-----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, P9wb6s5gBY9lIG1mEnY22IEnqH9aLv/l+yaDIh6X4DdhFU2I1QABANcAztlKp9u0 v724AnEBXQhJN8fX1txRhQ== 0000889812-96-000450.txt : 19960514 0000889812-96-000450.hdr.sgml : 19960514 ACCESSION NUMBER: 0000889812-96-000450 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960513 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: 96561807 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 March 31, 1996. 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 May 8, 1996 there were 9,871,981 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 March 31, 1996 (unaudited) and December 31, 1995 (audited) 2 Consolidated Statements of Income for the Three Months Ended March 31, 1996 (unaudited) and March 31, 1995 (unaudited) 3 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1996 (unaudited) and March 31, 1995 (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 9 Signatures 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, 1995 included in the Company's annual report filed on Form 10-K. The results of operations for the three months ended March 31, 1996 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 March 31, December 31, 1996 1995 ---- ---- Current assets: Cash and cash equivalents $14,359,895 $14,203,713 Accounts receivable, net 25,362,377 22,884,355 Inventories 26,949,337 26,093,106 Receivables, other 2,371,483 970,468 Other 1,300,636 987,017 Deferred tax benefit 1,773,058 2,400,935 ----------- ----------- Total current assets 72,116,786 67,539,594 Equipment and leasehold improvements, net 2,070,465 1,970,126 Other assets 1,339,522 1,313,694 Deferred tax benefit 0 581,507 Intangible assets, net 10,151,989 12,596,322 ----------- ----------- $85,678,762 $84,001,243 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Loans payable, banks $8,600,994 $9,921,881 Accounts payable 18,099,109 15,012,125 Income taxes payable 817,568 1,241,933 ----------- ----------- Total current liabilities 27,517,671 26,175,939 ----------- ----------- Long-term debt, less current portion 562,313 596,092 ----------- ----------- Minority interests 5,413,162 5,252,979 ----------- ----------- Shareholders' equity: Common stock, $.001 par; authorized 30,000,000 shares; outstanding 9,871,981 and 10,009,981 shares at March 31, 1996 and December 31, 1995, respectively 9,872 10,010 Additional paid-in capital 20,609,985 20,609,985 Retained earnings 34,337,918 32,565,096 Foreign currency translation adjustment 1,201,229 1,681,305 Treasury stock, at cost, 948,503 and 810,503 shares at March 31, 1996 and December 31, 1995, respectively (3,973,388) (2,890,163) ----------- ----------- 52,185,616 51,976,233 ----------- ----------- $85,678,762 $84,001,243 =========== =========== See notes to financial statements. Page 2 JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME Three Months Ended March 31, 1996 1995 ---- ---- (unaudited) (unaudited) Net sales $23,302,276 $21,612,397 Cost of sales 12,209,683 10,659,705 ----------- ----------- Gross margin 11,092,593 10,952,692 Selling, general and administrative 7,872,021 7,848,366 ----------- ----------- Income from operations 3,220,571 3,104,326 ----------- ----------- Other charges (income): Interest 210,307 242,463 Loss on foreign currency 20,243 238,716 Interest and dividend (income) (141,112) (68,690) ----------- ----------- 89,438 412,489 ----------- ----------- Income before income taxes 3,131,133 2,691,837 Income taxes 1,055,120 1,038,977 ----------- ----------- Net income before minority interest 2,076,013 1,652,860 Minority interest in net income of consolidated subsidiary 303,191 32,276 ----------- ----------- Net income $1,772,822 $1,620,584 =========== =========== Net income per common and common equivalent share $ 0.18 $ 0.16 =========== =========== Number of common and common equivalent shares outstanding 10,083,757 10,429,287 =========== =========== See notes to financial statements. Page 3 JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Three months ended March 31, 1996 1995 ---- ---- Operating activities: Net income $1,772,822 $1,620,584 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 450,024 328,074 Minority interest in net income 303,192 32,276 Increase (decrease) in cash from changes in: Accounts receivable (2,816,022) (1,333,371) Inventories (1,168,231) (2,649,763) Other assets (1,370,082) 1,327,267 Deferred tax benefit 1,174,684 229,729 Accounts payable 3,294,984 3,424,399 Income taxes payable (468,365) (330,170) ----------- ---------- Net cash provided by operating activities 1,173,006 2,649,025 ----------- ---------- Investing activities: Purchase of equipment and leasehold improvements (268,163) (185,597) Trademark and license acquisitions (6,733) (7,375) Proceeds from sale of trademark 1,575,000 ----------- ---------- Net cash provided by (used in) investing activities 1,300,104 (192,972) ----------- ---------- Financing activities: Increase (decrease) in loan payable, bank (1,138,887) 1,635,989 Repayment of long-term debt (48,638) Purchase of treasury stock (1,083,363) (1,704,554) ----------- ---------- Net cash (used in) financing activities (2,222,250) (117,203) ----------- ---------- Effect of exchange rate changes on cash (94,678) (27,828) ----------- ---------- Increase in cash and cash equivalents 156,182 2,311,022 Cash and cash equivalents at beginning of period 14,203,713 5,275,142 ----------- ---------- Cash and cash equivalents at end of period $14,359,895 $7,586,164 =========== ========== Supplemental disclosure of cash flows information: Cash paid during the period for: Interest $210,000 $201,000 Income taxes 883,000 1,213,000 ---------- ---------- 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, 1995. 