Coming off an ‘outstanding year’ which saw the company divert all of its energy into proprietary production, Nelvana announced strong first quarter 1999 results and plans for five new 2D and 3D series at its annual meeting.

Nelvana officers trumpeted the success the company had achieved in the previous year moving wholly into the domain of proprietary production and producing 187 program episodes, an increase of 41% from the previous year. The company expects to produce 220 episodes and a feature film this year.

New shows on the development slate include two 3D animated properties, The Leafmen and George Shrinks, both based on books by William Joyce (the latter combining 2D and 3D animation) and three 2D series, Callaghan, No Place Like Home and Robin, an adult-oriented series coproduction with Sweden’s AB Svensk Filmindustri, Sverges Television ab and TMO GmbH.

According to Nelvana ceo Michael Hirsh, in addition to developing a larger production slate, exploring new distribution opportunities and developing feature films, the company will focus on several areas of growth in the coming year, including increasing its publication and merchandising businesses, expanding Internet, e-commerce and other direct marketing solutions, and the pursuit of strategic acquisitions and investments. Hirsh says these potential investments will likely be in the merchandising area.

The company recently brought on director of corporate development Michael Klax, formerly of Alliance Atlantis Communications, to spearhead some of these initiatives. ‘We’re going to step up and be more aggressive in this area,’ says Hirsh.

Company cfo Sally Moyer Kent says in the coming year, the company will focus on reducing production costs and increasing margins, part of which entails lowering the company’s tax burden. In keeping with this goal, Nelvana recently received a licence to operate a digital paint facility in Ireland.

The company is also developing a ‘3D pipeline’ into Asia and will coproduce the upcoming season of its Donkey Kong series with a Chinese partner.

In its first quarter results, the company reported total revenue of $11.5 million for the three months ending March 31, compared with $6.9 million for the same period the previous year. Revenue from production and distribution increased to $6.4 million from $6 million last year, while merchandising revenue shot up to $1.6 million this quarter from $500,000 last year, due mainly to the success of the Franklin and Little Bear character brands, says Hirsh.

Net earnings for the quarter were $884,000, up from $721,000 last year, while earnings per share increased to $0.12 from $0.11.

Reflected in the quarter’s results is the closure of the Minneapolis-based service production facility of Windlight Studios, which was acquired by Nelvana last year. Nelvana has moved equipment and software from that shop to its Toronto 3D operation to mitigate the outlay required for current and upcoming projects.