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 JULY 31, 1998, 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
AUGUST 28, 1998.
<PAGE>
SOUND ADVICE, INC. AND SUBSIDIARY
INDEX
PAGE
----
PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements.
Condensed Consolidated Balance Sheets (Unaudited)
July 31, 1998 and January 31, 1998 3-4
Condensed Consolidated Statements of Operations (Unaudited)
for the Three and Six Months Ended July 31, 1998 and 1997 5
Condensed Consolidated Statements of Cash Flows (Unaudited)
for the Six Months Ended July 31, 1998 and 1997 6
Notes to Condensed Consolidated Financial Statements 7-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. 9-11
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
Page 2
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
SOUND ADVICE, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
JULY 31, 1998 AND JANUARY 31, 1998
JULY 31, 1998 JANUARY 31, 1998
----------------------- ----------------------
ASSETS (Unaudited)
- ------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 534,646 $ 1,421,392
Receivables:
Vendors 3,574,531 3,964,078
Trade 768,547 883,832
Employees 250,437 215,411
----------------------- ----------------------
4,593,515 5,063,321
Less allowance for doubtful accounts (372,600) (384,100)
----------------------- ----------------------
4,220,915 4,679,221
Inventories 24,607,056 31,027,992
Prepaid and other current assets 343,109 362,078
Income taxes receivable -- 55,000
----------------------- ----------------------
Total current assets 29,705,726 37,545,683
Property and equipment, net 13,670,267 13,977,184
Deferred tax assets, net -- --
Other assets 116,633 134,012
Goodwill, net 119,954 132,179
----------------------- ----------------------
$ 43,612,580 $ 51,789,058
======================= ======================
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
Page 3
<PAGE>
<TABLE>
<CAPTION>
SOUND ADVICE, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
JULY 31, 1998 AND JANUARY 31, 1998
JULY 31, 1998 JANUARY 31, 1998
----------------------- ----------------------
LIABILITIES AND SHAREHOLDERS' EQUITY (Unaudited)
- ------------------------------------
<S> <C> <C>
CURRENT LIABILITIES:
Borrowings under revolving credit facility $ 12,547,648 $ 10,700,152
Accounts payable 5,752,808 13,163,813
Accrued liabilities 5,399,658 7,502,918
Current maturities of long-term debt 558,266 593,020
----------------------- ----------------------
Total current liabilities 24,258,380 31,959,903
Long-term debt, excluding current maturities -- 53,483
Capital lease obligation 800,958 805,113
Other liabilities and deferred credits 3,325,632 3,628,481
----------------------- ----------------------
28,384,970 36,446,980
----------------------- ----------------------
SHAREHOLDERS' EQUITY:
Common stock, $.01 par value; authorized
10,000,000 shares; issued and outstanding
3,728,894 shares at July 31, 1998
and January 31, 1998 37,289 37,289
Additional paid-in capital 11,058,655 11,058,655
Retained earnings 4,131,666 4,246,134
----------------------- ----------------------
Total shareholders' equity 15,227,610 15,342,078
Commitments and contingencies
----------------------- ----------------------
$ 43,612,580 $ 51,789,058
======================= ======================
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
Page 4
<PAGE>
<TABLE>
<CAPTION>
SOUND ADVICE, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED JULY 31, 1998 AND 1997
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ----------------
JULY 31 JULY 31
------- -------
1998 1997 1998 1997
----------------- ----------------- --------------- -----------------
<S> <C> <C> <C> <C>
Net sales $ 33,518,258 $ 33,347,473 $ 67,166,607 $ 66,553,931
Cost of goods sold 22,121,464 22,379,909 43,924,775 44,304,998
----------------- ----------------- --------------- -----------------
Gross profit 11,396,794 10,967,564 23,241,832 22,248,933
Selling, general and administrative
expenses 11,241,959 12,108,468 22,480,389 23,132,774
----------------- ----------------- --------------- -----------------
Income (loss) from operations 154,835 (1,140,904) 761,443 (883,841)
Other income (expense):
Interest expense (378,696) (405,361) (756,826) (791,973)
Other, net 18,469 57,367 35,915 76,666
----------------- ----------------- --------------- -----------------
(Loss) income before income taxes
