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: June 29, 1996 Commission file No. 0-15338
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SEATTLE FILMWORKS, INC.
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(Exact name of registrant as specified in its charter.)
WASHINGTON 91-0964899
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1260 16TH AVENUE WEST, SEATTLE, WA 98119
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (206) 281-1390
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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 the
filing requirements for the past 90 days.
Yes X No
--- ---
As of August 1, 1996, there were issued and outstanding 10,819,213
shares of common stock, par value $.01 per share.
Index to Exhibits at Page 14
SEATTLE FILMWORKS, INC.
INDEX
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Page No.
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PART I -- FINANCIAL INFORMATION
Item 1 - Financial Statements 3-7
Balance Sheets as of June 29, 1996
and September 30, 1995 3-4
Statements of Income for the third quarter and nine
months ended June 29, 1996 and June 24, 1995 5
Statements of Cash Flows for the nine months ended
June 29, 1996 and June 24, 1995 6
Notes to Financial Statements 7
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-12
PART II -- OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K 12
SIGNATURES 13
INDEX TO EXHIBITS 14
EXHIBITS 15-41
PART I -- FINANCIAL INFORMATION
-------------------------------
ITEM 1 - FINANCIAL STATEMENTS
SEATTLE FILMWORKS, INC.
BALANCE SHEETS
(in thousands)
(UNAUDITED) (NOTE)
June 29, September 30,
ASSETS 1996 1995
===============================================================================
CURRENT ASSETS
Cash and cash equivalents $ 5,565 $ 8,560
Securities available for sale 1,066 1,345
Accounts receivable, net of
allowance for doubtful accounts 2,337 1,242
Inventories 8,450 4,626
Capitalized promotional expenditures 281 158
Prepaid expenses and other 353 164
Deferred income taxes 384 398
------- -------
TOTAL CURRENT ASSETS 18,436 16,493
FURNITURE, FIXTURES, AND EQUIPMENT,
at cost, less accumulated depreciation 5,071 3,200
CAPITALIZED CUSTOMER ACQUISITION EXPENDITURES 10,900 7,356
DEPOSITS AND OTHER ASSETS 236 68
NON-COMPETE AGREEMENTS,
net of accumulated amortization 845 1,127
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TOTAL ASSETS $35,488 $28,244
======= =======
Note: The September 30, 1995 balance sheet has been derived from audited
financial statements.
See notes to financial statements.
SEATTLE FILMWORKS, INC.
BALANCE SHEETS (CONTINUED)
(in thousands, except share information)
(UNAUDITED) (NOTE)
June 29, September 30,
LIABILITIES AND SHAREHOLDERS' EQUITY 1996 1995
=======================================================================================
CURRENT LIABILITIES
Accounts payable $ 6,752 $ 4,782
Accrued expenses 2,604 2,364
Income taxes payable 692 856
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TOTAL CURRENT LIABILITIES 10,048 8,002
DEFERRED INCOME TAXES 3,525 2,310
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TOTAL LIABILITIES 13,573 10,312
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 10,818,688 108 107
Additional paid-in capital 1,241 955
Retained earnings 20,566 16,870
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TOTAL SHAREHOLDERS' EQUITY 21,915 17,932
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $35,488 $28,244
======= =======
Note: The September 30, 1995 balance sheet has been derived from audited
financial statements.
See notes to financial statements.
SEATTLE FILMWORKS, INC.
