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 DECEMBER 31, 1994, 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)
(305) 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 __
NO X
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 FEBRUARY 6, 1995.
<PAGE>
SOUND ADVICE, INC. AND SUBSIDIARIES
INDEX
Page
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements.
Consolidated Balance Sheets (Unaudited)
December 31, 1994 and June 30, 1994 3-4
Consolidated Statements of Income (Unaudited) for the
Three and Six Months Ended December 31, 1994 and 1993 5
Consolidated Statements of Cash Flows (Unaudited) for the
Six Months Ended December 31, 1994 and 1993 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 4. Submission of Matters to a Vote of Security-Holders. 12
Item 6. Exhibits and Reports on Form 8-K. 13
SIGNATURES 14
Page 2
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PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS.
SOUND ADVICE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
DECEMBER 31, 1994 AND JUNE 30, 1994
<TABLE>
<CAPTION>
DEC. 31, 1994 JUNE 30, 1994
------------------------ ------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 50,861 $ 44,992
Receivables:
Vendors 6,050,219 3,906,918
Trade 1,919,469 781,614
Employees 372,381 216,778
------------------------ ------------------------
8,342,069 4,905,310
Less allowance for doubtful accounts (470,000) (460,000)
------------------------ ------------------------
7,872,069 4,445,310
Inventories 42,679,541 35,129,665
Prepaid and other current assets 618,009 1,211,132
Deferred tax asset 443,000 443,000
Prepaid income taxes -- 368,000
------------------------ ------------------------
Total current assets 51,663,480 41,642,099
Property and equipment, net 16,699,796 14,258,143
Property under capital lease, net 827,900 --
Deferred tax asset, net 763,927 812,308
Other assets 717,135 604,822
Goodwill, net 207,566 219,791
------------------------ ------------------------
$ 70,879,804 $ 57,537,163
======================== ========================
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Page 3
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SOUND ADVICE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
DECEMBER 31, 1994 AND JUNE 30, 1994
<TABLE>
<CAPTION>
DEC. 31, 1994 JUNE 30, 1994
------------------------ ------------------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
- - - ------------------------------------
CURRENT LIABILITIES:
Borrowings under revolving credit agreement $ 9,583,218 $ 9,729,685
Accounts payable 21,921,404 11,632,403
Accrued liabilities 6,889,799 5,397,283
Current installments of long-term debt 1,359,348 1,237,785
------------------------ ------------------------
Total current liabilities 39,753,769 27,997,156
Long-term debt, excluding current installments 2,882,940 3,574,868
Capital lease obligation 802,900 --
Other liabilities and deferred credits 4,156,810 4,032,297
------------------------ ------------------------
47,596,419 35,604,321
------------------------ ------------------------
SHAREHOLDERS' EQUITY:
Common stock, $.01 par value; authorized
10,000,000 shares; issued and outstanding
3,728,894 shares at December 31, 1994
and June 30, 1994 37,289 37,289
Paid-in capital 11,114,655 11,114,655
Retained earnings 12,131,441 10,780,898
------------------------ ------------------------
Total shareholders' equity 23,283,385 21,932,842
Commitments and contingencies
------------------------ ------------------------
$ 70,879,804 $ 57,537,163
======================== ========================
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Page 4
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SOUND ADVICE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net sales $ 60,853,509 $ 54,883,404 $ 107,574,497 $ 96,540,525
Cost of goods sold 43,137,698 37,648,693 75,349,738 66,045,865
-------------- -------------- -------------- --------------
Gross profit 17,715,811 17,234,711 32,224,759 30,494,660
Selling, general and administrative
expenses 15,855,734 14,705,127 29,412,803 27,129,477
-------------- -------------- -------------- --------------
Income from operations 1,860,077 2,529,584 2,811,956 3,365,183
Other income (expense):
Interest expense (313,905) (149,061) (558,099) (262,126)
Provision for shareholder settlement -- (1,252,000) -- (1,252,000)
Other, net (58,014) (8,815) (58,014) (8,815)
-------------- -------------- -------------- --------------
Income before income taxes 1,488,158 1,119,708 2,195,843 1,842,242
Provision for income taxes 573,300 407,100 845,300 660,000
-------------- -------------- -------------- --------------
Net income $ 914,858 $ 712,608 $ 1,350,543 $ 1,182,242
============== ============== ============== ==============
COMMON AND COMMON EQUIVALENT PER SHARE AMOUNTS:
- - - ----------------------------------------------
