-----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, EZb6QuKvGzNKBEjT2TIKQVircAe48xX2l3vTKE71NZrdZ8rUN9bgl1XwJ8GWMVf0 zVcK/zgvbr+4JMEKRw805w== 0000950134-96-002812.txt : 19960613 0000950134-96-002812.hdr.sgml : 19960613 ACCESSION NUMBER: 0000950134-96-002812 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960427 FILED AS OF DATE: 19960612 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GADZOOKS INC CENTRAL INDEX KEY: 0000924140 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-APPAREL & ACCESSORY STORES [5600] IRS NUMBER: 742261048 STATE OF INCORPORATION: TX FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-26732 FILM NUMBER: 96579829 BUSINESS ADDRESS: STREET 1: 4801 SPRING VALLEY STE 108B CITY: DALLAS STATE: TX ZIP: 75244 BUSINESS PHONE: 2149915500 MAIL ADDRESS: STREET 1: 4801 SPRING VALLEY ROAD SUITE 108B CITY: DALLAS STATE: TX ZIP: 75244 10-Q/A 1 AMENDMENT NO.1 TO FORM 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 - ------------------------------------------------------------------------------- 10-Q/A AMENDMENT NO.1 (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED APRIL 27, 1996 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF SECURITIES EXCHANGE ACTION OF 1934 COMMISSION FILE NUMBER 0-26732 GADZOOKS, INC. - ------------------------------------------------------------------------------- (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) TEXAS 74-2261048 - ------------------------------------------------------------------------------- (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION INCORPORATION OR ORGANIZATION) NUMBER) 4801 SPRING VALLEY ROAD SUITE 108B DALLAS, TX 75244 - ------------------------------------------------------------------------------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 214-991-5500 ----------------- - ------------------------------------------------------------------------------- (FORMER NAME, FORMER ADDRESS AND FISCAL YEAR, IF CHANGED SINCE LAST REPORT.) 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 ( ___ ) The number of shares outstanding of the registrant's common stock is 8,510,547 (as of June 6, 1996, including shares issued on May 30, 1996 in connection with the 3 for 2 stock split in the form of a stock dividend to holders of record on May 16, 1996). 2 GADZOOKS, INC. FORM 10-Q/A For the Quarter Ended April 27, 1996 INDEX PAGE PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Balance Sheets as of April 27, 1996 3 and January 27, 1996 Condensed Statements of Operations for the 4 First Quarter Ended April 27, 1996 and April 29, 1995 Condensed Statements of Cash Flows for the 5 First Quarter Ended April 27, 1996 and April 29, 1995 Notes to Financial Statements 6 Item 2. Management's Discussion and Analysis 7 - 9 of Financial Condition and Results of Operations PART II. OTHER INFORMATION 9 SIGNATURE PAGE 10
2 3 PART I - FINANCIAL INFORMATION GADZOOKS, INC. CONDENSED BALANCE SHEETS (In thousands) (Unaudited)
APRIL 27, JANUARY 27, 1996 1996 ----------- ----------- ASSETS - ------ Current assets: Cash and cash equivalents $17,927 $13,733 Accounts receivable 1,831 491 Inventory 20,311 18,707 Other current assets 734 1,161 ------- ------- 40,803 34,092 ------- ------- Leaseholds, fixtures and equipment, net 13,270 11,519 ------- ------- $54,073 $45,611 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Current liabilities: Accounts payable $ 8,279 $ 8,495 Accrued expenses & other current liabilities 3,428 3,775 Income taxes payable 630 1,321 Current portion of long-term obligations -- 133 ------- ------- 12,337 13,724 ------- ------- Accrued rent & other long-term obligation 1,156 1,122 Shareholders' equity: Common stock 85 78 Additional paid-in capital 38,512 29,442 Retained earnings 1,983 1,245 ------- ------- 40,580 30,765 ------- ------- $54,073 $45,611 ======= =======
The accompanying notes are an integral part of these financial statements. 3 4 GADZOOKS, INC. CONDENSED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited)
FIRST QUARTER ENDED --------------------------- APRIL 27, APRIL 29, 1996 1995 ------- ------- Net Sales $23,486 $15,999 Cost of goods sold including buying, distribution and occupancy costs 16,539 11,436 ------- ------- Gross Profit 6,947 4,563 Selling, general and administrative expenses 5,986 4,108 ------- ------- Operating Income 961 455 Interest income (expense), net 229 (81) ------- ------- Income before income taxes 1,190 374 Provision for income taxes 452 143 ------- ------- Net income $ 738 $ 231 ------- ------- Net income per common and common equivalent share $ 0.08 $ 0.04 ======= ======= Weighted average common and common equivalent shares outstanding 9,030 6,075 ======= =======
The accompanying notes are an integral part of these financial statements. 4 5 GADZOOKS, INC. CONDENSED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
