-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, RSNT9iuGpSwGwooA9KQrVC8kQij7rm2gki+G/zySYUv/VDKVVLNt2TRzRhYPfWe6 eL26SgM654Yah0fkf2bI/Q== 0000889812-95-000405.txt : 19950814 0000889812-95-000405.hdr.sgml : 19950814 ACCESSION NUMBER: 0000889812-95-000405 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950811 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: JEAN PHILIPPE FRAGRANCES INC CENTRAL INDEX KEY: 0000822663 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-DRUGS PROPRIETARIES & DRUGGISTS' SUNDRIES [5122] IRS NUMBER: 133275609 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-16469 FILM NUMBER: 95560999 BUSINESS ADDRESS: STREET 1: 551 FIFTH AVE STE 1500 CITY: NEW YORK STATE: NY ZIP: 10176 BUSINESS PHONE: 2129832640 MAIL ADDRESS: STREET 1: 551 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10176 10-Q 1 QUARTERLY REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (MARK ONE) /X/ Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 1995. OR / / Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ___________ to ________. Commission File No. 0-16469 JEAN PHILIPPE FRAGRANCES, INC. ( Exact name of registrant as specified in its charter ) Delaware 13-3275609 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 551 Fifth Avenue, New York, New York 10176 (Address of Principal Executive Offices) (Zip Code) Registrants telephone number, including area code: (212) 983-2640. 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 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 X No __ Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date. At August 10, 1995 there were 10,039,986 shares of common stock, par value $.001 per share, outstanding. JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES INDEX Page Number Part I. Financial Information Item I. Financial Statements 1 Consolidated Balance Sheets as of June 30, 1995 (unaudited) and December 31, 1994 (audited) 2 Consolidated Statements of Income for the Three Month and Six Month Periods Ended June 30, 1995 (unaudited) and June 30, 1994 (unaudited) 3 Consolidated Statements of Cash Flows for the Six Month Periods Ended June 30, 1995 (unaudited) and June 30, 1994 (unaudited) 4 Notes to Unaudited Financial Statements 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 6 Part II. Other Information Item 1. Legal Proceedings 10 Item 6. Exhibits and Reports on Form 8-K 10 Signatures 10 JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES Part I. Financial Information Item I. Financial Statements In the opinion of management the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the financial position of the Company and its results of operations and cash flows for the interim periods presented. Such financial statements have been condensed in accordance with the rules and regulations of the Securities and Exchange Commission and therefore, do not include all disclosures required by generally accepted accounting principles. These financial statements should be read in conjunction with the Company's audited financial statements for the year ended December 31, 1994 included in the Company's annual report filed on Form 10-K. The results of operations for the six months ended June 30, 1995 are not necessarily indicative of the results to be expected for the entire fiscal year. Page 1 JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS June 30, December 31, 1995 1994 -------- ------------ Current assets: Cash and cash equivalents $ 6,108,058 $ 5,275,142 Accounts receivable, net 22,377,414 19,875,844 Inventories 32,201,438 24,640,795 Receivables, other 528,041 1,936,618 Other 1,719,441 1,785,755 Deferred tax benefit 709,598 992,730 ----------- ----------- Total current assets 63,643,990 54,506,884 Equipment and leasehold improvements, net 1,339,535 1,201,739 Other assets 1,207,380 584,437 Deferred tax benefit 796,615 731,905 Intangible assets, net 11,954,794 12,427,031 ----------- ----------- $78,942,314 $69,451,996 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Loans payable, banks $10,057,200 $ 6,680,524 Current portion of long-term debt 206,398 187,266 Accounts payable 19,952,618 14,646,998 Income taxes payable 806,450 1,764,892 ----------- ----------- Total current liabilities 31,022,666 23,279,680 ----------- ----------- Long-term debt, less current portion 751,548 862,601 ----------- ----------- Minority interests 972,835 796,153 ----------- ----------- Shareholders' equity: Common stock, $.001 par; authorized 30,000,000 shares; outstanding 10,039,986 and 10,242,786 shares at June 30, 1995 and December 31, 1994, respectively 10,040 10,243 Additional paid-in capital 20,407,574 20,407,574 Retained earnings 26,776,160 23,527,569 Foreign currency translation adjustment 1,032,900 568,176 Treasury stock, at cost, 725,003 and 486,198 shares in 1995 and 1994, respectively (2,031,409) 0 ----------- ----------- 46,195,265 44,513,562 ----------- ----------- $78,942,314 $69,451,996 =========== =========== See notes to financial statements. Page 2 JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME Three Months Ended