R | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Florida | 65-0977964 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
35 Sawgrass Drive, Suite 2 Bellport, NY | 11713 | |
(Address of principal executive offices) | (Zip Code) |
Large Accelerated Filer | o | Accelerated Filer | ¨ | |||
Non-accelerated Filer | o (Do not check if a smaller reporting company) | Smaller Reporting Company | R |
ITEM 1 | ||
ITEM 2 | ||
ITEM 3 | ||
ITEM 4 | ||
PART II OTHER INFORMATION | ||
ITEM 1 | ||
ITEM 1A | ||
ITEM 2 | ||
ITEM 3 | ||
ITEM 4 | ||
ITEM 5 | ||
ITEM 6 | ||
PART I. | FINANCIAL INFORMATION |
ITEM 1. | FINANCIAL STATEMENTS |
July 30, 2011 | January 29, 2011 | ||||||
(unaudited) | (Note 1) | ||||||
ASSETS: | |||||||
Current assets: | |||||||
Cash | $ | 1,449 | $ | 1,236 | |||
Accounts receivable, net of allowances of $706 and $525, as of July 30, 2011 and January 29, 2011, respectively | 19,784 | 20,305 | |||||
Inventories | 224,341 | 224,645 | |||||
Prepaid expenses and other current assets | 9,251 | 9,769 | |||||
Total current assets | 254,825 | 255,955 | |||||
Property and equipment, net | 25,713 | 28,050 | |||||
Other assets, net | 15,563 | 16,467 | |||||
Total assets | $ | 296,101 | $ | 300,472 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY: | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 37,949 | $ | 25,789 | |||
Accounts payable-affiliates | 10,645 | 14,787 | |||||
Accrued expenses and other liabilities | 16,305 | 16,734 | |||||
Current portion of notes payable-affiliate | 53 | 373 | |||||
Current portion of obligations under capital leases and other long-term debt | 779 | 1,232 | |||||
Total current liabilities | 65,731 | 58,915 | |||||
Revolving credit facility | 47,054 | 57,879 | |||||
Notes payable-affiliates | 95,366 | 95,366 | |||||
Long-term portion of obligations under capital leases | 1,600 | 1,773 | |||||
Other long-term liabilities | 29,058 | 26,031 | |||||
Total liabilities | 238,809 | 239,964 | |||||
Commitments and contingencies | |||||||
Shareholders’ equity: | |||||||
Preferred stock, $0.10 par value, 1,000,000 shares authorized, as of July 30, 2011 and January 29, 2011, none issued | — | — | |||||
Common Stock, $0.01 par value, 20,000,000 shares authorized; 9,866,000 shares and 9,865,000 shares issued as of July 30, 2011 and January 29, 2011, respectively | 99 | 99 | |||||
Additional paid-in capital | 125,204 | 125,186 | |||||
Accumulated deficit | (59,434 | ) | (56,200 | ) | |||
Treasury stock, at cost, 898,249 shares as of July 30, 2011 and January 29, 2011 | (8,577 | ) | (8,577 | ) | |||
Total shareholders’ equity | 57,292 | 60,508 | |||||
Total liabilities and shareholders’ equity | $ | 296,101 | $ | 300,472 |
Thirteen Weeks Ended | Thirteen Weeks Ended | Twenty-six Weeks Ended | Twenty-six Weeks Ended | ||||||||||||
July 30, 2011 | July 31, 2010 | July 30, 2011 | July 31, 2010 | ||||||||||||
Net sales | $ | 103,595 | $ | 98,094 | $ | 209,376 | $ | 200,903 | |||||||
Cost of goods sold | 61,039 | 61,734 | 126,698 | 126,959 | |||||||||||
Gross profit | 42,556 | 36,360 | 82,678 | 73,944 | |||||||||||
Operating expenses: | |||||||||||||||
Selling, general and administrative expenses | 38,289 | 38,484 | 78,120 | 77,835 | |||||||||||
Depreciation and amortization | 1,879 | 2,160 | 3,755 | 4,352 | |||||||||||
Total operating expenses | 40,168 | 40,644 | 81,875 | 82,187 | |||||||||||
Income (loss) from operations | 2,388 | (4,284 | ) | 803 | (8,243 | ) | |||||||||
Interest expense | (1,867 | ) | (3,198 | ) | (4,037 | ) | (6,630 | ) | |||||||
Income (loss) before income tax expense | 521 | (7,482 | ) | (3,234 | ) | (14,873 | ) | ||||||||
Income tax expense | — | — | — | — | |||||||||||
Net income (loss) | $ | 521 | $ | (7,482 | ) | $ | (3,234 | ) | $ | (14,873 | ) | ||||
Net income (loss) per common share: | |||||||||||||||
Basic and diluted | $ | 0.06 | $ | (0.83 | ) | $ | (0.36 | ) | $ | (1.66 | ) | ||||
Weighted average number of common shares outstanding: | |||||||||||||||
Basic | 8,966,773 | 8,966,527 | 8,966,762 | 8,966,472 | |||||||||||
Diluted | 9,740,983 | 8,966,527 | 8,966,762 | 8,966,472 |
Twenty-six Weeks Ended | Twenty-six Weeks Ended | ||||||
July 30, 2011 | July 31, 2010 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (3,234 | ) | $ | (14,873 | ) | |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||
Amortization of deferred financing costs | 449 | 1,051 | |||||
Depreciation and amortization | 3,755 | 4,352 | |||||
Provision for losses on accounts receivable | 152 | 90 | |||||
Share-based compensation | 14 | 14 | |||||
Change in operating assets and liabilities: | |||||||
Accounts receivable | 369 | 5,221 | |||||
Inventories | 304 | (16,550 | ) | ||||
Prepaid expenses and other assets | 719 | 2,226 | |||||
Accounts payable-non affiliates | 12,160 | 3,199 | |||||
Accounts payable-affiliates | (4,142 | ) | (15,657 | ) | |||
Accrued expenses and other liabilities, and other long-term liabilities | 2,598 | 4,676 | |||||
Net cash provided by (used in) operating activities | 13,144 | (26,251 | ) | ||||
Cash flows from investing activities: | |||||||
Additions to property and equipment | (1,164 | ) | (1,277 | ) | |||
Net cash used in investing activities | (1,164 | ) | (1,277 | ) | |||
Cash flows from financing activities: | |||||||
(Repayments of) net borrowings under bank line of credit | (10,825 | ) | 28,059 | ||||
Payments on affiliated notes payable | (320 | ) | (320 | ) | |||
