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 SEPTEMBER 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 0-15194
SOUND ADVICE, INC.
------------------
(Exact name of registrant as specified in its charter)
FLORIDA 59-1520531
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
1901 TIGERTAIL BOULEVARD, DANIA, FLORIDA 33004
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
(954) 922-4434
----------------------------------------------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
----------------------------------------------------
(Former name, former address and former 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__
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S
CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICAL DATE.
COMMON STOCK, PAR VALUE $.01 PER SHARE - 3,728,894 SHARES OUTSTANDING AS OF
NOVEMBER 10, 1995.
<PAGE>
SOUND ADVICE, INC. AND SUBSIDIARIES
INDEX
PAGE
----
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements.
Consolidated Balance Sheets (Unaudited)
September 30, 1995 and June 30, 1995 3-4
Consolidated Statements of Operations (Unaudited) for the
Three Months Ended September 30, 1995 and 1994 5
Consolidated Statements of Cash Flows (Unaudited) for the
Three Months Ended September 30, 1995 and 1994 6
Notes to Consolidated Financial Statements 7-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. 9-11
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K. 12
SIGNATURES 13
Page 2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
SOUND ADVICE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 30, 1995 AND JUNE 30, 1995
SEPTEMBER 30, 1995 JUNE 30, 1995
------------------ --------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 43,016 $ 46,950
Receivables:
Vendors 5,654,692 4,232,746
Trade 1,276,408 1,010,135
Employees 382,977 280,755
------------------ --------------------
7,314,077 5,523,636
Less allowance for doubtful accounts (618,000) (470,000)
------------------ --------------------
6,696,077 5,053,636
Inventories 33,347,995 31,758,744
Prepaid and other current assets 1,026,869 1,242,569
Deferred tax asset 537,308 537,308
Prepaid/Refundable income taxes 837,783 551,683
------------------ --------------------
Total current assets 42,489,048 39,190,890
------------------ --------------------
Property and equipment, net 14,583,823 15,063,283
Property under capital lease, net 781,800 795,630
Deferred tax asset, net 1,003,157 1,003,157
Other assets 298,179 453,698
Goodwill, net 189,229 195,341
------------------ --------------------
$ 59,345,236 $ 56,701,999
================== ====================
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Page 3
<PAGE>
<TABLE>
<CAPTION>
SOUND ADVICE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 30, 1995 AND JUNE 30, 1995
SEPTEMBER 30, 1995 JUNE 30, 1995
------------------ --------------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Borrowings under revolving credit agreement $ 12,758,843 $ 8,677,413
Accounts payable 12,471,344 11,091,255
Cash overdraft -- 1,234,066
Accrued liabilities 5,623,964 5,430,521
Current installments of long-term debt 1,675,319 2,673,570
------------------ --------------------
Total current liabilities 32,529,470 29,106,825
Long-term debt, excluding current installments 884,690 907,913
Capital lease obligation 820,252 821,277
Other liabilities and deferred credits 4,472,222 4,469,969
------------------ --------------------
38,706,634 35,305,984
------------------ --------------------
SHAREHOLDERS' EQUITY:
Common stock, $.01 par value; authorized
10,000,000 shares; issued and outstanding
3,728,894 shares at September 30, 1995
and June 30, 1995 37,289 37,289
Additional paid-in capital 11,058,655 11,058,655
Retained earnings 9,542,658 10,300,071
------------------ --------------------
Total shareholders' equity 20,638,602 21,396,015
Commitments and contingencies
------------------ --------------------
$ 59,345,236 $ 56,701,999
================== ====================
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Page 4
<PAGE>
<TABLE>
<CAPTION>
SOUND ADVICE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
1995 1994
------------------ --------------------
<S> <C> <C>
Net sales $ 44,165,168 $ 46,720,988