Net earnings per share $ 0.24 $ 0.19 $ 0.36 $ 0.32
============== ============== ============== ==============
Weighted average number
of shares outstanding 3,736,925 3,762,810 3,738,593 3,751,835
============== ============== ============== ==============
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Page 5
<PAGE>
SOUND ADVICE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
NET CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,350,543 $ 1,182,242
Adjustments to reconcile net income to net cash provided by (used in) operating
activities:
Depreciation and amortization 1,482,228 1,309,640
Deferred income taxes 48,381 (497,600)
Loss on disposition of assets 58,014 13,151
Common stock warrant valuation -- 975,000
Changes in operating assets and liabilities:
Decrease (increase) in:
Receivables (3,426,759) (114,684)
Inventories (7,549,876) (2,943,136)
Prepaid and other current assets 593,123 78,429
Prepaid income taxes 368,000 1,350,635
Other assets (133,313) 25,051
Increase (decrease) in:
Accounts payable 10,289,001 3,266,076
Accrued liabilities 1,467,516 1,794,991
Other liabilities 124,513 (37,697)
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 4,671,371 6,402,098
----------- -----------
INVESTING ACTIVITIES:
Capital expenditures (3,948,670) (1,387,638)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (3,948,670) (1,387,638)
----------- -----------
FINANCING ACTIVITIES:
Repayments under revolving credit agreement (146,467) (4,758,236)
Repayments on long-term debt (570,365) (280,694)
Proceeds from issuance of common stock -- 50,000
----------- -----------
NET CASH USED IN FINANCING ACTIVITIES (716,832) (4,988,930)
----------- -----------
Increase in cash 5,869 25,530
Cash, beginning of period 44,992 50,885
----------- -----------
CASH, END OF PERIOD $ 50,861 $ 76,415
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $ 547,087 $ 262,126
=========== ===========
Income taxes paid (net of refunds) $ 225,000 $ (193,035)
=========== ===========
</TABLE>
Supplemental disclosure of noncash investing activity - During fiscal year 1995,
the Company recorded a capital lease obligation of $827,900.
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 December 31, 1994 and June
30, 1994, and the statements of income for the three and six month periods
ended December 31, 1994 and 1993 and statements of cash flows for the six
month periods ended December 31, 1994 and 1993. The results of operations
for the three and six months ended December 31, 1994 are not necessarily
indicative of the operating results expected for the year ending June 30,
1995. 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,
1994.
2.) EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
Earnings per common and common equivalent share has been determined
by dividing net income by the weighted average number of shares of common
stock and common stock equivalents outstanding during the respective
period.
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
December 31, 1994 and 1993 are as follows:
TRAILING FOUR QUARTERS ENDED DECEMBER 31,
(DOLLARS IN THOUSANDS)
QUARTERLY SALES
1994 1993
---- ----
AMOUNT % AMOUNT %
-------- ---- -------- ----
Second Quarter $ 60,854 32.8% $ 54,833 33.2%
(October - December)
First Quarter 46,721 25.1 41,657 25.2
(July - September)
Fourth Quarter 37,442 20.2 33,703 20.4
(April - June)
Third Quarter 40,779 21.9 34,965 21.2
(January - March) -------- ---- -------- ----
SALES FOR TRAILING TWELVE $185,796 100% $165,158 100%
MONTHS ENDED DECEMBER 31, ======== ==== ======== ====
1994 AND 1993, RESPECTIVELY
Page 7
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4.) PROPERTY AND EQUIPMENT, NET
Property and equipment, net, consist of the following:
DECEMBER 31, 1994 JUNE 30, 1994
Land $ 521,465 $ 521,465
Building 434,605 434,605
Furniture and equipment 8,583,352 8,044,226
Leasehold improvements 13,891,785 12,003,332
Display fixtures 4,525,973 3,934,506
Vehicles 998,708 1,002,714
------------ ------------
Total 28,955,888 25,940,848
Less accumulated depreciation (12,256,092) (11,682,705)
------------ ------------
Property and equipment, net $ 16,699,796 $ 14,258,143
============ ============
5.) STOCK OPTIONS
In December 1994, incentive stock options for an aggregate of
45,000 shares of common stock at an exercise price of $5.96 per share and
expiring no later than December 13, 1999 were issued, pursuant to the
Company's 1986 stock option plan, to certain executive officers of the
Company.
During the quarter ended December 31, 1994, incentive stock options
covering 23,000 shares of common stock (20,000 shares at an exercise price
of $4.20 per share, 1,500 shares at an exercise price of $5.45 per share
and 1,500 shares at an exercise price of $5.98 per share) were canceled
under the Company's 1986 stock option plan.