(benefit) (205,392) (1,488,898) 40,532 (1,599,148)
Income taxes (benefit) 26,000 (86,000) 155,000 (86,000)
----------------- ----------------- --------------- -----------------
Net loss $ (231,392) $ (1,402,898) $ (114,468) $ (1,513,148)
================= ================= =============== =================
BASIC AND DILUTED LOSS PER SHARE $ (0.06) $ (0.38) $ (0.03) $ (0.41)
================= ================= =============== =================
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 3,728,894 3,728,894 3,728,894 3,728,894
================= ================= =============== =================
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
Page 5
<PAGE>
<TABLE>
<CAPTION>
SOUND ADVICE, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED JULY 31, 1998 AND 1997
1998 1997
----------------------- ----------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (114,468) $ (1,513,147)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation and amortization 1,639,218 1,546,193
Deferred income taxes -- 517,000
Changes in operating assets and liabilities:
Decrease (increase) in:
Receivables 458,306 673,420
Inventories 6,420,936 377,356
Prepaid and other current assets 18,969 316,356
Income taxes receivable 55,000 945,571
Other assets 8,379 50,179
Increase (decrease) in:
Accounts payable (7,411,005) (2,139,394)
Accrued liabilities (2,103,260) (664,829)
Other liabilities & deferred credits (302,848) (118,348)
----------------------- ----------------------
NET CASH USED IN OPERATING ACTIVITIES (1,330,773) (9,643)
----------------------- ----------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,311,076) (604,636)
----------------------- ----------------------
NET CASH USED IN INVESTING ACTIVITIES (1,311,076) (604,636)
----------------------- ----------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on revolving credit facility 75,827,290 73,190,813
Repayments on revolving credit facility (73,979,795) (73,030,319)
Net repayments of long-term debt (88,237) (80,738)
Reductions in capital lease obligation (4,155) (3,956)
----------------------- ----------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,755,103 75,800
----------------------- ----------------------
Decrease in cash (886,746) (538,479)
Cash, beginning of period 1,421,392 609,747
----------------------- ----------------------
CASH, END OF PERIOD $ 534,646 $ 71,268
======================= ======================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $ 677,903 $ 697,531
======================= ======================
Income taxes paid, net of refunds $ 735,801 $ (1,273,571)
======================= ======================
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
Page 6
<PAGE>
SOUND ADVICE, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1.) BASIS OF PRESENTATION
The accompanying unaudited condensed 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 July 31, 1998 and January 31, 1998 and the
statements of operations for the three and six month periods ended July 31, 1998
and 1997 and statements of cash flows for the six month periods ended July 31,
1998 and 1997. These financial statements reflect the second quarter results of
the new fiscal year beginning on February 1, 1998. The comparable periods in
1997 have been restated to conform to the Company's new fiscal year. The
results of operations for the three and six months ended July 31, 1998 are not
necessarily indicative of the operating results expected for the fiscal year
ending January 31, 1999. 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 transition period
ended January 31, 1998.
2.) EARNINGS PER SHARE
In December 1997, the Company adopted the provisions of Statement of
Financial Accounting Standards No.128, "Earnings per Share" ("Statement 128")
which establishes new standards for computing and presenting earnings per share
("EPS"). Earnings per share for all prior periods have been restated to reflect
the provisions of this statement.
Basic earnings per share is computed by dividing net income (loss) by
the weighted average number of shares outstanding during the period. Diluted
earnings per share is computed assuming the exercise of stock options, as well
as their related income tax effects, unless their effect was antidilutive. For
loss periods, weighted average common share equivalents are excluded from the
calculation as their effect would be antidilutive.
