-----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, WKdNR84dM2QglZYEKsrRSc4sIh37NgQcNDF4G7u3kVKAP6GoPzvFG8HN84rxYTsF YpGASX1b+nAdFWLIeuySWg== 0001032210-97-000002.txt : 19970221 0001032210-97-000002.hdr.sgml : 19970221 ACCESSION NUMBER: 0001032210-97-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19961228 FILED AS OF DATE: 19970210 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SEATTLE FILMWORKS INC CENTRAL INDEX KEY: 0000791050 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PHOTOFINISHING LABORATORIES [7384] IRS NUMBER: 910964899 STATE OF INCORPORATION: WA FISCAL YEAR END: 0928 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15338 FILM NUMBER: 97522564 BUSINESS ADDRESS: STREET 1: 1260 16TH AVE WEST CITY: SEATTLE STATE: WA ZIP: 98119 BUSINESS PHONE: 2062811390 MAIL ADDRESS: STREET 1: 1260 16TH AVENUE WEST CITY: SEATTLE STATE: WA ZIP: 98119 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN PASSAGE MARKETING CORP DATE OF NAME CHANGE: 19890320 10-Q 1 FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: DECEMBER 28, 1996 Commission file No. 0-15338 ----------------- ------- SEATTLE FILMWORKS, INC. ------------------------ (Exact name of registrant as specified in its charter.) WASHINGTON 91-0964899 ------------------------------- ---------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 1260 16TH AVENUE WEST, SEATTLE, WA 98119 - --------------------------------------- --------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (206) 281-1390 --------------
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 the filing requirements for the past 90 days. Yes X No ___ ___ As of January 31, 1997, there were issued and outstanding 10,859,255 shares of common stock, par value $.01 per share. Index to Exhibits at Page 13 Page 1 of 14 SEATTLE FILMWORKS, INC. INDEX ----- Page No. -------- PART I -- FINANCIAL INFORMATION
Item 1 - Financial Statements 3-7 Balance Sheets as of December 28, 1996 and September 28, 1996 3-4 Statements of Income for the first quarter ended December 28, 1996 and December 30, 1995 5 Statements of Cash Flows for the first quarter ended December 28, 1996 and December 30, 1995 6 Notes to Financial Statements 7 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 8-11 PART II -- OTHER INFORMATION Item 6 - Exhibits and Reports on Form 8-K 11 SIGNATURES 12 INDEX TO EXHIBITS 13 EXHIBITS 14
Page 2 of 14 PART I -- FINANCIAL INFORMATION ------------------------------- ITEM 1 - FINANCIAL STATEMENTS SEATTLE FILMWORKS, INC. BALANCE SHEETS (in thousands)
(UNAUDITED) (NOTE) December 28, September 28, ASSETS 1996 1996 =============================================================== ============= ============== CURRENT ASSETS Cash and cash equivalents $ 2,480 $ 6,135 Securities available-for-sale 7,842 4,559 Accounts receivable, net of allowance for doubtful accounts 1,920 1,980 Inventories 8,727 6,577 Capitalized promotional expenditures 146 238 Prepaid expenses and other 559 351 Deferred income taxes 311 311 ------- ------- TOTAL CURRENT ASSETS 21,985 20,151 FURNITURE, FIXTURES, AND EQUIPMENT, at cost, less accumulated depreciation 5,123 5,337 CAPITALIZED CUSTOMER ACQUISITION EXPENDITURES 12,675 11,334 DEPOSITS AND OTHER ASSETS 373 253 NON-COMPETE AGREEMENT, net of accumulated amortization 657 751 ------- ------- TOTAL ASSETS $40,813 $37,826 ======= =======
Note: The September 28, 1996 balance sheet has been derived from audited financial statements. See notes to financial statements. Page 3 of 14 SEATTLE FILMWORKS, INC. BALANCE SHEETS (CONTINUED) (in thousands, except per share and share data)
(UNAUDITED) (NOTE) December 28, September 28, LIABILITIES AND SHAREHOLDERS' EQUITY 1996 1996 ======================================================= ============= ============== CURRENT LIABILITIES Accounts payable $ 6,329 $ 3,490 Accrued expenses 853 1,086 Accrued compensation 1,090 2,001 Income taxes payable 109 972 ------- ------- TOTAL CURRENT LIABILITIES 8,381 7,549 DEFERRED INCOME TAXES 4,209 3,602 ------- ------- TOTAL LIABILITIES 12,590 11,151 SHAREHOLDERS' EQUITY Preferred Stock, $.01 par value, authorized 2,000,000 shares, none issued Common Stock, $.01 par value, authorized 67,500,000 shares, issued and outstanding 10,848,155 108 108 Additional paid-in capital 1,871 1,680 Retained earnings 26,244 24,887 ------- ------- TOTAL SHAREHOLDERS' EQUITY 28,223 26,675 ------- ------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $40,813 $37,826 ======= =======
Note: The September 28, 1996 balance sheet has been derived from audited financial statements. See notes to financial statements. Page 4 of 14 SEATTLE FILMWORKS, INC. STATEMENTS OF INCOME (UNAUDITED) (in thousands, except per share and share data)
