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 MARCH 31, 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)
(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
MAY 1, 1995.
<PAGE>
SOUND ADVICE, INC. AND SUBSIDIARIES
INDEX
PAGE
----
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements.
Consolidated Balance Sheets (Unaudited)
March 31, 1995 and June 30, 1994 3-4
Consolidated Statements of Operations (Unaudited) for the
Three and Nine Months Ended March 31, 1995 and 1994 5
Consolidated Statements of Cash Flows (Unaudited) for the
Nine Months Ended March 31, 1995 and 1994 6
Notes to Consolidated Financial Statements 7-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. 10-12
PART II - OTHER INFORMATION
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)
MARCH 31, 1995 AND JUNE 30,1994
MARCH 31, 1995 JUNE 30, 1994
-------------- -------------
ASSETS
CURRENT ASSETS:
Cash $ 47,705 $ 44,992
Receivables:
Vendors 2,875,705 3,906,918
Trade 1,453,354 781,614
Employees 323,932 216,778
----------- -----------
4,652,991 4,905,310
Less allowance for doubtful accounts (520,000) (460,000)
----------- -----------
4,132,991 4,445,310
Inventories 31,739,068 35,129,665
Prepaid and other current assets 659,856 1,211,132
Deferred tax asset 443,000 443,000
Prepaid income taxes 567,881 368,000
----------- -----------
Total current assets 37,590,501 41,642,099
Property and equipment, net 16,274,799 14,258,143
Property under capital lease, net 809,460 -
Deferred tax asset, net 763,927 812,308
Other assets 717,426 604,822
Goodwill, net 201,454 219,791
----------- -----------
$56,357,567 $57,537,163
=========== ===========
See accompanying notes to consolidated financial statements.
Page 3
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SOUND ADVICE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
MARCH 31,199$ AND JUNE 30, 1994
MARCH 31,1995 JUNE 30,1994
------------- ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Borrowings under revolving credit agreement $13,439,906 $ 9,729,685
Accounts payable 6,992,493 11,632,403
Accrued liabilities 4,715,576 5,397,283
Current installments of long-term debt 1,359,448 1,237,785
----------- -----------
Total current liabilities 26,507,423 27,997,156
Long-term debt, excluding current installments 2,578,347 3,574,868
Capital lease obligation 822,255 -
Other liabilities and deferred credits 4,252,119 4,032,297
----------- -----------
34,160,144 35,604,321
----------- -----------
SHAREHOLDERS' EQUITY:
Common stock, $.01 par value; authorized
10,000,000 shares; issued and outstanding
3,728,894 shares at March 31, 1995
and June 30,1994 37,289 37,289
Paid-in capital 11,114,655 11,114,655
Retained earnings 11,045,479 10,780,898
----------- -----------
Total shareholders' equity 22,197,423 21,932,842
Commitments and contingencies
----------- -----------
$56,357,567 $57,537,163
=========== ===========
See accompanying notes to consolidated financial statements.
Page 4
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SOUND ADVICE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 1995 AND 1994
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
------------------------- ----------------------------
1995 1994 1995 1994
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Net sales $43,781,461 $40,778,572 $151,355,958 $137,319,097
Cost of goods sold 31,543,257 27,998,826 106,892,995 94,044,691
----------- ----------- ------------ ------------
Gross profit 12,238,204 12,779,746 44,462,963 43,274,406
Selling, general and
administrative expenses 13,521,304 12,168,824 42,934,107 39,298,301
----------- ----------- ------------ ------------
Income (loss) from operations (1,283,100) 610,922 1,528,856 3,976,105
Other income (expense):
Interest expense (482,662) (76,510) (1,040,761) (338,636)
Provision for shareholder
settlement - - - (1,252,000)
Other, net - 1,436 (58,014) (7,379)
----------- ----------- ------------ ------------
Income (loss) before
income taxes (1,765,762) 535,848 430,081 2,378,090
Provision (benefit) for
income taxes (679,800) 209,000 165,500 869,000
----------- ----------- ------------ ------------
Net income (loss) $(1,085,962) $ 326,848 $ 264,581 $ 1,509,090
=========== =========== ============ ============
COMMON AND COMMON EQUIVALENT
PER SHARE AMOUNTS:
NET EARNINGS (LOSS) PER SHARE $ (0.29) $ 0.09 $ 0.07 $ 0.40
=========== =========== ============ ============
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 3,728,894 3,739,752 3,734,675 3,746,720
=========== =========== ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
Page 5
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SOUND ADVICE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED MARCH 31,1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
NET CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 264,581 $1,509,090
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 2,437,818 2,058,077
Provision for loss on asset impairment 400.000
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 312,319 381.846
Inventories 3,390,597 (2,350,780)
Prepaid and other current assets 551,276 (151,536)
Prepaid income taxes (199,881) 1,299,635
Other assets (196,838) 27,828
Increase (decrease) in:
Accounts payable (4,639,910) (813,865)
Accrued liabilities (686,118) 1,471,584
Other liabilities and deferred credits 219,822 (41,356)
---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,960,061 3,881,074
---------- ----------
INVESTING ACTIVITIES:
Capital expenditures (4,791,477) (2,464,316)
---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (4,791,477) (2,464,316)
---------- ----------
FINANCING ACTIVITIES:
Net borrowings (repayments) on revolving
credit agreement 3,710,221 (1,048,763)
Repayments on long-term debt (874,858) (451,031)
Repayments on capital lease obligation (1,234)
Proceeds from issuance of common stock - 50,000
---------- ----------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 2,834,129 (1,449,794)
---------- ----------
Increase (decrease) in cash 2,713 (33,036)
Cash, beginning of period 44,992 50,885
---------- ----------
CASH, END OF PERIOD $ 47,705 $ 17,849
========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $1,078,749 $ 338,636
========== ==========
Income taxes paid (net of refunds) $ 317,000 $ 66,965
========== ==========
Supplemental disclosure of noncash investing activity - During fiscal year 1995, the Company
recorded a capital lease obligation of $827,900.