Six Months Ended June 30, June 30, 1995 1994 1995 1994 ----------- ----------- ----------- ----------- (unaudited) (unaudited) (unaudited) (unaudited) Net sales $22,152,130 $15,230,054 $43,764,527 $29,956,397 Cost of sales 11,187,095 8,167,904 21,846,800 16,166,842 ----------- ----------- ----------- ----------- Gross margin 10,965,035 7,062,150 21,917,727 13,789,555 Selling, general and administrative 7,977,722 4,711,843 15,826,088 9,334,877 ----------- ----------- ----------- ----------- Income from operations 2,987,313 2,350,307 6,091,639 4,454,678 Other charges (income): Interest 287,463 172,961 529,926 291,054 Loss (gain) on foreign currency 19,932 (5,685) 258,648 86,531 Interest and dividend (income) (56,862) (54,094) (125,552) (101,866) (Gain) on sale of stock of subsidiary (19,881) (22,093) (19,881) (112,955) ----------- ----------- ----------- ----------- 230,652 91,089 643,141 162,764 ----------- ----------- ----------- ----------- Income before income taxes 2,756,661 2,259,218 5,448,498 4,291,914 Income taxes 1,090,746 916,794 2,129,723 1,713,380 ----------- ----------- ----------- ----------- Net income before minority interest 1,665,915 1,342,424 3,318,775 2,578,534 Minority interest in net income of consolidated subsidiary 37,908 19,700 70,184 34,787 ----------- ----------- ----------- ----------- Net income $1,628,007 $1,322,724 $3,248,591 $2,543,747 =========== ========== ========== ========== Net income per common and common equivalent share $0.16 $0.13 $0.31 $0.24 =========== ========== ========== ========== Number of common and common equivalent shares outstanding 10,458,483 10,538,411 10,443,885 10,456,086 =========== ========== ========== ========== See notes to financial statements. Page 3 JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Six months ended June 30, 1995 1994 ----------- ----------- Operating activities: Net income $ 3,248,591 $ 2,543,747 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 669,386 348,989 Gain on sale of stock of subsidiary 19,881 (112,955) Minority interest in net income 70,184 34,787 Increase (decrease) in cash from changes in: Accounts receivable (1,531,570) (211,310) Inventories (6,560,643) (4,859,404) Other assets 874,320 (126,792) Deferred tax benefit 292,422 Accounts payable 4,155,620 6,351,761 Income taxes payable (958,442) (1,138,083) ----------- ----------- Net cash provided by operating activites 279,749 2,830,740 ----------- ----------- Investing activities: Purchase of equipment and leasehold improvements (339,279) (360,590) Cash portion of trademark and license acquisitions (96,099) (5,288,827) Net cash (used in) investing activities (435,378) (5,649,417) ----------- ----------- Financing activities: Increase (decrease) in loan payable, bank 3,026,676 679,629 Repayment of long-term debt (48,638) (231,314) Proceeds from sale of stock of subsidiary 40,454 211,935 Proceeds from exercise of options and warrants 265,668 Purchase of treasury stock (2,031,612) ----------- ----------- Net cash provided by financing activities 986,880 925,918 ----------- ----------- Effect of exchange rate changes on cash 1,665 10,294 ----------- ----------- Increase (decrease) in cash and cash equivalents 832,916 (1,882,465) Cash and cash equivalents at beginning of period 5,275,142 9,920,414 ----------- ----------- Cash and cash equivalents at end of period $6,108,058 $8,037,949 =========== =========== Supplemental disclosure of cash flows information: Cash paid during the period for: Interest $545,000 $275,000 Income taxes 3,038,000 2,541,000 See notes to financial statements. Page 4 JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES Notes to Unaudited Financial Statements 1. Significant Accounting Policies: The accounting policies followed by the Company are set forth in the notes to the Company's financial statements included in its Form 10-K which was filed with the Securities and Exchange Commission for the year ended December 31, 1994. 2. Earnings Per Share: Net income per common and common equivalent share is based on the weighted average number of common and common equivalent shares outstanding during each period. Common equivalent shares, which consist of unissued shares under options and warrants, are included in the computation when the results are dilutive. 3. Inventories: Inventories consist of the following: June 30, December 31, 1995 1994 ----------- ----------- Raw materials and component parts $14,379,293 $10,537,381 Finished goods 17,822,145 14,103,414 ----------- ----------- $32,201,43 $24,640,795 =========== =========== Page 5 JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Company's long-term business strategy of building core volume and profitability, developing products in new categories, exploring and closing on strategic acquisitions, and pursuing expansion in international markets, have resulted in another record for quarterly growth in sales and earnings. Three Months Ended June 30, 1995 Compared to June 30, 1994 Net sales increased 45% to $22.2 million, as compared to $15.2 million in 1994. This increase reflects the