-----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, Lt4dFKtyy11L7t9KHbq4iwID+vp4OM87iTzYbM0HveaIkXmU5gizcXdbXWSY/Wgb F6s8OwJZfXocrjlVmAI/dA== 0001095811-00-000538.txt : 20000315 0001095811-00-000538.hdr.sgml : 20000315 ACCESSION NUMBER: 0001095811-00-000538 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000314 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CRAIG JENNY INC /DE CENTRAL INDEX KEY: 0000878865 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PERSONAL SERVICES [7200] IRS NUMBER: 330366188 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 001-10887 FILM NUMBER: 569370 BUSINESS ADDRESS: STREET 1: 445 MARINE VIEW AVE STE 300 CITY: DEL MAR STATE: CA ZIP: 92014 BUSINESS PHONE: 6192597000 MAIL ADDRESS: STREET 1: 445 MARINE VIEW AVENUE STREET 2: SUITE 300 CITY: DEL MAR STATE: CA ZIP: 92014 FORMER COMPANY: FORMER CONFORMED NAME: JCI HOLDINGS INC DATE OF NAME CHANGE: 19600201 10-Q/A 1 FORM 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q/A QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended December 31, 1999 Commission File No. 001-10887 JENNY CRAIG, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) DELAWARE 33-0366188 ------------------------ ------------------------------------ (State of Incorporation) (I.R.S. Employer Identification No.) 11355 NORTH TORREY PINES ROAD, LA JOLLA, CA 92037 -------------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code(858) 812-7000 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 [ ] Number of shares of common stock, $.000000005 par value, outstanding as of the close of business on February 10, 2000- 20,688,971. -1- 2 This filing is being made solely to correct the presentation of Note 5 of Notes to Unaudited Consolidated Financial Statements on Page 6 of Form 10-Q for the quarter ended December 31, 1999. Due to an error in the conversion of the table to EDGAR format, certain amounts in the table were presented in incorrect columns. 3 ITEM 1. FINANCIAL STATEMENTS JENNY CRAIG, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ($ in thousands)
June 30, December 31, 1999 1999 -------- ------------ (unaudited) ASSETS Cash and cash equivalents ...................................... $ 38,864 28,772 Short-term investments ......................................... 3,150 3,651 Accounts receivable, net ....................................... 1,925 2,099 Inventories .................................................... 18,036 18,250 Prepaid expenses and other assets .............................. 4,795 2,347 -------- ------- Total current assets .................................. 66,770 55,119 Deferred tax assets ............................................ 13,406 23,216 Cost of reacquired area franchise rights, net .................. 8,078 7,578 Property and equipment, net .................................... 24,360 26,196 -------- ------- $112,614 112,109 ======== ======= LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable ............................................... $ 16,393 18,657 Accrued liabilities ............................................ 15,110 21,350 Accrual for litigation judgment ................................ 8,203 9,211 Deferred service revenue ....................................... 10,075 8,539 -------- ------- Total current liabilities ............................. 49,781 57,757 Note payable ................................................... 5,336 5,242 Obligation under capital lease ................................. -- 2,029 -------- ------- Total liabilities ..................................... 55,117 65,028 -------- ------- Stockholders' equity: Common stock $.000000005 par value, 100,000,000 shares authorized; 27,580,260 shares issued; 20,688,971 shares outstanding at June 30, 1999 and December 31, 1999 ........... -- -- Additional paid-in capital ..................................... 71,622 71,622 Retained earnings .............................................. 56,507 45,115 Accumulated other comprehensive income ......................... 4,130 5,106 Treasury stock, at cost; 6,891,289 shares at June 30, 1999 and December 31, 1999 ........................................ (74,762) (74,762) -------- ------- Total stockholders' equity ............................ 57,497 47,081 Commitments and contingencies .................................. ======== ======= $112,614 112,109 ======== =======
See accompanying notes to unaudited consolidated financial statements. -2- 4 JENNY CRAIG, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS ($ in thousands, except per share amounts)
Three Months Ended Six Months Ended December 31, December 31, ----------------------- ---------------------- 1998 1999 1998 1999 ------- ------- ------- ------- Revenues: Company-owned operations: Product sales ................................ $64,193 53,008 139,185 114,509 Service revenue .............................. 3,869 4,123 7,951 8,276 ------- ------- ------- ------- 68,062 57,131 147,136 122,785 ------- ------- ------- ------- Franchise operations: Product sales ................................ 5,235 4,327 10,961 9,372 Royalties .................................... 951 674 1,777 1,476 Initial franchise fees ....................... 5 25 5 35 ------- ------- ------- ------- 6,191 5,026 12,743 10,883 ------- ------- ------- ------- Total revenues ........................... 74,253 62,157 159,879 133,668 ------- ------- ------- ------- Costs and expenses: Company-owned operations: Product ...................................... 62,394 53,822 131,274 117,782 Service ...................................... 