6.) CAPITALIZED LEASE
Property held under capital lease is being amortized on the
straight-line method over the shorter of the lease term or the estimated
useful life of the asset.
7.) LEASE COMMITMENTS
The Company signed two new leases during the quarter ended December
31, 1994. One lease agreement was for the relocation of the Hollywood,
Florida store, whose lease had expired. The other is for a land lease for
a new store site located in Fairfax, Virginia.
8.) EMPLOYMENT AGREEMENTS
Effective as of July 1, 1994, the employment agreements for two of
the Company's executive officers were again extended for an additional one
year term (until June 30, 1995) on substantially the same terms and
conditions as in effect under their respective employment agreements during
fiscal year 1994, 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 1994 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 December 31, 1994,
increased to $60,854,000 compared to $54,883,000 in the prior year
resulting in an increase of $5,971,000 or 10.9% over the second quarter of
fiscal 1994. Comparable store sales increased 8.9% in the quarter ended
December 31, 1994 over the corresponding quarter in the prior year. 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.
Net sales of $107,574,000 for the six months ended December 31,
1994, increased by $11,034,000 or 11.4% over the corresponding period in
the prior fiscal year. The increase in net sales during the first three
months of the 1995 six month period is primarily attributable to same store
sales growth through successful promotions. The increase in net sales
during the second three months of the 1995 six month period is primarily
attributable to new product offerings, successful promotions and, to a
lesser extent, the opening of a new Fort Myers store in November and the
December relocation of the existing Hollywood store. Comparable store
sales increased 10.8% in the six months ended December 31, 1994 compared to
the corresponding six month period in the prior year.
Gross profit increased by $481,000 or 2.8% in the quarter ended
December 31, 1994 compared to the corresponding quarter of the prior year.
The gross profit percentage was 29.1% in the quarter ended December 31,
1994 and 31.4% in the quarter ended December 31, 1993. The decrease in
gross profit percentage when compared to the second quarter of fiscal 1994
is primarily attributable to the product mix, particularly as a result of
the introduction of personal computers, and competitive marketing
strategies in the second quarter of 1995. The Company anticipates a
continued reduction in the overall gross profit percentage as personal
computer sales achieve a larger portion of the overall product mix.
Gross profit increased by $1,730,000 in the six months ended
December 31, 1994 compared to the corresponding period in the prior year.
The gross profit percentage was 30.0% for the six months ended December 31,
1994 compared to 31.6% for the corresponding period in the prior year. The
Company expects a continued reduction in the gross profit percentage as
personal computer sales which began in mid November increase to represent a
larger percentage of the overall product mix.
Selling, general and administrative expenses increased $1,151,000
in the quarter ended December 31, 1994 over the same quarter in the prior
year. As a percentage of net sales, selling, general and administrative
expenses decreased to 26.1% in fiscal 1995
Page 9
<PAGE>
from 26.8% in the same three months of fiscal 1994. The increase in
selling, general and administrative expenses is attributable to commissions
on increased sales, expenses associated with the Company's preparation,
training and entry into the personal computer business, changes in certain
store level compensation programs and increases in payroll related costs.
Start-up costs associated with the entry into personal computers will be
reduced through growth in sales volume and adjustment of the product mix.
Selling, general and administrative expenses increased $2,283,000
in the six months ended December 31, 1994 compared to the comparable period
in the prior year. As a percentage of net sales, selling general and
administrative expenses decreased to 27.3% in fiscal 1995 from 28.1% in the
comparable six months of fiscal 1994.The increase in selling, general and
administrative expenses is attributable to commissions on increased sales,
expenses associated with the Company's entry into the personal computer
business, changes in store level compensation programs, increases in
payroll related costs and costs associated with the Company's delayed
conversion to a new management information system.
During the second quarter of fiscal year 1994, the Company recorded
a provision for shareholder settlement of $1,252,000 in connection with a
global settlement of class actions filed in May 1992 against the Company
and others. The provision for shareholder settlement reflected the value
of the common stock warrants, the Company's portion of the cash settlement
and other expenses associated with the settlement.
Interest expense increased by $165,000 for the quarter and $296,000
for the six months ended December 31, 1994 compared to the prior year.
This increase was primarily reflective of the increased borrowing under the
Company's revolving credit facility, higher interest rates and additional
term loan borrowing by the Company during fiscal 1995.
The Company had an effective tax rate of approximately 38% for the
quarter and six months ended December 31, 1994 compared to a tax rate of
36% in the same periods of the prior fiscal year. The prior periods'
effective tax rates reflected the utilization of state tax benefits from
prior years. The Company anticipates its effective tax rate will continue
to be approximately 38% as these state tax benefits have been fully
utilized.