Cost of goods sold 31,525,050 32,212,040
------------------ --------------------
Gross profit 12,640,118 14,508,948
Selling, general and administrative
expenses 13,365,113 13,557,069
------------------ --------------------
(Loss) income from operations (724,995) 951,879
Other income (expense):
Interest expense (320,572) (244,194)
Other, net 2,054 --
------------------ --------------------
(Loss) income before income taxes (benefit) (1,043,513) 707,685
Income taxes (benefit) (286,100) 272,000
------------------ --------------------
Net (loss) income $ (757,413) $ 435,685
================== ====================
COMMON AND COMMON EQUIVALENT
PER SHARE AMOUNTS:
NET (LOSS) EARNINGS PER SHARE $ (0.20) $ 0.12
================== ====================
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 3,728,894 3,740,676
================== ====================
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Page 5
<PAGE>
<TABLE>
<CAPTION>
SOUND ADVICE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
1995 1994
------------------- --------------------
<S> <C> <C>
NET CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (757,413) $ 435,685
Adjustments to reconcile net (loss) income to net cash
provided by (used in) operating activities:
Depreciation and amortization 863,200 684,408
Deferred income taxes -- (12,692)
Loss on disposition of assets -- 1,612
Changes in operating assets and liabilities:
(Increase) decrease in:
Receivables (1,642,441) (722,905)
Inventories (1,589,251) 3,377,310
Prepaid and other current assets 215,700 350,618
Prepaid income taxes (286,100) 259,693
Other assets 81,287 (23,727)
Increase (decrease) in:
Accounts payable 1,380,089 (3,683,031)
Accrued liabilities 193,443 (31,582)
Other liabilities and deferred credits 2,253 (6,182)
------------------ --------------------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (1,539,233) 629,207
------------------ --------------------
INVESTING ACTIVITIES:
Capital expenditures (289,566) (677,556)
------------------ --------------------
NET CASH USED IN INVESTING ACTIVITIES (289,566) (677,556)
------------------ --------------------
FINANCING ACTIVITIES:
Net borrowings under revolving credit agreement 4,081,430 330,730
Repayments of long-term debt (1,021,474) (275,651)
Increase in cash overdraft (1,234,066) --
Reductions in capital lease obligation (1,025) --
------------------ --------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,824,865 55,079
------------------ --------------------
(Decrease) increase in cash (3,934) 6,730
Cash, beginning of period 46,950 44,992
------------------ --------------------
CASH, END OF PERIOD $ 43,016 $ 51,722
================== ====================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $ 348,466 $ 251,481
================== ====================
Income taxes paid, net of refunds $ 0 $ 25,000
================== ====================
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Page 6
<PAGE>
SOUND ADVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in conformity with instructions to Form 10-Q and, therefore, do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, the accompanying financial statements contain all adjustments,
consisting of normal, recurring accruals, necessary to present fairly the
financial position of the Company at September 30, 1995 and June 30, 1995, and
the statements of operations for the three month periods ended September 30,
1995 and 1994 and statements of cash flows for the three month periods ended
September 30, 1995 and 1994. The results of operations for the three months
ended September 30, 1995 are not necessarily indicative of the operating results
expected for the year ending June 30, 1996. These financial statements should be
read in conjunction with the consolidated financial statements and notes thereto
contained in the Company's annual report on Form 10-K for the fiscal year ended
June 30, 1995.
2.) (LOSS) EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
(Loss) earnings per common and common equivalent share has been
determined by dividing net (loss) income by the weighted average number of
shares of common stock and common stock equivalents outstanding during the
respective period unless their effect was antidilutive.