</TABLE>
See accompanying notes to consolidated financial statements.
Page 6
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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 March 31, 1995 and June 30,
1994, and the statements of operations for the three and nine month periods
ended March 31, 1995 and 1994 and statements of cash flows for the nine
month periods ended March 31, 1995 and 1994. The results of operations for
the three and nine months ended March 31, 1995 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 (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE
Earnings (loss) per common and common equivalent share has been
determined by dividing net income (loss) 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
March 31, 1995 and 1994 are as follows:
TRAILING FOUR QUARTERS ENDED MARCH 31,
(DOLLARS IN THOUSANDS)
QUARTERLY SALES
1995 1994
------------------ ------------------
AMOUNT % AMOUNT %
-------- ----- -------- -----
Third Quarter $ 43,781 23.2% $ 40,779 23.8%
(January - March)
Second Quarter 60,854 32.2 54,883 32.1
(October - December)
First Quarter 46,721 24.8 41,657 24.4
(July - September)
Fourth Quarter 37,442 19.8 33,703 19.7
(April - June)
-------- ---- -------- ----
SALES FOR TRAILING TWELVE $188,798 100% $171,022 100%
MONTHS ENDED MARCH 31, ======== ==== ======== ====
1995 AND 1994, RESPECTIVELY
Page 7
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4.) PROPERTY AND EQUIPMENT, NET
Property and equipment, net, consist of the following:
MARCH 31, 1995 JUNE 30, 1994
-------------- -------------
Land $ 521,465 $ 521,465
Building 434,605 434,605
Furniture and equipment 8,456,934 8,044,226
Leasehold improvements 14,256,039 12,003,332
Display fixtures 4,727,053 3,934,506
Vehicles 1,002,599 1,002,714
------------ ------------
Total 29,398,695 25,940,848
Less accumulated depreciation (13,123,896) (11,682,705)
------------ ------------
Property and equipment, net $ 16,274,799 $ 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, at prices ranging from
$4.20 to $5.98 per share, were canceled under the Company's 1986 stock
option plan.
During the quarter ended March 31, 1995, incentive stock options
covering 31,500 shares of common stock, at prices ranging from $5.45 to
$10.48 per share, were canceled under the Company's 1986 stock option plan.
6.) DEBT - BANK LOAN AGREEMENT
During the third fiscal quarter, the Company's $30 million
revolving credit and term loan facility which matured on March 31, 1995 was
extended by its lending bank until September 29, 1995 under substantially
the same terms and conditions. (See "Item 2 Management's Discussion and
Analysis of Financial Condition and Results of Operations- Financial
Condition.")
7.) PROVISION FOR ASSET IMPAIRMENT
The Company recorded a $400,000 estimated provision for asset
impairment in the quarter ended March 31, 1995 which is included in
selling, general and administrative expenses. The valuation adjustment
relates to hardware and software purchased in 1994 in connection with the
Company's unsuccessful implementation of a new management information
system.
8.) 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.
Page 8
<PAGE>
9.) LEASE COMMITMENTS
During the second quarter the Company signed a lease agreement for
the relocation of the Hollywood, Florida store, whose lease had expired. In
addition, the land lease signed for a new store site in Fairfax, Virginia
was canceled in the third quarter in connection with the postponed entry
into the Washington, D.C./Baltimore metropolitan area.
10.) 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 9
<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 March 31, 1995,
increased to $43,782,000 compared to $40,779,000 in the prior year
resulting in an increase of $3,003,000 or 7.4% over the third quarter of
fiscal 1994. The overall sales growth is primarily attributable to the
opening of the new Fort Myers store and the relocation and expansion of the
Hollywood store. Comparable store net sales increased 1.2% in the quarter
ended March 31, 1995 over the corresponding quarter in the prior year
(excluding for comparative purposes one 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.
Net sales of $151,356,000 for the nine months ended March 31,
1995, increased by $14,037,000 or 10.2% over the corresponding period in
the prior fiscal year. The increase in net sales is primarily attributable
to same store sales growth through successful promotions and new product
offerings. Comparable store sales increased 8.0% in the nine months ended
March 31, 1995 compared to the corresponding nine month period in the prior
year. The remainder of the sales growth is attributable to the opening of
the new Fort Myers store in November 1994 and the December 1994 relocation
of the existing Hollywood store.
Gross profit decreased by $542,000 or 4.2% in the quarter ended
March 31, 1995 compared to the corresponding quarter of the prior year. The
gross profit percentage was 28.0% in the quarter ended March 31, 1995 and
31.3% in the quarter ended March 31, 1994. The decrease in gross profit
percentage when compared to the third quarter of fiscal 1994 is primarily
attributable to the product mix, particularly as a result of the
introduction of personal computers, competitive marketing strategies and
reduced availability in certain audio and video products in the third
quarter of fiscal 1995.