STATEMENTS OF INCOME (UNAUDITED)
(in thousands, except share information)
Third Quarter Ended Nine Months Ended
June 29, June 24, June 29, June 24,
1996 1995 1996 1995
======================================================================================
Net revenues $22,509 $15,791 $57,019 $40,354
Cost of goods and services 13,582 9,655 34,489 25,476
------- ------- ------- -------
GROSS PROFIT 8,927 6,136 22,530 14,878
Operating expenses:
Customer acquisition costs 2,974 2,177 8,748 6,233
Other selling expenses 1,706 948 5,168 2,763
Research and development 118 144 639 355
General and administrative 780 617 2,560 1,898
------- ------- ------- -------
Total operating expenses 5,578 3,886 17,115 11,249
------- ------- ------- -------
INCOME FROM OPERATIONS 3,349 2,250 5,415 3,629
Other income (expense):
Interest expense (1) (1) (3)
Interest income 94 55 348 172
Non operating income (expense), net (9) (29) (102) (26)
------- ------- ------- -------
Total other income 85 25 245 143
------- ------- ------- -------
INCOME BEFORE INCOME TAXES 3,434 2,275 5,660 3,772
Provision for income taxes (1,192) (762) (1,964) (1,265)
------- ------- ------- -------
NET INCOME $ 2,242 $ 1,513 $ 3,696 $ 2,507
======= ======= ======= =======
EARNINGS PER SHARE $.19 $.13 $.31 $.21
==== ==== ==== ====
WEIGHTED AVERAGE SHARES AND
EQUIVALENTS OUTSTANDING 11,852,528 11,687,504 11,811,553 11,662,856
========== ========== ========== ==========
See notes to financial statements.
SEATTLE FILMWORKS, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
Nine Months Ended
June 29, June 24,
1996 1995
=====================================================================================
OPERATING ACTIVITIES:
- ---------------------
Net income $ 3,696 $ 2,507
Charges to income not affecting cash:
Depreciation and amortization 1,571 1,213
Amortization of capitalized customer
acquisition expenditures 7,827 4,291
Deferred income taxes 1,229 1,029
Loss on disposal of equipment 88 24
Net change in receivables, inventories, payables and other (3,060) (1,214)
Capitalized promotional expenditures, net (123) 300
Additions to capitalized customer acquisition expenditures (11,371) (7,733)
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NET CASH FROM (USED IN) OPERATING ACTIVITIES (143) 417
INVESTING ACTIVITIES:
- ---------------------
Purchase of furniture, fixtures, and equipment (3,420) (1,170)
Purchases of securities available for sale (3,416) (11)
Sales of securities available for sale 3,695 1,197
Proceeds from sale of equipment 2 19
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NET CASH FROM (USED IN) INVESTING ACTIVITIES (3,139) 35
FINANCING ACTIVITY: Proceeds from issuance of Common Stock 287 323
- ------------------- -------- -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,995) 775
Cash and cash equivalents at beginning of period 8,560 2,711
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CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 5,565 $ 3,486
======== =======
See notes to financial statements.
SEATTLE FILMWORKS, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE A -- BASIS OF PRESENTATION
Seattle FilmWorks, Inc. (the "Company") principally markets 35mm
photographic film, photofinishing services and related photographic products on
a direct-to-consumer mail order basis under the brand name of Seattle
FilmWorks(R). The Company also markets 35mm photographic film, single-use
cameras and photographic supplies on a wholesale basis under the brand name of
OptiColor Film and Photo(TM).
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 and changes as discussed in Note D below) 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 third quarter and
nine months ended June 29, 1996 are not necessarily indicative of the results
that may be expected for the fiscal year ending September 28, 1996. 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 30, 1995.
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 information and the related capital accounts in the accompanying financial
statements have been retroactively adjusted for this stock split.
NOTE C -- RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform with the 1996
financial statements presentation.
NOTE D -- 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. This change in
accounting estimate was made to more accurately match incremental revenues and
expenses, and resulted in incremental amortization of $414,000 of previously
deferred customer acquisition costs in the second quarter of fiscal 1996. The
Company also recorded an additional $43,000 of amortization in the second
quarter of fiscal 1996 related to a change in estimated life of the benefit of a
non-compete agreement from ten years to five years.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Forward-Looking Information
- ---------------------------
Statements in this report concerning future results, performance,
achievements, expectations or trends, if any, are forward-looking statements.
Actual results, performance, achievements, events or trends could differ
materially from those expressed or implied by such forward-looking statements as
a result of known and unknown risks, uncertainties and other factors including
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 acceleration in growth of net
revenues and net income during fiscal 1995 and the first nine months of fiscal
1996. 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(TM).
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 under "capitalized customer acquisition expenditures."
Capitalized customer acquisition expenditures relating to the 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.
