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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED APRIL 30, 1997
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 0-14323
SPEC'S MUSIC, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 59-1362127
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1666 N.W. 82ND AVENUE
MIAMI, FLORIDA 33126
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(305) 592-7288
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
SHARES OF COMMON STOCK OUTSTANDING
AS OF JUNE 13, 1997: 5,305,069
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
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<PAGE>
SPEC'S MUSIC, INC.
FORM 10-Q
TABLE OF CONTENTS
PART I.
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED BALANCE SHEETS.......................... 3
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS................ 4
CONSOLIDATED CONDENSED STATEMENTS OF
CASH FLOWS................................................... 5
NOTES TO CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS......................................... 6-7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS
OF OPERATIONS................................................ 8-11
PART II.
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.............................. 12
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<PAGE>
<TABLE>
<CAPTION>
PART I.
ITEM 1. FINANCIAL STATEMENTS
SPEC'S MUSIC, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
APRIL 30, JULY 31,
1997 1996
----------- -----------
ASSETS (UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and equivalents $ 357,017 $ 405,753
Trade receivables 318,492 293,681
Income tax receivable 983,140 1,236,641
Inventories 17,106,959 19,704,076
Prepaid expenses 1,158,873 589,984
Deferred tax asset 827,825 2,122,384
----------- -----------
Total current assets 20,752,306 24,352,519
Video rental inventory, net 414,875 489,649
Property and equipment, net 14,673,205 16,714,965
Other assets 527,272 567,892
----------- -----------
Total Assets $ 36,367,658 $ 42,125,025
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturity of long-term debt $ 7,161,658 $ --
Accounts payable 9,482,722 8,408,500
Accrued expenses 2,422,159 2,262,378
Store closing reserve 1,838,764 2,859,289
----------- -----------
Total current liabilities 20,905,303 13,530,167
----------- -----------
Long term debt -- 9,654,094
Deferred income taxes 53,505 293,663
STOCKHOLDERS' EQUITY:
Common stock, par value $.01; 10,000,000
shares authorized; 5,300,369 and 5,319,269
shares issued at April 1997 and July
1996, respectively 53,005 53,194
Additional paid-in capital 3,523,467 3,700,043
Retained earnings 12,020,248 15,269,348
Less 37,375 and 74,600 shares in treasury at
April 1997, and July 1996, respectively,
at cost (187,870) (375,484)
----------- -----------
Total stockholders' equity 15,408,850 18,647,101
----------- -----------
Total Liabilities and Stockholders' equity $ 36,367,658 $ 42,125,025
----------- -----------
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
-3-
<PAGE>
<TABLE>
<CAPTION>
SPEC'S MUSIC, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine Months Ended
April 30, April 30,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Product sales $16,249,846 $17,565,238 $52,933,216 $59,704,005
Video rentals 260,214 363,724 827,083 1,176,694
----------- ----------- ----------- -----------
TOTAL REVENUES 16,510,060 17,928,962 53,760,299 60,880,699
----------- ----------- ----------- -----------
Cost of goods sold - sales 10,937,930 11,757,449 35,335,951 39,856,678
Cost of goods sold - rental 112,875 159,086 384,348 526,571
----------- ----------- ----------- -----------
TOTAL COST OF SALES 11,050,805 11,916,535 35,720,299 40,383,249
----------- ----------- ----------- -----------
GROSS PROFIT 5,459,255 6,012,427 18,040,000 20,497,450
Store operating, general and
administrative expenses 6,632,227 7,071,513 20,115,927 22,082,907
----------- ----------- ----------- -----------
Restructuring charge -- -- 250,000 --
Store closing expenses -- -- 269,569 --
----------- ----------- ----------- -----------
Operating loss (1,172,972) (1,059,086) (2,595,496) (1,585,457)
Other expense, net (206,651) (249,129) (681,424) (660,805)
----------- ----------- ----------- -----------
Loss before income taxes (1,379,623) (1,308,215) (3,276,920) (2,246,262)
Provision (benefit) for income