Options to purchase 213,500 shares of common stock at a range from
$1.69 to $1.77 per share and shareholder warrants to purchase 306,335 shares of
common stock at $8.70 per share were outstanding for the six month period ended
July 31, 1998, but were not included in the computation of diluted earnings per
share due to the net loss reported by the Company for this period. Options to
purchase 437,500 shares of common stock at $1.89 per share and warrants to
purchase 15,000 shares of common stock at $1.89 per share were outstanding for
the six month period ended July 31, 1998. In addition, options to purchase
10,000 shares of common stock at $2.86 per share were issued during the quarter
ended July 31, 1998. The options and the 15,000 warrants expire between February
21, 2001 and May 18, 2003 and the 306,335 shareholder warrants expire June 14,
1999.
Options and warrants to purchase shares of common stock that were
outstanding for the three and six months ended July 31, 1997 were not included
in the computation of diluted earnings per share due to the net loss reported by
the Company for these periods.
Page 7
<PAGE>
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 July 31, 1998 and
1997 are as follows:
<TABLE>
<CAPTION>
TRAILING FOUR QUARTERS ENDED JULY 31,
-------------------------------------
(Dollars in Thousands)
QUARTERLY SALES
- ---------------
1998 1997
---- ----
AMOUNT % AMOUNT %
------- ---- ------- ----
<S> <C> <C> <C> <C>
Second Quarter $33,518 22.0% $33,347 21.7%
(May - July)
First Quarter 33,648 22.1 33,206 21.7
(February - April)
Fourth Quarter 48,808 32.1 48,324 31.5
(November - January)
Third Quarter 36,282 23.8 38,418 25.1
(August - October)
-------- ---- -------- ----
SALES FOR TRAILING TWELVE
MONTHS ENDED JULY 31,
1998 AND 1997, RESPECTIVELY $152,256 100% $153,295 100%
======== ==== ======== ====
</TABLE>
4.) PROPERTY AND EQUIPMENT, NET
Property and equipment, net, consists of the following:
<TABLE>
<CAPTION>
JULY 31, 1998 JANUARY 31, 1998
------------- ----------------
<S> <C> <C>
Land $ 521,465 $ 521,465
Building 1,119,605 1,119,605
Furniture and equipment 9,178,973 8,708,705
Leasehold improvements 16,581,723 16,345,129
Display fixtures 6,538,494 5,999,650
Vehicles 1,025,138 959,768
----------- ------------
Total 34,965,398 33,654,322
Less accumulated depreciation (21,295,131) (19,677,138)
----------- ------------
Property and equipment, net $ 13,670,267 $ 13,977,184
=========== ============
</TABLE>
5.) STOCK OPTIONS
During the quarter ended July 31, 1998, non-qualified stock options
were issued covering 10,000 shares of common stock having an exercise price of
$2.86 per share.
6.) PROVISION (BENEFIT) FOR INCOME TAXES
The provision for income taxes includes an amount for taxes payable
based on pretax operating income and an increase in the valuation reserve on
deferred tax assets. The adjustment of the valuation reserve results from
taxable income in excess of pretax operating income. As a result, the provision
for income taxes totals $155,000 or 382.4% of the pretax income for the six
months ended July 31, 1998.
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 July 31, 1998 increased
$171,000 or 0.5% to $33,518,000 compared to $33,347,000 in the corresponding
period in the prior fiscal year. The increase in sales is attributable to the
addition of one showroom and one concept store in the 1998 quarter as compared
to the 1997 quarter. Overall sales increased in the categories of audio
products, DVD players (digital video disc) and projection televisions. Increases
in these categories were partially offset by reduced sales of mobile electronics
and VCRs. Comparable store net sales decreased 1.8% in the quarter ended July
31, 1998 over the corresponding quarter in the prior year. The comparable store
sales were adjusted to exclude the new stores opened in November 1997 and
February 1998. The Company's operations, in common with other retailers in
general, are subject to seasonal influences. Historically, the Company has
realized greater sales and profits during the holiday selling season.
Net sales for the six months ended July 31, 1998 increased by $613,000
or 0.9% to $67,167,000 over the corresponding period in the prior fiscal year.