Gross profit increased by $1,189,000 in the nine months ended
March 31, 1995 compared to the corresponding period in the prior year. The
gross profit percentage was 29.4% for the nine months ended March 31, 1995
compared to 31.5% for the corresponding period in the prior year. The
Company anticipated a reduction in gross profit percentage resulting
primarily from personal computer sales, which began in mid November 1994.
Selling, general and administrative expenses increased $1,352,000
in the quarter ended March 31, 1995 over the same quarter in the prior
year. As a percentage of net sales, selling, general and administrative
expenses increased to 30.9% in fiscal 1995 from 29.8% in the same three
months of fiscal 1994. The increase includes a $400,000 provision for asset
impairment (See Note 7 of Notes to Consolidated Financial Statements) and a
$197,000 write-off of expenses associated with the postponed entry
Page 10
<PAGE>
into the Washington, D.C./Baltimore metropolitan area. The remaining
increase is attributable to commissions on increased sales, expenses
associated with the Company's entry into the personal computer business,
changes in certain store level compensation programs, increased payroll
related costs and increased depreciation and amortization expense.
Selling, general and administrative expenses increased $3,636,000
in the nine months ended March 31, 1995 compared to the comparable period
in the prior year. As a percentage of net sales, selling general and
administrative expenses decreased to 28.4% in fiscal 1995 from 28.6% in the
comparable nine months of fiscal 1994. As previously disclosed, the
increase includes a $400,000 provision for asset impairment and a $197,000
write-off of expenses associated with the postponed entry into the
Washington, D.C./Baltimore metropolitan area. The remaining increase 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, increased payroll related costs, increased
depreciation and amortization expenses and costs associated with the
Company's unsuccessful implementation of 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 $406,000 for the quarter and
$702,000 for the nine months ended March 31, 1995 compared to the prior
year. This increase was primarily reflective of the increased borrowing
under the Company's revolving credit facility, additional outstanding term
loans and higher interest rates during fiscal 1995.
The Company had an effective income tax rate of approximately 38%
for the nine months ended March 31, 1995 compared to 37% for the nine
months ended March 31, 1994.
Net (loss) for the quarter ended March 31, 1995 was ($1,086,000)
or ($.29) per share compared to net income of $327,000 or $.09 per share
for the same quarter in the previous year. Net income for the nine months
ended March 31, 1995 and 1994 was $265,000, or $.07 per share, and
$1,509,000, or $.40 per share, respectively. The net loss for the quarter
ended March 31, 1995 and the reduction in net income for the nine months
ended March 31, 1995 was primarily attributable to reduced gross profit
margin, increased depreciation and interest expense, provision for asset
impairment and write-off of expenses related to the postponement of
expansion into Washington, D.C./Baltimore metropolitan area. The nine month
period of the previous year was reduced by the after-tax shareholder
settlement in the amount of $.21 per share.
Page 11
<PAGE>
FINANCIAL CONDITION
Net cash provided by operating activities was approximately
$1,960,000 for the nine months ended March 31, 1995. The Company had
working capital of approximately $11,083,000 at March 31, 1995 as compared
to the $13,645,000 in working capital at June 30, 1994 for an overall
decrease of $2,562,000. The decrease in current assets of $4,052,000 during
the nine month period was primarily related to the $3,391,000 reduction in
inventory. The reduction in current assets of $4,052,000 was partially
offset by a net decrease of $1,490,000 in current liabilities primarily
resulting from a decrease in trade payables of $4,640,000 offset by an
increase in borrowings under the revolving credit agreement of $3,710,000.
Borrowings under the revolving credit facility increased primarily as a
result of capital expenditures associated with the opening of the new
showroom in Fort Myers and the relocation and expansion of the Hollywood
showroom together with increased levels of inventory required for increased
sales and product offerings.
The Company has implemented an expense reduction program designed
to reduce selling, general and administrative expenses. The initial
reduction, primarily from personnel and related expense reductions together
with a reduction in warehousing costs, is expected to be realized in the
fourth fiscal quarter of 1995. Additional expense reductions, including
cost savings related to employee benefit programs, are expected to take
effect in the first quarter of fiscal 1996. In addition, the Company
implemented an inventory reduction program in the third quarter of fiscal
1995, in order to reduce the level of inventory required to support the
Company's sales volume and improve inventory turn. Inventory levels at
March 31, 1995 were reduced to $31,739,000 from $42,680,000 at December 31,
1994.
The Company maintains a $30 million revolving credit and term loan
facility, which matured on March 31, 1995 and was extended by its lending
bank until September 29, 1995 under substantially the same terms and
conditions. The Company is in the process of replacing its current facility
and, in that regard, has requested and received several alternative
multi-year financing proposals from other lending institutions which are
currently under review by the Company. It is anticipated that a new
financing arrangement will be completed prior to September 29, 1995.
In addition to the recently opened Fort Myers store and the
relocation and expansion of the Hollywood store, the Company had previously
announced its intention to enter the Washington, D.C./Baltimore
metropolitan area. During the third quarter, the Company announced its
intentions to postpone its expansion plans into the Washington,D.C./
Baltimore metropolitan area until no sooner than the latter part of 1996.