Principal payments under capital lease obligations | (626 | ) | (513 | ) | |||
Payments of long-term debt and other | — | (20 | ) | ||||
Proceeds from exercise of stock options | 4 | 2 | |||||
Net cash (used in) provided by financing activities | (11,767 | ) | 27,208 | ||||
Increase (decrease) in cash | 213 | (320 | ) | ||||
Cash at beginning of period | 1,236 | 1,951 | |||||
Cash at end of period | $ | 1,449 | $ | 1,631 | |||
Supplemental Information: | |||||||
Cash paid during the period for: | |||||||
Interest | $ | 1,031 | $ | 1,821 | |||
Income taxes | $ | 488 | $ | 97 |
July 30, 2011 | January 29, 2011 | ||||||||||||||||||||||||
Useful Life (years) | Original Cost | Accumulated Amortization | Net Book Value | Original Cost | Accumulated Amortization | Net Book Value | |||||||||||||||||||
Tradenames | 7-20 | $ | 9,408 | $ | 6,191 | $ | 3,217 | $ | 9,408 | $ | 6,000 | $ | 3,408 | ||||||||||||
Favorable leases | 7 | 886 | 295 | 591 | 886 | 232 | 654 | ||||||||||||||||||
Tradename (non-amortizing) | N/A | 8,500 | — | 8,500 | 8,500 | — | 8,500 | ||||||||||||||||||
$ | 18,794 | $ | 6,486 | $ | 12,308 | $ | 18,794 | $ | 6,232 | $ | 12,562 |
Fiscal Year | Amortization Expense | |||
Remainder of 2011 | $ | 254 | ||
2012 | 500 | |||
2013 | 476 | |||
2014 | 476 | |||
2015 | 476 | |||
2016 | 371 | |||
Thereafter | 1,255 | |||
$ | 3,808 |
Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | Aggregate Intrinsic Value | ||||||||||
Outstanding as of January 29, 2011 | 205,626 | $ | 9.84 | 6.1 | $ | 244 | |||||||
Granted | — | — | |||||||||||
Exercised | (1,000 | ) | 4.79 | 9 | |||||||||
Forfeited | (622 | ) | 3.52 | 2 | |||||||||
Outstanding as of July 30, 2011 | 204,004 | $ | 9.88 | 5.6 | $ | 732 | |||||||
Vested as of July 30, 2011 | 192,671 | $ | 10.18 | 5.5 | $ | 635 | |||||||
Exercisable as of July 30, 2011 | 182,161 | $ | 9.66 | 5.5 | $ | 669 |
July 30, 2011 | January 29, 2011 | ||||||
(in thousands) | |||||||
Revolving credit facility interest payable monthly, secured by a pledge of substantially all of the Company’s assets | $ | 47,054 | $ | 57,879 | |||
Subordinated convertible note payable-affiliate | 5,000 | 5,000 | |||||
Subordinated non-convertible notes payable-affiliates | 90,419 | 90,739 | |||||
142,473 | 153,618 | ||||||
Less current portion | (53 | ) | (373 | ) | |||
Total long-term debt | $ | 142,420 | $ | 153,245 |
Thirteen Weeks Ended July 30, 2011 | Thirteen Weeks Ended July 31, 2010 | Twenty-six Weeks Ended July 30, 2011 | Twenty-six Weeks Ended July 31, 2010 | ||||||||||||
Numerator: | |||||||||||||||
Net income (loss) - basic | $ | 521 | $ | (7,482 | ) | $ | (3,234 | ) | $ | (14,873 | ) | ||||
Add interest expense on convertible note | 79 | — | — | — | |||||||||||
Net income (loss) - diluted | $ | 600 | $ | (7,482 | ) | $ | (3,234 | ) | $ | (14,873 | ) | ||||
Denominator: | |||||||||||||||
Weighted average number of common shares - basic | 8,967 | 8,967 | 8,967 | 8,966 | |||||||||||
Incremental shares from assumed exercise of equity based awards | 60 | — | — | — | |||||||||||
Assumed conversion of convertible note | 714 | — | — | — | |||||||||||
Weighted average number of common shares - diluted | 9,741 | 8,967 | 8,967 | 8,966 | |||||||||||
Basic income (loss) per common share | $ | 0.06 | $ | (0.83 | ) | $ | (0.36 | ) | $ | (1.66 | ) | ||||
Diluted income (loss) per common share | $ | 0.06 | $ | (0.83 | ) | $ | (0.36 | ) | $ | (1.66 | ) |
Total Purchases Thirteen Weeks Ended July 30, 2011 | Total Purchases Thirteen Weeks Ended July 31, 2010 | Total Purchases Twenty-six Weeks Ended July 30. 2011 | Total Purchases Twenty-six Weeks Ended July 31, 2010 | Balance Due July 30, 2011 | Balance Due January 29, 2011 | ||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Parlux | $ | 6,466 | $ | 11,214 | $ | 16,501 | $ | 18,884 | $ | 9,437 | $ | 14,015 | |||||||||||
Quality King | — | 797 | — | 3,529 | — | — | |||||||||||||||||
Lighthouse Beauty Marketing, LLC | 77 | — | 427 | — | 128 | 318 | |||||||||||||||||
Lighthouse Beauty, LLC | 1,110 | — | 1,638 | — | 1,050 | 406 | |||||||||||||||||
$ | 7,653 | $ | 12,011 | $ | 18,566 | $ | 22,413 | $ | 10,615 | $ | 14,739 |
Thirteen Weeks Ended | Thirteen Weeks Ended | Twenty-six Weeks Ended | Twenty-six Weeks Ended | ||||||||||||
July 30, 2011 | July 31, 2010 | July 30, 2011 | July 31, 2010 | ||||||||||||
(in thousands) | |||||||||||||||
Net sales: | |||||||||||||||
Retail | $ | 78,851 | $ | 71,659 | $ | 151,233 | $ | 137,574 | |||||||
Wholesale | 24,744 | 26,435 | 58,143 | 63,329 | |||||||||||
$ | 103,595 | $ | 98,094 | $ | 209,376 | $ | 200,903 | ||||||||
Gross profit: | |||||||||||||||
Retail | $ | 35,765 | $ | 29,969 | $ | 68,134 | $ | 58,157 | |||||||
Wholesale | 6,791 | 6,391 | 14,544 | 15,787 | |||||||||||
$ | 42,556 | $ | 36,360 | $ | 82,678 | $ | 73,944 | ||||||||
July 30, 2011 | January 29, 2011 | ||||||||||||||
Total assets: | |||||||||||||||
Wholesale | $ | 326,798 | $ | 324,726 | |||||||||||
Retail | 240,935 | 246,961 | |||||||||||||
567,733 | 571,687 | ||||||||||||||
Eliminations (a) | (271,632 | ) | (271,215 | ) | |||||||||||
Consolidated assets | $ | 296,101 | $ | 300,472 |
(a) | Adjustment to eliminate intercompany receivables and investment in subsidiaries |
Thirteen Weeks Ended July 30, 2011 | Percentage of Net Sales | Thirteen Weeks Ended July 31, 2010 | Percentage of Net Sales | ||||||||
($ in thousands) | |||||||||||
