-----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, RLlPRUxYZxw8OANoHMGMlmM7LQKYuDH4ekqRRykkUbxVzyESa8MQj+008mXKddKq F5iwFP9KfroS+WPffat+Aw== 0000898430-00-000456.txt : 20000215 0000898430-00-000456.hdr.sgml : 20000215 ACCESSION NUMBER: 0000898430-00-000456 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000101 FILED AS OF DATE: 20000214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LESLIES POOLMART INC CENTRAL INDEX KEY: 0000866048 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-RETAIL STORES, NEC [5990] IRS NUMBER: 954620298 STATE OF INCORPORATION: DE FISCAL YEAR END: 0927 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-18741 FILM NUMBER: 541933 BUSINESS ADDRESS: STREET 1: 20630 PLUMMER ST CITY: CHATSWORTH STATE: CA ZIP: 91311 BUSINESS PHONE: 8189934212 MAIL ADDRESS: STREET 1: 20222 PLUMMER ST CITY: CHATSWORTH STATE: CA ZIP: 91311 10-Q 1 FORM 10-Q ================================================================================ 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 January 1, 2000. OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-18741 Leslie's Poolmart, Inc. (Exact name of registrant as specified in its charter) Delaware 95-4620298 (State or Other Jurisdiction of (I.R.S. Employer Identification No.) Incorporation or Organization) 20630 Plummer Street, Chatsworth, California 91311 (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code (818) 993-4212 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock (Title of Class) 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 such filing requirements for the past 90 days. Yes X No _____ ----- Applicable only to issuers involved in bankruptcy proceedings during the preceding five years: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ______ No _______ APPLICABLE ONLY TO CORPORATE REGISTRANTS: As of February 7, 2000 the number of outstanding shares of the Registrant's common stock was 1,433,643. ================================================================================ PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS LESLIE'S POOLMART, INC. ----------------------- CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)
January 1, October 2, 2000 1999 --------- --------- ASSETS (UNAUDITED) - ------ CASH $ 195 $ 193 RECEIVABLES, NET 4,412 7,350 INVENTORIES, NET 65,759 58,729 PREPAID EXPENSES 2,091 2,128 DEFERRED TAX ASSETS 5,121 5,122 DEFERRED INCOME TAX CHARGE 2,714 -- --------- --------- TOTAL CURRENT ASSETS 80,292 73,522 PROPERTY, PLANT AND EQUIPMENT, NET 47,661 47,336 GOODWILL, NET 8,323 8,392 NON-COMPETE COVENANT 511 627 DEFERRED FINANCING COSTS 2,323 2,460 OTHER ASSETS 435 443 --------- --------- $ 139,545 $ 132,780 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) - ---------------------------------------------- ACCOUNTS PAYABLE $ 23,929 $ 16,937 ACCRUED LIABILITIES 14,420 15,462 CURRENT PORTION OF LONG-TERM DEBT 100 101 INCOME TAXES -- 4,999 --------- --------- TOTAL CURRENT LIABILITIES 38,449 37,499 DEFERRED TAX LIABILITIES 3,106 3,106 LINE-OF-CREDIT BORROWINGS 22,749 7,512 LONG-TERM DEBT, NET OF CURRENT PORTION 1,081 1,095 SENIOR NOTES 90,000 90,000 PREFERRED STOCK 34,253 33,225 SHAREHOLDERS' EQUITY (DEFICIT) - ------------------------------ COMMON STOCK (45,701) (45,701) RETAINED EARNINGS (4,392) 6,044 --------- --------- TOTAL SHAREHOLDERS' DEFICIT (50,093) (39,657) --------- --------- $ 139,545 $ 132,780 ========= =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED BALANCE SHEETS 2 LESLIE'S POOLMART, INC. ----------------------- CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (IN THOUSANDS)
Three Months Ended ----------------------------------- January 1, January 2, 2000 1999 ----------- ------------ SALES $ 30,890 $ 26,132 COST OF SALES 23,538 19,886 -------- -------- GROSS PROFIT 7,352 6,246 SELLING, GENERAL & ADMINISTRATIVE EXPENSES 20,969 17,101 AMORTIZATION OF ACQUISITION COSTS 185 186 LOSS ON DISPOSITION OF FIXED ASSETS 301 127 -------- -------- LOSS FROM OPERATIONS (14,103) (11,168) INTEREST EXPENSE 3,033 2,642 -------- -------- LOSS BEFORE INCOME TAX BENEFIT (17,136) (13,810) INCOME TAX BENEFIT 7,729 6,145 -------- -------- NET LOSS (9,407) (7,665) -------- -------- SERIES A PREFERRED STOCK DIVIDENDS AND ACCRETION 1,028 923 LOSS APPLICABLE TO COMMON SHAREHOLDERS $(10,435) $ (8,588) ======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 3 LESLIE'S POOLMART, INC. ---------------------- CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS)
