<PAGE> 1
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 OCTOBER 31, 2000,
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 BEACH, 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 - 3,961,245 SHARES OUTSTANDING AS OF
DECEMBER 8, 2000.
<PAGE> 2
9
SOUND ADVICE, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements.
Condensed Consolidated Balance Sheets (Unaudited)
October 31, 2000 and January 31, 2000 ...................... 3
Condensed Consolidated Statements of Income (Unaudited)
for the Three and Nine Months Ended October 31, 2000 and 1999 4
Condensed Consolidated Statements of Cash Flows (Unaudited)
for the Nine Months Ended October 31, 2000 and 1999 ......... 5-6
Notes to Condensed Consolidated Financial Statements ........ 7-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ........................ 10-13
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ..................................... 14
SIGNATURES .................................................................... 15
</TABLE>
Page 2
<PAGE> 3
SOUND ADVICE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
OCTOBER 31, 2000 AND JANUARY 31, 2000
<TABLE>
<CAPTION>
OCTOBER 31, 2000 JANUARY 31, 2000
----------------- ----------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 2,414,450 $ 564,898
Receivables:
Vendors 3,371,758 3,979,027
Trade 1,805,123 1,024,652
Employees 521,514 431,775
------------ ------------
5,698,395 5,435,454
Less allowance for doubtful accounts (612,873) (508,640)
------------ ------------
5,085,522 4,926,814
Inventories 42,104,932 35,459,724
Prepaid income taxes 591,345 --
Prepaid and other current assets 252,651 830,407
Deferred tax assets, current 1,599,578 1,599,578
------------ ------------
Total current assets 52,048,477 43,381,421
Property and equipment, net 17,610,225 15,024,047
Deferred tax assets, net 1,915,130 1,915,130
Other assets 366,846 435,389
Goodwill, net 6,741,326 176,472
------------ ------------
$ 78,682,004 $ 60,932,459
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Cash overdraft $ 2,838,958 $ 1,662,351
Borrowings under revolving credit facility 18,528,906 7,309,531
Current maturities of long-term debt, and capital
lease obligation 1,653,550 1,516,834
Accounts payable 10,196,099 9,884,337
Income tax payable -- 781,041
Accrued liabilities 11,897,746 9,096,046
Deferred tax liabilities 111,156 111,156
------------ ------------
Total current liabilities 45,226,415 30,361,296
Long-term debt, excluding current maturities 2,326,972 3,363,424
Capital lease obligations, excluding current portion 1,451,720 788,444
Other liabilities and deferred credits 3,624,064 3,727,568
------------ ------------
52,629,171 38,240,732
------------ ------------
SHAREHOLDERS' EQUITY:
Common stock, $.01 par value; authorized 10,000,000 shares; issued and
outstanding 3,961,245 shares at October 31, 2000
and 3,766,394 at January 31, 2000 39,613 37,664
Additional paid-in capital 12,560,455 11,175,205
Retained earnings 13,452,765 11,478,858
------------ ------------
Total shareholders' equity 26,025,833 22,691,727
Commitments and contingencies
------------ ------------
$ 78,682,004 $ 60,932,459
============ ============
</TABLE>
Page 3
<PAGE> 4
SOUND ADVICE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED OCTOBER 31, 2000 AND 1999
<TABLE>
<CAPTION>
THREE MONTHS ENDED OCTOBER 31, NINE MONTHS ENDED OCTOBER 31,
--------------------------------- ---------------------------------
2000 1999 2000 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net sales $ 44,616,484 $ 39,263,111 $ 129,107,400 $ 118,414,515
Cost of goods sold 28,180,337 25,188,517 82,688,541 76,787,385
------------- ------------- ------------- -------------
Gross profit 16,436,147 14,074,594 46,418,859 41,627,130
Selling, general and administrative
expenses 14,396,400 12,808,285 41,277,283 38,172,856
------------- ------------- ------------- -------------
Income from operations 2,039,747 1,266,309 5,141,576 3,454,274
Other income (expense):
Interest expense (478,897) (317,589) (1,380,849) (1,024,017)
Cost of terminated stock offering (574,246) -- (574,246) --
Other, net 10,404 10,299 48,426 30,648
------------- ------------- ------------- -------------
Income before income taxes 997,008 959,019 3,234,907 2,460,905
Income taxes 388,000 -- 1,261,000 --
------------- ------------- ------------- -------------