First Quarter Ended -------------------------- Deccember 28, December 30, 1996 1995 =============================================================================== Net revenues $21,236 $16,689 Cost of goods and services 12,982 10,397 ------- ------- GROSS PROFIT 8,254 6,292 Operating expenses: Customer acquisition costs 3,482 2,538 Other selling expenses 1,760 1,332 Research and development 173 247 General and administrative 907 768 ------- ------- Total operating expenses 6,322 4,885 ------- ------- INCOME FROM OPERATIONS 1,932 1,407 Other income (expense): Interest income 146 142 Nonoperating income (expense), net 2 (93) ------- ------- Total other income 148 49 ------- ------- INCOME BEFORE INCOME TAXES 2,080 1,456 Provision for income taxes (723) (505) ------- ------- NET INCOME $ 1,357 $ 951 ======= ======= EARNINGS PER SHARE $ .11 $ .08 ======= ======== WEIGHTED AVERAGE SHARES AND EQUIVALENTS OUTSTANDING 11,883,352 11,771,703 ========== ==========
See notes to financial statements. Page 5 of 14 SEATTLE FILMWORKS, INC. STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands)
First Quarter Ended ----------------------------- December 28, December 30, 1996 1995 ============================================================================================== OPERATING ACTIVITIES: - --------------------- Net income $ 1,357 $ 951 Charges to income not affecting cash: Depreciation and amortization 697 537 Amortization of capitalized customer acquisition expenditures 3,214 2,165 Deferred income taxes 607 744 Loss on disposal of equipment 90 Net change in receivables, inventories, payables and other (1,466) (2,077) Capitalized promotional expenditures, net 92 56 Additions to capitalized customer acquisition expenditures (4,555) (4,417) ------- ------- NET CASH USED IN OPERATING ACTIVITIES (54) (1,951) INVESTING ACTIVITIES: - -------------------- Purchase of furniture, fixtures, and equipment (509) (877) Purchases of securities available for sale (3,283) (1,850) ------- ------- NET CASH USED IN INVESTING ACTIVITIES (3,792) (2,727) FINANCING ACTIVITY: Proceeds from issuance of Common Stock 191 22 - ----------------------------------------------------------- ------- ------- DECREASE IN CASH AND CASH EQUIVALENTS (3,655) (4,656) Cash and cash equivalents at beginning of period 6,135 8,560 ------- ------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,480 $ 3,904 ======= =======
See notes to financial statements. Page 6 of 14 SEATTLE FILMWORKS, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) NOTE A -- BASIS OF PRESENTATION Seattle FilmWorks, Inc. (the "Company") is a leading direct-to-consumer marketer and provider of high-quality amateur photofinishing services and products. The Company offers an array of complementary services and products, primarily on a mail-order basis, under the brand name Seattle FilmWorks(R). To a lesser extent, the Company provides services, products and photofinishing supplies on a wholesale basis to a variety of commercial customers. The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for fair presentation of interim results have been included. The Company follows a policy of recording its interim periods and year-end on a 5 week, 4 week and 4 week basis for comparability of results and to be consistent with its internal weekly reporting. Operating results for the first quarter ended December 28, 1996 are not necessarily indicative of the results that may be expected for the fiscal year ending September 27, 1997. For further information, refer to the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended September 28, 1996. NOTE B -- STOCK SPLIT On March 15, 1996 the Company effected a three-for-two stock split by declaring a stock dividend of one share for every two shares outstanding. All share data, per share data and related accounts in the accompanying financial statements have been retroactively adjusted for this stock split. NOTE C -- CHANGE IN ESTIMATES Effective as of the beginning of the second quarter of fiscal 1996, the Company changed from twelve months to six months the period over which it amortizes certain capitalized customer acquisition expenditures related to groups of existing customers. This change in accounting estimate was made to more accurately match incremental revenues and expenses. The Company also changed the estimated life of the benefit of a non-compete agreement from ten years to five years. Page 7 of 14 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Forward-Looking Information - --------------------------- Statements in