3.) SEASONALITY
Historically, the Company's net sales are greater during the holiday
season than during other periods of the year. Net sales by fiscal quarters and
their related percentages for the trailing four quarters ended September 30,
1995 and 1994 are as follows:
<TABLE>
<CAPTION>
TRAILING FOUR QUARTERS ENDED SEPTEMBER 30,
(DOLLARS IN THOUSANDS)
QUARTERLY SALES
1995 1994
---- ----
AMOUNT % AMOUNT %
-------- - -------- -
<S> <C> <C> <C> <C>
First Quarter $ 44,165 23.5% $ 46,721 26.0%
(July - September)
Fourth Quarter 39,148 20.8 37,442 20.8
(April - June)
Third Quarter 43,781 23.3 40,779 22.7
(January - March)
Second Quarter 60,854 32.4 54,833 30.5
(October - December) --------- ---- --------- ----
SALES FOR TRAILING TWELVE $ 187,948 100% $ 179,775 100%
MONTHS ENDED SEPTEMBER 30, ========= ==== ========= ====
1995 AND 1994, RESPECTIVELY
</TABLE>
Page 7
<PAGE>
4.) PROPERTY AND EQUIPMENT, NET
Property and equipment, net, consists of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, 1995 JUNE 30, 1995
------------------ ---------------
<S> <C> <C>
Land $ 521,465 $ 521,465
Building 434,605 434,605
Furniture and equipment 7,905,057 7,814,945
Leasehold improvements 14,340,769 14,236,432
Display fixtures 4,857,846 4,799,236
Vehicles 958,360 964,323
------------ --------------
Total 29,018,102 28,771,006
Less accumulated depreciation (14,434,279) (13,707,723)
------------ --------------
Property and equipment, net $ 14,583,823 $ 15,063,283
============ ==============
</TABLE>
5.) DEBT - BANK LOAN AGREEMENT
On October 13, 1995 the Company replaced its existing revolving credit
agreement and term loan facility. The new $20,000,000 credit facility is
comprised of a term loan of $6,680,000 and a revolving credit facility of
$13,320,000 under which the Company is able to borrow, repay and reborrow based
on the lesser of a borrowing base equal to 65% of eligible inventory in excess
of $6,680,000 or $13,320,000. The availability is reduced by outstanding letters
of credit which are limited to $1,200,000. The term loan facility bears interest
at prime plus 1.5% and is payable in monthly principal installments of
approximately $56,000, and additional principal reduction of $723,000 by
November 27, 1995 and a balloon payment of the outstanding balance at December
31, 1996. The revolving credit facility matures on December 31, 1996, and bears
interest on the outstanding balance at prime plus 1%. The Company paid a 1.375%
commitment fee in connection with the new facility and is obligated to pay
additional fees of .75% on February 28, 1996, 1% on July 1, 1996 and 1% on
September 30, 1996, based on the committed amount of the term loan and revolving
credit facility on the respective dates.
6.) EMPLOYMENT AGREEMENTS
Effective as of July 1, 1995, the employment agreements for two of the
Company's executive officers were again extended for an additional one year term
(until June 30, 1996) on substantially the same terms and conditions as in
effect under their respective employment agreements during fiscal year 1995,
including, without limitation, that the annual base salary payable to each of
them for the current fiscal year will be the same as they received for the 1995
fiscal year.
Page 8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
RESULTS OF OPERATIONS
The Company's net sales for the quarter ended September 30,1995,
decreased to $44,165,000 compared to $46,721,000 in the prior year resulting in
a decrease of $2,556,000 or 5.5% over the first quarter of fiscal 1995. The
decrease is primarily attributable to reduced sales in August during the
Company's annual scratch and dent sale, which resulted from the weather related
effects of Hurricane Erin. In addition, sales for the quarter were impacted to a
lesser extent from competition, particularly in South Florida, on lower end
electronic products sold by a number of different retailers. These lower end
electronic products make up a much smaller percentage of the Company's product
mix as compared to its competitors. Comparable store net sales decreased 10.8%
in the quarter ended September 30, 1995, over the corresponding quarter in the
prior year. The comparable store sales were adjusted to exclude the new store
opened in November 1994 and another relocated to a larger showroom in December
1994. The Company's operations, in common with other retailers in general, are
subject to seasonal influences. Historically, the Company has realized more of
its net sales and operating income in the second quarter ending in December.
Gross profit decreased by $1,869,000 or 12.9% in the quarter ended
September 30, 1995, compared to the corresponding quarter of the prior year.
The decrease in total gross profit when compared to the first quarter of fiscal
1995 is primarily attributable to an overall reduction in sales in the higher
end categories of audio, video and mobile electronics. The gross profit
percentage was 28.6% in the quarter ended September 30, 1995, and 31.1% in the
quarter ended September 30, 1994. The reduction in gross profit percentage in
1995 is attributable to the Company selling at reduced margins certain lower
end electronic products in order to reduce its lower end electronic products
mix and the introduction of personal computers.