As stated above, the increase in net sales for the six month period is
attributable to the addition of one showroom and one concept store in the 1998
second quarter compared to the prior year. Overall sales increased in the
categories of audio products, DVD players (digital video disc) and projection
televisions. Increases in these categories were partially offset by reduced
sales of mobile electronics and VCRs. Comparable store net sales as adjusted for
the new stores decreased 1.6% in the six months ended July 31, 1998 compared to
the corresponding six month period in the prior fiscal year.
Gross profit increased by $429,000 or 3.9% in the quarter ended July
31, 1998 compared to the corresponding quarter in the prior fiscal year. The
gross profit percentage was 34.0% in the quarter ended July 31, 1998 as compared
to 32.9% in the quarter ended July 31, 1997. The increase in gross profit and
gross profit percentage is directly related to the Company's sales mix of higher
margin categories.
Gross profit increased by $993,000 or 4.5% in the six months ended July
31, 1998 compared to the corresponding period in the prior year. The gross
profit percentage was 34.6% in the six months ended July 31, 1998 as compared to
33.4% in the six months ended July 31, 1997. As stated above, the increase in
gross profit and gross profit percentage is directly related to the Company's
sales mix of higher margin categories.
Selling, general and administrative expenses ("SG&A") decreased by
$867,000 or 7.2% in the quarter ended July 31, 1998 over the corresponding
period in the prior year. SG&A decreased by $652,000 or 2.8% in the six months
ended July 31, 1998 over the corresponding period in the prior year. The
decrease in both periods is primarily a result of reduced advertising expenses.
SG&A as a percentage of net sales decreased to 33.5% in both the quarter and six
months ended July 31, 1998 from 36.3% and 34.8%, respectively, in the comparable
periods of the previous fiscal year. The percentage decrease is primarily due to
the reduction in advertising expenses from the previous comparable periods.
Interest expense decreased by $27,000 and $35,000, respectively, for
the quarter and six months ended July 31, 1998 from the corresponding periods in
the prior fiscal year. The
Page 9
<PAGE>
decreases were primarily reflective of a lower effective interest rate under the
Company's revolving credit facility on an increased level of borrowing as
compared to the comparable period in the prior fiscal year.
The Company recorded an income tax provision of $26,000 for the quarter
and $155,000 for the six months ended July 31, 1998. As a result, the Company
had an effective income tax rate of approximately 12.7% for the quarter and
382.4% for the six months ended July 31, 1998. The provision in the 1998 period
includes an amount for taxes payable on operating income and an increase in the
valuation reserve for deferred tax assets. The Company had an income tax benefit
of approximately 5.8% for the quarter and 5.4% for the six months ended July 31,
1997.
Net loss for the quarter ended July 31, 1998 was $231,000 or $.06 per
share compared to net loss of $1,403,000 or $.38 per share for the same quarter
in the previous fiscal year. Net loss for the six months ended July 31, 1998 was
$114,000 or $.03 per share compared to net loss of $1,513,000 or $.41 per share
in the same period of the prior fiscal year. The improvement in the quarter and
six months ended July 31, 1998 over the comparable periods in the prior fiscal
year is primarily a result of increased gross profit due to the Company's sales
mix of higher margin categories, combined with the reduction in advertising
expenses.
FINANCIAL CONDITION
Net cash used in operating activities was approximately $1,331,000 for
the six months ended July 31, 1998 primarily due to the decrease in the
Company's accounts payable since January 31, 1998, which was substantially
offset by the decrease in the Company's inventory. The Company had working
capital of approximately $5,447,000 at July 31, 1998, as compared to the
$5,585,000 in working capital at January 31, 1998 for an overall decrease of
$138,000. The decrease in current assets of $7,840,000 during the six month
period was primarily related to the $6,421,000 decrease in inventory and the
decrease in cash of $887,000. The net decrease in current assets was offset by
an overall decrease of $7,702,000 in current liabilities. The net decrease in
current liabilities resulted primarily from a decrease in accounts payable of
$7,411,000, which was partially offset by the increase in borrowings under the
revolving credit facility of $1,847,000.
