-----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, Ig+ZE+8t/ZB47bzHY86QevkSxcA3SvNQmiDgBdwbMb3Vnu+jWESlJonkIU0ey/hE Sru2zJzcnv2q8doUnmq0RQ== 0000950144-97-007054.txt : 19970618 0000950144-97-007054.hdr.sgml : 19970618 ACCESSION NUMBER: 0000950144-97-007054 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970503 FILED AS OF DATE: 19970617 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PERFUMANIA INC CENTRAL INDEX KEY: 0000880460 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-DRUG STORES AND PROPRIETARY STORES [5912] IRS NUMBER: 650026340 STATE OF INCORPORATION: FL FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19714 FILM NUMBER: 97625486 BUSINESS ADDRESS: STREET 1: 11701 N W 101 RD CITY: MIAMI STATE: FL ZIP: 33178 BUSINESS PHONE: 3058891600 MAIL ADDRESS: STREET 1: 11701 N W 101 RD CITY: MIAMI STATE: FL ZIP: 33178 10-Q 1 PERFUMANIA, INC. FORM 10-Q 5-3-97 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 -------------------------------------- FOR THE QUARTERLY PERIOD ENDED MAY 3, 1997 COMMISSION FILE NUMBER 0-19714 PERFUMANIA, INC. STATE OF FLORIDA I.R.S. NO. 65-0026340 11701 N.W. 101st ROAD MIAMI, FLORIDA 33178 TELEPHONE NUMBER: (305) 889-1600 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 TWELVE (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 NINETY (90) DAYS. YES X NO ----- ----- COMMON STOCK $.01 PAR VALUE OUTSTANDING SHARES AT MAY 3, 1997 - 7,807,791 2 TABLE OF CONTENTS PERFUMANIA, INC. PART I FINANCIAL INFORMATION ITEM 1 FINANCIAL STATEMENTS Consolidated Balance Sheets................................ 3 Consolidated Statements of Operations...................... 4 Consolidated Statements of Cash Flows...................... 5 Notes to Condensed Consolidated Financial Statements....... 6 ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS......................................... 8 2 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS
PERFUMANIA, INC. CONSOLIDATED BALANCE SHEETS May 3, 1997 February 1, 1997 ----------- ---------------- ASSETS Current assets: Cash and cash equivalents $ 1,391,835 $ 1,641,527 Trade receivables, net: Customers, less allowance for doubtful accounts of $283,386 and $248,386 8,752,319 12,275,159 Affiliates 1,175,696 653,657 Advances to suppliers 6,903,210 5,023,718 Inventories, net of reserve of $940,000 86,881,847 85,110,423 Prepaid expenses and other current assets 1,449,511 1,899,320 Net deferred tax asset 2,232,627 873,472 Due from related parties 85,613 85,613 ------------- ------------- Total current assets 108,872,658 107,562,889 Property and equipment, net 18,189,577 17,709,758 Leased equipment under capital leases, net 1,908,791 2,013,857 Other assets 2,214,937 2,203,442 Due from related parties 457,243 417,763 ------------- ------------- $ 131,643,206 $ 129,907,709 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Bank line of credit and current portion of notes payable $ 36,138,200 $ 31,372,171 Accounts payable 37,109,701 36,128,515 Accrued expenses and other liabilities 3,018,360 3,940,440 Income taxes payable 339,203 1,321,203 Current portion of obligations under capital leases 630,979 873,425 Due to related parties 754,483 770,000 ------------- ------------- Total current liabilities 77,990,926 74,405,754 Long term portion of loans payable 4,718,487 4,519,859 Long-term portion of obligations under capital leases 1,187,516 1,187,516 ------------- ------------- Total liabilities 83,896,929 80,113,129 ------------- ------------- Excess of fair value of assets acquired over cost 616,169 470,000 ------------- ------------- Stockholders' equity: Preferred stock, $.01 par value, 1,000,000 shares authorized, none issued -- -- Common stock, $.01 par value, 25,000,000 shares authorized, 7,807,791 shares issued and outstanding 78,078 78,078 Capital in excess of par 51,900,229 51,900,229 Treasury stock (2,810,849) (2,655,110) Retained earnings (accumulated deficit) (2,037,350) 1,383 ------------- ------------- Total stockholders' equity 47,130,108 49,324,580 ------------- ------------- $ 131,643,206 $ 129,907,709 ============= =============