Selling, general and administrative expenses decreased $192,000 in the
quarter ended September 30, 1995, over the same quarter in the prior year.
Selling, general and administrative expenses as a percentage of net sales
increased to 30.3% from 29.0% in the same three months of fiscal 1995 as a
result of the reduction in net sales during the first quarter of 1995. The
overall decrease in total expenses is attributable to reduced commissions on
decreased sales, and decreased depreciation and amortization expenses.
Interest expense increased by $76,000 for the quarter ended September
30, 1995 compared to the same quarter of the prior year. The increase was
primarily reflective of the increased borrowing under the Company's revolving
credit facility and higher interest rates during fiscal 1996.
The Company had an effective income tax benefit of approximately 27%
for the quarter ended September 30, 1995 compared to an effective income tax
rate of 38% for the first quarter of fiscal 1995.
Page 9
<PAGE>
Net loss for the quarter ended September 30, 1995 was $757,000 or $.20
per share compared to net income of $436,000 or $.12 per share for the same
quarter in the previous year. The net loss in 1995 was primarily attributable to
the reduction in net sales, the reduction in gross profit percentage and
increased interest expense, which was partially offset by reduced selling,
general and administrative expenses.
FINANCIAL CONDITION
Net cash used in operating activities was approximately $1,539,000 for
the three months ended September 30, 1995. The Company had working capital of
approximately $9,960,000 at September 30, 1995, as compared to the $10,084,000
in working capital at June 30, 1995 for an overall decrease of $124,000. The
increase in current assets of $3,298,000 during the three month period was
primarily related to the $1,589,000 increase in inventory and $1,643,000
increase in receivables. The increase in current assets of $3,298,000 was offset
by a net increase of $3,423,000 in current liabilities resulting from an
increase in trade payables of $1,380,000 and an increase in borrowings under the
revolving credit agreement of $4,081,000, which were partially offset by the
$1,234,000 reduction in the cash overdraft and $998,000 reduction in current
installments of long-term debt. Borrowings under the revolving credit facility
increased primarily as a result of the increase in inventory, accounts
receivable and the net loss reported by the Company.
The Company's revolving credit facility was replaced on October 13,
1995 with a $20,000,000 credit facility comprised of a term loan facility in the
amount of $6,680,000 and a revolving credit facility which enables the Company
to borrow, repay and reborrow up to $13,320,000 limited to a borrowing base
equal to 65% of eligible inventory (as defined) in excess of $6,680,000. The
borrowing availability under the revolving credit facility is reduced by the
outstanding standby letters of credit issued pursuant to a letter of credit
subfacility of up to $1,200,000. The term loan facility bears interest at the
prime rate plus 1.5% per annum and is repayable as follows: (i) monthly
installments of principal in the approximate amount of $56,000 plus accrued
interest payable on the first day of each month commencing November 1, 1995,
through December 31, 1996 (the "Maturity Date"), (ii) a principal reduction
payment of $723,000 due by November 27, 1995 and (iii) a balloon principal
payment of approximately $5,178,000 plus accrued and unpaid interest due on the
Maturity Date. The revolving credit facility bears interest at the prime rate
plus 1% per annum with monthly interest only installments payable until the
Maturity Date, at which time the entire unpaid principal balance and accrued and
unpaid interest thereon is due in full. The Company paid at closing a
structuring and facility fee equal to 1.375% of the committed amount of the new
credit facility, and is obligated to pay so long as the credit facility is
outstanding the following additional fees: (a) 3/4% on February 28, 1996, (b) 1%
on July 1, 1996, and (c) 1% on September 30, 1996, of the committed amount of
the term loan and revolving credit facility on the respective dates. The
financing arrangements under the new credit facility are collateralized by,
among other assets, the Company's accounts receivable, inventory, fixed assets,
general intangibles, tax refund receivable and depository accounts.