Customer acquisition costs as a percentage of net revenues have decreased
slightly in the first nine months of fiscal 1996 as compared to the same period
of fiscal 1995. Management believes this decrease in customer acquisition costs
as a percentage of net revenues is due primarily to more efficient 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 has increased to 6.5% for the
first nine months of fiscal 1996 as compared to 6.2% for the same period of
fiscal 1995 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 of promotion 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. 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.
Third Quarter Ended Nine Months Ended
June 29, June 24, June 29, June 24,
1996 1995 1996 1995
==============================================================================
Net revenues 100.0% 100.0% 100.0% 100.0%
Cost of goods and services 60.3 61.1 60.5 63.1
----- ----- ----- -----
GROSS PROFIT 39.7 38.9 39.5 36.9
Operating expenses:
Customer acquisition costs 13.2 13.8 15.3 15.5
Other selling expenses 7.6 6.0 9.0 6.8
Research and development 0.5 0.9 1.2 0.9
General and administrative 3.5 3.9 4.5 4.7
----- ----- ----- -----
Total operating expenses 24.8 24.6 30.0 27.9
----- ----- ----- -----
INCOME FROM OPERATIONS 14.9 14.3 9.5 9.0
Total other income 0.4 0.1 0.4 0.3
----- ----- ----- -----
INCOME BEFORE INCOME TAXES 15.3 14.4 9.9 9.3
Provision for income taxes 5.3 4.8 3.4 3.1
----- ----- ----- -----
NET INCOME 10.0% 9.6% 6.5% 6.2%
===== ===== ===== =====
The Company's net revenues for the third quarter of fiscal 1996 increased
42.5% to $22,509,000 as compared to net revenues of $15,791,000 in the third
quarter of fiscal 1995. For the nine months ended June 29, 1996, net revenues
increased 41.3% to $57,019,000 compared to $40,354,000 for the same period of
fiscal 1995. The increased net revenues in fiscal 1996 were primarily due to
expanded customer acquisition activities and marketing to existing customers
during fiscal year 1995 and the first nine months of fiscal year 1996 which have
resulted in increased net revenues from photofinishing services and products.
Management also believes that its Seattle FilmWorks(R) branded business has
benefited from the Company's entry into the personal computer market with its
PhotoWorks(TM) and Pictures On Disk(TM) products, which were first introduced in
January 1994.
Cost of goods and services consist of labor, postage and supplies related
to the Company's services and products. Gross profit in the third quarter of
fiscal 1996 increased to 39.7% of net revenue compared to 38.9% in the third
quarter of fiscal 1995. For the first nine months of fiscal 1996, gross profit
increased to 39.5% as compared to 36.9% for the same period of fiscal 1995. The
increases in fiscal 1996 periods were 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. Gross profit was also favorably impacted during the second quarter of
fiscal 1996 by the reversal of $227,000 of state tax reserves upon the
resolution of uncertainties related to a recent state tax examination.
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 third quarter of fiscal 1996 increased to
24.8% of net revenue compared to 24.6% in the third quarter of fiscal 1995. For
the first nine months of fiscal 1996 total operating expenses increased to 30.0%
of net
revenue compared to 27.9% for the same period of fiscal 1995. The increase in
total operating expenses for fiscal 1996 periods 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 months to six months the amortization
period for certain marketing activities to specific groups of existing
customers. This change in accounting estimate resulted in incremental
amortization of $414,000 in the second quarter of fiscal 1996 of previously
deferred customer acquisition costs. The Company capitalized $11,371,000 of
customer acquisition expenditures in the nine-month period of fiscal 1996
compared to $7,733,000 for the nine-month period of fiscal 1995. Capitalized
customer acquisition expenditures as of June 29, 1996, increased to $10,900,000
compared to $7,356,000 as of September 30, 1995. 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 third quarter of fiscal 1996 increased to 7.6% of
net revenues compared to 6.0% of net revenues for the third quarter of fiscal
1995. For the first nine months of fiscal 1996, other selling expenses
increased to 9.0% of net revenues compared to 6.8% of net revenues for the first
nine months of fiscal 1995. The increase in fiscal 1996 periods was primarily
due to increased marketing activities associated with expanded promotional
activities to new and existing customers compared to fiscal 1995 periods. The
second quarter of fiscal 1996 also included approximately $43,000 resulting from
an increase in amortization of a non-compete agreement due to a change in the
estimated life from ten years to five years and $126,000 in expenses related to
securing certain rights to the PhotoWorks(TM) mark claimed by a third party.
