Operations for the Three Month and Nine Month Periods Ended December 31, 1996 and 1995 4 Condensed Consolidated Statement of Cash Flows for the Nine Month Periods Ended December 31, 1996 and 1995 5 Notes to Unaudited Condensed Consolidated Financial Statements 6 Item II: Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Part II: Other Information Item 1: Legal Proceedings 12 Item 2: Changes in Securities 12 Item 3: Defaults upon Senior Securities 12 Item 4: Submission of Matters to a Vote of Security Holders 12 Item 5: Other Information 12 Item 6: Exhibits and Reports on Form 8-K 12 (a). Exhibits 13 (b). Reports on Form 8-K 12 Signatures 14
2 3 MEDIA ARTS GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEET (IN THOUSANDS, UNAUDITED)
December 31, March 31, 1996 1996 ASSETS ----------- ----------- Current assets: Cash and cash equivalents......................................... $ 150 $ 382 Accounts receivable, net.......................................... 7,498 8,262 Inventories....................................................... 5,420 5,006 Net assets of discontinued operations............................. 1,546 17,398 Prepaid expenses and other current assets......................... 1,180 251 Deferred income taxes............................................. 1,874 1,059 Income taxes refundable........................................... 2,190 187 ----------- ----------- Total current assets.......................................... 19,858 32,545 Property and equipment, net.......................................... 3,550 3,794 Receivable from related parties...................................... 117 99 Other assets......................................................... 262 220 ----------- ----------- $ 23,787 $ 36,658 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable.................................................. $ 2,925 $ 2,800 Commissions payable............................................... 273 185 Accrued expenses.................................................. 3,480 3,063 Accrued royalties................................................. 1,447 345 Borrowings under line of credit................................... 1,627 4,375 Current portion of long-term debt................................. 554 586 ----------- ----------- Total current liabilities..................................... 10,306 11,354 Long-term debt, less current portion................................. 6,727 6,928 Convertible notes payable to related parties......................... 2,863 2,682 ----------- ----------- Total liabilities............................................. 19,896 20,964 ----------- ----------- Minority interest - 115 ----------- ----------- Stockholders' equity: Common stock...................................................... 58 58 Additional paid-in capital........................................ 15,725 15,725 Cumulative translation adjustment................................. 139 164 Accumulated deficit............................................... (12,031) (368) ----------- ----------- 3,891 15,579 ----------- ----------- $ 23,787 $ 36,658 =========== ===========
See accompanying notes to condensed consolidated financial statements. 3 4 MEDIA ARTS GROUP, INC. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS, UNAUDITED)
Three Months Ended Nine Months Ended December 31, December 31, ----------------------- ----------------------- 1996 1995 1996 1995 ---- ---- ---- ---- Net sales......................................... $ 15,471 $ 12,189 $ 35,512 $ 29,355 Cost of sales..................................... 5,228 3,941 12,982 9,818 ---------- ---------- --------- ---------- Gross profit...................................... 10,243 8,248 22,530 19,537 ---------- ---------- --------- ---------- Operating expenses Marketing and selling............................. 3,502 2,619 9,631 6,897 General and administrative........................ 2,833 2,705 7,581 8,617 ---------- ---------- --------- ---------- Total operating expenses..................... 6,335 5,324 17,212 15,514 ---------- ---------- --------- ---------- Operating income.................................. 3,908 2,924 5,318 4,023 Interest expense.................................. (669) (393) (1,749) (846) Exchange losses................................... (146) (180) (208) (162) ---------- ---------- --------- ---------- Income from continuing operations before income taxes.................................... 3,093 2,351 3,361 3,015 Provision for income taxes........................ 1,289 929 1,394 1,191 ---------- ---------- --------- ---------- Income from continuing operations................. 