-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, m6BJ+2OSd19tFZGiOiheGdj2EYUguW0YtyFQRVlI5K8l3IzfPpGX0UXnH/i/tjmg B2u/sgaGkV8wIJlY+W+07g== 0000906344-95-000023.txt : 19950814 0000906344-95-000023.hdr.sgml : 19950814 ACCESSION NUMBER: 0000906344-95-000023 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950811 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GOOD GUYS INC CENTRAL INDEX KEY: 0000785931 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-RADIO TV & CONSUMER ELECTRONICS STORES [5731] IRS NUMBER: 942366177 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14134 FILM NUMBER: 95560902 BUSINESS ADDRESS: STREET 1: 7000 MARINA BLVD CITY: BRISBANE STATE: CA ZIP: 94005 BUSINESS PHONE: 4156155000 MAIL ADDRESS: STREET 2: 7000 MARINA BLVD CITY: BRISBANE STATE: CA ZIP: 94005 10-Q 1 FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (Mark One) (X) Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 1995 or ( ) Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition period from ________________ to_______________ Commission File Number 0-14134 THE GOOD GUYS, INC. (Exact name of registrant as specified in its charter) Delaware 94-2366177 ______________________________ ___________________ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 7000 MARINA BOULEVARD, BRISBANE, CALIFORNIA 94005 (Address of principal executive offices and zip code) (415) 615-5000 (Registrant's telephone number, including area code) 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_____ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at July 31, 1995 _____________________________ ____________________________ Common Stock, $.001 par value 13,566,166 Page 1 of 13 THE GOOD GUYS, INC. INDEX Page No. Form 10-Q Cover Page 1 Form 10-Q Index 2 Part I. Financial Information: Item 1. Financial Statements Condensed Balance Sheets - 3 June 30, 1995 (Unaudited) and September 30, 1994 (Unaudited) Condensed Statements of Income - 4 Three and Nine-Month Periods Ended June 30, 1995 and 1994 (Unaudited) Condensed Statement of Changes in Shareholders' 5 Equity - Nine-Month Period Ended June 30, 1995 (Unaudited) Condensed Statements of Cash Flows - 6 Nine Month Periods Ended June 30, 1995 and 1994 (Unaudited) Notes to Condensed Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-9 Part II. Other Information Signature Page 10 Exhibit Index 11 Exhibit 11.1 Statement Setting Forth Computation of Earnings per share 12 Exhibit 27.1 Financial Data Schedule 13 Page 2 of 13 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS THE GOOD GUYS, INC. CONDENSED BALANCE SHEETS (Unaudited) (Dollar amounts in thousands) ASSETS June 30, Sept. 30, 1995 1994 ________ _________ Current assets: Cash and cash equivalents $ 7,832 $ 21,661 Receivables 17,534 11,080 Inventories 141,560 94,928 Prepaid expenses and other assets 3,875 8,995 _______ _______ Total current assets 170,801 136,664 Property and equipment, net 57,146 50,831 Other assets 4,109 1,217 _______ _______ $232,056 $188,712 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 71,579 $ 41,238 Accrued expenses and other liabilities Payroll 11,607 11,822 Sales taxes 3,248 5,774 Other 12,125 10,930 _______ _______ Total current liabilities 98,559 69,764 Shareholders' equity: Preferred stock, $.001 par value; authorized 2,000,000 shares; none issued Common stock,$.001 par value; authorized 40,000,000 shares; issued and outstanding 13,428,578 shares and 13,282,181 shares, respectively 13 13 Additional paid-in capital 60,352 58,926 Retained earnings 73,132 60,009 _______ _______ Total shareholders' equity 133,497 118,948 _______ _______ $232,056 $188,712 ======= ======= Page 3a of 13 The accompanying notes are an integral part of these condensed financial statements. Page 3b of 13 THE GOOD GUYS, INC. CONDENSED STATEMENTS OF INCOME (Unaudited) (Dollar amounts in thousands except per share data) Three Months Nine Months Ended June 30, Ended June 30, ______________ ______________ 1995 1994 1995 1994 Net sales $198,315 $164,431 $675,718 $545,776 Cost of sales 149,056 121,146 511,176 400,746 _______ _______ _______ _______ Gross profit 49,259 43,285 164,542 145,030 Selling, general and administrative expenses 45,301 40,195 142,398 124,896 _______ _______ _______ _______ Income from operations 3,958 3,090 22,144 20,134 Interest income (expense), net (163) 171 (411) 348 _______ _______ _______ _______ Income before income taxes 3,795 3,261 21,733 20,482 Income taxes 1,573 1,338 8,610 8,397 _______ _______ _______ _______ Net income $ 2,222 $ 1,923 $ 13,123 $ 12,085 ======= ======= ======= ======= Net income per share and common share equivalents $ .17 $ .15 $ .98 $ .92 ======= ======= ======= ======= Shares used in per share computation 13,426 13,185 13,378 13,124 ======= ======= ======= ======= The accompanying notes are an integral part of these condensed financial statements. Page 4 of 13 THE GOOD GUYS, INC. CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE NINE-MONTH PERIOD ENDED JUNE 30, 1995 (Unaudited) (Dollar amounts in thousands) Additional Common Stock paid-in Retained Shares Amount capital earnings Total ______ ______ _______ ________ _____ Balance at September 30, 1994 13,282,181 $13 $58,926 $60,009 $118,948 Net income for the nine-month period ended June 30, 1995 - - - 13,123 13,123 Issuance of common stock 146,397 - 1,426 - 1,426 __________ ___ ______ _______ _______ Balance at June 30, 1995 13,428,578 $13 $60,352 $73,132 $133,497 ========== == ====== ======= ======= The accompanying notes are an integral part of these condensed financial statements. Page 5 of 13 THE GOOD GUYS, INC. CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (Dollar amounts in thousands) Nine Months Ended June 30, 1995 1994 Cash Flows from Operating Activities: Net income $ 13,123 $ 12,085 _______ _______ Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 7,118 6,188 Change in assets and liabilities: Accounts receivables (6,454) (1,871) Merchandise inventories (46,632) (41,484) Prepaid expenses and other assets 2,228 2,531 Accounts payable 30,341 20,188 Accrued expenses (1,744) 9,101 _______ _______ Total adjustments (15,143) (5,347) _______ _______ Net cash provided by (used in) operating activities (2,020) 6,738 _______ _______ Cash Flows from Investing Activities: Purchase of property and equipment (13,235) (7,831) _______ _______ Net Cash used in investing activities (13,235) (7,831) _______ _______ Cash Flows from Financing Activities: Issuance of common stock 1,426 1,356 _______ _______ Net cash provided by financing activities 1,426 1,356 _______ _______ Net increase (decrease) in cash and cash equivalents (13,829) 263 Cash and cash equivalents at September 30, 1994 and 1993 21,661 12,741 _______ _______ Cash and cash equivalents at June 30, 1995 and 1994 $ 7,832 $ 13,004 ======= ======= Page 6a of 13 The accompanying notes are an integral part of these condensed financial statements. Page 6b of 13 THE GOOD GUYS, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) Note A - BASIS OF PRESENTATION The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles and reflect, in the opinion of management, all adjustments necessary for a fair presentation of the information contained therein, all of which adjustments are of a normal recurring nature. The condensed financial statements should be read in conjunction with the financial statements, notes, supplementary data and financial statement schedules included and incorporated by reference in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994. The weighted average number of shares outstanding during the quarter has been computed by taking the number of days each share was outstanding and dividing by the number of days in the quarter. Stock options are not included in the calculation of earnings per share for the quarter and nine months ended June 30, 1995 as the dilutive effect of the options was less than 3%. Certain reclassifications have been made to prior year amounts to conform with the classifications used in the current period. Note B - PREMIER PERFORMANCE GUARANTEE CONTRACTS The Company sells extended service contracts ("Premier Performance Guarantee contracts") on behalf of an unrelated company (the "Warrantor") that markets this product to cover merchandise sold by the Company. Commission revenue is recognized at the time of sale. The Company acts solely as an agent for the Warrantor and has no liability to the customer under the extended service contract nor any other material obligation to the customer or the Warrantor. Merchandise presented to the Company for servicing under extended service contracts is repaired by the Company on behalf of the Warrantor. The repairs are billed to the Warrantor at amounts customarily charged by the Company for these services. Page 7 of 13 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Net sales for the quarter ended June 30, 1995 reached $198.3 million, an increase of 21% over net sales of $164.4 million for the quarter ended June 30, 1994. This increase was due to a 5% comparable store sales increase, and an increase in the total number of stores in operation from 49 at June 30, 1994 to 60 at June 30, 1995. On a year-to-date basis, net sales for the period ended June 30, 1995 increased 24% to $675.7 million, compared to $545.8 million during the same period in 1994. Comparable store sales increased 8% for the nine months ended June 30, 1995. Gross profit as a percentage of net sales was 24.8% and 24.4% for the quarter and nine months ended June 30, 1995, respectively, as compared to 26.3% and 26.6% for the quarter and nine months ended June 30, 1994, respectively. These decreases were primarily caused by the increased proportion of sales represented by computer products, which typically carry lower gross margins, the cost impact from enhancements made to the Company's Premier Performance Guarantee program in November 1994, and a promotional consumer electronics market. For the quarter and nine months ended June 30, 1995, selling, general and administrative expenses were 22.8% and 21.1% of net sales, respectively, compared to the 24.4% and 22.9% recorded for the comparable 1994 periods. These decreases were the result of leveraging fixed expenses against the increased sales volume and a continued focus on cost control. The effective income tax rate for the quarter ended June 30, 1995 was 41.4%, compared to 41.0% for the quarter ended June 30, 