Net income $ 609,008 $ 959,019 $ 1,973,907 $ 2,460,905
============= ============= ============= =============
Common and common equivalent per share amounts:
Basic net income per share $ 0.16 $ 0.26 $ 0.52 $ 0.66
============= ============= ============= =============
Diluted net income per share $ 0.14 $ 0.23 $ 0.46 $ 0.59
============= ============= ============= =============
Weighted average number of shares
outstanding - basic 3,816,163 3,752,672 3,786,479 3,740,542
============= ============= ============= =============
Weighted average number of shares
outstanding - diluted 4,319,050 4,257,745 4,324,177 4,184,755
============= ============= ============= =============
</TABLE>
Page 4
<PAGE> 5
SOUND ADVICE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED OCTOBER 31, 2000 AND 1999
<TABLE>
<CAPTION>
2000 1999
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,973,907 2,460,905
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 2,741,501 2,605,538
Gain on disposition of assets (33,000) (22,876)
Deferred income taxes, net -- (960,000)
Changes in operating assets and liabilities:
Decrease (increase) in:
Receivables 20,492 694,286
Inventories (3,817,909) (2,221,921)
Prepaid income taxes (252,650)
Prepaid and other current assets 256,944 4,916
Other assets 19,712 (12,514)
Increase (decrease) in: --
Accounts payable (2,300,220) (3,149,717)
Income tax payable (781,041) --
Accrued liabilities 1,111,007 1,000,186
Other liabilities & deferred credits (103,504) (207,865)
------------- -------------
NET CASH PROVIDED BY OPERATING ACTIVITIES (1,164,761) 190,938
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (3,414,968) (2,530,868)
Proceeds from disposition of assets 33,000 833,137
Acquisition of stores (4,565,000) (301,938)
------------- -------------
NET CASH USED IN INVESTING ACTIVITIES (7,946,968) (1,999,669)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on revolving credit facility 158,310,615 134,186,859
Repayments on revolving credit facility (147,091,240) (135,414,472)
Principal payments on long-term debt (1,408,873) (467,483)
Increase in cash overdraft 1,176,607 3,317,580
Principal payments under capital lease obligations (99,359) (6,385)
Proceeds from exercise of stock options 73,531 51,375
------------- -------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 10,961,281 1,667,474
------------- -------------
Increase (decrease) in cash 1,849,552 (141,257)
Cash, beginning of period 564,898 1,384,051
------------- -------------
CASH, END OF PERIOD $ 2,414,450 $ 1,242,794
============= =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $ 1,005,131 $ 913,482
============= =============
Income taxes paid, net of refunds $ 2,633,705 $ 1,580,000
============= =============
</TABLE>
Page 5
<PAGE> 6
Sound Advice, Inc. and Subsidiaries
Condensed Consolidated Statements
of Cash Flows (unaudited)
For the Nine months ended October 31, 2000 and 1999
(Continued)
<TABLE>
<CAPTION>
<S> <C> <C>
SUPPLEMENTAL DISCLOSURE OF FAIR VALUE OF ASSETS
ACQUIRED AND LIABILITIES ASSUMED IN CONNECTION
WITH ACQUISITION:
Receivables 179,200 --
Inventory 2,827,299 71,519
Prepaid expenses and other assets 17,882 --
Fixed assets 1,038,731 148,640
Goodwill 6,607,026 81,779
Other assets 20,341 --
------------- -------------
Total assets $ 10,690,479 $ 301,938
============= =============
Accounts payable $ 2,611,982 $ --
Customer deposits 1,216,652 --
Accrued expenses 474,041 --
Notes payable 509,137 --
------------- -------------
Total liabilities $ 4,811,812 $ --
============= =============
Less common stock issued to seller 1,313,667 --
------------- -------------
Net cash used in acquistion $ 4,565,000 $ 301,938
============= =============
</TABLE>
Page 6
<PAGE> 7
SOUND ADVICE, INC. AND SUBSIDIARIES
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 October 31, 2000 and January 31, 2000 and
the statements of income for the three and nine month periods ended October 31,
2000 and 1999 and statements of cash flows for the nine month periods ended
October 31, 2000 and 1999. The results of operations for the three and nine
months ended October 31, 2000 are not necessarily indicative of the operating
results expected for the fiscal year ending January 31, 2001. 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 period ended January 31, 2000.