1,804 1,422 1,967 1,824 Loss from discontinued operations................. - (740) (1,385) (1,902) Loss on disposal of discontinued operations....... - - (12,245) - ---------- ---------- ---------- ---------- Net income (loss)................................. $ 1,804 $ 682 $ (11,663) $ (78) ========== ========== ========== ==========- Income (loss) from continuing operations per common share.................................... $ 0.18 $ 0.14 $ 0.20 $ 0.18 Loss from discontinued operations................. - (0.07) (0.14) (0.19) Loss on disposal of discontinued operations....... - - (1.24) - ---------- ---------- --------- ---------- Net income (loss) per common share................ $ 0.18 $ 0.07 $ (1.18) $ (0.01) ========== ========== ========= ========== Weighted average common and common equivalent shares outstanding..................... 9,932 9,909 9,889 9,877 ========== ========== ========= ==========
See accompanying notes to condensed consolidated financial statements. 4 5 MEDIA ARTS GROUP, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (IN THOUSANDS, UNAUDITED)
Nine Months Ended December 31, ----------------------------- 1996 1995 ------ ------ Cash flows from operating activities: Net loss....................................................... $ (11,663) $ (78) Adjustments to reconcile net loss to net cash provided by (used in) continuing operating activities: Losses from discontinued operations......................... 13,630 1,902 Depreciation................................................ 717 476 Amortization of intangibles................................. 243 137 Deferred income taxes....................................... 1,288 1,055 Provision for returns and allowances........................ 827 100 Provision for losses on accounts receivable................. 651 (180) Changes in assets and liabilities: Accounts receivable......................................... (714) (2,518) Receivables from related parties............................ (18) 175 Inventories................................................. (414) (89) Prepaid expenses and other current assets................... (368) (1,015) Other assets................................................ (42) (51) Accounts payable............................................ 241 (126) Commissions payable......................................... 88 (596) Accrued expenses............................................ (671) 754 Accrued royalties........................................... 1,102 (122) ----------- ----------- Net cash provided by (used in) continuing operating activities... 4,897 (176) Net cash used in discontinued operations......................... (2,164) (4,637) ----------- ----------- 2,733 (4,813) ----------- ----------- Net cash used in investing activities for acquisition of property and equipment...................................... (473) (350) ----------- ----------- Cash flows from financing activities: Repayment of borrowings under line of credit................... (2,169) (35) Proceeds from (repayment of) notes payable, net of debt issuance costs......................................................... (504) 5,469 Repayment of notes payable to related parties.................. - (1,080) Payment of pro rata distribution to stockholders............... - (325) ----------- ----------- Net cash provided by (used in) financing activities.............. (2,673) 4,029 ----------- ----------- Effect of exchange rate changes on cash.......................... 181 - ----------- ----------- Net decrease in cash and cash equivalents........................ (232) (1,134) Cash and cash equivalents at beginning of period................. 382 1,552 ----------- ----------- Cash and cash equivalents at end of period....................... $ 150 $ 418 =========== =========== Noncash investing and financing activities: Notes issued in exchange for operations of a gallery.............. $ - $ 1,494 Warrants issued in conjunction with issuance of notes............. - 453
See accompanying notes to condensed consolidated financial statements. 5 6 MEDIA ARTS GROUP, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - Basis of Presentation The consolidated financial statements of Media Arts Group, Inc. (the Company) include its wholly owned subsidiary, Thomas Kinkade Stores, Inc., and its majority owned subsidiary John Hine Limited (JHL). The Company markets and distributes fine quality gift and collectible art work and other art memorabilia primarily in the United States. The condensed interim financial statements of Media Arts Group, Inc. have been prepared by the Company without audit. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission. The information included in this report should be read in conjunction with the Company's audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K. In the opinion of management, the accompanying unaudited interim financial statements reflect all material adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. The results of the interim period ended December 31, 1996 are not necessarily indicative of the results that may be expected for the entire fiscal year which ends March 31, 1997. NOTE 2 - Discontinued Operations On September 27, 1996, the Company decided to dispose of the assets and operations of JHL, a United Kingdom company which was acquired in December 1993 and which manufactures and distributes collectible miniature cottages and similar products. On November 11, 1996, a Receiver was appointed by Natwest, John Hine's lender in the United Kingdom. The Receiver ceased operations of JHL on December 31, 1996, and a Liquidator was appointed on February 7, 1997 to dispose of the remaining assets of JHL. The disposal has been accounted for as a discontinued operation and accordingly the assets held for disposal and operating results of JHL have been segregated and reported as discontinued operations in the accompanying consolidated balance sheets and statements of operations. The loss on disposal of the segment of $12,245,000 included a provision of $335,000 (net of income taxes of $135,000) for operating losses during the phaseout period. Prior year financial statements have been restated to reflect the discontinuance of the JHL operations. The net assets of the discontinued operations at December 31, 1996 consist primarily of accounts receivable and inventory related to United States operations less the net amount due to JHL, and at March 31, 1996 also include goodwill, licenses and customer lists together with the assets and liabilities of the United Kingdom operation. 6 7 MEDIA ARTS GROUP, INC. Operating results of discontinued operations are summarized as follows (in thousands):
Three Months Ended Nine Months Ended December 31, December 31, ----------------------- ----------------------- 1996 1995 1996 1995 ---- ---- ---- ---- Net sales of discontinued operations.............. $ 1,396 $ 3,283 $ 5,603 $ 11,817 ========== ========== ========= ========== Loss from discontinued operations before income taxes.................................... - (1,037) (2,253) (2,846) Benefit from income taxes......................... - (297) (868) (945) ---------- ---------- --------- ---------- Loss from discontinued operations................. - (740) (1,385) (1,901) ========== ========== ========= ========== Loss on disposal of discontinued operations before income taxes.................................... - - (15,513) - Benefit from income taxes......................... - - (3,268) - ---------- ---------- --------- ---------- Loss on disposal of discontinued operations....... $ - $ - $ (12,245) $ - ========== ========== ========= ==========
NOTE 3 - Net income (loss) per share Net income (loss) per share is computed using the weighted average number of shares of Common Stock and dilutive Common Stock equivalent shares outstanding. Common Stock equivalents include shares from the exercise of stock options and warrants (using the treasury stock method). NOTE 4 - Inventories Inventories consisted of (in thousands):
December 31, March 31, 1996 1996 ------------- ------------- Raw materials................................... $ 854 $ 854 Work-in-process................................. 50 41 Finished goods.................................. 4,516 4,111 ------------- ------------- $ 5,420 $ 5,006 ============= =============
NOTE 5 - Debt As of December 31, 1996, the Company had borrowings of $1.6 million under a line of credit with a bank (the Senior Debt and the Senior Lender, respectively) and had issued $8,000,000 in secured notes payable to investors (the Subordinated Debt and the Investors, respectively). At December 31, 1996, the Company was not in compliance with certain financial covenants under the Senior Debt and the Subordinated Debt. The Senior Debt and the Subordinated Debt are secured by substantially all of the assets of the Company. NOTE 6 - Litigation The Company and its subsidiaries are defendants in certain legal actions and claims arising in the ordinary course of business. Management believes that such litigation and claims will be resolved without material effect on the Company's financial position or results of operations. 7 8 MEDIA ARTS GROUP, INC. ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information set forth below should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included in Part I - - Item 1 of this Quarterly Report and the Company's Annual Report on Form 10-K for the year ended March 31, 1996 which contains the audited financial statements and notes thereto for the years ended March 31, 1996 and 1995 and December 31, 1993 and for the three month period ended March 31, 1994 and Management's Discussion and Analysis of Financial Condition and Results of Operations for those respective periods. RESULTS OF OPERATIONS Net Sales Net sales for the quarter ended December 31, 1996, were $15.5 million, an increase of $3.3 million or 27% compared to the $12.2 million reported for the quarter ended December 31, 1995. Net sales for the nine months ended December 31, 1996, were $35.5 million, an increase of $6.2 million or 21% compared to the $29.4 million reported for the same period in the prior year. The increase compared to the prior year is due to increases in sales by the Company-owned retail galleries (TK Stores) and expansion of the Company's customer base through the opening of licensed Signature Galleries, as well as to improved results from the Company's sales force, which was changed from independent sales representatives to in-house employees in the prior year. Retail sales by TK Stores for the nine months ended December 31, 1996 increased by $1.9 million, or 19%, due to increased demand for Thomas Kinkade lithograph products. Gross Profit Gross profit increased by $2.0 million, or 24%, to $10.2 million for the quarter ended December 31, 1996, in comparison to $8.2 million for the quarter ended December 31, 1995. Gross profit was $22.5 million for the nine months ended December 31, 1996, an increase of $3.0 million compared to the prior year. The increase was due to growth in net sales in the current quarter as compared to the prior year partly offset by a decrease in gross margin. The Company's consolidated gross margin was 66% for the quarter ended December 31, 1996, compared to 68% for the same quarter in the prior year, and was 63% for the nine months ended December 31, 1996, compared to 67% for the same period in the prior year. The decrease in the gross margin was due primarily to changes in product mix of wholesale products to lower priced products with lower gross margins, as well as to an increase in the proportion of retail sales which have a lower margin than wholesale sales. The Company increased selling prices by approximately 6% in September 1996. Selling Expenses Selling expenses were $3.5 million during the quarter ended December 31, 1996, compared to $2.6 million in the same period of the prior year, representing an increase of approximately 34%. Selling expenses for the nine months ended September 1996 totaled $9.6 million compared to $6.9 million in the prior year, representing an increase of 40%. As a percentage of net sales, selling expenses were 23% for the current quarter compared to 21% for the quarter ended December 31, 1995, and increased to 27% for the nine months ended December 31, 1996, from 23% for the same period in the prior year. The increase as a percentage of net sales was primarily the result of salary and commission expenses increasing at a greater rate than the increase in net sales. As a result of the decision to discontinue the operations of John Hine Limited (JHL), the Company plans to implement various cost-cutting measures relating to sales and marketing expenses. However, the level of expenditure may not decrease significantly during the remainder of the fiscal year in absolute terms as well as a percentage of net sales as the Company continues to focus on expanding distribution and establishing new distribution channels. 8 9 MEDIA ARTS GROUP, INC. General and Administrative Expenses General and administrative expenses totaled $2.8 million during the quarter ended December 31, 1996, compared to $2.7 million for the same period in the prior year, and represented 18% and 22% of net sales for those periods, respectively. General and administrative expenses for the nine months ended December 31, 1995, decreased by $1.0 million to $7.6 million compared to $8.6 million for the same period in the prior year. The decrease in general and administrative expenses was primarily due to reductions in headcount, together with other cost-cutting measures such as the consolidation of the Company's corporate offices into the Company's San Jose manufacturing facility. Interest Expense Interest expense was $669,000 and $1.7 million for the quarter and nine months ended December 31, 1996, respectively, compared to $393,000 and $846,000 for the same respective periods in the prior year. The increase in interest expense compared to the prior year was due primarily to the issuance of $8 million in notes payable in July 1995, which increased the aggregate amount and interest rate of the Company's long-term debt, as well as to an increase in the rate of interest on that debt in September 1996. Foreign Currency Exchange Gains and Losses In December 1994 the Company established a foreign currency bank line of credit facility which was used to minimize the effects of currency exchange rate