taxes 677,824 (496,000) (27,820) (853,000)
----------- ----------- ----------- -----------
NET LOSS $(2,057,447) $ (812,215) $(3,249,100) $(1,393,262)
----------- ----------- ----------- -----------
LOSS PER SHARE $ (.39) $ (.15) $ (.62) $ (.25)
----------- ----------- ----------- -----------
Weighted average number of
common shares outstanding 5,254,000 5,449,000 5,249,000 5,492,000
----------- ----------- ----------- -----------
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
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<PAGE>
<TABLE>
<CAPTION>
SPEC'S MUSIC, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED APRIL 30, 1997 AND 1996
(UNAUDITED)
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES: ------------ ------------
<S> <C> <C>
Net loss $ (3,249,100) $ (1,393,262)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Depreciation and amortization of property and equipment 1,863,228 2,056,318
Amortization of video rental inventory 381,886 599,972
Gain on disposal of video rental inventory -- (79,368)
Loss on disposal of property and equipment 269,569 76,858
Deferred compensation expense 63,651 18,490
Amortization of preopening expenses 28,294 564,902
Amortization of intangibles -- 14,318
(Increase) decrease in assets:
Receivables (24,811) 343,870
Income tax receivable 253,501 --
Inventories 2,597,117 3,209,939
Prepaid expenses (597,183) (216,338)
Prepaid income taxes -- (681,845)
Other assets (66,897) 185,803
Deferred tax asset 1,294,559 177,000
Increase (decrease) in liabilities:
Accounts payable 1,074,222 596,845
Accrued expenses 202,454 385,693
Restructuring charge -- (251,203)
Store closing reserve (1,020,525) --
Deferred income taxes (240,158) (91,000)
------------ -----------
Net cash provided by operating activities 2,829,807 5,516,992
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of video rental inventory (307,112) (280,925)
Disposition of video rental inventory -- --
Additions to property and equipment (224,386) (2,957,550)
Disposition of property and equipment 145,390 --
------------ -----------
Net cash (used in) investing activities (386,108) (3,238,475)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 65,289,974 13,500,000
Repayments of borrowings (67,782,409) (13,400,000)
Repayments of capital lease -- (25,636)
------------ -----------
Net cash provided by (used in) financing activities (2,492,435) 74,364
------------ -----------
Net increase (decrease) in cash (48,736) 2,352,881
Cash at beginning of period 405,753 552,224
------------ -----------
Cash at end of period $ 357,017 $ 2,905,105
------------ -----------
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
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<PAGE>
SPEC'S MUSIC, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The accompanying consolidated condensed financial statements should be read
in conjunction with the Company's consolidated financial statements and
notes thereto included in the Company's Annual Report on Form 10-K for the
fiscal year ended July 31, 1996.
The consolidated condensed financial statements were prepared from the books
and records of the Company without audit or verification. In the opinion of
management all adjustments, which are of a normal recurring nature and
necessary to present fairly the financial position, results of operations and
cash flows for all the periods presented have been made. Certain information
and footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted.
The results of operations for the nine month period ended April 30, 1997 are
not necessarily indicative of the operating results for the full fiscal year.
The accompanying financial statements include the accounts of the Company
and its wholly-owned subsidiary. All significant intercompany balances and
transactions have been eliminated.
2. CURRENT MATURITY OF LONG-TERM DEBT
In May 1996, the Company obtained a new 2 year credit agreement (the
"Revolving Credit Facility"), which includes a $3,000,000 stand-by letter of
credit facility, both of which expire in May 1998. Under the Company's new
Revolving Credit Facility, it may borrow up to the lesser of (a) $15,000,000
or (b) 60% of the Company's eligible inventory (as defined in the "Revolving
Credit Facility"). A commitment fee of 3/8% of the unused portion is payable
monthly. There were no borrowings under the stand-by letter of credit during
the first nine months of fiscal 1997.