FIRST QUARTER ENDED ------------------------ APRIL 27, APRIL 29, 1996 1995 ------- ------- CASH FLOWS FROM OPERATING ACTIVITIES : Net income $ 738 $ 231 Adjustments to reconcile net income to cash provided by operating activities : Depreciation 479 309 Changes to operating assets and liabilities (3,825) (1,340) ------- ------- NET CASH USED IN OPERATING ACTIVITIES (2,608) (800) ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES : Capital expenditures, net (2,230) (1,423) ------- ------- NET CASH USED IN INVESTING ACTIVITIES (2,230) (1,423) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES : Proceeds from line of credit, net -- 2,585 Payments on long-term obligations (45) (247) Issuance of common stock, net 8,952 -- Tax benefit from exercise of stock options 125 -- ------- ------- NET CASH PROVIDED BY FINANCING ACTIVITIES 9,032 2,338 ------- ------- Net increase in cash and cash equivalents 4,194 115 Cash and cash equivalents at beginning of period 13,733 321 ------- ------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $17,927 $ 436 ======= =======
The accompanying notes are an integral part of these financial statements. 5 6 GADZOOKS, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION The accompanying condensed financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of April 27, 1996 and April 29, 1995, and the results of operations and cash flows for the three months then ended. The results of operations for the first quarter ended April 27, 1996 and April 29, 1995 are not necessarily indicative of the results to be expected for the full fiscal year. The condensed balance sheet as of January 27, 1996 is derived from audited financial statements. The condensed financial statements should be read in conjunction with the financial statement disclosures contained in the Company's Report to Shareholders for the year ended January 27,1996. 2. COMMON STOCK OFFERING On January 31, 1996, the Company completed a secondary offering of 600,000 shares of its common stock, while an additional 1,987,500 shares were sold by other selling shareholders (after giving effect to the stock split described in Note 3). The Company's portion of the net proceeds after deducting expenses associated with the offering of $9.0 million will be used to finance new store openings, store remodelings, and for other general corporate purposes. 3. STOCK SPLIT On May 1, 1996, the Board of Directors declared a three-for-two split of the Company's common stock in the form of a 50 percent stock dividend. The stock split was payable on May 30, 1996 to holders of record on May 16, 1996, and has been given retroactive effect in these financial statements. 6 7 Management's Discussion and Analysis of Financial Condition and Results of Operations GENERAL Gadzooks is a rapidly growing, mall-based specialty retailer of casual apparel and related accessories for young men and women principally between the ages of 13 and 19. The Company opened its first store in 1983, and had 146 stores in operation at April 27, 1996, located in 22 states throughout the Southwestern, Midwestern, and Southeastern regions of the United States. The Company accelerated its expansion program in late fiscal 1992 and opened 10 new stores in the second six months of that fiscal year, followed by 23 new stores in fiscal 1993, 26 new stores in fiscal 1994, and 39 new stores in fiscal 1995. The Company has opened 20 new stores since the beginning of fiscal 1996. The Company's business is subject to seasonal influences with slightly higher sales during the Christmas holiday, back-to-school, and spring break seasons. Management's discussion and analysis should be read in conjunction with the Company's financial statements and the notes related thereto. RESULTS OF OPERATIONS First Quarter Ended April 27, 1996 Compared to First Quarter Ended April 29,1995 Net sales increased approximately $7.5 million, or 46.8 percent to $23,486,000 during the first quarter of fiscal 1996 from $15,999,000 during the comparable quarter of fiscal 1995. Comparable store sales increased 7.3 percent for the first quarter of fiscal 1996. The balance of the sales increase was attributable to new stores not yet included in the comparable store sales base. A store becomes comparable after it has been open for 14 full fiscal months. Gross profit increased approximately $2.4 million to $6,947,000 during the first quarter of fiscal 1996 from $4,563,000 during the comparable quarter of fiscal 1995. As a percentage of net sales, gross profit increased to 29.6 percent compared to 28.5 percent in the comparable quarter of last year. The Company's merchandise margin was substantially higher than in the prior year's quarter due to fewer price-based promotional activities during the first quarter of fiscal 1996. The Company entered the first quarter of 1996 with less fall and winter markdown 7 8 merchandise to clear from its store system than in the prior year primarily due to strong sales during the 1995 