Three Months Ended ------------------------ January 1, January 2, 2000 1999 ------------ ----------- CASH FLOWS FROM OPERATING ACTIVITIES - ------------------------------------ NET LOSS $ (9,407) $ (7,665) ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH USED IN OPERATING ACTIVITIES: DEPRECIATION AND AMORTIZATION 2,241 1,912 LOSS ON DISPOSITION OF FIXED ASSETS 301 127 INCOME TAX BENEFIT (7,729) (6,145) NET CHANGE IN RECEIVABLES, INVENTORY AND PAYABLES 1,875 (1,511) OTHER, NET 44 (266) -------- -------- NET CASH USED IN OPERATING ACTIVITIES (12,675) (13,548) -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES - ------------------------------------ PURCHASE OF PROPERTY, PLANT AND EQUIPMENT (2,545) (3,619) -------- -------- NET CASH USED IN INVESTING ACTIVITIES (2,545) (3,619) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES - ------------------------------------ NET LINE-OF-CREDIT BORROWINGS 15,237 7,784 PAYMENTS OF LONG-TERM DEBT (15) (12) -------- -------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 15,222 7,772 -------- -------- NET INCREASE (DECREASE) IN CASH 2 (9,395) CASH AT BEGINNING OF PERIOD 193 9,564 -------- -------- CASH AT END OF PERIOD $ 195 $ 169 ======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 4 LESLIE'S POOLMART, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JANUARY 1, 2000 (Unaudited) (1) Presentation of Financial Information The financial statements included herein have been prepared by Leslie's Poolmart, Inc. (the "Company"), without audit, and include all adjustments of a normal recurring nature which are, in the opinion of management, necessary for a fair presentation of the results of operations for the three month periods ended January 1, 2000 and January 2, 1999 pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes the disclosures in these financial statements are adequate to make the information presented not misleading. The following material under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" is written with the presumption that the users of the interim financial statements have read or have access to the Company's 1999 Annual Report on Form 10-K filed with the Securities and Exchange Commission on December 22, 1999. This document contains the latest audited financial statements and notes thereto, together with Management's Discussion and Analysis of Financial Condition and Results of Operations as of October 2, 1999 and for the year then ended. The results of operations for the three months ended January 1, 2000 and January 2, 1999 are not indicative of the results for a full year. (2) Organization and Operations Leslie's Poolmart, Inc. is a specialty retailer of swimming pool supplies and related products. The Company markets its products under the trade name Leslie's Swimming Pool Supplies through 370 retail stores in 30 states; a nationwide mail order catalog; and a new internet E-commerce capability. The Company also repackages certain bulk chemical products for retail sale. The Company's business is highly seasonal as the majority of its sales and all of its operating profits are generated in the quarters ending June and September. On January 3, 2000, Brian P. McDermott was appointed Chairman of the Board, while Lawrence H. Hayward assumed the responsibilities of President and Chief Executive Officer, the post previously occupied by Mr. McDermott. Mr. Hayward also serves on the Board of Directors of the Company. Michael J. Fourticq, the outgoing Chairman of the Board, remains on the Board of Directors. Mr. Hayward joined Leslie's from Fleming Companies, Inc. In 1999, while at Fleming, Mr. Hayward served as President of ABCO Desert Markets, an Arizona based retail chain. From 1995 to 1999, Mr. Hayward served as President and CEO of Carr Gottstein Foods Company, Alaska's largest food and drug retailer and wholesale distributor. Between 1990 to 1995, Mr. Hayward served as Vice President, Retail Operations for Buttrey Food & Drug. Prior to this, Mr. Hayward served in positions of increasing responsibility at American Stores Companies. 