In connection with the postponement, the Company has determined not to
enter into any long-term commitments for showroom or warehouse sites at
this time, however, the company is currently exploring the potential
relocation of its two remaining smaller format showrooms to full size
showrooms. Generally, each of these relocations would require outlays of
approximately $900,000 to $1,100,000 for leasehold improvements, fixtures
and additional inventory if relocated on a build-to-suit basis. It is
anticipated that funding for these relocations would be provided through
the Company's new financing arrangement.
Page 12
<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 Third Amendment to Credit Agreement, dated
as of March 29, 1995, among the Registrant,
SAI Distributors, Inc. and NationsBank of
Florida, N.A.
27. Financial Data Schedule.
(b) Reports on Form 8-K. No reports on Form 8-K have been filed
during the quarter ended March 31, 1995.
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 MAY 12, 1995 /S/ PETER BESHOURI
------------ -------------------------------
Peter Beshouri, Chairman of the
Board, President and Chief
Executive Officer
Date MAY 12, 1995 /S/ KENNETH L. DANIELSON
------------ -------------------------------
Kenneth L. Danielson, Chief
Financial and Accounting Officer
Page 14
THIRD AMENDMENT TO CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT, dated as of March 29,
1995 (the "Third Amendment") is among SOUND ADVICE, INC., a Florida
corporation (the "Borrower"), SAI DISTRIBUTORS, INC., a Florida corporation
(the "Guarantor") and NATIONSBANK OF FLORIDA, N.A., a national banking
association (the "Lender" or "Bank").
W I T N E S S E T H:
WHEREAS, the Borrower, the Guarantor and the Lender previously
entered into an "Amended and Restated Credit Agreement", dated as of
February 4, 1993, as amended by the "First Amendment to Credit Agreement"
dated as of February 26, 1993 ("First Amendment"), as amended by the
"Second Amendment to Credit Agreement" dated as of December 28, 1993
("Second Amendment ") (collectively, the "Credit Agreement"), pursuant to
which the Lender has extended to Borrower a commitment to make revolving
credit loans and to issue letters of credit and make a $3,600,000.00 term
loan in favor of the Borrower (the "Commitment"); and
WHEREAS, the Commitment is evidenced by an Amended and Restated
Renewal Revolving Credit Promissory Note in the principal amount of THIRTY
MILLION DOLLARS ($30,000,000.00), dated February 28, 1995 and a Term Note
dated February 26, 1993 in the original principal amount of Three Million
Six Hundred Thousand Dollars ($3,600,000.00) ("Term Note"), which Term Note
is a part of the Commitment; and
WHEREAS, in order to secure its obligations and indebtedness under
the Note and the Credit Agreement, the Borrower executed and delivered to
Lender an Amended and Restated Security Agreement, dated as of February 4,
1993 (the "Security Agreement") granting to Lender a first, perfected
security interest in the Collateral (as defined in the Security Agreement);
and
WHEREAS, in order to induce Lender to make the Commitment
available to the Borrower, the Guarantor executed and delivered to Lender a
Continuing and Unconditional Guaranty, dated as of February 4, 1993 which
has been confirmed by the Guarantor from time to time (the "Guaranty") (the
Credit Agreement, the Security Agreement and the Guaranty are hereinafter
referred to as the "Loan Documents"); and
WHEREAS, the Borrower and the Guarantor have requested that the Lender
extend the Note and the Credit Agreement; and
WHEREAS, the Lender is willing to do so on the terms and subject
to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the parties hereto agree as
follows:
FTL:46289:5
1
<PAGE>
1. RECITALS. The foregoing recitals are true and correct and
are incorporated as part of this Agreement.
2. DEFINITIONS. All capitalized terms used herein shall,
except as modified hereby, have the meanings ascribed to them in the
Credit Agreement.
3. RENEWAL PROMISSORY NOTE.
Even date herewith, Borrower shall execute the Amended
and Restated Renewal Revolving Credit Promissory Note in the amount of
THIRTY MILLION DOLLARS ($30,000,000.00) in the form attached hereto as
EXHIBIT A ("Renewal Revolving Note"), which Renewal Revolving Note and any
modifications, renewals, replacements and substitutions therefor made from
time to time hereafter shall constitute the "Revolving Credit Note"
contemplated in the Credit Agreement.
4. TERMINATION DATE. The "Termination Date" shall mean
September 29, 1995, time being of the essence. Borrower acknowledges that
Lender shall have no obligation to extend the Termination Date. As of the
Termination Date, all Obligations of the Borrower to the Lender shall be
due and payable and all available credit from Lender to Borrower including,
without limitation, the Commitment and any letter(s) of credit shall be
terminated.
5. USE OF LOAN. Section 4.12(iv) of the Credit Agreement is,
effective as of January 1, 1995, intentionally left blank.
6. CAPITAL EXPENDITURE. The maximum capital expenditure
during any fiscal year, as contemplated by Section 6.8 of the Credit
Agreement, is, effective as of January 1, 1995, until June 30, 1995,
amended from FOUR MILLION DOLLARS ($4,000,000.00) to FIVE MILLION TWO
HUNDRED THOUSAND DOLLARS ($5,200,000.00). As of July 1, 1995, the maximum
capital expenditure shall revert to FOUR MILLION DOLLARS ($4,000,000.00)
from FIVE MILLION TWO HUNDRED THOUSAND DOLLARS ($5,200,000.00).