Retail | $ | 78,851 | 76.1% | $ | 71,659 | 73.1% | |||||
Wholesale | 24,744 | 23.9% | 26,435 | 26.9% | |||||||
Total net sales | $ | 103,595 | 100.0% | $ | 98,094 | 100.0% |
Thirteen Weeks Ended July 30, 2011 | Thirteen Weeks Ended July 31, 2010 | |||||||
(in thousands) | ||||||||
Retail | $ | 35,765 | $ | 29,969 | ||||
Wholesale | 6,791 | 6,391 | ||||||
Total gross profit | $ | 42,556 | $ | 36,360 |
Thirteen Weeks Ended July 30, 2011 | Thirteen Weeks Ended July 31, 2010 | |||
Retail | 45.4% | 41.8% | ||
Wholesale | 27.4% | 24.2% | ||
Total gross profit percentage | 41.1% | 37.1% |
Twenty-six Weeks Ended July 30, 2011 | Percentage of Net Sales | Twenty-six Weeks Ended July 31, 2010 | Percentage of Net Sales | |||||||||
(in thousands) | ||||||||||||
Retail | $ | 151,233 | 72.2% | $ | 137,574 | 68.5% | ||||||
Wholesale | 58,143 | 27.8% | 63,329 | 31.5% | ||||||||
Total net sales | $ | 209,376 | 100.0% | $ | 200,903 | 100.0% |
Twenty-six Weeks Ended | Twenty-six Weeks Ended | ||||||
July 30, 2011 | July 31, 2010 | ||||||
(in thousands) | |||||||
Retail | $ | 68,134 | $ | 58,157 | |||
Wholesale | 14,544 | 15,787 | |||||
Total gross profit | $ | 82,678 | $ | 73,944 |
Twenty-six Weeks Ended | Twenty-six Weeks Ended | ||
July 30, 2011 | July 31, 2010 | ||
Retail | 45.1% | 42.3% | |
Wholesale | 25.0% | 24.9% | |
Total gross profit percentage | 39.5% | 36.8% |
ITEM 4. | CONTROLS AND PROCEDURES |
PART II. | OTHER INFORMATION |
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1A. | RISK FACTORS |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
ITEM 4. | REMOVED AND RESERVED |
ITEM 5. | OTHER INFORMATION |
ITEM 6. | EXHIBITS |
3.1 | Amended and Restated Articles of Incorporation, as amended through August 8, 2008 (Incorporated by reference to Exhibit 3.1 to the Company’s Form 10-K filed July 2, 2009). | ||
3.2 | Bylaws (Incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-1 (No 33-46833)). | ||
31.1 | Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
31.2 | Certification by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
32.1 | Certification by Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
32.2 | Certification by Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
101.INS | XBRL Instance Document | ||
101.SCH | XBRL Taxonomy Extension Schema Document | ||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | ||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | ||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | ||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
PERFUMANIA HOLDINGS, INC. (Registrant) | ||||
Date: | September 12, 2011 | By: | By: /s/ Michael W. Katz | |
Michael W. Katz | ||||
President and Chief Executive Officer | ||||
(Principal Executive Officer) | ||||
By: | By: /s/ Donna L. Dellomo | |||
Donna L. Dellomo | ||||
Chief Financial Officer | ||||
(Principal Financial and | ||||
Accounting Officer) |
(1) | I have reviewed this report on Form 10-Q of Perfumania Holdings, Inc.; |
(2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
(3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report. |
(4) | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
(d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
(5) | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | September 12, 2011 |
By: /S/ Michael W. Katz | |
Michael W. Katz | |
President and Chief Executive Officer |
(1) | I have reviewed this report on Form 10-Q of Perfumania Holdings, Inc.; |
(2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
(3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report. |
(4) | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
(5) | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | September 12, 2011 | |
By: /S/ Donna L. Dellomo | ||
Donna L. Dellomo | ||
Chief Financial Officer |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
By: | By: /S/ Michael W. Katz | ||
Michael W. Katz | |||
President and | |||
Chief Executive Officer | |||
September 12, 2011 |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
By: | By: /S/ Donna L. Dellomo | ||
Donna L. Dellomo | |||
Chief Financial Officer | |||
September 12, 2011 |
Condensed Consolidated Balance Sheets Parentheticals (USD $)
In Thousands, except Share data |
Jul. 30, 2011
|
Jan. 29, 2011
|
---|---|---|
Accounts receivable | $ 706 | $ 525 |
Preferred stock par value | $ 0.10 | $ 0.10 |
Preferred stock shares authorized | 1,000,000 | 1,000,000 |
Common stock par value | $ 0.01 | $ 0.01 |
Common stock shares authorized | 20,000,000 | 20,000,000 |
Common stock shares issued | 9,866,000 | 9,865,000 |
Treasury stock shares | 898,249 | 898,249 |
Condensed Consolidated Statements of Operations (USD $)
In Thousands, except Share data |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 30, 2011
|
Jul. 31, 2010
|
Jul. 30, 2011
|
Jul. 31, 2010
|
|
Net sales | $ 103,595 | $ 98,094 | $ 209,376 | $ 200,903 |
Cost of goods sold | 61,039 | 61,734 | 126,698 | 126,959 |
Gross profit | 42,556 | 36,360 | 82,678 | 73,944 |
Operating expenses: | Â | Â | Â | Â |
Selling, general and administrative expenses | 38,289 | 38,484 | 78,120 | 77,835 |
Depreciation and amortization | 1,879 | 2,160 | 3,755 | 4,352 |
Total operating expenses | 40,168 | 40,644 | 81,875 | 82,187 |
Income (loss) from operations | 2,388 | (4,284) | 803 | (8,243) |
Interest expense | (1,867) | (3,198) | (4,037) | (6,630) |