The Revolving Credit Facility and all of the Company's obligations in
connection therewith are secured by a first-priority security interest in
substantially all of the Company's assets, and the Company may not further
pledge its assets without the prior approval of its lender. The Company is
also required to meet certain monthly financial covenants, including minimum
earnings, current ratio, fixed charge coverage and tangible net worth levels.
In addition, the Company may not exceed certain capital expenditures and
inventory costs levels.
The Revolving Credit Facility bears interest at a floating rate, adjusted
monthly, equal to the Index Rate (as defined below) plus 2.875%. The "Index
Rate" is the last month-end published rate for 30-day dealer-placed
commercial paper sold through dealers by major corporations as published in
the Money Rates section of the Wall Street Journal. Accrued interest is
payable monthly in arrears. The interest rate at April 30, 1997 was 8.495%.
The outstanding principal amount under the Revolving Credit Facility was
approximately $7.2 million as of April 30, 1997.
Presently, the Company is not in compliance with certain of the financial
covenants contained in the Revolving Credit Facility. As a result, the
Company has reclassified all amounts due under the credit agreement as
current liabilities.
The Company is currently having discussions with the lender to restructure
the terms and conditions of the Revolving Credit Facility to better meet its
working capital needs.
-6-
<PAGE>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS, CONT'D.
3. STATEMENT OF CASH FLOWS INFORMATION
The following is supplemental disclosure of cash flow information:
Nine months ended
April 30,
------------------------
1997 1996
--------- ---------
Interest paid $ 584,464 $ 598,287
Income tax paid -0- -0-
Supplemental noncash financing activities information:
During the nine months ended April 30, 1997, no Restricted Stock Awards were
granted and awards totaling $95,286 were canceled. During the nine months
ended April 30, 1996, no Restricted Stock Awards were granted and $102,865
were canceled.
The Company contributed $85,346 and $33,669 in common stock to the Company's
401(k) Plan during the nine months ended April 30, 1997 and 1996,
respectively.
4. LOSS PER SHARE
Loss per share is computed based on losses for each period, divided by the
weighted average number of common shares and equivalents outstanding during
each period. Stock options have been excluded from the loss per share
computations for both years as they were antidilutive to the calculation.
5. STORE CLOSING RESERVE
In July 1996, the Company adopted a plan as part of its response to industry
conditions to close four unprofitable store locations. As a result of the
planned closing of the store locations, the Company has recorded a charge of
approximately $3,251,000 ($2,045,000 after income tax benefits) representing
lease termination costs, write-down of assets, rent expense, and other
miscellaneous expenses. These store locations are expected to be closed
during fiscal 1997. During the first quarter of fiscal 1997, the Company
closed three of the four stores that were reserved for. The outstanding
reserve balance was $1,839,000 as of April 30, 1997. In the fourth quarter
of fiscal 1997, the remaining store will close. Management expects to fully
utilize the remaining reserve.
6. RESERVE FOR RESTRUCTURING
The Company announced plans to restructure the business which included
closing it's warehouse and distribution center. A provision of $250,000 has
been recorded in the second quarter ended January 31, 1997 representing costs
for severance, outplacement and other miscellaneous expenses. The
outstanding reserve balance was $201,000 as of April 30, 1997. The Company
expects to complete the restructuring of the business in the fourth quarter
of fiscal 1997 and expects to fully utilize the remaining reserve.
-7-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is an analysis of the Company's results of operations, liquidity
and capital resources. To the extent that such analysis contains statements
which are not of a historical nature, such statements are forward-looking
statements, which involve risks and uncertainties. These risks include changes
in the competitive environment for the Company's products, including the entry
or exit of non-traditional retailers of the Company's products to or from its
markets; the release by the music industry of an increased or decreased number
of "hit releases;" unfavorable developments with respect to a lease; general
economic factors in markets where the Company's products are sold; the Company's
ability to meet the renegotiated financial covenants contained in the Revolving
Credit Facility; and other factors discussed in the Company's filings with the
Securities and Exchange Commission.