7. ADDITIONAL REPORTING REQUIREMENTS. In addition to any other
financial reporting currently required to be provided by the Borrower to the
Lender, the Borrower
shall also provide the following to Lender:
(i) Copy of Borrower's monthly inventory, reconciliation
reports on a form satisfactory to Lender on or prior to the thirtieth (30th)
day of each month for the preceding month; and
(ii) Borrowing base certificates based upon Borrower's
closed month end general ledger balance on or prior to thirty (30) days
following the applicable month end.
8. RELEASE. BORROWER AND GUARANTOR HEREBY RELEASE THE BANK, ITS
OFFICERS, DIRECTORS, EMPLOYEES AND ATTORNEYS FROM ALL CAUSES OF ACTION
WHICH THE BORROWER OR GUARANTOR HAS OR COULD HAVE WITH RESPECT TO THE LOAN
DOCUMENTS OR ANY MATTER PERTAINING TO THE LOAN DOCUMENTS AS OF THE DATE
HEREOF.
FTL:46289:5
2
<PAGE>
9. RATIFICATION OF SECURITY AGREEMENT.
(a) The Borrower, by execution of this Third
Amendment: (i) acknowledges the continued effectiveness of the Security
Agreement securing all Obligations (as defined in the Security Agreement)
of the Borrower to the Lender, including the Renewal Revolving Note and the
Term Note; and (ii) ratifies and confirms the Security Agreement. The term
"Obligations" is hereby amended to include the indebtedness and obligations
of the Borrower to the Lender evidenced by the Renewal Revolving Note and
the Term Note.
(b) The Borrower represents and warrants that: (i)
each of the representations and warranties of the Borrower contained in the
Security Agreement is true and correct as of the date hereof; (ii) the
Borrower is in full compliance with each of the covenants of the Borrower
set forth in the Security Agreement; and (iii) no Event of Default (as
defined in the Security Agreement) or event which, with the lapse of time,
the giving of notice, or both, would become an Event of Default has
occurred and is continuing under the Security Agreement.
10. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The
Borrower represents and warrants that: (a) each of the representations and
warranties of the Borrower contained in Article 4 of the Credit Agreement
is true and correct as of the date hereof; provided, however, Borrower
hereby discloses the existence of the following Subsidiaries: (i) SAI
Realty Investments, Inc., a Florida corporation; (ii) Sound Advice of
Virginia, Inc., a Virginia corporation; and (iii) Sound Advice Electronics
of Maryland, Inc., a Maryland corporation; (b) no Default or Event of
Default has occurred and is continuing under the Credit Agreement; and (c)
Borrower has no defenses, offsets or counterclaims to any of its
obligations or indebtedness under the Credit Agreement or this Third
Amendment or any other document executed in connection with or pursuant to
the Credit Agreement or this Third Amendment.
11. RATIFICATION OF GUARANTY. The Guarantor, by execution
of this Third Amendment, consents to the execution and delivery by the
Borrower of this Third Amendment and all of the documents contemplated
hereby and ratifies and confirms the effectiveness and enforceability of
the Guaranty. The term Liabilities (as defined in the Guaranty) is hereby
amended to include, without limitation, the indebtedness and obligations of
the Borrower to the Lender evidenced by the Renewal Revolving Note and the
Term Note. The Guarantor represents and warrants that it has no
counterclaims, defenses or offsets under the Guaranty or under any other
document executed in connection with or pursuant to the Guaranty.
12. EXPENSES. The Borrower shall reimburse Lender for all
reasonable expenses and fees paid or incurred in connection with the
documentation, negotiation and closing of the transactions contemplated by
this Third Amendment and the documents required hereby, including, without
limitation, documentary stamp taxes and similar state and local
taxes and fees, filing and recording fees and the fees and expenses of
Lender's counsel, whether such fees and expenses are incurred prior to or
after the date of execution hereof.
13. NO FURTHER MODIFICATION. Except as hereinabove
specifically modified, all of the provisions of the Credit Agreement, the
Security Agreement and the Guaranty shall
FTL:46289:5
3
<PAGE>
remain unaltered and in full force and effect. It is the intent of the
parties that this Third Amendment constitute a modification and not a
novation of the existing agreements between the parties. Borrower
acknowledges and agrees that the Lender is not obligated to further modify
or extend the Termination Date.
14. ADDITIONAL PROVISIONS.
(a) This Third Amendment is non-transferrable and
non-assignable by the Borrower. No one other than the parties hereto shall
be entitled to rely on this Third Amendment.
(b) This Third Amendment may be executed
simultaneously in one or more counterparts, each of which shall be deemed
an original for evidentiary purposes and all of which together shall
constitute one and the same instrument.
(c) This Third Amendment shall be governed by and construed
in accordance with the internal laws of the State of Florida.
(d) This Third Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
assigns, heirs and personal representatives.
(e) This Third Amendment may not be amended except in a
writing signed by the party against whom enforcement is sought.
(f) Time is of the essence with respect to this
Third Amendment, the Loan Documents and all the documents contemplated in
each of them.
(g) DEFAULT. An "Event of Default" under documents
evidencing and securing any existing or future loans between Borrower and
Guarantor and Bank shall constitute an Event of Default under the Credit
Agreement, and an Event of Default under the Credit Agreement shall
constitute an Event of Default under any such existing or future loan.