Income (loss) before income tax expense | 521 | (7,482) | (3,234) | (14,873) |
Income tax expense | 0 | 0 | 0 | 0 |
Net income (loss) | $ 521 | $ (7,482) | $ (3,234) | $ (14,873) |
Net income (loss) per common share: | Â | Â | Â | Â |
Basic and diluted | $ 0.06 | $ (0.83) | $ (0.36) | $ (1.66) |
Weighted average number of common shares outstanding: | Â | Â | Â | Â |
Basic | 8,966,773 | 8,966,527 | 8,966,762 | 8,966,472 |
Diluted | 9,740,983 | 8,966,527 | 8,966,762 | 8,966,472 |
Document and Entity Information
|
6 Months Ended | |
---|---|---|
Jul. 30, 2011
|
Sep. 09, 2011
|
|
Entity Registrant Name | Perfumania Holdings, Inc. | Â |
Entity Central Index Key | 0000880460 | Â |
Current Fiscal Year End Date | --01-28 | Â |
Entity Filer Category | Smaller Reporting Company | Â |
Document Type | 10-Q | Â |
Document Period End Date | Jul. 30, 2011 | |
Document Fiscal Year Focus | 2011 | Â |
Document Fiscal Period Focus | Q2 | Â |
Amendment Flag | false | Â |
Entity Common Stock, Shares Outstanding | Â | 8,967,751 |
"+ text.join( "
\n" ) +"
" + text[p] + "
\n"; } } }else{ formatted = '' + raw + '
'; } html = ''+ "\n"+''+ "\n"+''+ "\n"+' formatted: '+ ( this.Default == 'raw' ? 'as Filed' : 'with Text Wrapped' ) +''+ "\n"+' | '+ "\n"+'
'+ "\n"+' | '+ "\n"+' '+ "\n"+'
'+ "\n"+' | '+ "\n"+' '+ "\n"+'
Basic and Diluted Net Income (Loss) Per Common Share
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 30, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NOTE 7 - BASIC AND DILUTED NET LOSS PER COMMON SHARE [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Text Block] | BASIC AND DILUTED NET INCOME (LOSS) PER COMMON SHARE Basic net income (loss) per common share has been computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per common share includes, in periods in which they are dilutive, the effect of those common stock equivalents where the average market price of the common stock exceeds the exercise prices for the respective periods. For the thirteen weeks ended July 31, 2010, the twenty-six weeks ended July 30, 2011 and the twenty-six weeks ended July 31, 2010, all common stock equivalents, which include outstanding stock options, the subordinated convertible note payable to affiliate and warrants outstanding were excluded from the diluted net loss per share calculation because the results would be antidilutive. For the thirteen weeks ended July 30, 2011, warrants outstanding were excluded from the diluted net income per share calculation because the result would be antidilutive. A reconciliation of the numerator and denominator of basic and diluted net income (loss) per share is as follows (in thousands except per share amounts):
During the thirteen weeks ended July 30, 2011 and July 31, 2010, there were 1,510,500 and 2,405,578, respectively, potential shares of common stock which were excluded from the diluted loss per share calculation because the effect of including these potential shares was antidilutive. During the twenty-six weeks ended July 31, 2011 and July 30, 2010, there were 2,418,290 and 2,405,578, respectively, potential shares of common stock which were excluded from the diluted loss per share calculation because the effect of including those potential shares was antidilutive. |
Intangibles
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 30, 2011
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INTANGIBLES [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets Disclosure [Text Block] | INTANGIBLES The following table provides information related to intangible assets (in thousands), which are included in other assets, net on the accompanying condensed consolidated balance sheets as of July 30, 2011 and January 29, 2011:
There was no recorded goodwill as of July 30, 2011 and January 29, 2011. In accordance with accounting standards, intangible assets with indefinite lives are not amortized, but rather tested for impairment at least annually by comparing the estimated fair values to their carrying values. Trademarks, including tradenames and owned licenses having finite lives, are amortized over their respective lives to their estimated residual values and are also reviewed for impairment in accordance with accounting standards when changes in circumstances indicate the assets’ value may be impaired. Impairment testing is based on a review of forecasted operating cash flows and the profitability of the related brand. There were no triggering events during the thirteen weeks or twenty-six weeks ended July 30, 2011 that would indicate potential impairment and the requirement to review the carrying value of intangible assets. Amortization expense associated with intangible assets subject to amortization is included in depreciation and amortization on the accompanying condensed consolidated statements of operations. Amortization expense for intangible assets subject to amortization was $0.1 million and $0.2 million for the thirteen weeks ended July 30, 2011 and July 31, 2010, respectively and $0.3 million for both twenty-six week periods ended July 30, 2011 and July 31, 2010. As of July 30, 2011, the weighted average amortization periods for the remaining tradenames with finite lives and for favorable lease agreements are 16.9 years and 7.0 years, respectively. As of July 30, 2011, future amortization expense associated with intangible assets subject to amortization is as follows (in thousands):
|