See accompanying notes to consolidated financial statements. 3 4 PERFUMANIA, INC. CONSOLIDATED STATEMENTS OF OPERATIONS Thirteen Thirteen Weeks Ended Weeks Ended May 3, 1997 May 4, 1996 ----------- ----------- Net sales: Unaffiliated customers $28,946,685 $23,220,473 Affiliates 1,042,039 -- ----------- ----------- 29,988,724 23,220,473 ----------- ----------- Cost of goods sold: Unaffiliated customers 16,040,684 13,312,526 Affiliates 1,042,039 -- ----------- ----------- 17,082,723 13,312,526 ----------- ----------- Gross profit 12,906,001 9,907,947 ----------- ----------- Operating expenses: Selling, general and administrative 14,111,897 10,278,919 Depreciation and amortization 1,294,004 854,190 ----------- ----------- Total operating expenses 15,405,901 11,133,109 ----------- ----------- Loss from operations before other expense (2,499,900) (1,225,162) Other expense (897,988) (724,989) ----------- ----------- Loss before income taxes (3,397,888) (1,950,151) Benefit for income taxes (1,359,155) (760,559) ----------- ----------- Net loss ($2,038,733) ($1,189,592) =========== =========== Loss per common share ($0.28) ($0.16) =========== =========== See accompanying notes to consolidated financial statements. 4 5 PERFUMANIA, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
Thirteen Thirteen Weeks Ended Weeks Ended May 3, 1997 May 4, 1996 ----------- ----------- Cash flows from operating activities: Net loss ($2,038,733) ($1,189,592) Adjustments to reconcile net loss to net cash used in operating activities: Capitalized from preopening costs (96,927) (149,489) Provision for doubtful accounts 35,000 60,000 Deferred tax benefit (1,359,155) (760,559) Depreciation and amortization 1,294,004 854,190 Loss on disposition 115,000 16,319 Change in assets and liabilities, (Increase) decrease in: Trade receivables 2,965,801 3,658,950 Advances to suppliers (1,879,492) (2,248,438) Inventories (1,771,424) (8,021,023) Other current assets 410,329 54,986 Other assets (79,764) 29,540 Increase (decrease) in: Accounts payable 982,000 2,486,015 Accrued expenses and other current liabilities (890,911) (40,745) Income taxes payable (982,000) -- ----------- ----------- Total adjustments (1,258,353) (4,060,254) ----------- ----------- Net cash used in operating activities (3,297,086) (5,249,846) ----------- ----------- Cash flows from investing activities: Additions to property and equipment (1,495,595) (1,268,042) ----------- ----------- Net cash used in investing activities (1,495,595) (1,268,042) ----------- ----------- Cash flows from financing activities: Net borrowings and repayments under bank line of credit and notes payable 4,964,657 3,183,935 Issuance of convertible debentures -- 2,935,361 Net repayment to related parties (15,517) (2,236) Prinicipal payments under capital lease obligations (250,412) (118,462) Proceeds from issuance of common stock -- 8,250 Purchases of treasury stock (155,739) -- Subscription of stock -- 956,250 ----------- ----------- Net cash provided by financing activities 4,542,989 6,963,098 ----------- ----------- Increase (decrease) in cash and cash equivalents (249,692) 445,210 Cash and cash equivalents at beginning of period 1,641,527 331,028 ----------- ----------- Cash and cash equivalents at end of period $ 1,391,835 $ 776,238 =========== =========== Supplemental disclosure of cash flow information: - ------------------------------------------------- Cash paid for: Interest $ 896,244 $ 797,547 Income Taxes 982,000 25,000
See accompanying notes to consolidated financial statements. 5 6 PERFUMANIA, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (1). SIGNIFICANT ACCOUNTING POLICIES The condensed consolidated financial statements include the accounts of Perfumania and subsidiaries (the Company). All material intercompany balances and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information presented not misleading. The financial information presented herein, which is not necessarily indicative of results to be expected for the current fiscal year, reflects all adjustments which, in the opinion of the Company, are necessary for a fair statement of the results for the periods indicated. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended February 1, 1997. (2). STOCKHOLDERS' EQUITY