this report concerning expectations for the future constitute forward-looking statements which are subject to a number of known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements of the Company or industry trends to differ materially from those expressed or implied by such forward-looking statements. Relevant risks and uncertainties include, among others, those described below, those stated in the Company's Annual Report on Form 10-K and those identified by the Company from time to time in other filings with the Securities and Exchange Commission, press releases and other communications. General - ------- Seattle FilmWorks, Inc. (the "Company") is a leading direct-to-consumer marketer and provider of high-quality amateur photofinishing services and products. The Company offers an array of complementary services and products primarily on a mail-order basis under the brand name Seattle FilmWorks(R). The Company has experienced an increase in net revenues in each year since 1990. Management believes this growth is attributable principally to its direct- marketing programs, including the customer acquisition technique of offering two rolls of film for $2.00 or less (the "Introductory Offer"). The Introductory Offer has been nationally advertised in package inserts, newspaper supplements and magazines and through various other direct-response media. Beginning in fiscal 1995, the Company shifted the focus of, and substantially expanded, its customer acquisition programs. Management believes that these steps are the primary reasons for the growth of net revenues and net income during fiscal 1995, 1996 and the first three months of fiscal 1997. In addition, management believes its core photofinishing business has benefited from the introduction of new products, such as the January 1994 introduction of Pictures On Disk/TM/ and PhotoWorks(R). Customer acquisition costs are comprised of the costs of generating a lead and the amortization of direct costs associated with the Company's promotional offers sent to prospective and existing customers. The costs of generating a lead include all direct-response media, advertising and other costs associated with developing target customer lists. These costs per lead have declined during each of the last three fiscal years. The direct costs of customer acquisition include film, postage and printed material costs associated with mailings to prospective and existing customers. These direct costs per recipient of the Introductory Offer have also declined during each of the last three fiscal years. The direct costs of customer acquisition are capitalized as an asset on the Company's balance sheet as "capitalized customer acquisition expenditures." Capitalized customer acquisition expenditures relating to prospective customers are amortized over three years, and capitalized customer acquisition expenditures relating to certain marketing activities to groups of existing customers are amortized over six months. These amortization rates are based on estimates of the timing of future roll processing volumes per customer. The proportion of capitalized customer acquisition expenditures to be amortized over three years relative to those to be amortized over six months will vary from period to period based on the timing and mix of promotional activities. Rates of amortization are compared from time to time with the actual timing of roll processing volumes in order to assess whether the amortization rates appropriately match the direct costs of customer acquisition with the related revenues. If the Company were to experience a material change in the timing of roll processing volumes, it could be required to accelerate the rate of amortization of capitalized customer acquisition expenditures, which could have a material adverse effect on the Company's business, financial condition and operating results. Page 8 of 14 Customer acquisition costs as a percentage of net revenues have increased to 16.4% in the first quarter of fiscal 1997 as compared to 15.2% in the first quarter of fiscal 1996. Management believes this increase in customer acquisition costs as a percentage of net revenues was due primarily to expansion of the Company's customer acquisition programs. Future periods may reflect increased customer acquisition costs due to timing of the amortization of capitalized expenditures or the development and initiation of additional marketing programs. For tax purposes, customer acquisition expenditures are expensed as incurred, thereby reducing current federal income tax liabilities and increasing deferred federal income tax liabilities. Net income