[TYPE] 10-Q
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 Quarter Ended July 1, 1995 Commission File No.0-6882
URT INDUSTRIES, INC.
Exact name of Registrant as Specified in Its Charter)
Florida 59-1167907
(State or Other Jurisdiction (I.R.S. Employer I.D. No.)
of Incorporation or Organization)
3451 Executive Way, Miramar, Florida 33025
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:(305) 432-
4200
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
and (2) has been subject to the filing requirements for at least
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.
At July 1, 1995, there were outstanding:
11,222,918 shares of Class A common stock
1,309,063 shares of Class B common stock
<PAGE>
<TABLE>
<CAPTION>
URT INDUSTRIES, INC., AND SUBSIDIARIES
Consolidated Balance Sheets
July 1, 1995 and April 1, 1995
<S> c> <C> <C>
Assets July 1,
1995 April 1,
(Unaudited 1995
)
Current Assets:
Cash and cash equivalents $ 1,392,066 2,014,147
Marketable investment securities 2,654,410 2,649,534
Inventories 5,357,164 5,578,737
Current portion of due from
officers/shareholders 28,470 28,470
Land held for sale 0 300,000
Prepaid expenses and other current
assets 387,351 368,205
Refundable income taxes 257,229 257,229
_________ __________
Total current assets 10,076,690 11,196,322
Property and equipment, net 3,030,988 3,102,928
Due from officers/shareholders 132,645 139,550
Other assets 167,146 208,995
_________ __________
$ 13,407,469 14,647,795
Liabilities and Shareholders' Equity
Current Liabilities:
Current portion of long-term debt $ 104,139 110,028
Accounts payable 3,730,142 4,130,530
Accrued liabilities 1,436,734 1,787,628
_________ __________
Total current liabilities 5,271,015 6,028,186
Long-term debt, less current portion 913,767 929,654
Accrued rent 515,685 500,470
Minority interest in a subsidiary 424,873 486,644
_________ __________
7,125,340 7,944,954
Shareholders' equity:
Common stock, Class A, $.01 par
value. Authorized, 20,000,000
shares; issued, 13,764,588
shares; outstanding, 11,222,918
shares at July 1, 1995 and at
April 1, 1995 137,646 137,646
Common stock, Class B, $.01 par
value. Authorized, 10,000,000
shares; issued, 1,552,866 shares;
outstanding, 1,309,063 at July 1,
1995 and 1,313,283 at April 1,
1995 15,529 15,529
Capital in excess of par 5,542,152 5,542,152
Retained earnings 1,567,760 1,987,944
_________ __________
7,263,087 7,683,271
Less stock held in treasury, at cost
(note 5) (980,958) (980,430)
_________ __________
6,282,129 6,702,841
Commitments and contingencies (note
4)
$13,407,469 14,647,795
<FN>
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
URT INDUSTRIES, INC., AND SUBSIDIARIES
Consolidated Statements of Operations and Retained Earnings
Three months ended July 1, 1995 and July 2, 1994
(Unaudited)
<S> <C> <C> <C>
July 1, July 2,
1995 1994
Net sales $ 6,268,280 7,617,569
_________ __________
Costs and expenses:
Cost of sales 3,997,811 4,766,587
Selling, general and administrative 2,782,160 3,178,372
_________ __________
6,779,971 7,944,959
_________ __________
Loss from operations (511,691) (327,390)
_________ __________
Other (charges) credits:
Interest expense (20,732) (20,616)
Interest income 50,468 42,597
_________ __________
29,736 21,981
_________ __________
Loss before benefit for income
taxes and minority interest in
net loss of consolidated
subsidiary (481,955) (305,409)
Benefit for income taxes (note 3) 0 (110,000)
_________ __________
Loss before minority interest in
net loss of consolidated
subsidiary (481,955) (195,409)
Minority interest in net loss of
consolidated subsidiary (61,771) (25,606)
_________ __________
Net loss (420,184) (169,803)
Retained earnings, beginning of period 1,987,944 3,747,029
_________ __________
Retained earnings, end of period 1,567,760 3,577,226
_________ __________
Net loss per common share (note 2) $ (.03) (.01)
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
URT INDUSTRIES, INC., AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Three months ended July 1, 1995 and July 2, 1994
(Unaudited)
<S> <C> <C> <C>
July 1, July 2,
1995 1994
Cash flows from operating activities:
Net loss $ (420,184) (169,803)
________ _________
Adjustments to reconcile net loss to
net cash used in operating
activities:
Depreciation and amortization 136,825 121,216
Minority interest in net loss of
subsidiary (61,771) (25,606)
Changes in assets and
liabilities affecting cash
flows from operating
activities:
(Increase) decrease in:
Marketable investment
securities (4,876) 0
Inventories 221,573 (238,723)