15. MANDATORY ARBITRATION. Any controversy or claim between
or among the parties hereto including, but not limited to, those arising
out of or relating to this Third Amendment or any related agreements or
instruments, including any claim based on or arising from an alleged tort,
shall be determined by binding arbitration in accordance with the Federal
Arbitration Act (or if not applicable, the applicable state law), the Rules
of Practice and Procedure for the Arbitration of Commercial Disputes of
Judicial Arbitration and Mediation Services, Inc. (J.A.M.S.), and the
"Special Rules" set forth below. In the event of any inconsistency, the
Special Rules shall control. Judgment upon any arbitration award may be
entered in any court having jurisdiction. Any party to this Third
Amendment may bring an action, including a summary or expedited proceeding,
to compel arbitration of any controversy or claim to which this Third
Amendment applies in any court having jurisdiction over such action.
FTL:46289:5
4
<PAGE>
(a) SPECIAL RULES. The arbitration shall be
conducted in the city of Fort Lauderdale, Florida and administered by
J.A.M.S. who will appoint an arbitrator; if J.A.M.S. is unable or legally
precluded from administering the arbitration, then the American Arbitration
Association will serve. All arbitration hearings will be commenced within
ninety (90) days of the demand for arbitration; further, the arbitrator
shall only, upon a showing of cause, be permitted to extend the
commencement of such hearing for up to an additional sixty (60) days.
(b) RESERVATION OF RIGHTS. Nothing in this Third
Amendment shall be deemed to: (i) limit the applicability of any otherwise
applicable statutes of limitation or repose and any waivers contained in
this Third Amendment; or (ii) be a waiver by the Bank of the protection
afforded to it by 12 U.S.C. Sec. 91 or any substantially equivalent state
law; or (iii) limit the right of the Bank hereto (A) to exercise self help
remedies such as (but not limited to) setoff, or (B) to foreclose against
any real or personal property collateral, or (C) to obtain from a court
provisional or ancillary remedies such as (but not limited to) injunctive
relief or the appointment of a receiver. The Bank may exercise such self
help rights, foreclose upon such property, or obtain such provisional or
ancillary remedies before, during or after the pendency of any arbitration
proceeding brought pursuant to this Third Amendment. At Bank's option,
foreclosure under a deed of trust or mortgage may be accomplished by any of
the following: the exercise of a power of sale under the deed of trust or
mortgage, or by judicial sale under the deed of trust or mortgage, or by
judicial foreclosure. Neither this exercise of self help remedies nor the
institution or maintenance of an action for foreclosure or provisional or
ancillary remedies shall constitute a waiver of the right of any party,
including the claimant in any such action, to arbitrate the merits of the
controversy or claim occasioning resort to such remedies.
IN WITNESS WHEREOF, the parties hereto have caused this Third
Amendment to be dated for convenience as of the date and year first above
written.
SOUND ADVICE, INC., a Florida
corporation
By: /S/ KENNETH L. DANIELSON (SEAL)
----------------------------
Print Name: KENNETH L. DANIELSON
Title: CHIEF FINANCIAL OFFICER
CONSENTED AND AGREED TO:
SAI DISTRIBUTORS, INC., a Florida
corporation
By: /S/ KENNETH L. DANIELSON (SEAL)
----------------------------
Print Name: KENNETH L. DANIELSON
Title: CHIEF FINANCIAL OFFICER
FTL:46289:5
5
<PAGE>
NATIONSBANK OF FLORIDA, N.A.
By: /S/ GARY E. DUNCAN
----------------------
Print Name: GARY E. DUNCAN
Title: SENIOR VICE PRESIDENT
STATE OF GEORGIA )
) ss:
COUNTY OF FULTON )
I HEREBY CERTIFY that on this day, before me, an officer duly
authorized in the State aforesaid and in the County aforesaid to take
acknowledgments, the foregoing instrument was acknowledged before me by
KENNETH L. DANIELSON, the CFO of SOUND ADVICE, INC., a Florida corporation,
freely and voluntarily under authority duly vested in him/her by said
corporation and that the seal affixed thereto is the true corporate seal
of said corporation. He/She is personally known to me or who has produced
FLA. DRIVER'S LICENSE as identification.
WITNESS my hand and official seal in the County and State last
aforesaid this 29TH day of MARCH, 1995 .
/S/ VIRGINIA ANN PHIPPS
-----------------------------------
Notary Public
VIRGINIA ANN PHIPPS
Typed, printed or stamped name of Notary Public
My Commission Expires:
FTL:46289:5
6
<PAGE>
STATE OF GEORGIA )
) ss:
COUNTY OF FULTON )
I HEREBY CERTIFY that on this day, before me, an officer duly
authorized in the State aforesaid and in the County aforesaid to take
acknowledgments, the foregoing instrument was acknowledged before me by
KENNETH L. DANIELSON, the CFO of SAI DISTRIBUTORS, INC., a Florida
corporation, freely and voluntarily under authority duly vested in him/her
by said corporation and that the seal affixed thereto is the true corporate
seal of said corporation. He/She is personally known to me or who has
produced FLA. DRIVER'S LICENSE as identification.
WITNESS my hand and official seal in the County and State last
aforesaid this 29TH day of MARCH, 1995 .