Capital Common Stock In Excess Treasury Stock Retained --------------------------- of Par --------------------------- Earnings Shares Amount Value Shares Amount (Deficit) Total ------------ ------------ ------------ ------------ ------------ ------------ ------------ Balance at February 1, 1997 7,807,791 $ 78,078 $ 51,900,229 667,900 ($ 2,655,110) $ 1,383 $ 49,324,580 Purchases of treasury stock -- -- -- 45,400 (155,739) -- (155,739) Net loss for the thirteen weeks ended May 3, 1997 -- -- -- -- -- (2,038,733) (2,038,733) ------------ ------------ ------------ ------------ ------------ ------------ ------------ Balance at May 3, 1997 7,195,983 $ 78,078 $ 51,900,229 713,300 ($2,810,849) ($2,037,350) $ 47,130,108 ------------ ------------ ------------ ------------ ------------ ------------ ------------
(3). EARNINGS (LOSS) PER COMMON SHARE Earnings (loss) per common share are computed by dividing net income (loss) by the weighted average number of common shares outstanding. The weighted average number of common shares for the period ended May 3, 1997 and May 4, 1996 were 7,195,983 and 7,489,818. 6 7 4). SEGMENT INFORMATION The Company operates in two industry segments, specialty retail sale and wholesale distribution of fragrances and related products. Financial information for these segments is summarized in the following table. Thirteen Weeks Thirteen Weeks Ended Ended May 3, 1997 May 4, 1996 ----------- ----------- Sales Wholesale $ 6,541,323 $ 5,028,257 Retail 23,447,401 18,192,216 ----------- ----------- Total net sales $29,988,724 $23,220,473 ----------- ----------- Cost of goods sold Wholesale $ 5,084,973 $ 3,839,397 Retail 11,997,750 9,473,129 ----------- ----------- Total cost of goods sold $17,082,723 $13,312,526 ----------- ----------- Gross profit Wholesale $ 1,456,350 $ 1,188,860 Retail 11,449,651 8,719,087 ----------- ----------- Total gross profit $12,906,001 $ 9,907,947 ----------- ----------- Number of stores 270 195 May 3, 1997 February 1, 1997 ----------- ---------------- Inventory - --------- Wholesale $33,954,792 $32,051,346 Retail 52,927,055 53,059,077 ----------- ----------- $86,881,847 $85,110,423 ----------- ----------- An unaffiliated customer of the wholesale segment accounted for approximately 6% and 9% of the consolidated net sales for the thirteen weeks ended May 3, 1997 and May 4, 1996, respectively, and 59% and 72% of the consolidated net trade accounts receivable balance at May 3, 1997 and February 1, 1997, respectively. 7 8 PART I. FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS SEASONALITY The Company's operations have historically been seasonal, with generally higher retail sales in the third and fourth fiscal quarters than in the first and second fiscal quarters. Significantly higher fourth fiscal quarter retail sales result from increased purchases of fragrances as gift items during the Christmas holiday season. Wholesale sales also vary by fiscal quarter as a result of the selection of merchandise available for sale as well as the need for the Company to stock its retail stores for the Christmas holiday season. Therefore, the results of any interim period are not necessarily indicative of the results that might be expected during a full fiscal year. LIQUIDITY AND CAPITAL RESOURCES At May 3, 1997 working capital was $30.9 million compared to $33.2 million at February 1, 1997. The decrease was primarily due to the current period loss. Net cash used in operating activities during the thirteen weeks ended May 3, 1997 was approximately $3.3 million, principally as a result of the net change in the Company's trade receivables, advances to suppliers, inventories and accounts payable. At May 3, 1997, approximately $0.7 million of the Company's trade receivables were considered past due compared to $0.2 million at February 1, 1997. Of the $9.9 million in trade receivables, $6.1 million was due from one customer which also accounted for 27.1% of the Company's wholesale sales during the thirteen weeks ended May 3, 1997. The Company's sales to this customer are made on an open account terms and since late 1991 the Company has extended credit terms to this customer of up to one year. The Company has not experienced any write-offs of accounts receivable from this customer due to collectibility. Net cash used in investing activities during the current period was $1.5 million. This represents