RESULTS OF OPERATIONS
THREE MONTHS ENDED APRIL 30, 1997 AND 1996
REVENUES
Total revenues decreased by $1,419,000 or 7.9%, during the third quarter of
fiscal 1997 compared to the third quarter of fiscal 1996. As of the end of the
third fiscal quarter ended April 30, 1997, the Company operated six fewer stores
than in the third fiscal quarter of 1996. On a same-store basis (stores open
for more than one year), revenues increased by 3.1% over last year.
Revenues from product sales decreased by 7.5% for the chain as a whole and
increased by 2.1% on a same-store basis. Revenues declined because the Company
operated six fewer stores than in the third fiscal quarter of 1996 and
increased unit sales of compact discs were more than offset by decreased unit
sales of cassettes and video product. Same-store revenues improved over last
year due to an increase in new hit release titles.
Video rental revenue decreased by 28.5% for the Company as a whole and by 26.8%
on a same-store basis as compared to the third quarter in fiscal 1996. The
Company maintains video rental departments in limited stores based on customer
demand and has not aggressively promoted this business. Since the third quarter
of fiscal 1996, the Company closed three and opened one video rental department.
The Company plans to continue to review and adjust its prices and focus its
marketing and advertising campaign to differentiate itself from price oriented
mass merchants and discount electronics stores. Nevertheless, the Company is
likely to continue to experience revenue declines due to non-traditional
retailers' price slashing. In addition, revenues are expected to decline after
the closure of the Coconut Grove mega store during the fourth quarter of fiscal
1997.
GROSS PROFIT
Gross profits from product sales, which are net of product management and
distribution costs, were 32.7% and 33.1% during the third quarters of fiscal
1997 and 1996, respectively. Gross profit, as a percentage of revenue,
decreased because of promotional markdowns and the shift in sales mix to compact
and laser discs, which have lower gross margins than audio cassettes and VHS
tapes.
-8-
<PAGE>
MANAGEMENT'S DISCUSSION
AND ANALYSIS, CONTINUED
Gross profits from video rentals were 56.6% and 56.3% during the third quarters
of fiscal 1997 and 1996, respectively. Some fluctuation in gross profit margins
may be expected due to the fixed nature of the video rental inventory being
amortized on an accelerated method over a three year period.
Total gross profit was 33.1% and 33.5% of revenue during the third quarters of
fiscal 1997 and 1996, respectively. The Company expects total gross profit, as
a percentage of revenues to decline in the foreseeable future because of the
continued shift in the sales mix to compact and laser discs, the continued
decline of video rental revenues and the increased pricing pressures due to a
heightened competitive environment, as described above.
STORE OPERATING, GENERAL AND ADMINISTRATIVE EXPENSES
Store operating, general and administrative expenses, as a percentage of
revenue, were 40.2% and 39.4% during the third quarters of fiscal 1997 and 1996,
respectively. Store occupancy costs decreased due to the Company operating six
fewer stores than in the third fiscal quarter of 1996. General and
administrative expenses during the third quarter of fiscal 1997 increased
slightly compared to the third quarter of fiscal 1996. However, as a percentage
of revenue, the increase of store operating, general and administrative expenses
were largely due to the significant decline in total revenue.
OTHER INCOME (EXPENSE)
The Company incurred interest expenses of $253,000 and $215,000 during the third
quarter of fiscal 1997 and 1996, respectively. The increase is due to a higher
interest rate on the Company's Revolving Credit Facility combined with the
amortization of deferred financing costs which was partially offset by lower
average borrowings for the quarter.
INCOME TAXES
Provision for income taxes of $678,000 was recorded to reduce the deferred
income tax asset associated with the Company's net operating loss carry
forwards. In view of continuing losses from operations, the Company has
recorded a valuation allowance on deferred asset amounts which may not be
recoverable through the future carryback of operating losses.