Company's ability to integrate new product lines with existing product offerings, thus, creating greater opportunities to serve the needs of our customers. Sales generated by the Company's domestic operations increased 56%. Such growth is primarily the result of our recently acquired Cutex nail care and lip color product line which did not exist in the second quarter of 1994. Sales by the Company's foreign subsidiaries increased 33%; at comparable foreign currency exchange rates, sales by the Company's foreign subsidiaries increased 14%. Such increase reflects new product introductions under the Ombre Rose and Burberrys labels. The Company's primary sales efforts are focused on capitalizing on its expanding list of customer relationships both domestically and abroad. With efficient product development and a strong national sales force, the Company can now offer all customers its growing collection of fragrance, personal care and color cosmetics products. Gross profit margin for 1995 increased to 50% of sales from 46% in 1994. Sales of Cutex products continue to enable the Company to improve overall gross margin. However, as discussed below, such sales require additional selling expenditures. The Company's business lines, excluding Cutex, generated a 46% gross margin in both 1995 and 1994. Selling, general and administrative expenses represented 36% of net sales in 1995 as compared to 31% in 1994. The increase is primarily the result of promotion and advertising expenses required for certain new product lines. In addition, most licensed product lines call for royalties to be paid based on sales volume and some require minimum advertising expenditures. After 1995, with a full year of sales for most new product lines, the Company believes it will once again be in a position to leverage its selling, general and administrative expenses with increased sales volume. Page 6 JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES Interest expense increased to $287,000 in 1994 from $173,000 in 1993. The Company uses its available credit lines, as needed, to finance its working capital needs. Net income for the three months ended June 30, 1995 increased 23% to $1.6 million compared to $1.3 million for the corresponding quarter of the prior year. Earnings per share increased 23% to $0.16 per share compared to $0.13 per share for the corresponding quarter of the prior year. The weighted average number of shares outstanding was 10,458,483 in 1995 and 10,538,411 in 1994. Six Months Ended June 30, 1995 Compared to June 30, 1994 Net sales increased 46% to $43.8 million, as compared to $30.0 million in 1994. This increase reflects the Company's ability to integrate new product lines with existing product offerings, thus, creating greater opportunities to serve the needs of our customers. Sales generated by the Company's domestic operations increased 51%. Such growth is primarily the result of our recently acquired Cutex nail care and lip color product line which did not exist in the first half of 1994. Sales by the Company's foreign subsidiaries increased 40%; at comparable foreign currency exchange rates, sales by the Company's foreign subsidiaries increased 23%. Such increase reflects new product introductions under the Ombre Rose and Burberrys labels. The Company's primary sales efforts are focused on capitalizing on its expanding list of customer relationships both domestically and abroad. With efficient product development and a strong national sales force, the Company can now offer all customers its growing collection of fragrance, personal care and color cosmetics products. Gross profit margin for 1995 increased to 50% of sales from 46% in 1994. Sales of Cutex products continue to enable the Company to improve overall gross margin. However, as discussed below, such sales require additional selling expenditures. The Company's business lines, excluding Cutex, generated a 46% gross margin in both 1995 and 1994. Selling, general and administrative expenses represented 36% of net sales in 1995 as compared to 31% in 1994. The increase is primarily the result of promotion and advertising expenses required for certain new product lines. In addition, most licensed product lines call for royalties to be paid based on sales volume and some require minimum advertising expenditures. After 1995, with a full year of sales for most new product lines, the Company believes it will once again be in a position to leverage its selling, general and administrative expenses with increased sales volume. Page 7 JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES Interest expense increased to $530,000 in 1995 from $291,000 in 1994. The Company uses its available credit lines, as needed, to finance its working capital needs. In 1995, as a result of the precipitous decline of the U.S. dollar relative to the French franc, the Company incurred a loss on foreign currency of $259,000 as compared to a loss of $87,000 in 1994. The Company, on occasion enters into foreign currency forward exchange contracts as a hedge for short-term intercompany