Research and development expenses decreased to $118,000 in the third
quarter of fiscal 1996 as compared to $144,000 for the third quarter of fiscal
1995. The decrease resulted primarily from lower contract service costs.
Research and development expenses for the first nine months of fiscal 1996
increased to $639,000 as compared to $355,000 for the first nine months of
fiscal 1995. The increase for the nine-month period was primarily related to
the Company's continued development of digital services and products. 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 $780,000 for the third
quarter of fiscal 1996 as compared to $617,000 for the third quarter of fiscal
1995. For the first nine months of fiscal 1996, general and administrative
expenses increased to $2,560,000 from $1,898,000 for the same period of fiscal
1995. The increases in fiscal 1996 periods were due to increased compensation
expenses based on the Company's profitability and increased legal and accounting
costs. General and administrative expenses as a percent of net revenues
decreased to 3.5% for the third quarter of fiscal 1996 as compared to 3.9% for
the third quarter of fiscal 1995 and decreased to 4.5% for the first nine months
of fiscal 1996 as compared to 4.7% of net revenues for the first nine months of
fiscal 1995. General and administrative expenses consist of costs related to
computer operations, human resource functions, finance, accounting, investor
relations and general corporate activities.
Total other income for the third quarter of fiscal 1996 increased to
$85,000 as compared to $25,000 for the third quarter of fiscal 1995. Total
other income increased to $245,000 for the first nine months of fiscal 1996 as
compared to $143,000 for the first nine months of fiscal 1995. The increases
were due primarily to interest income from short-term investments due to higher
levels of cash generated by operations.
The federal income tax rate for the first nine months of fiscal 1996 as
compared to the first nine months of fiscal 1995 increased to 34.7% from 33.5%.
The increase in the effective tax rate is due primarily to an increase in the
marginal federal corporate tax rate due to expected income levels and the
expiration of the federal research and development tax credit.
Net income in the third quarter of fiscal 1996 was $2,242,000, or $.19 per
share, compared to $1,513,000 or $.13 per share for the third quarter of fiscal
1995. For the first nine months of fiscal 1996, net income was $3,696,000, or
$.31 per share compared to $2,507,000, or $.21 per share for the same period in
fiscal 1995. The increase in net income compared to 1995 periods is 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 July 26, 1996, the Company's principal sources of liquidity included
cash and short-term investments of $6,128,726 and an unused revolving line of
credit of $6,000,000. The ratio of current assets to current liabilities for
the Company was 1.8 to 1 at the end of the third quarter of fiscal 1996, down
slightly from the current ratio of 2.0 to 1 at September 30, 1995. During the
first three quarters of fiscal 1996 the Company increased inventory levels by
$3,824,000 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 $1,970,000 increase in accounts
payable at the end of the third 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.
The Company has a commitment to purchase equipment related to its Pictures
On Disk(TM) product in the amount of $470,000 by January 1, 1997. In addition,
the Company plans to expend approximately $500,000 during the remainder of
fiscal 1996, principally for photofinishing equipment and for leasehold
improvements, although at this time it has no binding commitments to do so.
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.
---------
10.1 Incentive Stock Option Plan, as amended and restated as of
April 1, 1996
10.2 1987 Stock Option Plan, as amended and restated as of April 1,
1996
11 Computation of Earnings Per Share
(b) REPORTS ON FORM 8-K.
--------------------
None
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: August 7, 1996 /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)
INDEX TO EXHIBITS
SEATTLE FILMWORKS, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 29, 1996
Exhibit Description Page No.
- ------- ----------- --------
10.1 Incentive Stock Option Plan, as amended and restated as of April 1, 1996 15-26
10.2 1987 Stock Option Plan, as amended and restated as of April 1, 1996 27-40
11 Computation of Earnings Per Share 41