NET EARNINGS (LOSS)
During the third quarter of fiscal 1997, the Company incurred a loss of
$(2,057,447) or $(.39) per share compared to $(812,000) or $(.15) per share
during the third quarter of fiscal 1996.
NINE MONTHS ENDED APRIL 30, 1997 AND 1996
REVENUES
Total revenues decreased by $7,120,400 or 11.7% in the first nine months of
fiscal 1997, compared to the same period in fiscal 1996. On a same-store
basis, revenues were unchanged compared to the nine months of fiscal 1996.
-9-
<PAGE>
MANAGEMENT'S DISCUSSION
AND ANALYSIS, CONTINUED
Revenues from product sales decreased by 11.3% for the chain as a whole and by
0.6% on a same-store basis during the first nine months of fiscal 1997. This
decrease is due in part to the Company operating six fewer stores during the
nine months of fiscal 1997.
Video rental revenues decreased by 30% for the chain as a whole and by 21% on a
same-store basis. The closing of three video rental departments since the third
quarter of fiscal 1996 and a lower demand for video rentals contributed to lower
rental revenues.
GROSS PROFIT
Gross profit from product sales, which is net of product management and
distribution costs, was 33.2% during the first nine months of fiscal 1997 and
1996. Gross profit, which is expressed as a percentage of revenues, remained
unchanged primarily because of an increase in sales of higher margin accessory
items during the first quarter of fiscal 1997.
Gross profit for video rentals was 53.5% and 55.2% during the first nine months
of fiscal 1997 and 1996, respectively. Some fluctuations in gross profit margins
may be expected due to the fixed nature of the video rental inventory being
amortized on an accelerated method over a three year period.
Total gross profit was 33.6% and 33.7% of revenue during the first nine months
of fiscal 1997, and 1996, respectively. The unchanged gross profit from product
sales was partially offset by a decrease in gross profits from video rentals.
Some fluctuation in gross profit margins may be expected due in part to the many
factors that affect the Company's purchases for sale and in part to the
Company's promotional strategies.
STORE OPERATING, GENERAL AND ADMINISTRATIVE EXPENSES
Store operating, general and administrative expenses, as a percentage of
revenue, were 37.4% and 36.3% during the first nine months of fiscal 1997 and
1996, respectively. Store operating expenses decreased due to operating six
fewer stores compared to the same period in 1996. General and administrative
expenses for the nine months of fiscal 1997 increased slightly compared to the
nine months of fiscal 1996. However, as a percentage of revenue, the
increase of store operating, general and administrative expenses were due to
the significant decline in total revenues.
OTHER INCOME (EXPENSE)
Other expenses include interest expense of $733,000 and $669,000 during the
first nine months of fiscal 1997 and 1996, respectively. The increase is due
to a higher interest rate on the Company's Revolving Credit Facility combined
with the amortization of deferred financing costs which were partially offset by
lower average borrowings for the nine months.
NET EARNINGS (LOSS)
For the nine month period ended April 30, 1997, the net loss was $(3,249,100) or
$(.62) per share, compared to a net loss of $(1,393,000) or $(.25) per share for
the first nine months of fiscal 1996.
-10-
<PAGE>
MANAGEMENT'S DISCUSSION
AND ANALYSIS, CONTINUED
LIQUIDITY AND CAPITAL RESOURCES
As of April 30, 1997, the Company's working capital was $.2 million compared to
$10.8 million at July 31, 1996. The decrease in working capital during the
first nine months of fiscal 1997 was primarily the result of the
reclassification of long-term debt to current debt and the reduction of the
deferred tax asset associated with the Company's net operating loss carry
forwards.
Cash flows from operating activities provided $2.8 million in the nine months of
fiscal 1997, compared to providing $5.5 million in fiscal 1996. The primary
reason for the decline in cash flows from operating activities relate to the
inventory reductions in the first nine months of fiscal 1996, obtained from
just-in-time buying practices.