1994. For the nine months ended June 30, 1995, the effective rate was 39.6%, compared to 41.0% for the comparable 1994 period. Net income for the quarter ended June 30, 1995 was $2.2 million ($0.17 per share) or 1.1% of net sales for the period. These results compare to net income of $1.9 million ($0.15 per share), or 1.2% of net sales for the quarter ended June 30, 1994. For the nine month period ended June 30, 1995, net income reached $13.1 million or $.98 per share, compared to $12.1 million or $.92 per share for the same period last year. Page 8 of 13 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT'D.) Liquidity and Capital Resources At June 30, 1995, the Company had working capital of $72.2 million. Net cash used in operating activities was $2.0 million for the quarter ended June 30, 1995 as compared to net cash provided by operating activities of $6.7 million for the quarter ended June 30, 1994. This decrease in net cash from operating activities was primarily attributable to an increase in merchandise inventories and accounts receivable that were partially offset by an increase in accounts payable. The increases in merchandise inventories and accounts payable were due to preparing for and supporting a larger store base during the first nine months of 1995 than for the same period in the prior year. The increase in accounts receivable resulted from an increase in sales over the comparable period in the prior year and the proceeds due from store equipment leasing transactions which had not been received at June 30, 1995. Net cash used in investing activities, which primarily consists of expenditures for stores, distribution facilities and administrative property and equipment, was $13.2 million for the nine months ended June 30, 1995 as compared to $7.8 million during the same period last year. This increase was primarily attributable to the increase in the number of new stores opened during the nine months ended June 30, 1995. On June 28, 1995, the Company entered into a new credit agreement, expiring February 28, 1997, providing a revolving line of credit of up to $75 million, the availability of which fluctuates seasonally. The credit agreement contains restrictive loan covenants which if violated could be used as a basis for termination of the agreement. The Company was in compliance with all covenants under the credit agreement as of June 30, 1995. There were no borrowings outstanding under the credit agreement at June 30, 1995. The Company expects to be able to fund its working capital requirements and expansion plans with a combination of anticipated cash flow from operations, normal trade credit, financing arrangements and continued use of lease financing. The Company believes that because of competition among manufacturers and the technological changes in the consumer electronics industry, inflation has not had an effect on net sales and cost of sales. Page 9 of 13 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibit Description 11.1 Statement of Computation of Per Share Earnings 27.1 Financial Data Schedule (b) No reports on Form 8-K were filed during the quarter for which this report is filed. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THE GOOD GUYS, INC. Registrant August 10, 1995 /s/ Robert A. Gunst _______________ ______________________________ Date Robert A. Gunst President and Acting Chief Financial Officer Page 10 of 13 EXHIBIT INDEX NUMBER DESCRIPTION PAGE 11.1 Statement of Computation of Per Share 12 Earnings 27.1 Financial Data Schedule 13 Page 11 of 13 THE GOOD GUYS, INC. Exhibit 11.1 STATEMENT SETTING FORTH COMPUTATION OF EARNINGS PER SHARE (Thousands Except Per Share Data) June 30 June 30 1995 1994 ________ ________ Net Income $ 2,222 $ 1,923 1. As presented in the 10-Q Shares used in per share computation 13,426 13,185 Net income per common share and common share equivalents $ .17 $ .15 ======== ======== 2. Computation of primary and fully diluted earnings per share including common stock equivalents a) Primary earnings per common share Weighted average number of shares: Common stock (A) 13,426 13,185 Stock Options (B) 135 248 ________ ________ Total 13,561 13,433 Primary earnings per share $ .16 $ .14 ======== ======== b) Fully diluted earnings per share Weighted average number of shares: Common stock (A) 13,426 13,185 Stock Options (B) 150 248 ________ ________ Total 13,576 13,433 Fully diluted earnings per share $ .16 $ .14 ======== ======== (A) The weighted average number of common shares outstanding during the quarter has been computed by taking the number of days each share was outstanding and dividing by the number of days in the quarter. (B) Stock Options in primary earnings per share are calculated using the average market price. Stock options in fully diluted earnings per share are calculated using the higher of the ending market price or the average market price. Page 12 of 13 EX-27.1 2 EX-27.1 - FINANCIAL DATA SCHEDULE
5 1,000 9-MOS SEP-30-1995 JUN-30-1995 7,832 0 17,534 0 141,560 170,801 97,462 40,316 232,056 98,559 0 13 0 0 133,484 232,056 675,718 675,718 511,176 511,176 142,398 0 411 21,733 8,610 13,123 0 0 0 13,123 .98 .98
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