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, 1997, or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______ TO ________.
Commission file number 0-15194
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 MAY
12, 1997.
<PAGE>
SOUND ADVICE, INC. AND SUBSIDIARIES
INDEX
PAGE
----
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements.
Consolidated Balance Sheets (Unaudited)
March 31, 1997 and June 30, 1996 3-4
Consolidated Statements of Operations (Unaudited) for the
Three and Nine Months Ended March 31, 1997 and 1996 5
Consolidated Statements of Cash Flows (Unaudited) for the
Nine Months Ended March 31, 1997 and 1996 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 2. Changes in Securities 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
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, 1997 AND JUNE 30, 1996
MARCH 31, 1997 JUNE 30, 1996
-------------- -------------
ASSETS
- ------
CURRENT ASSETS:
Cash $ 54,725 $ 1,007,231
Receivables:
Vendors 2,568,439 3,259,226
Trade 905,649 623,840
Employees 267,377 217,742
------------ ------------
3,741,465 4,100,808
Less allowance for doubtful accounts (436,000) (572,000)
------------ ------------
3,305,465 3,528,808
Inventories 30,423,782 27,587,101
Prepaid and other current assets 743,677 638,113
Deferred tax asset 609,930 712,930
Income taxes receivable 1,273,571 1,170,571
------------ ------------
Total current assets 36,411,150 34,644,754
------------ ------------
Property and equipment, net 14,034,913 13,947,974
Deferred tax asset, net 96,098 96,098
Other assets 176,354 196,035
Goodwill, net 152,554 170,891
------------ ------------
$ 50,871,069 $ 49,055,752
============ ============
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Page 3
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SOUND ADVICE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
MARCH 31, 1997 AND JUNE 30, 1996
MARCH 31, 1997 JUNE 30, 1996
-------------- -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Borrowings under revolving credit facility $10,889,422 $ 9,100,115
Accounts payable 8,745,519 11,605,540
Cash overdraft 986,824 --
Accrued liabilities 6,832,364 5,152,353
Current installments of long-term debt 168,696 161,406
----------- -----------
Total current liabilities 27,622,825 26,019,414
Long-term debt, excluding current installments 616,910 745,564
Capital lease obligation 812,033 815,940
Other liabilities and deferred credits 4,205,134 4,305,995
----------- -----------
33,256,902 31,886,913
----------- -----------
SHAREHOLDERS' EQUITY:
Common stock, $.01 par value; authorized
10,000,000 shares; issued and outstanding
3,728,894 shares at March 31, 1997
and June 30, 1996 37,289 37,289
Additional paid-in capital 11,058,655 11,058,655
Retained earnings 6,518,223 6,072,895
----------- -----------
Total shareholders' equity 17,614,167 17,168,839
Commitments and contingencies
----------- -----------
$50,871,069 $49,055,752
=========== ===========
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Page 4
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<TABLE>
<CAPTION>
SOUND ADVICE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 1997 AND 1996
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
------------------------------ ------------------------------
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net sales $ 35,431,135 $ 39,078,800 $ 123,506,107 $ 136,504,152
Cost of goods sold 23,481,739 27,094,825 84,254,395 97,913,399
------------- ------------- ------------- -------------
Gross profit 11,949,396 11,983,975 39,251,712 38,590,753
Selling, general and administrative
expenses 11,699,889 11,754,041 37,240,706 40,817,957
------------- ------------- ------------- -------------
Income (loss) from operations 249,507 229,934 2,011,006 (2,227,204)
Other income (expense):
Interest expense (355,596) (293,014) (1,133,558) (1,017,059)
Other, net 22,022 (1,001) 42,880 1,835
------------- ------------- ------------- -------------
(Loss) income before income taxes (benefit) (84,067) (64,081) 920,328 (3,242,428)
Income taxes (benefit) -- -- 475,000 (461,300)
------------- ------------- ------------- -------------
Net (loss) income $ (84,067) $ (64,081) $ 445,328 $ (2,781,128)
============= ============= ============= =============
COMMON AND COMMON EQUIVALENT
PER SHARE AMOUNTS:
NET (LOSS) INCOME PER SHARE $ (0.02) $ (0.02) $ 0.12 $ (0.75)
============= ============= ============= =============
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 3,728,894 3,728,894 3,732,197 3,728,894
============= ============= ============= =============
</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 NINE MONTHS ENDED MARCH 31, 1997 AND 1996
1997 1996
------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 445,328 $ (2,781,128)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,806,590 2,496,785
Loss on disposition of assets 876 --
Changes in assets and liabilities:
Receivables 223,343 1,033,841
Inventories (2,836,681) 5,637,378
Prepaid and other current assets (105,564) 495,912