fluctuations on the Company's income statement. In conjunction with the decision to dispose of JHL, the Company ceased utilizing the facility during the September 1996 quarter. Provision for Income Tax The Company recorded income tax expense of $1.3 million and $1.4 million for the quarter and nine months ended December 31, 1996, respectively, compared to income tax expense of $929,000 and $1.2 million for the same respective periods in the prior year. The Company's effective income tax rate for the nine months ended December 31, 1996 was 41% compared to 39% for the same period in the prior year. Minority Interest Minority shareholders owned a 49% interest in John Hine until August 31, 1994, at which time the Company acquired an additional 46% interest in John Hine, leaving a 3% minority interest outstanding. Discontinued Operations On September 27, 1996, the Company decided to dispose of the assets and operations of JHL, a United Kingdom company which was acquired in December 1993 and which manufactures and distributes collectible miniature cottages and similar products. On November 11, 1996, a Receiver was appointed by Natwest, John Hine's lender in the United Kingdom. The Receiver ceased operations of JHL on December 31, 1996, and a Liquidator was appointed on February 7, 1997 to dispose of the remaining assets of JHL. The loss on disposal of the segment of $12,245,000 included a provision of $335,000 (net of income taxes of $135,000) for operating losses during the phaseout period. Net sales of the discontinued operations aggregated $5,603,000 and $11,990,000 for the nine months ended December 31, 1996 and 1995, respectively, and aggregated $1,396,000 and $3,283,000 for the quarters ended December 31, 1996 and 1995, respectively. 9 10 MEDIA ARTS GROUP, INC. Seasonality The Company's business has experienced, and is expected to continue to experience, significant seasonality. The Company's net revenues and net income are usually highest in the September and December quarters. Management believes that the seasonal effect is due primarily to customer buying patterns and is typical of the fine art, gift and collectible industry. The Company expects the seasonal trends to continue in the foreseeable future. In addition, because the Company generally does not maintain a significant backlog of orders due to the Company's relatively short production lead time, sales in any quarter are substantially dependent on orders booked in that quarter. Fluctuations in operating results may also result in volatility in the Company's earnings and the price of the Company's Common Stock. Liquidity and Capital Resources The Company's working capital position decreased by $11.6 million during the nine months ended December 31, 1996, from $21.2 million at March 31, 1996 to $9.6 million at December 31, 1996. The decrease was due principally to the write off of assets related to the planned disposal of JHL, as well as to the accrual of $335,000 of losses during the phaseout period and accrual of $690,000 of estimated costs of the disposal (net of income tax benefit of $135,000 and $433,000, respectively). Cash provided by continuing operating activities totaled approximately $4.9 million during the nine months ended December 31, 1996, and related primarily to income from continuing operations of $2.0 million plus an increase in accrued royalties, partly offset by increases in accounts receivable and inventory. Accrued royalties increased by $1.1 million during the period, while accounts receivable and inventory decreased by $1.1 million due to seasonal factors. The Company made capital expenditures of $473,000 for property and equipment during the nine months ended December 31, 1996. The Company anticipates that total capital expenditure for the year ended March 31, 1997 will be approximately $750,000. The Company's working capital requirements in the foreseeable future will change depending on various factors. The primary variables include product development efforts, consumer acceptance of the company's products, expansion of distribution channels for the Company's products, successful third party manufacturing relationships, and any other adjustments in its operating plan needed in response to competition, acquisition opportunities or unexpected events. In conjunction with the disposal of JHL, notes payable to a related party aggregating $1.7 million are due for repayment. The Company is currently negotiating the deferral of this payment. In the event the payment is not deferred, the Company may require additional external financing in order to repay the note. No assurances can be given that such additional financing can be obtained. As of December 31, 1996, the Company had borrowings of $1.6 million under a line of credit with a bank (the Senior Debt and the Senior Lender, respectively) and had issued $8,000,000 in secured notes payable to investors (the Subordinated Debt and the Investors, respectively). At December 31, 1996, the Company was not in compliance with certain financial covenants under the Senior Debt and the Subordinated Debt. Under the terms of the Senior Debt facility, the Senior Lender is not required to make additional advances to the Company. The Senior Debt and the Subordinated Debt are secured by substantially all of the assets of the Company. 