Contingencies
|
6 Months Ended |
---|---|
Jul. 30, 2011
|
|
NOTE 9 – CONTINGENCIES [Abstract] |  |
Contingencies Disclosure [Text Block] | CONTINGENCIES The Company is involved in various legal proceedings in the ordinary course of business. Management cannot presently predict the outcome of these matters, although management believes, based in part on the advice of counsel, that the ultimate resolution of these matters will not have a materially adverse effect on the Company’s consolidated financial position, results of operations or cash flows. |
Related Party Transactions
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 30, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NOTE 10 – RELATED PARTY TRANSACTIONS [Abstract] |  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions Disclosure [Text Block] | RELATED-PARTY TRANSACTIONS Glenn and Stephen Nussdorf and their sister, Arlene Nussdorf, owned an aggregate 6,649,476 shares or approximately 74% of the total number of shares of the Company’s common stock as of July 30, 2011, excluding shares issuable upon conversion of certain Warrants or the Convertible Note discussed in Note 5, and not assuming the exercise of any outstanding options held by the Company’s officers and directors. Stephen Nussdorf has served as the Chairman of the Company’s Board of Directors since February 2004 and Executive Chairman of the Board since April 2011. The Nussdorfs are officers and principals of Quality King, which distributes pharmaceuticals and health and beauty care products, and the Company’s President and Chief Executive Officer, Michael W. Katz (“Mr. Katz”), is also an executive of Quality King. See Note 5 for a discussion of notes payable to affiliates. Effective August 1, 2008, the 2003 Stockholder Agreement between our predecessor company, Model Reorg, Inc. and Mr. Katz was amended and restated (the “Agreement”) and the Company’s subsidiary, Model Reorg Acquisition LLC, issued a $1.9 million promissory note payable to Mr. Katz. The note, which bears interest at 4% and is payable in equal monthly installments of $53,333 commencing September 1, 2008 and terminating August 1, 2011, liquidated Model Reorg’s preexisting obligation to Mr. Katz under the Agreement, which had provided for stock ownership and an earnings participation in Model Reorg. Under the Agreement, Mr. Katz is bound by certain non-compete, non-solicitation and confidentiality covenants. The note payable is included in current and long-term notes payable-affiliate as of July 30, 2011 and January 29, 2011, in the aggregate amount of $0.1 million and $0.4 million, respectively. Transactions With Affiliated Companies Glenn Nussdorf beneficially owns approximately 11.1% of the outstanding common stock of Parlux Fragrances, Inc. (“Parlux”), a publicly traded manufacturer and distributor of prestige fragrances and beauty products. The Company has historically purchased merchandise from Parlux. Glenn Nussdorf also has an ownership interest in Lighthouse Beauty Marketing, LLC and Lighthouse Beauty, LLC, both of which are manufacturers and distributors of prestige fragrances. Starting in fiscal 2010, the Company began purchasing merchandise from both entities. Starting in fiscal 2009, the Company has also purchased merchandise from Quality King. The amounts due to these related companies are non-interest bearing and are included in accounts payable-affiliates in the accompanying condensed consolidated balance sheets. Purchases from related parties are generally payable in 90 days; however, due to the seasonality of the Company’s business, these terms are generally extended. Related party accounts have historically been brought closer to terms at the end of the holiday season. During the rest of the year, the Company has relied upon these extended terms to provide a portion of its liquidity. Transactions with these related companies during the thirteen and twenty-six weeks ended July 30, 2011 and July 31, 2010 were as follows:
Glenn, Stephen and Arlene Nussdorf own GSN Trucking, Inc. (“GSN”) which provides general transportation and freight services. The Company periodically utilizes GSN to transport both inbound purchases of merchandise and outbound shipments to wholesale customers. During the thirteen and twenty-six weeks ended July 30, 2011, total payments to GSN for transportation services provided were less than $0.1 million. There was no balance due to GSN at July 30, 2011. Quality King occupies a leased 560,000 square foot facility in Bellport, NY. The Company began occupying approximately half of this facility in December 2007 under a sublease that terminates on September 30, 2027, and this location serves as the Company’s principal offices. As of July 30, 2011, the monthly current sublease payments are approximately $211,000 and increase by 3% annually. Total payments by the Company to Quality King were approximately $0.6 million during both thirteen week periods ended July 30, 2011 and July 31, 2010, and $1.3 million for both twenty-six week periods ended July 30, 2011 and July 31, 2010 for this sublease. The Company and Quality King are parties to a Services Agreement providing for the Company’s participation in certain third party arrangements at the Company’s respective share of Quality King’s cost, including allocated overhead, plus a 2% administrative fee, and the provision of legal services. The Company also shares with Quality King the economic benefit of the bulk rate contract that the Company has with UPS to ship Quality King’s merchandise and related items. The Services Agreement will terminate on thirty days’ written notice from either party. The expenses charged under these arrangements to the Company were $0.2 million during the thirteen weeks ended July 30, 2011 and July 31, 2010, and $0.3 million during the twenty-six weeks ended July 30, 2011 and July 31, 2010. The balance due to Quality King for expenses charged under the Services Agreement was less than $0.1 million at both July 30, 2011 and January 29, 2011. |