Deferred tax asset 103,000 --
Income taxes receivable (103,000) 38,700
Other assets (7,319) 82,460
Accounts payable (2,860,021) (5,200,275)
Accrued liabilities 1,680,011 (379,907)
Other liabilities (100,861) (51,869)
------------- -------------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (1,754,298) 1,371,897
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,849,068) (574,543)
------------- -------------
NET CASH USED IN INVESTING ACTIVITIES (1,849,068) (574,543)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on revolving credit agreement 136,858,988 93,701,950
Repayments on revolving credit agreement (135,069,681) (98,106,309)
Net (repayments) borrowings on long-term debt (121,364) 3,043,081
Increase in cash overdraft 986,824 570,914
Reductions in capital lease obligation (3,907) (3,228)
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NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 2,650,860 (793,592)
------------- -------------
(Decrease) increase in cash (952,506) 3,762
Cash, beginning of period 1,007,231 46,950
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CASH, END OF PERIOD $ 54,725 $ 50,712
============= =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $ 827,961 $ 901,012
============= =============
Income taxes paid, net of refunds $ (1,273,410) $ (500,000)
============= =============
</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. Certain items included
in these statements are based on management estimates. 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, 1997 and June 30, 1996 and the
statements of operations for the three and nine month periods ended March 31,
1997 and 1996 and statements of cash flows for the nine month periods ended
March 31, 1997 and 1996. The results of operations for the three and nine months
ended March 31, 1997 are not necessarily indicative of the operating results
expected for the fiscal year ending June 30, 1997. 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, 1996.
2.) NET INCOME (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE
Net income (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, 1997 and 1996
are as follows:
TRAILING FOUR QUARTERS ENDED MARCH 31,
--------------------------------------
(Dollars in Thousands)
QUARTERLY SALES
- ---------------
1997 1996
---- ----
AMOUNT % AMOUNT %
------- ----- ------- -----
Third Quarter $35,431 22.7% $39,079 22.3%
(January - March)
Second Quarter 47,724 30.6 53,260 30.3
(October - December)
First Quarter 40,351 25.9 44,165 25.1
(July - September)
Fourth Quarter 32,481 20.8 39,148 22.3
(April - June)
SALES FOR TRAILING TWELVE $155,987 100% $175,652 100%
MONTHS ENDED MARCH 31, ======== ===== ======== =====
1997 AND 1996, RESPECTIVELY
Page 7
<PAGE>
4.) PROPERTY AND EQUIPMENT, NET
Property and equipment, net, consists of the following:
MARCH 31, 1997 JUNE 30, 1996
-------------- -------------
Land $ 521,465 $ 521,465
Building 1,119,605 1,119,605
Furniture and equipment 8,084,802 8,545,945
Leasehold improvements 15,258,552 14,494,852
Display fixtures 5,306,187 5,049,940
Vehicles 920,585 949,168
------------ ------------
Total 31,211,196 30,680,975
Less accumulated depreciation (17,176,283) (16,733,001)
------------ ------------
Property and equipment, net $ 14,034,913 $ 13,947,974
============ ============
5.) PROVISION (BENEFIT) FOR INCOME TAXES
During the fiscal year ended June 30, 1996, the Company recognized the
maximum available tax benefit associated with its net operating loss carryback.
The Company had sufficient taxable income in previous years to support the
recognition of its deferred tax assets. A valuation allowance has been
established to the extent future deductible amounts cannot be recovered through
Federal taxes paid within the statutory carryback period. Additional tax
benefits will be recognized when the Company generates sufficient additional
taxable income.
6.) STOCK OPTIONS AND WARRANTS
During the first quarter ended September 30, 1996 incentive stock options
covering an aggregate of 11,000 shares of common stock having an exercise price
of $7.27 per share expired. During the second quarter ended December 31, 1996
incentive stock options covering an aggregate of 27,500 shares of common stock
having an exercise price of $5.45 per share expired and a warrant to acquire
10,000 shares of common stock having an exercise price of $8.78 per share also
expired. In March 1997, incentive stock options to purchase an aggregate of
75,000 shares of common stock at an exercise price of $1.69 per share and
immediately exercisable through March 9, 2002 were issued, pursuant to the
Company's second amended and restated 1986 stock option plan (the "stock option
plan") to four executive officers of the Company. At the same time, stock
options to purchase 31,000 shares of common stock previously issued to two
executive officers at an exercise price of $6.29 were cancelled and reissued
pursuant to the stock option plan at an exercise price of $1.69 per share and
are immediately exercisable through March 9, 2002.