5 (3) Inventories Inventories consist of the following: January 1, January 2, 2000 1999 ------------ ------------ (in thousands) Raw materials and supplies $ 1,043,000 $ 1,122,000 Finished goods 64,716,000 47,225,000 ------------ ------------ Total Inventories $ 65,759,000 $ 48,347,000 ============ ============ (4) Fiscal Periods In 1997, the Company changed its fiscal year end from the Saturday closest to December 31 to the Saturday closest to September 30. The 1999 fiscal year ended on October 2, 1999 and included 52 weeks. The 1998 fiscal year ended on October 3, 1998, and included 53 weeks. ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Leslie's Poolmart, Inc. is the leading specialty retailer of swimming pool supplies and related products in the United States. The Company currently markets its products through 370 Company-owned retail stores in 30 states; a nationwide mail order catalog; and a new internet E- commerce capability. Leslie's is vertically integrated, operating a chemical repackaging facility in Ontario, California. It supplies its retail stores from distribution facilities located in Ontario, California; Dallas, Texas; Bridgeport, New Jersey; and Covington, Kentucky. SEASONALITY AND QUARTERLY FLUCTUATIONS The Company's business exhibits substantial seasonality which the Company believes is typical of the swimming pool supply industry. In general, sales and net income are highest during the fiscal quarters ending in June and September, which represent the peak months of swimming pool use. Sales are substantially lower during the quarters ending December and March when the Company will typically incur operating losses. The Company expects that its quarterly results of operations will fluctuate depending on the timing and amount of revenue contributed by new stores and, to a lesser degree, the timing of costs associated with the opening of new stores. The Company generally attempts to open its new stores in the quarter ending in March in order to position itself for the following peak season. RESULTS OF OPERATIONS Summary ------- (In thousands) Three Months Ended --------------------------------- January 1, January 2, 2000 1999 -------------- ------------ Sales $30,890 $26,132 Loss from Operations (14,103) (11,168) Depreciation 1,919 1,588 Goodwill Amortization 185 186 Loss on Asset Dispositions 301 127 -------- -------- EBITDA Loss $(11,698) $(9,267) 6 In the first quarter ended January 1, 2000, the Company reported an EBITDA loss of $11,698,000, as compared to an EBITDA loss of $9,267,000 for the first quarter of fiscal 1999. EBITDA represents earnings before interest, taxes, depreciation, amortization, loss or gain on fixed asset dispositions, and any other non-cash income or expenses. During the quarter, 11 new stores were opened and 5 stores were closed, bringing the total store count to 370 on January 1, 2000, up from 319 on January 2, 1999. The Company historically incurs an operating loss in the quarter ending in December and generally expects such losses to grow as new stores continue to be added at a significant rate. Sales --------------------------------- (In thousands) Three Months Ended --------------------------------- January 1, January 2, 2000 1999 -------------- ------------ Retail Stores $ 30,366 $ 25,546 Mail Order 524 586 ------ -------- $ 30,890 $ 26,132 Total sales for the first fiscal quarter increased 18.2% over the same quarter of 1999. Retail store sales grew 18.9% in the period due to an increase in the total number of stores in operation this year versus last as well as a comparable store sales increase of 11.8%. The increase in comparable store sales is primarily the result of the maturing of the new stores opened over the last several years, the continued growth in commercial sales, and the rapid growth of the store-based service operations. Mail order catalog sales in the first quarter declined 10.6% compared to the same quarter of the prior year due to continued cannabilization from new store openings. Gross profit for the three months ended January 1, 2000 equaled $7,352,000 or 23.8% of sales, .1% of sales