Fair Value Measurements
|
6 Months Ended |
---|---|
Jul. 30, 2011
|
|
NOTE 8 - FAIR VALUE MEASUREMENTS [Abstract] | Â |
Fair Value Disclosures [Text Block] | FAIR VALUE MEASUREMENTS The Company applies authoritative accounting guidance regarding fair value and disclosures as it applies to financial and non-financial assets and liabilities. The guidance defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date. The three levels are defined as follows: Level 1: Observable inputs such as quoted prices in active markets (the fair value hierarchy gives the highest priority to Level 1 inputs); Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and Level 3: Unobservable inputs in which there is little or no market data and require the reporting entity to develop its own own assumptions As of July 30, 2011, the Company had no material financial assets or liabilities measured on a recurring basis that required adjustments or write-downs and the carrying values of current assets and liabilities approximate their fair value. The Company measures certain assets at fair value on a non-recurring basis, specifically long-lived assets evaluated for impairment. No such impairments were recorded during the thirteen and twenty-six weeks ended July 30, 2011. There were no non-financial liabilities outstanding as of July 30, 2011 and January 29, 2011. |
Basis of Presentation and Operations
|
6 Months Ended |
---|---|
Jul. 30, 2011
|
|
Basis of Presentation and Operations [Abstract] | Â |
Business Description and Basis of Presentation [Text Block] | BASIS OF PRESENTATION AND OPERATIONS The condensed consolidated balance sheet of Perfumania Holdings, Inc. and subsidiaries (the “Company”) as of January 29, 2011, which has been derived from our audited financial statements as of and for the year ended January 29, 2011, and the accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and note disclosures normally included in annual financial statements, prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), have been condensed or omitted pursuant to those rules and regulations. The financial information presented herein, which is not necessarily indicative of results to be expected for the full current fiscal year, reflects all adjustments which, in the opinion of management, are necessary for a fair presentation of the interim unaudited condensed consolidated financial statements. Such adjustments are of a normal, recurring nature. These condensed consolidated financial statements should be read in conjunction with the financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended January 29, 2011. Due to the seasonality of the Company’s business, with the most significant activity occurring from September through December each year, the results of operations for the thirteen and twenty-six weeks ended July 30, 2011 are not necessarily indicative of results to be expected for the full fiscal year. The Company is an independent, national, vertically integrated wholesale distributor and specialty retailer of perfumes and fragrances that does business through five primary operating subsidiaries; Perfumania, Inc. (“Perfumania”), Quality King Fragrance, Inc. (“QFG”), Scents of Worth, Inc. (“SOW”), Perfumania.com, Inc. (“Perfumania.com”) and Five Star Fragrance Company, Inc. (“Five Star”). We operate in two industry segments, wholesale distribution and specialty retail sales of designer fragrances and related products. Our wholesale business, which is conducted through QFG, distributes designer fragrances to mass market retailers, drug and other chain stores, retail wholesale clubs, traditional wholesalers, and other distributors throughout the United States. For reporting purposes, the wholesale business also includes the Company’s manufacturing division, operated by Five Star, which owns and licenses designer and other fragrance brands that are sold principally through the Company’s wholesale business, SOW’s consignment business and Perfumania’s retail stores, paying royalties to the licensors based on a percentage of sales. All manufacturing operations are outsourced to third-party manufacturers. Five Star’s sales and results of operations are not significant to the Company’s results on a consolidated basis. Our retail business is conducted through three subsidiaries: •Perfumania, a specialty retailer of fragrances and related products, •SOW, which sells fragrances in retail stores on a consignment basis, and •Perfumania.com, an Internet retailer of fragrances and other specialty items. As of July 30, 2011, Perfumania operated a chain of 343 retail stores specializing in the sale of fragrances and related products at discounted prices up to 75% below the manufacturers’ suggested retail