as a percentage of net revenues increased to 6.4% for the first three months of fiscal 1997 as compared to 5.7% for the same period of fiscal 1996 primarily due to the relationship between changes in costs of goods sold, customer acquisition costs and other selling expenses which in turn are primarily driven by changes in sales mix and the Company's customer acquisition strategy. Operating results will fluctuate in the future due to changes in the mix of sales, intensity and effectiveness of promotional activities, price increases by suppliers, introductions of new products, research and development requirements, actions by competitors, foreign currency exchange rates, conditions in the direct-to-consumer market and the photofinishing industry in general, national and global economic conditions and other factors. Demand for the Company's photo-related services and products is highly seasonal, with the highest volume of photofinishing activity occurring during the summer months. However, seasonality of demand may be offset by the introduction of new services and products, changes in the level of effectiveness of customer acquisition programs and other factors. This seasonality, when combined with the general growth of the Company's photofinishing business, has produced greater photofinishing net revenues during the last half of the Company's fiscal year (April through September), with a peak occurring in the fourth fiscal quarter. Net income is affected by the seasonality of the Company's net revenues due to the fixed nature of a portion of the Company's operating expenses, seasonal variation in sales mix and the Company's practice of relatively higher expenditures on marketing programs prior to the summer months. RESULTS OF OPERATIONS The following table presents information from the Company's statements of income, expressed as a percentage of net revenues for the periods indicated.
First Quarter Ended ----------------------------- December 28, December 30, 1996 1995 ============================================================== Net revenues 100.0% 100.0% Cost of goods and services 61.1 62.3 ----- ----- GROSS PROFIT 38.9 37.7 Operating expenses: Customer acquisition costs 16.4 15.2 Other selling expenses 8.3 8.0 Research and development .8 1.5 General and administrative 4.3 4.6 ----- ----- Total operating expenses 29.8 29.3 ----- ----- INCOME FROM OPERATIONS 9.1 8.4 Total other income .7 .3 ----- ----- INCOME BEFORE INCOME TAXES 9.8 8.7 ----- ----- Provision for income taxes 3.4 3.0 ----- ----- NET INCOME 6.4% 5.7% ===== =====
Page 9 of 14 Net revenues for the first quarter of fiscal 1997 increased 27.2% to $21,236,000 as compared to net revenues of $16,689,000 in the first quarter of fiscal 1996. The increased net revenues in fiscal 1997 were primarily due to expanded customer acquisition activities and marketing to existing customers during fiscal year 1996 and the first three months of fiscal year 1997 which have resulted in increased net revenues from photofinishing services and products. Management believes that its Seattle FilmWorks(R) branded business has benefited from the Company's entry into the personal computer market with its PhotoWorks(R) and Pictures On Disk/TM/products, which were first introduced in January 1994. Management also believes net revenues were negatively affected by heavy snowfall in the Pacific Northwest which delayed receipt and processing of nearly two days of customers orders at the close of the quarter. Cost of goods and services consist of labor, postage and supplies related to the Company's services and products. Gross profit in the first quarter of fiscal 1997 increased to 38.9% of net revenue compared to 37.7% in the first quarter of fiscal 1996. The increase in fiscal 1997 was due primarily to a product mix containing a higher percentage of the Company's Seattle FilmWorks(R) branded products, which carry a higher gross profit margin than the Company's other services and products. Fluctuations in gross profit will occur in future periods due to the seasonal nature of revenues, mix of product sales, intensity of promotional activities and other factors. Total operating expenses in the first quarter of fiscal 1997 increased to 29.8% of net revenue compared to 29.3% in the first quarter of fiscal 1996. This increase was due primarily to an increase in customer acquisition and other selling activities, which affect revenues in current and future periods. The Company's principal technique for acquiring new customers is its Introductory Offer of two rolls of 35 mm film for $2.00 or less. Effective as of the beginning of the second quarter