Net income for the quarter ended December 31, 1994 was $915,000 or
$.24 per share compared to $713,000 or $.19 per share for the same quarter
in the previous year. Net income for the six months ended December 31,
1994 and 1993 was $1,351,000, or $.36 per share, and $1,182,000, or $.32
per share, respectively. The quarter and six months of the previous year
are reduced by the after tax shareholder settlement in the amount of $.21
per share.
Page 10
<PAGE>
FINANCIAL CONDITION
Net cash provided by operating activities was approximately
$4,671,000 for the six months ended December 31, 1994. The Company had
working capital of approximately $11,910,000 at December 31, 1994 as
compared to the $13,645,000 in working capital at June 30, 1994. The
increase in current assets, primarily in inventory (approximately
$7,550,000), during the six month period of $10,021,000 was offset by a
corresponding increase of $11,757,000 in current liabilities primarily in
trade payables (approximately) $10,289,000). The funding of such trade
payables in the third quarter of fiscal 1995 will be accomplished primarily
through available borrowings under the Company's revolving credit facility
and cash flow from operations. Inventory levels along with related trade
payables were increased as a result of the holiday selling season, entry
into personal computers, a new Fort Myers store and a relocated larger
Hollywood store. Inventories are expected to decrease on an overall
basis from the December 1994 level to levels in the mid $30 million range
through May of 1995. For periods after that date inventories are expected
to increase for seasonal summer sales and preparation for entry into the
Washington, D.C./Baltimore metropolitan market.
The Company maintains a $30 million revolving credit and term loan
facility, which currently expires on March 31, 1995. As part of the
renewal and refinancing discussions with its lender, the Company intends to
explore restructuring a portion of the outstanding revolver loan balance
into an additional term loan facility. In addition, certain covenants may
need to be modified to provide the Company with additional borrowing
capacity for expansion purposes. In that regard, the Company anticipates
that operating cash requirements for fiscal 1995, including those funds
needed in connection with the preparations and costs associated with
entering the Washington, D.C./Baltimore area market, will require obtaining
satisfactory terms and covenants with respect to the renewal and extension
of its current financing arrangement.
In addition to the recently opened Fort Myers store and relocation
and expansion of the Hollywood store, the Company has previously announced
its intention to enter the Washington, D.C./Baltimore metropolitan area.
Although the Company originally expected to open showrooms in the new
market area during fiscal year 1995, it is currently anticipated that 4
showrooms will be operating by the end of calendar year 1995. To date, one
land lease has been finalized and the Company is pursuing several
additional sites in the new region. In that regard, the Company expects to
seek additional borrowing capacity or funding sources for its expansion
into Washington, D.C./Baltimore metropolitan area. The amount and type of
financing required will be dependent on the nature of the final lease and
development terms for each store site.
Page 11
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders.
(a) The Registrant held its 1994 annual meeting of shareholders
on Wednesday, February 1, 1995 (the "Annual Meeting").
(b) One matter voted upon at the Annual Meeting was the
election of six directors which comprised the Registrant's entire Board of
Directors. The six nominees, who were the nominees of the Registrant's
Board of Directors and all of which were serving as directors of the
Registrant as of the date of the Annual Meeting, were all elected at the
Annual Meeting as directors of the Registrant receiving the number of votes
for election and abstentions and percentage of total votes cast as set
forth next to their respective names below:
NOMINEE FOR DIRECTOR FOR THE ELECTION ABSTAIN
-------------------- ---------------- -------
Peter Beshouri 2,887,656 (99.2%) 23,228 (0.8%)
Michael Blumberg 2,887,456 (99.2%) 23,428 (0.8%)
Gregory Sturgis 2,887,656 (99.2%) 23,228 (0.8%)
Joseph Piccirilli 2,887,656 (99.2%) 23,228 (0.8%)
G. Kay Griffith 2,897,656 (99.5%) 13,228 (0.5%)
Richard W. McEwen 2,897,656 (99.5%) 13,228 (0.5%)
(c) The following two additional matters were separately voted
upon at the Annual Meeting and each of such matters received the votes of
the holders of the number of shares of Common Stock and percentage of total
votes cast at the Annual Meeting as indicated below:
(1) Proposal to amend the Second Amended and Restated
Sound Advice, Inc. 1986 Stock Option Plan (the
"Plan") to increase the number of shares of Common
Stock issuable pursuant to the Plan to 750,000 shares.