2.) EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income available
to common shareholders by the weighted-average number of common shares
outstanding during the period. Diluted earnings per share is computed by
dividing income available to common shareholders by the weighted-average number
of common shares outstanding during the period increased to include the number
of additional common shares that would have been outstanding if the diluted
potential common shares had been issued. The diluted effect of outstanding
options is reflected in diluted earnings per share by application of the
treasury stock method.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
OCTOBER 31, OCTOBER 31,
------------------------ ------------------------
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Basic:
Weighted average common shares
outstanding 3,816,163 3,752,672 3,786,479 3,740,542
========= ========= ========= =========
Diluted:
Weighted average common shares
outstanding 3,816,163 3,752,672 3,786,479 3,740,542
Dilutive effect of options and warrants 502,887 505,073 537,698 444,213
--------- --------- --------- ---------
Total 4,319,050 4,257,745 4,324,177 4,184,755
========= ========= ========= =========
</TABLE>
Page 7
<PAGE> 8
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 October 31, 2000
and 1999 are as follows:
TRAILING FOUR QUARTERS ENDED OCTOBER 31,
(Dollars in Thousands)
QUARTERLY SALES
2000 1999
------------------- -------------------
AMOUNT % AMOUNT %
-------- ---- -------- --
Third Quarter $ 44,616 23.8% $ 39,263 23.1%
(August - October)
Second Quarter 41,815 22.2 40,684 23.8
(May - July)
First Quarter 42,676 22.7 38,468 22.5
(February - April)
Fourth Quarter 58,934 31.3 52,218 30.6
(November - January)
-------- ---- -------- ----
SALES FOR TRAILING TWELVE
MONTHS ENDED OCTOBER 31,
2000 AND 1999, RESPECTIVELY $188,041 100% $170,633 100%
======== ===== ======== =====
4.) PROPERTY AND EQUIPMENT, NET
Property and equipment, net, consists of the following:
OCTOBER 31, 2000 JANUARY 31, 2000
---------------- -----------------
Building $ 684,990 $ 684,990
Furniture and equipment 11,796,241 10,071,333
Leasehold improvements 22,800,094 19,859,021
Display fixtures 7,956,895 7,654,874
Vehicles 1,004,526 884,195
------------ ------------
Total 44,242,746 39,154,413
Less accumulated depreciation (26,632,521) (24,130,366)
------------ ------------
Property and equipment, net $ 17,610,225 $ 15,024,047
============ ============
5.) STOCK OPTIONS
During the quarter ended October 31, 2000, non-qualified stock options
for 1,000 shares were exercised at $2.86 per share.
Page 8
<PAGE> 9
6.) ACQUISTION
On October 17, 2000, the Company purchased the assets and assumed
certain liabilities of Showcase Home Entertainment of the Southwest, LLC., a
Scottsdale, Arizona based retailer of consumer electronics and custom design
services. The purchase price for the acquisition was $6.0 million, of which $4.5
million was paid in cash and $1.5 million was paid by issuing 172,851 shares of
common stock. The acquisition has been accounted for under the purchase method
of accounting. The excess of the purchase price paid over the fair value of net
assets acquired of approximately $6.6 million was recorded as goodwill and will
be amortized over 15 years. Under the name Showcase Home Entertainment, the
Company operates two upscale showrooms in Scottsdale and Chandler, Arizona, as
well as a home theater showroom in the home entertainment department of The
Great Indoors home design center located in Scottsdale. The results of
operations for Showcase have been included in the consolidated statement of
income since the date of the acquisition and are not significant to the
quarterly results. Purchase price allocations are preliminary.
7.) TERMINATION OF COMMON STOCK OFFERING
In November 2000, the Company terminated its previously announced
public stock offering due to the volatility in the financial marketplace. In
connection with the termination, the Company expensed $574,000 of costs
associated with the offering during the third quarter.
8.) PROVISION FOR INCOME TAXES
In the three and nine months ended October 31, 2000, the Company
recorded a provision for income taxes of $388,000 and $1,261,000, respectively,
at an effective tax rate of 39%. In the three and nine months ended October 31,
1999, the Company reduced the valuation reserve on deferred tax assets by
$374,500 and $960,000, respectively.
9.) RECENT ACCOUNTING PRONOUNCEMENTS
In December 1999, the SEC issued Staff Accounting Bulletin No. 101,
"Revenue Recognition in Financial Statements" (SAB 101) and amended it in March
and June 2000. The Company is required to adopt the provisions of SAB 101 in the
fourth quarter of 2000.
Page 9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
Net sales for the quarter ended October 31, 2000 increased $5,353,000
or 14% to $44,616,000 compared to $39,263,000 in the corresponding period in the
prior fiscal year. The increase in sales resulted primarily from the increase in
same store sales, the relocation and expansion of a Sound Advice store in
November 1999 and the addition of one Bang & Olufsen store in February 2000. The
core category of video was primarily reponsible for the sales increase. The
largest sales increases were in projection televisions, audio speakers and
custom installations. Comparable store net sales increased 11% in the quarter
ended October 31, 2000 over the corresponding quarter in the prior year. The
comparable store sales were adjusted to exclude the new Bang & Olufsen store
opened in February 2000. Our operations, similar to those of other retailers,
are subject to seasonal influences. Historically, we have realized greater sales
and profits during the holiday selling season.