/S/ VIRGINIA ANN PHIPPS
----------------------------------
Notary Public
VIRGINIA ANN PHIPPS
Typed, printed or stamped name of Notary Public
My Commission Expires:
STATE OF GEORGIA )
) ss:
COUNTY OF FULTON )
I HEREBY CERTIFY that on this day, before me, an officer duly
authorized in the State aforesaid and in the County aforesaid to take
acknowledgments, the foregoing instrument was acknowledged before me by
GARY E. DUNCAN, the SVP of NATIONSBANK OF FLORIDA, N.A., a national banking
association, freely and voluntarily under authority duly vested in him/her
by said association. He/She is personally known to me or who has produced
GA DRIVER'S LICENSE as identification.
WITNESS my hand and official seal in the County and State last
aforesaid this 29TH day of MARCH, 1995 .
/S/ VIRGINIA ANN PHIPPS
----------------------------------------
Notary Public
VIRGINIA ANN PHIPPS
Typed, printed or stamped name of Notary Public
My Commission Expires:
FTL:46289:5
7
<PAGE>
SCHEDULE OF EXHIBITS
Exhibit A - $30,000,000.00 Renewal Revolving Note
FTL:46289:5
8
<PAGE>
SOUND ADVICE, INC.
AMENDED AND RESTATED
RENEWAL REVOLVING CREDIT PROMISSORY NOTE
Amount: $30,000,000.00 Effective Date: March 29, 1995
FOR VALUE RECEIVED, the undersigned, SOUND ADVICE, INC., a Florida
corporation ("Maker" or "Borrower"), promises to pay to the order of
NATIONSBANK OF FLORIDA, N.A., successor by merger to NCNB National Bank of
Florida ("Lender" or "Bank"), at the offices of Lender in Fort Lauderdale,
Florida, or at such other place as the holder of this Note may from time to
time designate, the principal sum of THIRTY MILLION DOLLARS
($30,000,000.00) in lawful money of the United States of America, or the
aggregate unpaid principal amount of all advances made by Lender to the
undersigned under this Note, whichever is less, and to pay interest on the
principal amount of each advance remaining from time to time outstanding
from the date hereof until maturity, at the "Rate" (as hereinafter defined)
adjusted daily to reflect changes in such Rate, with each adjustment to
become effective on the date the change occurs. The "Rate" shall be
selected by the Borrower and shall constitute either the Lender's Prime
Rate or the Lender's unadjusted thirty (30) day floating certificate of
deposit rate plus 250 basis points. Unless otherwise designated, the Rate
shall be the Lender's Prime Rate. "Lender's Prime Rate" means, for the
purposes hereof, that index rate of interest per annum which Lender from
time to time announces as its prime rate. The Prime Rate is not necessarily
the best or lowest rate charged or offered by Lender to its borrowing
customers.
Notwithstanding the foregoing, however, in no event shall the
interest rate applicable to principal outstanding under this Note exceed
the maximum rate of interest allowed by applicable law, as amended from
time to time. If any payment of interest or in the nature of interest
thereunder would cause the foregoing interest rate limitation to be
exceeded, then such excess payment shall be credited as a payment of
principal unless the undersigned notifies Lender in writing that the
undersigned wishes to have such excess sum returned, together with interest
at the rate specified in Section 687.04(2), Florida Statutes, or any
successor statute.
Interest shall be computed on the basis of a year of 360 days and
the actual number of days elapsed. Payments made pursuant to the terms of
this Note shall first be credited to interest and lawful charges then
accrued and the remainder to principal.
Interest shall be payable monthly in arrears beginning on April 1,
1995, and continuing on the like day of each month thereafter, until
payment of the outstanding principal amount hereunder is due pursuant to
the terms of that certain Amended and Restated Credit Agreement, dated as
of February 4, 1993 among Borrower, SAI Distributors, Inc. and Lender, as
amended by the First, Second and Third Amendments thereto (the
"Agreement"). Principal outstanding hereunder shall be due and payable in a
single payment on September 29, 1995.
FTL:46286:2
1
<PAGE>
If any payment of principal under this Note is not paid when due
(whether on demand, by acceleration or otherwise), each amount shall bear
interest from such date at the highest lawful rate until paid, provided,
however, that such rate shall not exceed twenty-five percent (25%) per
annum.
This Note is issued pursuant to, and is subject to, the provisions
of the Agreement. This Note is secured by collateral, as described more
fully in the Agreement and other security documents executed pursuant to
the Agreement (collectively, together with this Note and the Agreement, the
"Loan Documents"). Reference is made to such Loan Documents for a
description of the relative rights and obligations of the undersigned and
Lender, including rights and obligations of prepayment, events of default,
and rights of acceleration of maturity in the event of default, which terms
are incorporated herein.
This Note is a renewal of that certain Renewal Revolving Credit
Promissory Note from the undersigned to Lender in the amount of
$30,000,000.00, with an Effective Date of February 28, 1995. Accrued but
unpaid interest on the Note renewed hereby shall be paid on the first
payment date hereunder.
The undersigned agrees to pay all costs of collection incurred in
enforcing this Note, including reasonable attorneys' fees, regardless of
whether suit or other proceedings are instituted, and if instituted, for
all trial, appellate, and other proceedings, if any.
All persons now or at any time liable for payment of this Note
hereby waive presentment, protest, notice of protest, and notice of
dishonor. The undersigned expressly consents to any extensions and renewals
of this Note, in whole or in part, and all delays in time of payment or
other performance under this Note which Lender may grant at any time from
time to time, without limitation and without any notice or further consent
of the undersigned. All notices, demands, and other communications required
or permitted in connection with this Note shall be given in the manner
specified in the Agreement.