Christmas holiday season. Store occupancy costs, included in cost of goods sold, increased slightly as a percentage of sales as a result of the large number of new stores opened in recent periods, but was offset by a reduction in buying and distribution costs as a percentage of sales, as a result of the Company's larger store base. Selling, general and administrative expenses increased approximately $1.9 million to $5,986,000 during the first quarter of 1996 from $4,108,000 during the comparable quarter of fiscal 1995. As a percentage of net sales, selling, general and administrative expenses decreased to 25.5 percent of sales during the first quarter of fiscal 1996 from 25.7 percent of sales during the comparable quarter of last year. The decrease as a percentage of net sales was due to leveraging of certain store expenses as a percentage of sales as a result of the comparable store sales increases achieved during the quarter, and to a slight reduction in corporate overhead as a percentage of sales due to leverage achieved through the Company's larger store base. Operating income increased approximately $0.5 million to $961,000 during the first quarter of fiscal 1996 from $455,000 during the comparable quarter of last year. As a percentage of net sales, operating income increased to 4.1 percent of sales from 2.8 percent of sales during the comparable quarter of last year. Net interest income increased approximately $0.3 million to $229,000 during the first quarter of fiscal 1996 from $81,000 net interest expense in the comparable period of last year. The Company's interest income increased due to temporary investments of cash available from the two public stock offerings completed in October, 1995 and January, 1996. LIQUIDITY AND CAPITAL RESOURCES General. The Company's primary uses of cash are financing new store openings and purchasing merchandise inventories. The Company is currently meeting its cash requirements through cash flow from operations and proceeds of its initial public offering completed in October, 1995, and a secondary public offering completed in January, 1996. Cash Flows. At April 27, 1996, cash and cash equivalents were $17.9 million, an increase of $4.2 million since January 27, 1996. Sources of cash for the first quarter of fiscal 1996 were primarily proceeds from the issuance of common stock of $9.0 million and net cash from operations of $1.2 million. The primary uses of cash were increased inventory levels of $1.6 million, reductions in liabilities of $1.4 million, increases in other assets of $0.8 million, and capital expenditures of $2.2 million. The Company opened 20 new stores during the first quarter of 1996 as compared with 11 new stores in the sames period of the prior year. 8 9 Credit Facility. The Company currently has a loan agreement with First Interstate Bank of Texas, N.A., Dallas, Texas, which provides for a revolving line of credit of $7.0 million. Amounts borrowed under the Revolving Line bear interest at the bank's prime rate minus 0.65 percent. The Company must also pay a commitment fee of 0.35 percent per annum on the unused portion of the revolving line. As of April 27, 1996, no amounts were outstanding under the revolving line. The Revolving Line also provides for the issuance of letters of credit that are generally used in certain circumstances in connection with merchandise purchases. As of June 10, 1996, letters of credit in the amount of $1.4 million were issued and outstanding. Capital Expenditures. The Company anticipates opening approximately 30 new stores during the remaining quarters of fiscal 1996. The Company estimates that its average capital expenditures to open a new store, including leasehold improvements and furniture and fixtures, will be approximately $155,000 (approximately $100,000 net of all landlord allowances). The cost of initial inventory for a new store is approximately $100,000; however, the immediate cash requirement for inventory is partially financed through the Company's payment terms with its vendors. Pre-opening costs range from $8,000 to $10,000 for travel, hiring and training, and other miscellaneous costs associated with the setup of a new store prior to its opening for business. Pre-opening costs are expensed in the period of which the store opens. PART II - OTHER INFORMATION Items 1-6 are not applicable. 9 10 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. GADZOOKS, INC. (Registrant) DATE: June 10, 1996 By: /s/ MONTY R. STANDIFER ------------------------------- Monty R. Standifer Senior Vice President and Chief Financial Officer 10 11 Exhibit Index Exhibit - ------- 27 Financial Data Schedule EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS JAN-25-1997 APR-27-1996 17,927 0 1,831 0 20,311 40,803 13,270 0 54,073 12,337 0 85 0 0 40,495 54,073 23,486 0 16,539 5,986 0 0 229 1,190 452 738 0 0 0 738 .08 0
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