Prepaid expenses and other
current assets (19,146) (45,224)
Other assets 41,849 (410,927)
Refundable income taxes 0 (121,000)
Increase (decrease) in:
Accounts payable (400,388) 200,775
Accrued liabilities (350,894) (450,688)
Accrued rent 15,215 15,724
________ _________
Total adjustments (421,613) (954,453)
Net cash used in operating
activities (841,797) (1,124,256)
_________ _________
Cash flows from investing activities:
Purchase of property and equipment (64,885) (2,481)
Proceeds from sale of land 300,000 0
Repayment of due from
officers/shareholders 6,905 6,376
_________ _________
Net cash provided by
investing activities 242,020 3,895
_________ _________
Cash flows from financing activities:
Repayment of long-term debt (21,776) (62,550)
Acquisition of treasury stock (528) 0
Issuance of common stock 0 8,625
_________ _________
Net cash used in financing
activities (22,304) (53,925)
_________ _________
Net decrease in cash (622,081) (1,174,286)
Cash, beginning of period 2,014,147 6,723,034
_________ _________
Cash, ending of period $ 1,392,066 5,548,748
_________ _________
Supplemental disclosures of cash flow
information:
Cash paid during the period for $
interest 20,732 20,616
<FN>
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
URT INDUSTRIES, INC., AND SUBSIDIARIES
Notes to Consolidated Financial Statements
July 1, 1995 and July 2, 1994
(Unaudited)
(1) BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited consolidated financial
statements have been prepared in accordance with the
instructions to Form 10-Q and, therefore, do not include
all footnotes and information necessary for a fair
presentation of financial position, results of operations,
and cash flows in conformity with generally accepted
accounting principles. However, in the opinion of
management, all adjustments (consisting only of normal
recurring accruals) necessary for a fair presentation have
been made.
The results of operations for the three months ended July
1, 1995, are not necessarily indicative of the operating
results to be expected for the year ending March 29, 1996.
The Company's business is seasonal. Historically,
approximately 23% of the Company's sales have occurred in
the first fiscal quarter.
Inventories, which consist of compact discs, tapes and
accessories, are stated at the lower of cost (principally
average) or market.
(2) NET LOSS PER COMMON SHARE
Net loss per common share was computed by dividing net loss
by the weighted average number of total common shares
outstanding during the periods.
(3) INCOME TAXES
The Company follows Statement of Financial Accounting
Standard (SFAS 109) "Accounting for Income Taxes".
The Company provides for income taxes currently payable
and, in addition, provides for deferred income taxes
resulting from timing differences between financial and
taxable income net of any valuation allowance. The benefit
of income taxes has been reduced by $178,000 for the
increase in the valuation allowance for deferred taxes.
The Company files a consolidated tax return with its
subsidiaries.
The Company anticipates that for fiscal year 1996, its tax
rate will be approximately 37%.
(4) COMMITMENTS
The Company is a lessee under various operating leases.
Several of them contain escalation clauses principally tied
to the Consumer Price Index. Several of the leases contain
renewal options.
The aggregate minimum rental commitments provided for in
such leases at July 1, 1995 are as follows:
<TABLE>
<S> <C> <C>
Fiscal year
ending Amount
1996 $ 1,297,309
1997 1,695,177
1998 1,561,568
1999 1,340,440
2000 1,181,966
Thereafter 5,799,015
_________
$ 12,875,475
</TABLE>
Rent expense under operating leases amounted to $514,901
and $604,000 for the three months ended July 1, 1995 and
July 2, 1994.
TREASURY STOCK (5)
Treasury stock consists of the following number of shares:
<TABLE>
<S> <C> <C>
July 1, April 1,
1995 1995
Class A common stock 2,541,670 2,541,670
Class B common stock 243,803 239,583
</TABLE>
<PAGE>
URT INDUSTRIES, INC., AND SUBSIDIARIES
Item 7. Management's Discussions And Analysis Of Financial
Condition And Results Of Operations For The Three
months Ended July 1, 1995, Compared To The Three
months Ended July 2, 1994.
RESULTS OF OPERATIONS
Net sales for the three months ended July 1, 1995 ("1995")
decreased by approximately 17.7% compared to the three months
ended July 2, 1994 ("1994"). Such decrease is attributed to a
decrease in comparable store sales (11.4%), and a decrease in
sales in those stores that closed during 1995 versus 1994
(6.3%).