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 during fiscal 1999. However, in order to fully
complete the store expansion program currently planned in fiscal 1999, the
Company may need to seek additional financing sources. In that regard, the
Company is exploring additional financing sources in connection with the
expansion program. The Company has signed leases for two additional showrooms
located in Palm Beach County, Florida and Tallahassee, Florida, as well as an
additional B&O concept store in Boca Raton, Florida. The Company may also need
to seek additional sources of financing (debt and/or equity or a combination
thereof) in order to proceed with any expansion program beyond fiscal 1999.
The Company's ownership of its former Fort Lauderdale store is
encumbered by a first mortgage loan from a bank in the amount of $640,000, with
a balance of approximately $426,000 at July 31, 1998. This loan was extended and
modified for a two year period ending
Page 10
<PAGE>
in August 2000. Such loan bears interest at the rate of 1% above the prime rate
of the lender (such lender's prime rate was 8.5% at July 31, 1998). The Company
currently has listed this property for sale.
The Company recognizes the potential problems for many computer systems
relating to the Year 2000. The majority of the Company's systems are purchased
from outside vendors. Those installed systems which are not currently able to
fully function in the Year 2000 either have new versions which are Year 2000
compliant and which the Company is preparing to install on the system, or the
vendor has committed to a Year 2000 compliant release in sufficient time to
allow installation and testing prior to critical cutover dates. Consequently,
the Company presently does not anticipate either a significant amount of
incremental expense or a disruption in service associated with the Year 2000 and
its impact on the Company's computer system. In addition, the Company is
assessing the impact of vendors' compliance to Year 2000 and what the impact
will be on the Company's ongoing results of operations.
Effective February 1, 1998, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" and Statement of Financial Accounting Standards No. 131, "Disclosures
about Segments of an Enterprise and Related Information". Effective August 1,
1998, the Company adopted the provisions of Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging Activity".
The adoption of these statements did not have a material impact on the Company's
operating results, financial position or cash flows.
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," "Year
2000" 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 refinance
or repay existing financings or 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 6. Exhibits and Reports on Form 8-K.
(a) Exhibits. The following exhibits are filed with this report:
EXHIBIT NO. DESCRIPTION
----------- -----------------------------------------
27. Financial Data Schedule (filed herewith).
(b) Reports on Form 8-K. No reports on Form 8-K were filed by the
Company.
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 September 11, 1998 /s/ PETER BESHOURI
------------------------------------
Peter Beshouri, Chairman of the
Board, President and Chief
Executive Officer
Date September 11, 1998 /s/ KENNETH L. DANIELSON
------------------------------------
Kenneth L. Danielson, Chief
Financial and Accounting Officer
Page 13
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- ------- -----------
27. Financial Data Schedule (filed herewith).
<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 JULY 31, 1998, AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> FEB-01-1998
<PERIOD-END> JUL-31-1998
<CASH> 534,646
<SECURITIES> 0
<RECEIVABLES> 4,593,515
<ALLOWANCES> 372,600
<INVENTORY> 24,607,056
<CURRENT-ASSETS> 29,705,726
<PP&E> 34,965,398
<DEPRECIATION> 21,295,131
<TOTAL-ASSETS> 43,612,580
<CURRENT-LIABILITIES> 24,258,380
<BONDS> 800,958
0
0
<COMMON> 37,289
<OTHER-SE> 15,190,321
<TOTAL-LIABILITY-AND-EQUITY> 43,612,580
<SALES> 67,166,607
<TOTAL-REVENUES> 67,166,607
<CGS> 43,924,775
<TOTAL-COSTS> 43,924,775
<OTHER-EXPENSES> 22,480,389
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 756,826
<INCOME-PRETAX> 40,532
<INCOME-TAX> 155,000
<INCOME-CONTINUING> (114,468)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (114,468)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