purchases of furniture, fixtures and equipment for store openings and renovations of existing stores during the first and second quarters. Net cash provided by financing activities during the current period was approximately $4.5 million, which was primarily the result of an increase in the Company's use of its line of credit. On April 16, 1997, the Company's $30 million line of credit, which expires on April 30, 1999, was increased to $35 million. During the thirteen weeks ended May 3, 1997, the Company opened nine stores and closed one store. At May 3, 1997, the Company operated 270 stores. The Company plans to open approximately 40 stores during the remainder of fiscal 1997. 8 9 RESULTS OF OPERATIONS Comparison of the Thirteen Weeks Ended May 3, 1997 with the Thirteen Weeks Ended May 4, 1996. Net sales increased 29.1% from $23.2 million in the first thirteen weeks of 1997 to $30.0 million in the first thirteen weeks of 1997. The increase in net sales was the result of a 30.1% increase in wholesale sales (from $5.0 million to $6.5 million), and a 28.9% increase in retail sales (from $18.2 million to $23.4 million). The increase in wholesale sales was primarily due to a difficult wholesale market last year. The increase in retail sales was principally due to the increase in the number of stores operated during the first thirteen weeks of 1997 compared to the first thirteen weeks of 1996. Comparable store sales during the current period increased 4.5% when compared to last year. Gross profit increased 30.3% from $9.9 million in the first thirteen weeks of 1996 (42.7% of total net sales) to $12.9 million in the first thirteen weeks of 1997 (43.0% of net sales) primarily due to an increase in gross profit for both the retail and wholesale divisions. Gross profit for the wholesale division increased from $1.2 million in the first thirteen weeks of 1996 to $1.5 million in the first thirteen weeks of 1997 as a result of higher wholesale sales. As a percentage of net sales, gross profit for the wholesale division decreased from 23.6% in the first thirteen weeks of 1996 to 22.3% in the first thirteen weeks of 1997. Gross profit for the retail division increased to $11.4 million in the first thirteen weeks of 1997 from $8.7 million in the first thirteen weeks of 1996 as a result of higher retail sales. As a percentage of net sales, gross profit for the retail division increased from 47.9% in the first thirteen weeks of 1996 to 48.8% in the thirteen weeks of 1997 primarily as a result of less promotional sales of merchandise at lower margins. Operating expenses, which include selling, general and administrative expenses as well as depreciation, increased 38.6% from $11.1 million in the first thirteen weeks of 1996 to $15.4 million in the first thirteen weeks of 1997. The increase was primarily due to costs associated with the operation of 73 additional stores during the current period. The Company had a net loss of $2,038,733, or $0.28 per share, in the first thirteen weeks of 1997 compared to a net loss of $1,189,592 or $0.16 per share, in the first thirteen weeks of 1996. The weighted average number of common shares outstanding were 7,195,983 for the first thirteen weeks of 1997 and 7,489,818 for the first thirteen weeks of 1996. 9 10 PERFUMANIA, INC. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused the report to be signed on its behalf by the undersigned, thereunto duly authorized. Perfumania, Inc. ----------------------------------------- (Registrant) Date: June 13, 1997 By: /s/ SIMON FALIC ----------------------------------------- Simon Falic Chairman of the Board and Chief Executive Officer (Principal Executive Officer) By: /s/ RON A. FRIEDMAN ----------------------------------------- Ron A. Friedman President, Chief Financial Officer, Treasurer and Secretary (Principal Financial and Accounting Officer) 10 EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS JAN-31-1998 FEB-02-1997 MAY-03-1997 1,391,835 0 8,752,319 0 86,881,847 108,872,658 18,189,577 0 131,643,206 77,990,926 0 0 0 78,078 47,263,353 131,643,206 29,988,724 29,988,724 17,082,723 17,082,723 0 0 0 (3,397,888) (1,359,155) (2,038,733) 0 0 0 (2,038,733) 0.28 0.28
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