borrowings. No material hedge transactions were entered into during 1995. The Company recognized a net gain on sale of stock of a subsidiary aggregating $20,000 in 1995 and $113,000 in 1994. The 1995 gain resulted from the conversion of debt into common stock of a consolidated subsidiary and the 1994 gain resulted from the sale of common stock of the consolidated subsidiary. Such issuances of shares has been accounted for as a gain on sale of stock of a subsidiary and is not part of a broader corporate reorganization contemplated by the Company. Although additional shares may be issued in the future, the Company has no plans to spin-off its subsidiary nor to repurchase the shares previously issued. The Company's effective income tax rate was 39% in 1995 and 40% in 1994. Net income for the six months ended June 30, 1995 increased 28% to $3.2 million compared to $2.5 million for the corresponding period of the prior year. Results include a net gain from the sale of common stock of a subsidiary of $20,000 in 1995 and $113,000 in 1994. Excluding such gain, net income increased 33% and earnings per share increased 35% to $0.31 per share compared to $0.23 per share for the corresponding period of the prior year. The weighted average number of shares outstanding was 10,443,885 in 1995 and 10,456,086 in 1994. Page 8 JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES Liquidity and Capital Resources The Company's financial position continues to show solid strength as a result of profitable operating results and positive operating cash flow. At June 30, 1995, working capital aggregated $32.6 million and the Company had cash and cash equivalents on hand of approximately $6.1 million. The Company's Board of Directors has authorized the repurchase of up to 500,000 shares of the Company's common stock and as of June 30, 1995, 238,800 shares had been purchased at an average price per share of $8.51. The Company's short-term financing requirements are expected to be met by available cash at June 30, 1995, cash generated by operations and short-term credit lines provided by domestic and foreign banks. The principal credit facility for 1995 is a $12.0 million unsecured revolving line of credit provided by a domestic commercial bank. Borrowings under the domestic revolving line of credit are due on demand and bear interest at the bank's prime lending rate. Management of the Company believes that funds generated from operations, supplemented by its available credit facilities, will provide it with sufficient resources to meet all present and reasonably foreseeable future operating needs. Operating activities provided $280,000 of net cash for the six months ended June 30, 1995. The Company continues to closely monitor and improve its procedures with respect to collection of outstanding receivables and inventory levels reflect the increase necessary to support the upcoming selling season and new product introductions scheduled for shipment beginning in August of 1995. Inflation rates in the U.S. and foreign countries in which the Company operates have not had a significant impact on operating results for the period ended June 30, 1995. Page 9 JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES Part II. Other Information Item 1. Legal Proceedings The Company previously reported that the Town of Kearney had commenced an administrative proceeding against the fee owner and managing agent of a public warehouse located at 100 Central Avenue, South Kearney, New Jersey ("the South Kearney Warehouse"), where the Company is one of several lessees. Although the Company had been provided with a copy of an administrative order directing that the South Kearney Warehouse be vacated by January 13, 1995, the Town of Kearney granted the Company's request to remain in the South Kearney Warehouse until October 31, 1995. In July 1995 the Company entered into a lease for warehouse space at 60 Stults Road, South Brunswick, New Jersey (the "South Brunswick Warehouse"). The commencement date of the lease for the South Brunswick Warehouse is subject to vacation by the existing tenant, and receipt by the Company of certain local governmental approvals. Management believes that it will be able to vacate the South Kearney Warehouse and move into the South Brunswick Warehouse prior to October 31, 1995. Items 2, 3, 4 and 5. These items are omitted as they are either not applicable or have been included in Part I. Item 6. Exhibits and 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 on the 11th day of August 1995. JEAN PHILIPPE FRAGRANCES, INC. By: /s/ Russell Greenberg --------------------------------- Russell Greenberg, Executive Vice President and Chief Financial Officer Page 10 EX-27 2 FINANCIAL DATA SCHEDULE
5 6-MOS DEC-31-1995 JAN-01-1995 JUN-30-1995 6,108,058 0 22,377,414 0 32,201,438 63,643,990 1,339,535 0 78,942,314 31,022,666 0 0 0 18,386,205 27,809,060 78,942,314 43,764,527 43,764,527 21,846,800 37,672,888 643,141 0 529,926 5,448,498 2,129,723 3,318,775 0 70,184 0 3,248,591 .31 .31
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