10 11 MEDIA ARTS GROUP, INC. The Company is currently negotiating with a prospective lender in order to increase working capital and to replace the Senior Debt. No assurance can be given that the terms of any new debt will be comparable to that of the Senior Debt. 11 12 MEDIA ARTS GROUP, INC. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS - Not Applicable ITEM 2. CHANGES IN SECURITIES - Not Applicable ITEM 3. DEFAULTS UPON SENIOR SECURITIES - As of December 31, 1996, the Company had borrowings of $1.6 million under a line of credit with a bank (the Senior Debt and the Senior Lender, respectively). Borrowing capacity under the Senior Debt facility is based upon eligible accounts receivable and aggregated $6.0 million as of December 31, 1996. As of December 31, 1996, the Company had also issued $8,000,000 in secured notes payable to investors (the Subordinated Debt and the Investors, respectively). At December 31, 1996, the Company was not in compliance with certain financial covenants under the Senior Debt and the Subordinated Debt. Under the terms of the Senior Debt facility, the Senior Lender is not required to make additional advances to the Company. The Senior Debt and the Subordinated Debt are secured by substantially all of the assets of the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - None ITEM 5. OTHER INFORMATION - Not Applicable ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibit 11.01 - Computation of Income From Continuing Operations and Net Income Per Share (b) Reports on Form 8-K - none 12 13 MEDIA ARTS GROUP, INC. 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. MEDIA ARTS GROUP, INC. (Registrant) By /s/ Kenneth E. Raasch ----------------------------------- Kenneth E. Raasch Chairman of the Board of Directors President & Chief Executive Officer By /s/ Raymond A. Peterson ----------------------------------- Raymond A. Peterson Vice President of Finance & Chief Financial Officer Date: February 12, 1996 13 14 EXHIBIT INDEX Exhibit Number 11.01 Computation of Income From Continuing Operations and Net Income Per Share 27. Financial Data Schedule. EX-11.01 2 COMPUTATION OF INCOMES PER SHARE 1 MEDIA ARTS GROUP, INC. EXHIBIT 11.01 ITEM 6(A): EXHIBITS AND REPORTS ON FORM 8-K COMPUTATION OF NET INCOME FROM CONTINUING OPERATIONS AND NET INCOME PER SHARE (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (1)
Three Months Ended Nine Months Ended December 31, December 31, ----------------------- ----------------------- 1996 1995 1996 1995 ---- ---- ---- ---- Income (loss) from continuing operations.......... 1,804 1,422 1,967 1,824 Loss from discontinued operations................. - (740) (1,385) (1,902) Loss on disposal of discontinued operations....... - - (12,245) - ---------- ---------- ---------- ---------- Net income (loss)................................. $ 1,804 $ 682 $ (11,663) $ (78) ========== ========== ========= ========== Weighted average common shares outstanding........ 9,867 9,718 9,867 9,718 Common shares issuable on exercise of options and warrants (2)................................ 65 191 22 159 ---------- ---------- --------- ---------- Weighted average common and common equivalent shares outstanding................... 9,932 9,909 9,889 9,877 ========== ========== ========= ========== Income (loss) from continuing operations per common share...................................... $ 0.18 $ 0.14 $ 0.20 $ 0.18 Loss from discontinued operations................. - (0.07) (0.14) (0.19) Loss on disposal of discontinued operations....... - - (1.24) - ---------- ---------- --------- ---------- Net loss per common share......................... $ 0.18 $ 0.07 $ (1.18) $ (0.01) ========== ========== ========= ==========
(1) This Exhibit should be read with Note 2 of Notes to Unaudited Condensed Consolidated Financial Statements. (2) The computation of common and common stock equivalents utilizes the treasury stock method. EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS MAR-31-1996 DEC-31-1996 150 0 10,130 2,632 5,420 19,975 5,490 1,940 23,787 10,306 0 0 0 58 3,833 23,787 35,512 35,512 12,982 17,212 0 875 1,749 3,361 1,394 1,967 (13,630) 0 0 (11,663) (1.18) (1.18)
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