7.) EMPLOYMENT AGREEMENTS
Effective as of March 24, 1997, the employment agreements for two of the
Company's executive officers were extended for an additional year to June 30,
1998 on substantially the same terms and conditions as in effect under their
respective employment agreements expiring June 30, 1997.
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 March 31,1997, decreased
$3,648,000 or 9.3% to $35,431,000 compared to $39,079,000 in the prior fiscal
year. The decrease is primarily attributable to the Company's decision to
eliminate personal computers and other non-performing low margin products from
the product mix along with reduced sales of cellular telephones and VCRs.
Comparable store net sales decreased 9.9% in the quarter ended March 31, 1997
over the corresponding quarter in the prior year. The comparable store sales
were adjusted to exclude the store relocated to a larger showroom in November
1996. 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 for the nine months ended March 31,1997, decreased by $12,998,000
or 9.5% to $123,506,000 compared to $136,504,000 in the prior fiscal year. The
decrease in net sales is attributable, as stated above, to the Company's
decision to eliminate personal computers and other non-performing low margin
products from the product mix. Comparable store net sales decreased 10.2% in the
nine months ended March 31, 1997 over the corresponding period in the prior
fiscal year. The comparable store sales were adjusted to exclude the store
relocated to a larger showroom in November 1996.
Gross profit decreased by $35,000 or .3% in the quarter ended March 31, 1997
compared to the corresponding quarter in fiscal 1996. The gross profit
percentage was 33.7% in the quarter ended March 31, 1997. The gross profit
percentage exclusive of computer sales was 32.3% for the quarter ended March 31,
1996. The increase in gross profit percentage is directly related to the
Company's renewed focus on value added selling in the core categories of high
end audio, video and mobile electronics.
Gross profit increased by $661,000 or 1.7% in the nine months ended March
31, 1997 compared to the corresponding period in the prior fiscal year. The
gross profit for the prior fiscal year was impacted by a $1,500,000 provision
for loss on personal computers and related accessories recorded in the second
quarter of fiscal 1996 in connection with such product category's elimination
from the Company's product mix. The gross profit percentage was 31.8% in the
nine months ended March 31, 1997. Exclusive of the provision for loss on
personal computers and accessories, the gross profit percentage for the nine
month period ended March 31, 1996 was 29.4%. As stated above, this increase in
gross profit and gross profit percentage is directly related to the Company's
renewed focus on value added selling in the core categories of high end audio,
video and mobile electronics and the elimination of computers and other
non-performing low margin products from the product mix.
Selling, general and administrative expenses ("SG&A") decreased by $54,000
and $3,577,000 for the three and nine months ended March 31, 1997 over the
Page 9
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corresponding periods in the prior year. Decreases in SG&A in both periods were
primarily attributable to cost reduction programs initiated by the Company
primarily in the areas of advertising and personnel expense. The Company
continues to monitor and control expenses in its effort to reduce the overall
level of SG&A expense. Since a sizeable amount of these reductions were
associated with the elimination of expenses associated with sales of personal
computers, it is anticipated that future expense reductions in this area will
not be as significant. SG&A as a percentage of net sales increased to 33.0% and
30.2% in the quarter and nine months ended March 31, 1997 from 30.1% and 29.9%,
respectively, in the comparable periods of the previous year. The percentage
increase in both periods is directly attributable to the reduction in net sales
from the previous comparable periods.
Interest expense increased by $63,000 for the quarter and $116,000 for the
nine months ended March 31, 1997 compared to the same periods in the prior year.
The increase was primarily reflective of a higher effective interest rate under
the Company's revolving credit facility during the third quarter and first nine
months of fiscal 1997 on a decreased level of average outstanding borrowings.
The Company had an effective income tax rate of approximately 51.6% for the
nine months ended March 31, 1997 compared to an effective income tax rate
benefit of 14.2% in the comparable period of the previous year. The effective
tax rate increased during the first nine months of fiscal 1997 due primarily to
an increase in taxable income and the upward adjustment to the valuation reserve
on deferred tax assets resulting from a reduction in the amount of taxes paid in
prior years that would be available to offset future tax losses or temporary
differences.