2,786 3,172 5,526 6,228 ------- ------- ------- ------- 65,180 56,994 136,800 124,010 ------- ------- ------- ------- Franchise operations: Product ...................................... 3,652 3,144 7,715 6,633 Other ........................................ 398 361 816 780 ------- ------- ------- ------- 4,050 3,505 8,531 7,413 ------- ------- ------- ------- 5,023 1,658 14,548 2,245 General and administrative expenses .............. 6,176 6,512 12,134 12,798 Litigation judgment .............................. -- 219 -- 1,008 Restructuring charge ............................. -- 7,512 -- 7,512 ------- ------- ------- ------- Operating income (loss) ................... (1,153) (12,585) 2,414 (19,073) Other income, net, principally interest .......... 466 308 931 695 ------- ------- ------- ------- Income (loss) before taxes ................ (687) (12,277) 3,345 (18,378) Income taxes (benefit) ........................... (270) (4,667) 1,272 (6,986) ------- ------- ------- ------- Net income (loss) .......................... $ (417) (7,610) 2,073 (11,392) ======= ======= ======= ======= Basic and diluted net income (loss) per share .................................. $ (.02) (.37) .10 (.55) ======= ======= ======= =======
See accompanying notes to unaudited consolidated financial statements. -3- 5 JENNY CRAIG, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS ($ in thousands)
Six Months Ended December 31, ----------------------- 1998 1999 ------- ------- Cash flows from operating activities: Net income (loss) ................................................ $ 2,073 (11,392) Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation and amortization .................................... 2,701 2,902 Non-cash portion of restructuring charge ......................... -- 1,303 Provision for deferred income taxes (benefit) .................... (4,802) (9,810) Loss on write-off of cost of reacquired area franchise rights .... -- 96 Loss on disposal of property and equipment ....................... 203 1,349 (Increase) decrease in: Accounts receivable .................................... (26) (174) Inventories ............................................ (2,855) (214) Prepaid expenses and other assets ...................... 2,264 2,448 Increase (decrease) in: Accounts payable ....................................... 4,327 2,264 Accrued liabilities .................................... (3,068) 4,310 Accrual for litigation judgment ........................ -- 1,008 Deferred service revenue ............................... (1,501) (1,536) ------- ------- Net cash used in operating activities ......... (684) (7,446) ------- ------- Cash flows from investing activities: Purchase of property and equipment ................................ (1,805) (2,957) Purchase of short-term investments ................................. (4,295) (3,375) Proceeds from maturity of short-term investments ................... 3,042 2,874 ------- ------- Net cash used in investing activities ......... (3,058) (3,458) ------- ------- Cash flows from financing activities- Principal payments on note payable and capital lease obligation.... (95) (164) ------- ------- Effect of exchange rate changes on cash and cash ..................... 15 976 equivalents ------- ------- Net decrease in cash and cash equivalents ............................ (3,822) (10,092) Cash and cash equivalents at beginning of period ..................... 42,124 38,864 ------ ------- Cash and cash equivalents at end of period ........................... $38,302 28,772 ======= ======= Supplemental disclosure of cash flow information: Income taxes paid ................................................. $ 3,832 1,464 Supplemental disclosure of investing activities: Equipment acquired under capital lease ............................ $ -- 2,726
See accompanying notes to unaudited consolidated financial statements. -4- 6 JENNY CRAIG, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS December 31, 1999 1. The accompanying unaudited consolidated financial statements 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 only of normal recurring adjustments, considered necessary for a fair presentation have been included. Operating results for any interim period are not necessarily indicative of the results for any other interim period or for the full year. These statements should be read in conjunction with the June 30, 1999 consolidated financial statements. 2. The weighted average number of shares used to calculate basic net income (loss) per share was 20,688,971 for all periods presented. The impact of outstanding stock options during the periods presented did not create a difference between calculated basic net income (loss) per share and diluted net income (loss) per share. Stock options had the effect of increasing the number of shares used in the diluted net income per share calculation by application of the treasury stock method by 5,584 shares for the six months ended December 31, 1998. The effect of 2,389,800 and 2,938,500 stock options have been excluded from the calculation of diluted net loss per share for the quarter ended December 31, 1998 and the quarter and six month period ended December 31, 1999, respectively, as inclusion of the effect of the stock options would have been antidilutive. 3. Comprehensive income (loss) for the quarters and six months ended December 31, 1998 and 1999 presented below includes foreign currency translation items. There was no tax expense or tax benefit associated with the foreign currency items.
