PRIVATE MEDIA GROUP INC - 10-Q Quarterly Report

Back to GetFilings.com

U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended_____________________September 30, 2002

o 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 000-25067

PRIVATE MEDIA GROUP, INC.
(Exact Name of Issuer as Specified in its Charter)

Nevada		87-0365673
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

Carrettera de Rubì 22-26, 08190 Sant Cugat del Vallès, Barcelona, Spain
(Address of principal executive offices)

34-93-590-7070

Issuer’s telephone number

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:

Class		Outstanding at November 12, 2002

Common Stock, par value $.001		28,608,609

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

PRIVATE MEDIA GROUP, INC.
CONSOLIDATED BALANCE SHEETS

	December 31,			September 30, (Unaudited)

	2001			2002			2002

	EUR			EUR			USD
	(in thousands)
ASSETS
Cash and cash equivalents		6,408			1,559			1,529
Short-term investment		2,850			2,850			2,794
Trade accounts receivable		15,930			15,216			14,918
Related party receivable		1,563			5,687			5,576
Inventories - net (Note 3)		8,252			8,738			8,567
Deferred tax asset		159			159			156
Prepaid expenses and other current assets		1,785			2,029			1,989

TOTAL CURRENT ASSETS		36,946			36,239			35,528
Library of photographs and videos - net		14,241			17,079			16,744
Property, plant and equipment – net		2,786			3,771			3,697
Goodwill and other intangible assets (Note 5)		2,892			2,854			2,798
Other assets		220			221			217

TOTAL ASSETS		57,086			60,165			58,985

LIABILITIES AND SHAREHOLDERS’ EQUITY
Short-term borrowings		4,530			4,568			4,478
Accounts payable trade		6,874			7,781			7,628
Income taxes payable		2,431			370			363
Deferred tax liability		22			21			20
Accrued other liabilities		728			1,208			1,184

TOTAL CURRENT LIABILITIES		14,586			13,948			13,674
Long-term borrowings		220			202			198
SHAREHOLDERS’ EQUITY
$4.00 Series A Convertible Preferred Stock 10,000,000 shares authorized, 7,000,000 shares issued and outstanding		—			—			—
Common Stock, $.001 par value, 100,000,000 shares authorized 28,370,857 and 28,608,609 issued and outstanding at December 31, 2001 and September 30, 2002, respectively		863			863			846
Additional paid-in capital		14,316			15,698			15,390
Stock dividends to be distributed		396			356			349
Retained earnings		29,802			30,966			30,358
Accumulated other comprehensive income (loss)		(3,097	)		(1,867	)		(1,830	)

TOTAL SHAREHOLDERS’ EQUITY		42,280			46,016			45,114

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		57,086			60,165			58,985

See accompanying notes to consolidated statements.

- 2 -

PRIVATE MEDIA GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

		Three-months ended September 30, (unaudited)						Nine-months ended September 30, (unaudited)

		2001			2002			2001			2002			2002

		EUR			EUR			EUR			EUR			USD
		(in thousands)
Net sales			8,999			11,060			28,231			31,349			30,734
Cost of sales			2,521			5,575			9,479			13,684			13,416

Gross profit			6,478			5,485			18,752			17,665			17,319
Selling, general and administrative expenses			4,059			4,018			11,407			14,244			13,965
Offering expenses			—			—			—			1,401			1,374

Operating profit (loss)			2,419			1,467			7,345			2,020			1,980
Sale of controlled entity			—			—			1,889			—			—
Interest expense			—			81			157			264			259
Interest income			56			114			124			119			117

Income before income tax			2,475			1,500			9,201			1,875			1,838
Income taxes (benefit)			313			29			1,898			(401	)		(393	)

Net income			2,161			1,529			7,303			2,276			2,231

Other comprehensive income:
	Foreign currency adjustments		(2,044	)		(113	)		(3,499	)		1,230			1,206

	Comprehensive income		117			1,416			3,804			3,506			3,437

Income applicable to common shares			1,778			1,173			6,111			1,166			1,143

Net income per share:
Basic			0.06			0.04			0.22			0.04			0.04

Diluted			0.04			0.03			0.15			0.04			0.04

See accompanying notes to consolidated statements.

- 3 -

PRIVATE MEDIA GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

		Nine-months ended September 30, (unaudited)

		2001		2002		2002

		EUR		EUR		USD
		(in thousands)
Cash flows from operating activities:
Net income			7,303		2,276		2,231
Adjustment to reconcile net income to net cash flows from operating activities:
	Depreciation		463		453		444
	Bad debt provision		—		686		673
	Provision for offering expenses		—		170		166
	Tax provision on asset held for sale		436		—		—
	Amortization of goodwill and other intangible assets