prices. Perfumania.com offers a selection of our more popular products for sale over the Internet and serves as an alternative shopping experience to the Perfumania retail stores. SOW operates the largest national designer fragrance consignment program, with contractual relationships to sell products on a consignment basis in approximately 2,400 stores, including more than 1,300 Kmart locations nationwide. Its other retail customers include Burlington Coat Factory, SYMS, Loehmann’s, Daffy’s, Steinmart and K & G. OTHER MATTERS - LIQUIDITY ENHANCEMENT In January 2011, the Company entered into a new $225 million Senior Credit Facility (the “Senior Credit Facility”) (see Note 5). The Company currently anticipates that cash flows from operations and the projected borrowing availability under the Senior Credit Facility will be sufficient to fund its liquidity requirements for at least the next twelve months. Nevertheless, there can be no certainty that availability under the Senior Credit Facility will be sufficient to fund the Company’s liquidity needs. The sufficiency and availability of the Company’s projected sources of liquidity may be adversely affected by a variety of factors, including, without limitation, the level of the Company’s operating cash flows, which will be impacted by retailer and consumer acceptance of the Company’s products, general economic conditions and the level of consumer spending and the Company’s ability to comply with financial and other covenants included in the Senior Credit Facility. The Company has incurred substantial indebtedness to fund its business. If the Company does not have a sufficient borrowing base at any given time, borrowing availability under the Senior Credit Facility may not be sufficient to support liquidity needs. Insufficient borrowing availability under the Senior Credit Facility would have a material adverse effect on the Company’s financial condition and results of operations. If the Company were unable to comply with the requirements in the Senior Credit Facility, it would be unable to borrow under such agreement and any amounts outstanding would become immediately due and payable, which would have a material adverse effect on the Company’s financial condition, results of operations and liquidity. If we need to raise additional funds to support our operations, we may not be able to do so on favorable terms, or at all. Without such funding, we may need to modify or abandon our growth strategy or eliminate product offerings, either of which could negatively impact our financial position. |
Accounting For Share-Based Payments
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 30, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | ACCOUNTING FOR SHARE-BASED PAYMENTS The 2010 Equity Incentive Plan (the “2010 Plan”) provides for equity-based awards to the Company’s employees, directors and consultants. Under the 2010 Plan, the Company initially reserved 1,000,000 shares of common stock for issuance. This number automatically increases on the first trading day of each fiscal year beginning with fiscal 2011, by an amount equal to 1 1/2% of the shares of common stock outstanding as of the last trading day of the immediately preceding fiscal year; accordingly, 1,134,500 shares of common stock were reserved for issuance as of July 30, 2011. The Company previously had two stock option plans which expired on October 31, 2010. No further awards will be granted under these plans, although all options previously granted and outstanding will remain outstanding until they are either exercised or forfeited. As of July 30, 2011, 15,000 stock options have been granted to the Independent Board Members pursuant to the 2010 Plan. The following is a summary of the stock option activity during the twenty-six weeks ended July 30, 2011:
Share-based compensation expense, which is included in selling, general and administrative expenses on the accompanying condensed consolidated statements of operations, was not material in all periods presented. |
Revolving Credit Facility, Notes Payable to Affiliates and Subordinated Convertible Note Payable to Affiliate
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 30, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NOTE 5 - REVOLVING CREDIT FACILITY, NOTES PAYABLE TO AFFILIATES AND SUBORDINATED CONVERTIBLE NOTE PAYABLE TO AFFILIATE [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Text Block] | REVOLVING CREDIT FACILITY, NOTES PAYABLE TO AFFILIATES AND SUBORDINATED CONVERTIBLE NOTE PAYABLE TO AFFILIATE The Company’s revolving credit facility, notes payable to affiliates and subordinated convertible note payable to affiliate consist of the following:
The Company has a $225 million revolving Senior Credit Facility with a syndicate of banks that is used for the Company’s general corporate purposes and those of its subsidiaries, including working capital. This facility does not require amortization of principal and is scheduled to expire in January 2015, when all amounts will be due and payable in full. Under this facility, revolving loans may be drawn, repaid and reborrowed up to the amount available under a borrowing base calculated with reference to specified percentages of the Company’s credit card and trade receivables and inventory, which may be reduced by the lender in its reasonable discretion. The Company must maintain availability under the facility of at least $10 million. As of July 30, 2011, the Company had $68.4 million of availability. Interest under the Senior Credit Facility is at variable rates plus specified margins that are determined based upon the Company’s excess availability from time to time. The Company is also required to pay monthly commitment fees based on the unused amount of the Senior Credit Facility and a monthly fee with respect to outstanding letters of credit. All obligations of the Company related to the Senior Credit Facility are secured by first priority perfected security interests in all personal and real property owned by the Company, including without limitation 100% (or, in the case of excluded foreign subsidiaries, 66%) of the outstanding equity interests in the subsidiaries. The Company is subject to customary limitations on its ability to, among other things, pay dividends and make distributions, make investments and enter into joint ventures, and dispose of assets. The Company was in compliance with all financial and operating covenants as of July 30, 2011. In addition, the Company has outstanding unsecured debt obligations as follows: (i)a promissory note in the principal amount of $35 million, held by Quality King (the “QKD Note”), which provides for payment of principal in quarterly installments between April 30, 2015 and July 31, 2018 and payment of interest in quarterly installments commencing on January 31, 2011 at the then current senior debt rate, as defined in the Senior Credit Facility, plus 1% per annum; (ii)promissory notes in the aggregate principal amount of approximately $55.4 million, held by six estate trusts established by Glenn, Stephen and Arlene Nussdorf (the “Nussdorf Trust Notes”), which provide for payment of the principal in full on April 30, 2015 and payments of interest in quarterly installments commencing on January 31, 2011 at the then current senior debt rate plus 2% per annum; and (iii)a convertible note in the principal amount of $5 million held by Glenn and Stephen Nussdorf (the “Convertible Note”), which allows the holders to convert any or all of the principal and accrued interest into shares of the Company’s common stock at $7.00 per share. This note provides for payment in January 2009 and is currently in default because of the restrictions on payment described below, resulting in an increase of 2% in the nominal interest rate, which is the prime rate plus 1%. These notes are subordinated to the Senior Credit Facility. No principal may be paid on any of them until three months after the Senior Credit Facility terminates and is paid in full, and payment of interest is subject to satisfaction of certain conditions, including the Company’s maintaining excess availability under the Senior Credit Facility of $17.5 million (or 17.5% of commitment) and a fixed charge coverage ratio, as defined in the credit agreement, of 1.1:1.0. Interest expense on these notes was approximately $1.2 million and $1.5 million for the thirteen weeks ended July 30, 2011 and July 31, 2010, respectively, and $2.6 million and $3.3 million for the twenty-six weeks ended July 30, 2011 and July 31, 2010, respectively, and is included in interest expense on the accompanying condensed consolidated statements of operations. No payments of principal or interest have been made on the QKD Note and the Nussdorf Trust Notes. On the Convertible Note, no payments of principal have been made and no interest payments have been made since October 2008. Accrued interest payable due at July 30, 2011 and January 29, 2011, respectively on the Nussdorf Trust Notes, the Quality King Note and the Convertible Note was approximately $19.1 million and $16.5 million and is included in other long-term liabilities on the accompanying condensed consolidated balance sheets as of July 30, 2011 and January 29, 2011, respectively. |
^,5B&>>/JR?:Q=])7.&@_QOG35RV;S2+7NCN,4&+.B8/\W0R)W-H
M-Q8B!]\HTWO`-2V+!2F:DL0-9"-\H.(CI,,*[%3@L6S5CH[`ID5)$,ZCB$LB
M0-3DT*38`UO'4*5)S"`F>% F>#'S"O9PGV?3
MZZ 7$+`G]@'/%@6E%/.!]
M#CR+6<_BX!*2T.J3N!-Y(WXM(!Z]$(_6&"]V>,0IBVPO=`,+-!M(3[B=!)X%
M3CS9H#&>L8I`F\AX`J%[K#&RH\3UK<1)XHBZH1\QSH%0R_8CQS:\'J:8AL?^
MO[UKVVT;2:+O"^P_$`(&F`5HN]D7=K @5J^-V\_=?%W_]F66^>;NB"46Y_3?MI
MD72]?L?K`.RR :S"0J1RRPO=)Q`AD*$.19587C(7$:YY@YC>N?NF2!*CJIG
M[I4@(,&ONTV%ME?-*-*G3;K=Q=*A2@NXJ76HIR>I7UA1`XVVIHV$%ZWEOWE*
MNHL-C2GQ4ZZ62^3975)../2B@-B!Y_N4!VX0^1S+$`PRVV\]7KYC?-#0MIA&V&0C\DW%>[TU"D`GH1]3%FKM;FZ*VC]$R%C3`@5LIT
M]_GK8&`S5`SCG1XXGFU;BSK>9GY[_:GA2G=/1T(9`XF\W@[=D#7-1SO$7/[K
M_4\BE8'G))V1V6.2)BJHVC5I)6/B4\MUF=I$T*.$!X$Q_E\B@?#4T
MZU'P6`+W.`T>@_\.#-!UQ_3BA$61XTJG$080K/B]@R3(WESGZ!3N.B%,F.48
M7F0#&E,C=,&9N>H0+N:)%_>6W3+XFC-^-H%[G!OW/?!K#L:KMD>-V+?ML#U@
M99;?H]`%"=I/HO#)_L0.8RMB,3@1!L:3N!XSO%:(CDU[;NX,,H
N,)X"$P))55%6#:=%U93B"M`T``CX
MZY?__1]"_KG\8NNV/HS?%_G-%2A_F,XR<&CO$=`_7$,N)-&KDK8)HWP2XY_?
M1+CN_S;_O(K>D)$8@A^;5C^_.6-O2#;Z^4T"TY]9B6V&)K=\F[E^&-/$L%E@
MTO.+31EXVBY/!Y-V/)[H;IZ"T`]*KG?BHN=F/W`5Y-":
MGRH0K0C,`V[5"`\Q;;M5LZ$2`;/ENE:KS%ME4;/-%_B]ID[7Q,YJA#WFLB%V
M\6BOTE9EY*;W*+9!4G]*:I/7S.C+!#W0'J2RF:]44NR++]Z?DR,!?\%\#BQ.
M8.DU$3]XA*M=\1:;#!*D*_)JM99%[O0/R"9QLTREL>-D^@NK3P&*,#RSC>
MR^A:,&M]IOW`J&OR^Q8]*U?4YQ`!J\Q?WB+A&:8Q8G2D]H"MXMB&5%K)@$C+
M$?M7][74MFJ86BN+M!Z:U&D7TE*T$P4AUCG^!X*?D%#LM093'O$T$SUX@K('
M53M3C2KPF&W;?C!4$('1,YRVM.G[#2E5H.E.F-@O3^+]ECXX`^RF=;3)-7+)
M(1L+5*)#F4DH@X%HYK
M;Z;CZ6`/)/*,\GN3E/:2EH>T_F\QNDU!"