The remedies of Lender, as provided herein, or in any other
agreement between the undersigned and Lender are cumulative and concurrent
(except as may be provided in the Loan Documents) and may be pursued
singularly, successively, or together, and may be exercised as often as the
occasion therefor shall arise.
This Note has been made, executed and delivered by the undersigned
in Atlanta, Georgia.
MANDATORY ARBITRATION. Any controversy or claim between or among
the parties hereto including, but not limited to, those arising out of or
relating to this Note or any related agreements or instruments, including
any claim based on or arising from an alleged tort, shall be determined by
binding arbitration in accordance with the Federal Arbitration Act (or if
not applicable, the applicable state law), the Rules of Practice and
Procedure for the Arbitration of Commercial Disputes of Judicial
Arbitration and Mediation Services, Inc. (J.A.M.S.), and the "Special
Rules" set forth below. In the event of any inconsistency, the Special
Rules shall control. Judgment upon any arbitration award may be entered in
any court having jurisdiction. Any party to this Note may bring
FTL:46286:2
2
<PAGE>
an action, including a summary or expedited proceeding, to compel
arbitration of any controversy or claim to which this Note applies in any
court having jurisdiction over such action.
a. SPECIAL RULES. The arbitration shall be
conducted in the city of Fort Lauderdale, Florida, and administered by
J.A.M.S. who will appoint an arbitrator; if J.A.M.S. is unable or legally
precluded from administering the arbitration, then the American Arbitration
Association will serve. All arbitration hearings will be commenced within
ninety (90) days of the demand for arbitration; further, the arbitrator
shall only, upon a showing of cause, be permitted to extend the
commencement of such hearing for up to an additional sixty (60) days.
b. RESERVATION OF RIGHTS. Nothing in this Note
shall be deemed to: (i) limit the applicability of any otherwise applicable
statutes of limitation or repose and any waivers contained in this Note; or
(ii) be a waiver by the Bank of the protection afforded to it by 12 U.S.C.
Sec. 91 or any substantially equivalent state law; or (iii) limit the right
of the Bank hereto (A) to exercise self help remedies such as (but not
limited to) setoff, or (B) to foreclose against any real or personal
property collateral, or (C) to obtain from a court provisional or ancillary
remedies such as (but not limited to) injunctive relief or the appointment
of a receiver. The Bank may exercise such self help rights, foreclose upon
such property, or obtain such provisional or ancillary remedies before,
during or after the pendency of any arbitration proceeding brought pursuant
to this Note. At Bank's option, foreclosure under a deed of trust or
mortgage may be accomplished by any of the following: the exercise of a
power of sale under the deed of trust or mortgage, or by judicial sale
under the deed of trust or mortgage, or by judicial foreclosure. Neither
this exercise of self help remedies nor the institution or maintenance of
an action for foreclosure or provisional or ancillary remedies shall
constitute a waiver of the right of any party, including the claimant in
any such action, to arbitrate the merits of the controversy or claim
occasioning resort to such remedies.
IN WITNESS WHEREOF, the undersigned has caused this Note to be
executed as of the day and year first above written.
Signed, Sealed and Delivered
in the Presence of: SOUND ADVICE, INC., a Florida corporation
By: (SEAL)
---------------------------- ----------------------------------
Kenneth L. Danielson
- ----------------------------- Chief Financial Officer
FTL:46286:2
3
<PAGE>
STATE OF GEORGIA )
) SS:
COUNTY OF FULTON )
I HEREBY CERTIFY that on this day, before me, an officer duly
authorized in the State aforesaid and in the County aforesaid to take
acknowledgments, the foregoing instrument was acknowledged before me by
KENNETH L. DANIELSON, the Chief Financial Officer of SOUND ADVICE, INC., a
Florida corporation, freely and voluntarily under authority duly vested in
him by said corporation and that the seal affixed thereto is the true
corporate seal of said corporation. He is personally known to me or who has
produced ----------------- as identification.
WITNESS my hand and official seal in the County and State last
aforesaid this __________ day of March, 1995.
-----------------------------------
Notary Public
-----------------------------------------------
Typed, printed or stamped name of Notary Public
My Commission Expires:
FTL:46286:2
4
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE REGISTRANT'S
FINANCIAL STATEMENTS AS OF AND FOR THE NINE MONTH PERIOD ENDED MARCH 31, 1995,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000793971
<NAME> SOUND ADVICE, INC.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> MAR-31-1995
<CASH> 47,705
<SECURITIES> 0
<RECEIVABLES> 1,453,354
<ALLOWANCES> 520,000
<INVENTORY> 31,739,068
<CURRENT-ASSETS> 37,590,501
<PP&E> 29,398,695
<DEPRECIATION> 13,123,896
<TOTAL-ASSETS> 56,357,567
<CURRENT-LIABILITIES> 26,507,423
<BONDS> 0
<COMMON> 37,289
0
0
<OTHER-SE> 22,160,134
<TOTAL-LIABILITY-AND-EQUITY> 56,357,567
<SALES> 151,355,958
<TOTAL-REVENUES> 151,355,958
<CGS> 106,892,995
<TOTAL-COSTS> 106,892,995
<OTHER-EXPENSES> 42,658,633
<LOSS-PROVISION> 275,474
<INTEREST-EXPENSE> 1,040,761
<INCOME-PRETAX> 430,081
<INCOME-TAX> 165,500
<INCOME-CONTINUING> 264,581
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 264,581
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