of fiscal 1996 the Company reduced from twelve to six months the amortization period for certain marketing activities to specific groups of existing customers. The Company capitalized $4,555,000 of customer acquisition expenditures in the first quarter of fiscal 1997 compared to $4,417,000 for the first quarter of fiscal 1996. Capitalized customer acquisition expenditures as of December 28, 1996, increased to $12,675,000 compared to $11,334,000 as of September 28, 1996. Management believes this increased investment in customer acquisition combined with new service and product introductions are the primary reasons for the increase in photofinishing-related revenues. Each year the Company prepares detailed plans for its various marketing activities, including the mix between customer acquisition expenditures and other selling expenses. However, the Company occasionally changes both the mix and total marketing expenditures between periods to take advantage of marketing opportunities as they become available. Future periods may reflect increased customer acquisition costs due to the timing of the amortization of capitalized expenditures or the development and initiation of additional marketing programs. Other selling expenses include marketing costs associated with building brand awareness, testing of new marketing strategies and marketing to existing customers, as well as certain costs associated with acquiring new customers. Other selling expenses in the first quarter of fiscal 1997 increased to 8.3% of net revenues compared to 8.0% of net revenues for the first quarter of fiscal 1996. This increase was primarily due to increased marketing activities associated with expanded promotional activities to new and existing customers compared to the fiscal 1996 period. Research and development expenses decreased to $173,000 in the first quarter of fiscal 1997 as compared to $247,000 for the first quarter of fiscal 1996. The decrease resulted primarily from lower contract service costs for the first quarter of fiscal 1997. Research and development expenses consist primarily of costs incurred in researching new computerized digital imaging concepts, developing computer software products and creating equipment necessary to provide customers with new computer-related photographic services and products. General and administrative expenses increased to $907,000 for the first quarter of fiscal 1997 as compared to $768,000 for the first quarter of fiscal 1996. This increase was due to increased compensation expenses based on the Company's profitability, increased costs related to the Company's management information systems and increased legal and accounting costs. General and administrative expenses as a percent of net revenues decreased to 4.3% for the first quarter of fiscal 1997 as compared to 4.6% for the first quarter of fiscal 1996. General and administrative expenses consist of costs related to computer operations, human resource functions, finance, accounting, investor relations and general corporate activities. Page 10 of 14 Total other income for the first quarter of fiscal 1997 increased to $148,000 as compared to $49,000 for the first quarter of fiscal 1996. The increase resulted from higher interest income and from a $90,000 loss on equipment disposals during the first quarter of fiscal 1996. The federal income tax rate for the first three months of fiscal 1997 as compared to the first three months of fiscal 1995 increased to 34.8% from 34.7%. The increase in the effective tax rate was due primarily to an increase in the marginal federal corporate tax rate due to expected income levels. Net income in the first quarter of fiscal 1997 was $1,357,000, or $.11 per share, compared to $951,000 or $.08 per share for the first quarter of fiscal 1996. The increase in net income was primarily attributable to the increase in net revenues and gross profit partially offset by the increase in operating expenses. LIQUIDITY AND CAPITAL RESOURCES As of January 31, 1997, the Company's principal sources of liquidity included cash and short-term investments of $11,501,922 and an unused revolving line of credit of $6,000,000. The ratio of current assets to current liabilities for the Company was 2.6 to 1 at the end of the first quarter of fiscal 1997, down slightly from the current ratio of 2.7 to 1 at September 28, 1996. During the first quarter of fiscal 1997 the Company increased its investment in securities available-for-sale by $3,283,000 which was the primary reason for the decrease in cash and cash equivalents. The Company also increased inventory levels by $2,150,000 to accommodate