Page 10
<PAGE>
The Company currently believes funds from the Company's operations
combined with borrowings available under the new credit facility and vendor and
floor plan financing arrangements will be sufficient to satisfy its currently
projected operating cash requirements during fiscal year 1996. However,
additional sources of financing (debt and/or equity or a combination thereof)
would be required for any material expansion program.
Page 11
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits. The following exhibits are filed with this report:
EXHIBIT NO. DESCRIPTION
----------- --------------------------------------------
10.1 Sixth Amendments to Employment Agreement,
both effective as of July 1, 1995, between
the Company and each of Peter Beshouri and
Michael Blumberg.
27. Financial Data Schedule.
(b) Reports on Form 8-K. On August 10, 1995, a Form 8-K, dated August
9, 1995, of the Company, was filed reporting in Item 5 thereof,
among other things, that the Company had voluntarily agreed with
the Securities and Exchange Commission ("SEC") to an entry of a
cease and desist order by the SEC on August 9, 1995, concerning the
Company's Annual Report on Form 10-K for the fiscal year ended June
30, 1991, and Quarterly Reports on Form 10-Q for the quarters ended
September 30 and December 31, 1991.
Page 12
<PAGE>
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.
SOUND ADVICE, INC.
------------------------------------
(Registrant)
Date NOVEMBER 13, 1995 /s/ PETER BESHOURI
------------------------------------
Peter Beshouri, Chairman of the
Board, President and Chief
Executive Officer
Date NOVEMBER 13, 1995 /s/ KENNETH L. DANIELSON
------------------------------------
Kenneth L. Danielson, Chief
Financial and Accounting Officer
Page 13
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO.
- -------
10.1 Sixth Amendments to Employment Agreement, both effective as of
July 1, 1995, between the Company and each of Peter Beshouri
and Michael Blumberg.
27. Financial Data Schedule.
EXHIBIT 10.1
SIXTH AMENDMENT TO EMPLOYMENT AGREEMENT
SIXTH AMENDMENT, made and entered into effective as of the 1st day of
July, 1995, to the Employment Agreement, dated as of June 30, 1986, by and
between SOUND ADVICE, INC., a Florida corporation (the "Employer"), and PETER
BESHOURI (the "Employee"), as previously amended by that First Amendment to
Employment Agreement, dated as of May 15, 1989, that Second Amendment to
Employment Agreement, dated as of October 27, 1989, that Third Amendment to
Employment Agreement, dated as of July 1, 1992, that Fourth Amendment to
Employment Agreement, dated as of July 1, 1993, and that Fifth Amendment to
Employment Agreement, dated as of July 1, 1994 (collectively, the "Agreement").
W I T N E S S E T H :
WHEREAS, the Employee and the Employer mutually desire and each of them
is willing, in accordance with the terms and conditions specifically restated,
added, deleted or otherwise set forth below, to amend the Agreement, it being
understood by the Employee and the Employer that all terms and conditions of the
Agreement not otherwise modified by this Sixth Amendment thereto shall remain
effective and continue operating in full force throughout the entire term of the
Agreement, as amended.
NOW, THEREFORE, for and in consideration of the covenants and
conditions hereinafter set forth, the parties hereto mutually agree as follows:
1. TERM. Section 2 of the Agreement is hereby amended to
provide that the term of the Agreement is hereby extended for
another year or until June 30, 1996.
<PAGE>
2. BONUS. In lieu of any bonus arrangement set forth in Section
4(b) of the Agreement, the Employee shall be entitled to participate in the
Employer's annual incentive bonus plan and long term incentive stock option
program adopted in December 1994 by the Employer's Board of Directors and the
Stock Option Committee thereof, respectively.
3. EFFECT. Except as otherwise modified by this Sixth
Amendment, all terms, conditions and provisions of the Agreement
shall remain effective and continue operating in full force
throughout the entire term of the Agreement, as amended.
4. CAPTIONS. Paragraph titles or captions contained in
this Sixth Amendment are inserted only as a matter of
convenience and for reference and in no way define, limit,
extend or describe the scope of this Sixth Amendment or the
intent of any provision hereof.