Net loss for the quarter ended March 31, 1997 was $84,000 or $.02 per share
compared to net loss of $64,000 or $.02 per share for the same quarter in the
previous year. Net income for the nine months ended March 31, 1997 was $445,000
or $.12 per share compared to net loss of $2,781,000 or $.75 per share in the
same period of the prior fiscal year. The net income in the 1997 fiscal year was
primarily attributable to the increase in gross profit as a result of the
Company's renewed focus in the core categories of audio, video and mobile
electronics, and the elimination of personal computers and other low margin
products and reduction in SG&A expenses.
FINANCIAL CONDITION
Net cash used in operating activities was approximately $1,754,000 for the
nine months ended March 31, 1997 primarily due to the increase in the Company's
inventory since June 30, 1996. The Company had working capital of approximately
$8,788,000 at March 31, 1997, as compared to the $8,625,000 in working capital
at June 30, 1996 for an overall increase of $163,000. The increase in current
assets of $1,766,000 during the nine month period was primarily related to the
$2,837,000 increase in inventory, which was partially offset by a decrease in
cash of $953,000. The net increase in current assets was offset by an overall
increase of $1,603,000 in current liabilities primarily resulting from an
increase in each of borrowings under the revolving credit facility of
$1,789,000, cash overdraft of $987,000, and accrued liabilities of $1,680,000,
which were partially offset by a decrease of $2,860,000 in accounts payable.
Page 10
<PAGE>
The Company currently believes that funds from the Company's operations
combined with borrowings available under its revolving credit facility and
vendor credit programs will be sufficient to satisfy its currently projected
operating cash requirements over the next twelve months. The Company's operating
performance has improved as a result of a return to its traditional focus on
value added selling in the core categories of high end audio, video and mobile
electronics together with the elimination of personal computers and other
non-performing products from its product mix.
The Company is pursuing the opening of additional store sites within the
state of Florida. It is currently anticipated that one additional store will be
opened prior to November 30, 1997, with an additional store opened near the end
of fiscal 1998 or the beginning of fiscal 1999. Although the Company has
existing borrowing capacity to assist in the opening of new stores, the Company
intends to seek additional financing solely for the purpose of store expansion.
Accordingly, the Company's ability to achieve its store expansion goals could be
adversely effected if it is unable to obtain such additional financing.
FORWARD-LOOKING STATEMENTS
This Form 10-Q contains forward-looking statements (within the meaning of
Section 21E. of the Securities Exchange Act of 1934, as amended) representing
the Company's current expectations, beliefs, estimates or intentions concerning
the Company's future performance and operating results, its products, services,
markets and industry, and/or future events relating to or effecting the Company
and its business and operations. When used in this Form 10-Q, the words
"believes," estimates," "plans," "expects," "intends," "anticipates," and
similar expressions as they relate to the Company or its management are intended
to identify forward-looking statements. The actual results or achievements of
the Company could differ materially from those indicated by the forward-looking
statements because of various risks and uncertainties related to and including,
without limitation, the effectiveness of the Company's business and marketing
strategies, the product mix sold by the Company, customer demand, availability
of existing and new merchandise from and the establishment and maintenance of
relationships with suppliers, price competition for products and services sold
by the Company, management of expenses, gross profit margins, the opening of
additional stores, availability and terms of financing to fund capital and
expansion needs, the continued and anticipated growth of the retail home
entertainment and consumer electronics industry, a change in interest rates,
exchange rate fluctuations, the seasonality of the Company's business and the
other risks and factors detailed in this Form 10-Q and in the Company's other
filings with the Securities and Exchange Commission. These risks and
uncertainties are beyond the ability of the Company to control. In many cases,
the Company cannot predict the risks and uncertainties that could cause actual
results to differ materially from those indicated by the forward- looking
statements.
Page 11
<PAGE>
PART II - OTHER INFORMATION
Item 2. Changes in Securities.