Three Months Ended Six Months Ended December 31, December 31, -------------------- -------------------- 1998 1999 1998 1999 ----- ------ ----- ------- Net income (loss) $(417) (7,610) 2,073 (11,392) Foreign currency translation adjustments 512 497 15 976 ----- ------ ----- ------- Comprehensive income (loss) $ 95 (7,113) 2,088 (10,416) ===== ====== ===== =======
4. In November 1999, the Company announced a restructuring plan to reduce annual operating expenses. The plan included the closure of 86 underperforming Company-owned centres in the United States, which represented 16% of the total United States Company-owned centres, and a staff reduction of approximately 15% at the Company's corporate headquarters. All employees were notified in early November and the centres were closed by November 30, 1999. A charge of $7,512,000 was recorded in the quarter ended December 31, 1999 in connection with this restructuring. The charge was comprised of $3,882,000 for lease termination costs at the 86 centres, $1,563,000 for severance payments to terminated employees, $1,303,000 for the write-off of fixed assets at the closed centres, $291,000 for refunds to program participants at the closed centres, and $473,000 for other closure costs which include sign removals and demolition of leasehold improvements. The Company does not believe that there will be any material sub-lease income available with respect to the closed centres due to the relatively short remaining lease terms on the respective centres, nor does the Company believe that there will be any material salvage value of the fixed assets, which consist substantially of leasehold improvements. Of the total charge of $7,512,000, approximately $6,209,000 will require cash payments and $1,303,000 represents the non-cash write-off of fixed assets. As of December 31, 1999, the Company had made cash payments of $685,000 for lease termination costs, $547,000 for severance to terminated employees, $68,000 for refunds to program participants, and $11,000 for other closure costs. The Company estimates that the remaining cash payments of approximately $4,898,000, which is the principal reason for the increase in accrued liabilities on the accompanying balance sheet at December 31, 1999, will be substantially incurred by June 30, 2000. -5- 7 JENNY CRAIG, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) 5. The Company operates in the weight management industry. Substantially all revenue results from the sale of weight management products and services, whether the centre is operated by the Company or its franchisees. The Company's reportable segments consist of Company-owned operations and franchise operations, further segmented by geographic area. The following presents information about the respective reportable segments ($ in thousands):
Three Months Six Months Ended December 31, Ended December 31, ------------------------ ----------------------- 1998 1999 1998 1999 -------- ------- ------- ------- Revenue: Company-owned operations: United States ............. $ 56,238 44,702 123,725 96,731 Foreign ................... 11,824 12,429 23,411 26,054 Franchise operations: United States ............. 4,888 3,328 9,989 6,874 Foreign ................... 1,303 1,698 2,754 4,009 Operating income (loss): Company-owned operations: United States ............. (4,069) (14,615) (2,995) (24,668) Foreign ................... 1,796 1,580 3,217 4,107 Franchise operations: United States ............. 920 109 1,521 290 Foreign ................... 200 341 671 1,198 Identifiable assets: United States ................ 95,501 97,132 95,501 97,132 Foreign ...................... 12,494 14,977 12,494 14,977
-6- 8 SIGNATURE 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. JENNY CRAIG, INC. By: /S/ James S. Kelly --------------------------------- James S. Kelly Vice President and Chief Financial Officer Date: March 14, 2000 -18- -----END PRIVACY-ENHANCED MESSAGE-----