During the last few years, non-traditional music retailers such
as appliance and computer retailers and super bookstores have
begun to sell prerecorded music and video products. They have
adopted policies of selling music products at near or below
wholesale cost as a means of attracting customers to sell other
products. During the current fiscal year, the effect of this
competition was encountered in some of our markets and will be
expanded to some others in the future. The Company has reduced
prices which has resulted in lower sales and lower gross profit.
The Company believes that it will remain competitive due to its
locations, selection of product and superior customer service.
The cost of sales for 1995 was lower than that for 1994 due to
the decrease in net sales. Cost of sales as a percentage of net
sales has increased from 62.6% in 1994 to 63.8% in 1995 due to a
reduction in retail pricing in an effort to meet the increased
competition.
Selling, general and administrative (SG&A) expenses in 1995
decreased by 12.5% compared to 1994. Such decrease is
attributable to a decrease in comparable store expenses (2.9%),
a decrease in store operating expenses of stores that opened or
closed during 1995 versus 1994 (5.9%) and a decrease in
corporate overhead (3.7%). SG&A expenses as a percentage of net
sales increased from 41.7% in 1994 to 44.4% in 1995 due to the
fixed nature of certain expenses and the decrease in net sales
in addition to the aforementioned items.
The Company incurred a net loss of approximately $420,000 in
1995 versus a net loss of approximately $170,000 in 1994 due to
the reduction in net sales and gross profit as described above.
LIQUIDITY AND CAPITAL RESOURCES
The Company had working capital of $4,805,675 at July 1, 1995
compared to working capital of $5,168,136 at April 1, 1995 and a
current ratio (the ratio of total current assets to total
current liabilities) of 1.91 to 1 at July 1, 1995 compared to a
current ratio of 1.86 to 1 at April 1, 1995.
The Company has historically maintained a strong cash position
and management believes that this will continue in the future.
At July 1, 1995, the Company had long term obligations of
$913,767. Management anticipates that its ability to repay its
long term debt will be satisfied primarily through funds
generated from its operations.
Management believes that the Company has excellent relationships
with its banks and suppliers and does not anticipate any
significant difficulties in financing operations at current
levels.
Management anticipates that cash generated from operations and
cash equivalent on hand will provide sufficient liquidity to
maintain adequate working capital for operations and the opening
of any new stores during the next few years.
Inflation trends have not had an impact upon revenues because
increases in costs have been passed along to customers.
The Company's business is seasonal in nature, with the highest
sales and earnings occurring in the third fiscal quarter, which
includes the Christmas selling season.
Subsequent to July 1, 1995 the Company sold its leasehold in a
store to the landlord for cash proceeds of $325,000.
<PAGE>
URT ENTERTAINMENT CORP.
OTHER INFORMATION
PART II
Item 6. Exhibits and Reports on Form 8-K
In the opinion of the Company, no Form 8-K was required to be
filed during the quarter reporting any material unusual charges
or credits to income during the quarter, or reporting a change
in independent accountants.
<PAGE>
URT ENTERTAINMENT CORP.
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.
URT INDUSTRIES, INC.
Registrant
Date: August 15, 1995 Allan Wolk
Allan Wolk, Chairman of the Board
(Principal Executive Officer)
Date: August 15, 1995 Jason Wolk
Jason Wolk, Vice President
(Chief Accounting Officer)
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<FISCAL-YEAR-END> March 29 1996
<PERIOD-START> April 2, 1995
<PERIOD-END> July 1, 1995
<PERIOD-TYPE> 3-mos
<CASH> 1,392,066
<SECURITIES> 2,654,410
<RECEIVABLES> 0
[ALLOWANCE] 0
<INVENTORY) 5,357,164
<CURRENT-ASSETS> 10,076,690
<PP&E> 3,030,988
<DEPRECIATION> 0
<TOTAL-ASSETS> 13,407,469
<CURRENT-LIABILITIES> 5,271,015
<BONDS> 0
0
0
<COMMON> 153,175
<OTHER-SE> 6,128,954
<TOTAL-LIABILITY-AND-EQUITY> 13,407,469
<SALES> 6,268,280
<TOTAL-REVENUES> 6,268,280
<CGS> 3,997,811
<TOTAL-COSTS> 6,779,971
<OTHER EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,732
<INCOME-PRETAX> (481,955)
<INCOME-TAX> 0
<INCOME-CONTINUING> (61,771)
<DISCONTINUED> 0
<EXTRAORDINARY> (61,771)
<CHANGES> 0
<NET-INCOME> (420,184)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