(c) Sales of Unregistered Securities
The Company has not issued or sold any unregistered securities during
the quarter ended March 31, 1997, except that, pursuant to the Second Amended
and Restated Sound Advice, Inc. 1986 Stock Option Plan, as amended (the "Stock
Option Plan"), (i) the Company granted as of March 10, 1997, incentive stock
options to purchase an aggregate of 75,000 shares of the Company's common stock
to four executive officers of the Company at an exercise price of $1.69 per
share, which stock options are immediately exercisable through March 9, 2002;
and (ii) incentive stock options to purchase 31,000 shares of the Company's
common stock previously granted to two of such executive officers at an exercise
price of $6.29 per share were cancelled and reissued by the Company at an
exercise price of $1.69 per share and are immediately exercisable through March
9, 2002. See Note 6 of Notes to Consolidated Financial Statements. The foregoing
stock options were granted by the Company in reliance upon the exemption from
registration available under Section 4(2) of the Securities Act of 1933, as
amended.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits. The following exhibits are filed with this report:
EXHIBIT NO. DESCRIPTION
10.1 Second Amended and Restated Sound Advice, Inc.
1986 Stock Option Plan, as amended (incorporated
by reference from the Company's Registration
Statement on Form S-8, Exhibit 4.3 filed May 14,
1997).
10.2 Eighth Amendments to Employment Agreements, both
dated as of March 24, 1997, between the Company
and each of Peter Beshouri and Michael Blumberg
(filed herewith).
27. Financial Data Schedule (filed herewith).
(b) Reports on Form 8-K. No reports on Form 8-K have been filed during
the quarter ended March 31, 1997.
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 MAY 14, 1997 /s/ PETER BESHOURI
-------------- ------------------------
Peter Beshouri, Chairman of the
Board, President and Chief
Executive Officer
Date MAY 14, 1997 /s/ KENNETH L. DANIELSON
------------ ------------------------------
Kenneth L. Danielson, Chief
Financial and Accounting Officer
Page 13
<PAGE>
EXHIBIT INDEX
Exhibit
NO.
10.1 Second Amended and Restated Sound Advice, Inc. 1986 Stock Option Plan,
as amended (incorporated by reference from the Company's Registration
Statement on Form S-8, Exhibit 4.3 filed May 14, 1997).
10.2 Eighth Amendments to Employment Agreements, both dated as of March 24,
1997, between the Company and each of Peter Beshouri and Michael Blumberg
(filed herewith).
27. Financial Data Schedule (filed herewith).
EXHIBIT 10.2
EIGHTH AMENDMENT TO EMPLOYMENT AGREEMENT
EIGHTH AMENDMENT, dated as of the 24th day of March, 1997, 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, that Fifth Amendment to Employment
Agreement, dated as of July 1, 1994, that Sixth Amendment to Employment
Agreement, dated as of July 1, 1995, and that Seventh Amendment to Employment
Agreement, dated as of July 1, 1996 (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 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 Eighth Amendment thereto shall remain effective and continue operating
in full force throughout the entire term of the Agreement, as amended.
<PAGE>
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, 1998.
2. EFFECT. Except as otherwise modified by this Eighth
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.
3. CAPTIONS. Paragraph titles or captions contained in this
Eighth 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 Eighth 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>
EIGHTH AMENDMENT TO EMPLOYMENT AGREEMENT
EIGHTH AMENDMENT, dated as of the 24th day of March, 1997, 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, that Fifth Amendment to Employment
Agreement, dated as of July 1, 1994, that Sixth Amendment to Employment
Agreement, dated as of July 1, 1995, and that Seventh Amendment to Employment
Agreement, dated as of July 1, 1996 (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 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 Eighth Amendment thereto shall remain effective and continue operating
in full force throughout the entire term of the Agreement, as amended.
<PAGE>
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, 1998.
2. EFFECT. Except as otherwise modified by this Eighth
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.
3. CAPTIONS. Paragraph titles or captions contained in this
Eighth 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 Eighth
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 NINE MONTH PERIOD ENDED MARCH 31, 1997,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 54,725
<SECURITIES> 0
<RECEIVABLES> 3,741,465
<ALLOWANCES> 436,000
<INVENTORY> 30,423,782
<CURRENT-ASSETS> 36,411,150
<PP&E> 31,211,196
<DEPRECIATION> 17,176,283
<TOTAL-ASSETS> 50,871,069
<CURRENT-LIABILITIES> 27,622,825
<BONDS> 1,428,943
0
0
<COMMON> 37,289
<OTHER-SE> 17,576,878
<TOTAL-LIABILITY-AND-EQUITY> 50,871,069
<SALES> 123,506,107
<TOTAL-REVENUES> 123,506,107
<CGS> 84,254,395
<TOTAL-COSTS> 84,254,395
<OTHER-EXPENSES> 37,240,706
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,133,558
<INCOME-PRETAX> 920,328
<INCOME-TAX> 475,000
<INCOME-CONTINUING> 445,328
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 445,328
<EPS-PRIMARY> 0.12
<EPS-DILUTED> 0.12
</TABLE>