2. Earnings Per Share: Net income per 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: March 31, December 31, 1996 1995 ---- ---- Raw materials and component parts $13,083,107 $10,981,751 Finished goods 13,866,230 15,111,355 ----------- ----------- $26,949,337 $26,093,106 =========== =========== 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 strategic acquisition opportunities, and pursuing expansion in international markets, has resulted in another record for quarterly sales and earnings. Three Months Ended March 31, 1996 Compared to March 31, 1995 Net sales increased 8% to $23.3 million, as compared to $21.6 million in 1995. This increase is the result of continued growth of the Company's Alternative Designer Fragrance lines along with the continued success of new product development by the Company's international operations. Sales generated by the Company's core Alternative Designer Fragrance lines increased 16% and sales by the Company's French subsidiaries increased 27%; at comparable foreign currency exchange rates, sales by the Company's French subsidiaries increased 24%. The overall sales increase was achieved despite a significant decline in net sales of Cutex products caused in part by the recent discontinuance of the Cutex Color Splash lip line and an unusually strong first quarter of 1995, which included the launch of the Cutex Fresh Color lip and nail lines. Gross margin for 1996 decreased to 48% of sales from 51% in 1995. The decline in Cutex sales for the three months ended March 31, 1996, as compared to the corresponding period of the prior year, had a direct impact on gross margin as Cutex sales provide the Company with a higher gross margin than the Company's other product lines. The Company's business lines, excluding Cutex, generated a 46% gross margin in 1996 and 1995. Selling, general and administrative expenses decreased to 34% of net sales in 1996 as compared to 36% in 1995 reflecting our successful efforts in controlling such expenditures. Interest expense decreased to $210,000 in 1996 from $242,000 in 1995. The Company's French subsidiaries used a portion of the proceeds of its November 1995 public offering to reduce short term borrowings. The Company continues to use its available credit lines, as needed, to finance its working capital needs. Page 6 JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES In 1996, the Company incurred a loss on foreign currency of $20,000 as compared to a loss of $239,000 in 1995. The 1995 loss was the result of the steep decline of the U.S. dollar relative to the French franc. The Company's effective income tax rate decreased to 34% in 1996 from 39% in 1995. Such decline is due to the utilization of net operating loss carryforwards made available to the Company's foreign subsidiaries as a result of the March 1996 sale of the Bal a Versailles trademarks. Net income for the three months ended March 31, 1996 increased 9% to $1.8 million compared to $1.6 million for the corresponding quarter of the prior year. Earnings per share increased 13% to $0.18 per share compared to $0.16 per share for the corresponding quarter of the prior year. The weighted average number of shares outstanding was 10,083,757 in 1996 and 10,429,287 in 1995 as a result of the Company's ongoing stock buyback program. 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 March 31, 1996, working capital aggregated $44.6 million and the Company had cash and cash equivalents on hand of approximately $14.4 million. The Company's Board of Directors has authorized the repurchase of up to 1,000,000 shares of the Company's common stock and as of March 31, 1996, 462,305 shares had been purchased at an average price per share of $8.60. The Company's short-term financing requirements are expected to be met by available cash at March 31, 1996, cash generated by operations and short-term credit lines provided by domestic and foreign banks. The principal credit facilities for 1996 are a $12.0 million unsecured revolving line of credit provided by a domestic commercial bank and $6.0 million in credit lines provided by a consortium of international financial institutions. Borrowings under the domestic revolving line of credit are due on demand and bear interest at the prime 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. Page 7 JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES Operating activities provided $1.2 million of net cash in the three months ended March 31, 1996. The Company continues to closely monitor credit limits and collection of outstanding receivables. Improved techniques in forecasting and materials requisition planning continue to improve the Company's purchasing and production activities. Inventory levels reflect anticipated needs for the upcoming selling season and new product introductions. 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 March 31, 1996. Page 8 JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES Part II. Other Information Items 1, 2, 3, 4, 5 and 6 are omitted as they are either not applicable or have been included in Part I. 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 13th day of May 1996. JEAN PHILIPPE FRAGRANCES, INC. By: /s/ Russell Greenberg Russell Greenberg, Executive Vice President and Chief Financial Officer Page 9 EX-27 2 FINANCIAL DATA SCHEDULE
5 1 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 14,359,895 0 25,362,377 0 26,949,337 72,116,786 2,070,465 0 85,678,762 27,517,671 0 0 0 16,646,469 35,539,147 85,678,762 23,302,276 23,302,276 12,209,683 20,081,704 89,438 0 210,307 3,131,133 1,055,120 2,076,013 0 303,191 0 1,772,822 .18 .18
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