Cash flow used in investing activities decreased from $3.2 million in the first
nine months of fiscal 1996 to $386,000 in the first nine months of fiscal 1997.
The primary reason for the decline in cash flows used in investing activities
relate to fewer additions to property and equipment in the first nine months of
fiscal 1997 compared to the first nine months of fiscal 1996.
At April 30, 1997, the Company had a $15 million secured Revolving Credit
Agreement, expiring May 1998, which includes a $3,000,000 stand-by letter of
credit facility. Under the Revolving Credit Agreement, the Company may borrow
up to the lesser of (a) $15,000,000 or (b) 60% of the Company's eligible
inventory (as defined in the credit agreement). At April 30, 1997, the Company
had an outstanding balance of $7,161,658 under the Revolving Credit Agreement.
There were no borrowings under the stand-by letter of credit during the first
nine months of fiscal 1997.
Presently, the Company is not in compliance with certain of the financial
covenants contained in the Revolving Credit Facility. As a result, the Company
has reclassified all amounts due under the credit agreement as current
liabilities.
The Company is currently having discussions with the lender to restructure the
terms and conditions of the Revolving Credit Facility to better meet its working
capital needs.
The Company is a specialty retailer in Florida and Puerto Rico of prerecorded
music and video products and is also engaged in the rental of video tapes. This
industry has experienced increased competition during the past few years, which
coupled with other business related factors, has negatively impacted the
Company's performance. The Company anticipates the competitive conditions will
continue into the foreseeable future. The Company's return to profitable
operations and continuity into the future is dependent upon various factors
including improving sales and profit margins, reducing expenses, eliminating
unprofitable stores, the competitive environment, and the successful
renegotiation of the terms of its Credit Agreement or obtaining other credit
facilities. Management believes that its cash flow from operations and
availability under its existing credit agreement should be adequate to cover
the Company's projected cash requirements during the year ending July 31, 1997.
Operating results are however, subject to various uncertainties and
contingencies, many of which are beyond the Company's control. The Company's
future profitability or the lack thereof, could have a substantial impact on its
liquidity, its ability to meet its debt covenants, and its availability of
capital resources necessary to conduct its business.
-11-
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule (Exhibit only to electronic filing).
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the quarter
ended April 30, 1997.
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.
SPEC'S MUSIC, INC.
-------------------------------
(Registrant)
June 19, 1997 /s/ Ann S. Lieff
- ----------------------------- -------------------------------
Date ANN S. LIEFF
Chief Executive Officer
(Principal Executive Officer)
June 19, 1997 /s/ Donald A. Molta
- ----------------------------- -------------------------------
Date DONALD A. MOLTA
Vice President and Chief
Financial Officer
(Principal Financial and
Accounting Officer)
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-END> APR-30-1997
<CASH> 357,017
<SECURITIES> 0
<RECEIVABLES> 318,492
<ALLOWANCES> 0
<INVENTORY> 17,106,959
<CURRENT-ASSETS> 20,752,306
<PP&E> 25,479,490
<DEPRECIATION> 10,806,285
<TOTAL-ASSETS> 36,367,658
<CURRENT-LIABILITIES> 20,905,303
<BONDS> 7,161,658
0
0
<COMMON> 53,005
<OTHER-SE> 15,355,845
<TOTAL-LIABILITY-AND-EQUITY> 37,670,849
<SALES> 52,933,216
<TOTAL-REVENUES> 53,760,299
<CGS> 35,335,951
<TOTAL-COSTS> 35,720,299
<OTHER-EXPENSES> 20,635,496
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 732,844
<INCOME-PRETAX> (3,276,920)
<INCOME-TAX> (27,820)
<INCOME-CONTINUING> (3,249,100)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,249,100)
<EPS-PRIMARY> (.62)
<EPS-DILUTED> 0
</TABLE>