lower than was reported in the same quarter of the prior year. The slightly lower gross margin is primarily due to increased promotional activity in the quarter as compared to prior year. Partially offsetting this were occupancy costs which declined slightly as a percentage of sales versus prior year on the quarter's strong sales performance. In the first quarter of fiscal 2000, selling, general and administrative expenses equaled $20,969,000, an increase of 22.6% over the same period of last year. This increase is largely the result of higher store expenses and increased overhead costs associated with the continued growth in the number of stores. The loss on disposition of fixed assets increased slightly versus prior year with the closure of 5 under-performing stores in the quarter. Interest expense equaled $3,033,000 in the first quarter of fiscal 2000, up slightly from the same period of last year. Increased line-of-credit borrowings produced the higher interest expense in this quarter. FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES Changes in Financial Condition Between October 2, 1999 and January 1, 2000, total current assets increased $6,770,000 principally the result of inventory which increased $7,030,000 during the period. The inventory increase is due to several early buys of merchandise, for which extended dating terms were received from vendors, in preparation for the upcoming selling season. During the same period, current liabilities increased $950,000, due to a $6,992,000 increase in accounts payable partially offset by a $4,999,000 decrease in current income tax liabilities. The higher accounts payable reflects the increased inventory in the period while the reduced income tax liability reflects the accrued tax benefit associated with the quarterly operating loss. 7 Liquidity and Capital Resources In the quarter ended January 1, 2000, net cash used in operating activities was $12,675,000 compared with $13,548,000 in the comparable quarter of the prior year. In the first fiscal quarter, cash is typically used to finance the operating losses experienced outside of the Company's peak selling season. In the quarter, cash used in investing activities was $2,545,000, down from $3,619,000 in the same quarter of the prior year. This decrease resulted from lower capital expenditures associated with reduced new store openings planned for fiscal 2000 versus the prior year. Cash provided by financing activities was $15,222,000 in the quarter, compared with cash provided of $7,772,000 in the same quarter of last year. Line-of-credit borrowings increased primarily to finance the usual first quarter operating loss whereas, in the prior year, lesser additional borrowings were needed as the Company had substantial cash balances available at the start of the quarter. The Company believes that its internally generated funds, as well as its borrowing capacity, are adequate to meet its working capital needs, maturing obligations and capital expenditure requirements, including those relating to the opening of new stores. YEAR 2000 ISSUE The computer systems issue relating to dates beyond 1999 is the result of many computer programs being written to use and store dates with only the last two digits of the applicable year. As a result, these programs may assume that all two digit dates are twentieth century dates. This could have resulted in system failure, anomalous system behavior or incorrect system reporting. To date, the Company has not experienced any significant issues related to Year 2000. PART II. OTHER INFORMATION ITEM 5: OTHER INFORMATION ITEM 6: Exhibits and Reports on Form 8-A (a) Exhibits 27. Financial Data Schedule (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. LESLIE'S POOLMART, INC. Date: February 11, 2000 /s/ Robert D. Olsen ------------------- Robert D. Olsen Chief Financial Officer 8 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ACCOMPANYING CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS SEP-30-2000 OCT-03-1999 JAN-01-2000 195 0 4,412 0 65,759 80,292 47,661 0 139,545 38,449 0 34,253 0 (45,701) 0 139,545 0 30,890 0 23,538 0 0 3,033 (17,136) (7,729) (9,407) 0 0 0 (9,407) 0 0
-----END PRIVACY-ENHANCED MESSAGE-----