IN WITNESS WHEREOF, the Employee has hereunto set his hand and the
Employer has caused this Amendment to be executed by its duly authorized officer
effective as of the day and year first above written.
SOUND ADVICE, INC.
By: /S/ MICHAEL BLUMBERG
---------------------
MICHAEL BLUMBERG, Senior
Vice President
EMPLOYEE:
/S/ PETER BESHOURI
------------------
PETER BESHOURI
2
<PAGE>
SIXTH AMENDMENT TO EMPLOYMENT AGREEMENT
SIXTH AMENDMENT, made and entered into effective as of the 1st day of
July, 1995, to the Employment Agreement, dated as of June 30, 1986, by and
between SOUND ADVICE, INC., a Florida corporation (the "Employer"), and MICHAEL
BLUMBERG (the "Employee"), as previously amended by that First Amendment to
Employment Agreement, dated as of May 15, 1989, that Second Amendment to
Employment Agreement, dated as of October 27, 1989, that Third Amendment to
Employment Agreement, dated as of July 1, 1992, that Fourth Amendment to
Employment Agreement, dated as of July 1, 1993, and that Fifth Amendment to
Employment Agreement, dated as of July 1, 1994 (collectively, the "Agreement").
W I T N E S S E T H :
WHEREAS, the Employee and the Employer mutually desire and each of them
is willing, in accordance with the terms and conditions specifically restated,
added, deleted or otherwise set forth below, to amend the Agreement, it being
understood by the Employee and the Employer that all terms and conditions of the
Agreement not otherwise modified by this Sixth Amendment thereto shall remain
effective and continue operating in full force throughout the entire term of the
Agreement, as amended.
NOW, THEREFORE, for and in consideration of the covenants and
conditions hereinafter set forth, the parties hereto mutually agree as follows:
1. TERM. Section 2 of the Agreement is hereby amended to
provide that the term of the Agreement is hereby extended for
another year or until June 30, 1996.
<PAGE>
2. BONUS. In lieu of any bonus arrangement set forth in Section
4(b) of the Agreement, the Employee shall be entitled to participate in the
Employer's annual incentive bonus plan and long term incentive stock option
program adopted in December 1994 by the Employer's Board of Directors and the
Stock Option Committee thereof, respectively.
3. EFFECT. Except as otherwise modified by this Sixth
Amendment, all terms, conditions and provisions of the Agreement
shall remain effective and continue operating in full force
throughout the entire term of the Agreement, as amended.
4. CAPTIONS. Paragraph titles or captions contained in
this Sixth Amendment are inserted only as a matter of
convenience and for reference and in no way define, limit,
extend or describe the scope of this Sixth Amendment or the
intent of any provision hereof.
IN WITNESS WHEREOF, the Employee has hereunto set his hand and the
Employer has caused this Amendment to be executed by its duly authorized officer
effective as of the day and year first above written.
SOUND ADVICE, INC.
By: /S/ PETER BESHOURI
---------------------------
PETER BESHOURI, President
and Chief Executive Officer
EMPLOYEE:
/S/ MICHAEL BLUMBERG
--------------------
MICHAEL BLUMBERG
2
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE REGISTRANT'S
FINANCIAL STATEMENTS AS OF AND FOR THE THREE MONTH PERIOD ENDED SEPTEMBER 30,
1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> SEP-30-1995
<CASH> 43,016
<SECURITIES> 0
<RECEIVABLES> 7,314,077
<ALLOWANCES> 618,000
<INVENTORY> 33,347,995
<CURRENT-ASSETS> 42,489,048
<PP&E> 29,018,102
<DEPRECIATION> 14,434,279
<TOTAL-ASSETS> 59,345,236
<CURRENT-LIABILITIES> 32,529,470
<BONDS> 0
<COMMON> 37,289
0
0
<OTHER-SE> 20,601,313
<TOTAL-LIABILITY-AND-EQUITY> 59,345,236
<SALES> 44,165,168
<TOTAL-REVENUES> 44,165,168
<CGS> 31,525,050
<TOTAL-COSTS> 31,525,050
<OTHER-EXPENSES> 13,365,113
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 320,572
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