UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2002
OR
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: 0-24294
Media Arts Group, Inc.
(Exact name of registrant as specified in its charter)
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Delaware |
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77-0354419 |
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(State or other
jurisdiction of |
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(I.R.S. Employer |
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900 Lightpost Way, Morgan Hill, CA 95037 |
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(Address of principal executive offices and zip code) |
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Registrant’s telephone number: (408) 201-5000 |
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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 ý No o
The number of shares outstanding of the Registrant’s Common Stock, $0.01 par value, was 13,224,232 at November 13, 2002.
Media Arts Group, Inc.
FORM 10-Q
INDEX
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Part I: Financial Information |
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Item 1: Financial Statements |
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Condensed Consolidated Balance Sheets as of September 30, 2002 and December 31, 2001 |
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Condensed Consolidated Statements of Operations for the Three Month And Nine Month Periods Ended September 30, 2002 and 2001 |
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Condensed Consolidated Statements of Cash Flows for the Nine Month Periods Ended September 30, 2002 and 2001 |
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Notes to Condensed Consolidated Financial Statements |
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Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3: Quantitative and Qualitative Disclosures about Market Risk |
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Item 4: Controls and Procedures |
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Part II: Other Information |
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Item 1: Legal Proceedings |
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Item 2: Changes in Securities and Use of Proceeds |
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Item 3: Defaults upon Senior Securities |
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Item 4: Submission of Matters to a Vote of Security Holders |
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Item 5: Other Information |
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Item 6: Exhibits and Reports on Form 8-K |
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Signatures |
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Certifications |
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2
MEDIA ARTS GROUP, INC.
(In thousands except share data)
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September
30, |
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December
31, |
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(Unaudited) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
16,248 |
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$ |
2,148 |
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Restricted cash |
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2,000 |
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— |
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Accounts receivable, net of allowance for doubtful accounts and sales returns of $5,562 and $8,493 |
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15,429 |
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20,178 |
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Receivables from related parties |
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96 |
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152 |
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Inventories |
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13,200 |
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18,271 |
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Prepaid expenses and other current assets |
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3,929 |
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6,094 |
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Cash surrender value of life insurance |
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2,071 |
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2,476 |
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Current and deferred income taxes |
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5,688 |
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11,342 |
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Total current assets |
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58,661 |
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60,661 |
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Property and equipment, net |
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18,668 |
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23,106 |
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Notes receivable |
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652 |
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347 |
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Long-term deferred income taxes |
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2,457 |
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332 |
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Other assets |
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887 |
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1,044 |
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Total assets |
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$ |
81,325 |
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$ |
85,490 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Bank line of credit |
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$ |
— |
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$ |
1,500 |
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Convertible notes payable to related party |
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1,200 |
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1,200 |
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Accounts payable |
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4,416 |
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6,401 |
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Commissions payable |
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184 |
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609 |
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Accrued royalties |
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484 |
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1,547 |
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Accrued compensation costs |
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3,457 |
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1,885 |
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Accrued expenses |
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4,131 |
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4,443 |
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Deferred compensation costs |
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2,524 |
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2,524 |
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Capital lease obligation |
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384 |
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583 |
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Total current liabilities |
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16,780 |
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20,692 |
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Other liabilities |
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2,268 |
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— |
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Total liabilities |
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19,048 |
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20,692 |
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Stockholders’ equity: |
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Preferred stock, $0.01 par value; 1,000,000 shares |
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Authorized; none issued and outstanding |
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Common stock, $0.01 par value; 80,000,000 shares authorized, 13,540,675 shares issued and 13,224,232 outstanding at September 30, 2002 and 13,534,175 shares issued and 13,217,771 outstanding at December 31, 2001 |
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90 |
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90 |
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Additional paid-in capital |
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38,636 |
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38,616 |
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Deferred stock-based compensation |
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— |
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(3 |
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Retained earnings |
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27,224 |
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29,770 |
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Treasury shares, 316,295 shares at cost at September 30, 2002 and 316,404 shares at December 31, 2001 |
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(3,673 |
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(3,675 |
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Total stockholders’ equity |
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62,277 |
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64,798 |
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Total liabilities and stockholders’ equity |
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$ |
81,325 |
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$ |
85,490 |
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See accompanying notes to condensed consolidated financial statements.
3
MEDIA ARTS GROUP, INC.
(In thousands, except per share amounts, unaudited)
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Three
Months Ended |
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Nine
Months Ended |
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2002 |
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2001 |
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2002 |
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2001 |
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Revenues: |
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Net product and other revenues |
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$ |
19,666 |
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$ |
22,039 |
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$ |
68,707 |
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$ |
67,449 |
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Licensing revenues |
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1,437 |
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2,742 |
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5,826 |
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7,030 |
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Net revenues |
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21,103 |
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24,781 |
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74,533 |
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74,479 |
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Cost of revenues: |
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Cost of revenues - product and other |
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10,703 |
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12,349 |
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39,649 |
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38,450 |
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Cost of licensing revenues |
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