FOR AGAINST ABSTAIN
--- ------- -------
1,473,397 (68.5%) 663,408 (30.9%) 12,351 (0.6%)
(2) Proposal to amend the Plan to permit the Stock
Option Committee of the Plan, in connection with
the granting of non-qualified stock options, the
authority and discretion to provide for accelerated vesting
on death or cessation of employment or directorship by
reason of disability and the exercise of non-qualified
stock options for up to two years after termination or
cessation of employment or directorship under certain
circumstances.
FOR AGAINST ABSTAIN
--- ------- -------
2,597,051 (91.9%) 206,331 (7.3%) 23,726 (0.8%)
There were 761,728 and 83,776 broker nonvotes with respect
to matters (1) and (2) above, respectively.
(d) Not applicable.
Page 12
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Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits. The following exhibits are filed with this report:
EXHIBIT NO. DESCRIPTION
----------- ----------------------------------------------------
10.1 Amendments to Second Amended and Restated
Sound Advice, Inc. 1986 Stock Option Plan
(incorporated by reference from the
Registrant's Definitive Proxy Statement dated
December 30, 1994, Exhibit "A", File No. 0-15194).
10.2 Fifth Amendments to Employment Agreement,
both effective as of July 1, 1994, between the
Registrant and each of Peter Beshouri and
Michael Blumberg (included herewith).
27. Financial Data Schedule (included herewith).
(b) Reports on Form 8-K. No reports on Form 8-K have been
filed during the quarter ended December 31, 1994.
Page 13
<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 February 14, 1995 /s/ Peter Beshouri
----------------- -----------------------------------
Peter Beshouri, Chairman of the
Board, President and Chief
Executive Officer
Date February 14, 1995 /s/ Kenneth L. Danielson
----------------- -----------------------------------
Kenneth L. Danielson, Chief
Financial and Accounting Officer
Page 14
FIFTH AMENDMENT TO EMPLOYMENT AGREEMENT
FIFTH AMENDMENT, made and entered into effective as of the 1st day of
July, 1994, 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, and that
Fourth Amendment to Employment Agreement, dated as of July 1, 1993
(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 Fifth
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, 1995.
<PAGE>
2. BONUS. In lieu of any bonus arrangement set forth in Section
4(b) of the Agreement, the Board of Directors of the Corporation shall
propose to the Employee, prior to November 30, 1994 (or by such later date
as agreed to by the Employee), a bonus arrangement for the Employee for the
fiscal year ending June 30, 1995, acceptable to the Employee, such that the
Employee retains the right to terminate the Agreement if such bonus
arrangement is not acceptable to him.
3. EFFECT. Except as otherwise modified by this Fifth 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 Fifth
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 Fifth
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 on 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>
FIFTH AMENDMENT TO EMPLOYMENT AGREEMENT
FIFTH AMENDMENT, made and entered into effective as of the 1st day of
July, 1994, 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, and that
Fourth Amendment to Employment Agreement, dated as of July 1, 1993
(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 Fifth
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, 1995.
<PAGE>
2. BONUS. In lieu of any bonus arrangement set forth in Section 4(b) of
the Agreement, the Board of Directors of the Corporation shall propose to
the Employee, prior to November 30, 1994 (or by such later date as agreed
to by the Employee), a bonus arrangement for the Employee for the fiscal
year ending June 30, 1995, acceptable to the Employee, such that the
Employee retains the right to terminate the Agreement if such bonus
arrangement is not acceptable to him.
3. EFFECT. Except as otherwise modified by this Fifth 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 Fifth
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 Fifth
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 on 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 SIX MONTH PERIOD ENDED DECEMBER 31,
1994, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> DEC-31-1994
<CASH> 50,861
<SECURITIES> 0
<RECEIVABLES> 8,342,069
<ALLOWANCES> 470,000
<INVENTORY> 42,679,541
<CURRENT-ASSETS> 51,663,480
<PP&E> 29,783,788
<DEPRECIATION> 12,256,092
<TOTAL-ASSETS> 70,879,804
<CURRENT-LIABILITIES> 39,753,769
<BONDS> 0
<COMMON> 37,289
0
0
<OTHER-SE> 23,246,096
<TOTAL-LIABILITY-AND-EQUITY> 70,879,804
<SALES> 107,574,497
<TOTAL-REVENUES> 107,574,497
<CGS> 75,349,738
<TOTAL-COSTS> 75,349,738
<OTHER-EXPENSES> 29,470,817
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 558,099
<INCOME-PRETAX> 2,195,843
<INCOME-TAX> 845,300
<INCOME-CONTINUING> 1,350,543
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,350,543
<EPS-PRIMARY> .36
<EPS-DILUTED> .36
</TABLE>