expanded marketing plans, achieve faster turnaround of customer orders, and support increased photofinishing volume. This increase in inventory was also the principal reason for the $2,839,000 increase in accounts payable at the end of the first quarter. Federal income taxes payable were favorably affected by the increase in capitalized customer acquisition expenditures which are expensed as incurred for federal income tax purposes, thereby having the effect of reducing current federal income tax liabilities and increasing deferred federal income tax liabilities. On January 22, 1997, the Company announced that it may repurchase shares of its Common Stock, either through open market purchases at prevailing market prices, through block purchases or in privately negotiated transactions. Repurchases may be commenced or discontinued by the Company at any time. Although the number of shares to be repurchased is uncertain, any repurchased shares will serve to offset the dilutive effect of shares of Common Stock issued under the Company's stock option and stock purchase plans. Although the Company does not currently have any fixed material commitments with regard to capital expenditures, it currently expects to spend approximately $3,500,000 during the remainder of fiscal 1997, principally for photofinishing equipment and for leasehold improvements. The Company currently anticipates that existing funds together with anticipated cash flow from operations and the Company's available line of credit of $6,000,000 will be sufficient to finance its operations and planned capital expenditures and to service its indebtedness for the foreseeable future. However, if the Company does not generate sufficient cash from operations to satisfy its ongoing expenses, the Company will be required to seek external sources of financing or to refinance its obligations. Possible sources of financing include the sale of equity securities or additional bank borrowings. There can be no assurance that the Company will be able to obtain adequate financing in the future. PART II -- OTHER INFORMATION ---------------------------- ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K. (a) EXHIBITS. --------- 11 Computation of Earnings Per Share (b) REPORTS ON FORM 8-K. -------------------- None Page 11 of 14 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. SEATTLE FILMWORKS, INC. DATED: February 10, 1997 /s/ Gary R. Christophersen -------------------------------------- Gary R. Christophersen President/Chief Executive Officer (Principal Executive Officer) /s/ Case H. Kuehn -------------------------------------- Case H. Kuehn Vice President-Finance/Treasurer (Principal Financial and Chief Accounting Officer) Page 12 of 14 INDEX TO EXHIBITS SEATTLE FILMWORKS, INC. QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED DECEMBER 28, 1996 Exhibit Description Page No. - ------- ----------- -------- 11 Computation of Earnings Per Share 14 Page 13 of 14 EX-11 2 COMPUTATION OF EARNINGS PER SHARE EXHIBIT 11 SEATTLE FILMWORKS, INC. COMPUTATION OF EARNINGS PER SHARE
First Quarter Ended --------------------------- December 28, December 30, 1996 1995 ================================================================================== COMPUTATION OF PRIMARY EARNINGS PER SHARE: - ------------------------------------------ Weighted average shares outstanding 10,835,277 10,727,024 Net effect of dilutive stock options based on the treasury stock method using average market price 1,048,075 1,044,679 ----------- ----------- Total shares and equivalents 11,883,352 11,771,703 =========== =========== Net income $ 1,356,919 $ 950,711 =========== =========== PRIMARY EARNINGS PER SHARE $ .11 $ .08 =========== =========== COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE: - ------------------------------------------------ Weighted average shares outstanding 10,835,277 10,727,024 Net effect of dilutive stock options based on the treasury stock method using the higher of quarter-end market price or average market price 1,048,075 1,044,679 ----------- ----------- Total shares and equivalents 11,883,352 11,771,703 =========== =========== Net income $ 1,356,919 $ 950,711 =========== =========== FULLY DILUTED EARNINGS PER SHARE $ .11 $ .08 =========== ===========
Page 14 of 14 EX-27 3 FINANCIAL DATA SCHEDULE
5 Seattle FilmWorks, Inc. first quarter 1997 10-Q. 1,000 3-MOS SEP-27-1997 SEP-29-1996 DEC-28-1996 10,322 0 1,920 0 8,727 21,985 5,123 0 40,813 8,381 0 0 0 108 28,115 40,813 0 21,236 12,982 6,322 (148) 0 0 2,080 723 0 0 0 0 1,357 .11 .11 Asset Values Represent Net Amounts
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