Net sales for the nine months ended October 31, 2000 increased
$10,693,000 or 9% to $129,107,000 compared to $118,414,000 in the corresponding
period in the prior fiscal year. As stated above, the increase in net sales for
the nine month period resulted from the increase in same store sales, the
relocation of a Sound Advice store and the addition of one Bang & Olufsen store
compared to the prior year. Overall sales increased in the core categories of
audio, video, mobile products and furniture. For the nine months, the largest
sales increases were in projection televisions, audio speakers, and custom
installations. Comparable store net sales, adjusted for the new store, increased
8% in the nine months ended October 31, 2000 compared to the corresponding nine
month period in the prior fiscal year.
Cost of goods sold includes the cost of merchandise, net of vendor
rebates and discounts, allowances for product shrinkage and obsolescence. Gross
profit for the quarter ended October 31, 2000 was $16,436,000, an increase of
$2,362,000 or 17%, compared to the corresponding quarter in the prior fiscal
year. The increase in gross profit was directly related to the increased sales
of projection televisions, home theater systems, and custom installation
services. The gross profit margin was 36.8% in the quarter ended October 31,
2000 compared to 35.8% in the quarter ended October 31, 1999.
Gross profit for the nine months ended October 31, 2000 was
$46,419,000, an increase of $4,792,000 or 12% compared to the corresponding
period in the prior year. As stated above, the increase in gross profit was
directly related to the increase in total sales. The gross profit margin was
36.0% in the nine months ended October 31, 2000 compared to 35.2% in the nine
months ended October 31, 1999.
Page 10
<PAGE> 11
Selling, general and administrative expenses, referred to as SG&A
expense, includes costs related to sales commissions, salaries, advertising,
warehouse and distribution, corporate expenses, store operations, including rent
and utilities, and depreciation. SG&A expense for the quarter ended October 31,
2000 was $14,396,000, an increase of $1,588,000 or 12% over the corresponding
period in the prior year. SG&A expense in the nine months ended October 31, 2000
was $41,277,000, an increase of $3,104,000 or 8% over the corresponding period
in the prior year. The increase in both periods was primarily a result of sales
commissions on increased gross profit and costs associated with the new stores.
SG&A as a percentage of net sales decreased to 32.3% for the quarter and 32.0%
for the nine months ended October 31, 2000 from 32.6% for the corresponding
quarter and 32.2% for the corresponding nine month period of the previous fiscal
year.
Income from operations in the quarter ended October 31, 2000 was
$2,040,000, an increase of $773,000, or 61%, over the corresponding quarter in
the prior year. Income from operations as a percentage of net sales increased to
4.6% in the quarter ended October 31, 2000 from 3.2% in the same quarter of the
prior year.
Income from operations in the nine months ended October 31, 2000 was
$5,142,000, an increase of $1,687,000, or 49%, over the corresponding period in
the prior year. Income from operations as a percentage of net sales increased to
4.0% in the nine months ended October 31, 2000 from 2.9% in the corresponding
period in the prior year.
Interest expense increased by $161,000 and $357,000, respectively, for
the quarter and nine months ended October 31, 2000 from the corresponding
periods in the prior fiscal year. The increases were attributable to an increase
in the effective interest rate and increased borrowings compared to the
comparable periods in the prior fiscal year.
Income taxes of $388,000 for the quarter and $1,261,000 for the nine
months ended October 31, 2000 were recorded at an effective tax rate of 39%. The
income tax provision in the quarter and nine month periods of the prior fiscal
year included an amount for taxes payable on pretax operating income and an
increase in the valuation reserve for deferred tax assets.
Net income for the quarter ended October 31, 2000 was $609,000 or $.16
per share basic and $.14 per share diluted compared to net income of $959,000 or
$.26 per share basic and $.23 per share diluted for the same quarter in the
previous fiscal year. Net income for the nine months ended October 31, 2000 was
$1,974,000 or $.52 per share basic and $.46 per share diluted compared to net
income of $2,461,000 or $.66 per share basic and $.59 per share diluted in the
same period of the prior fiscal year. The decrease in net income for the quarter
and nine months ended October 31, 2000 was primarily a result of the one time
charge for expenses relating to our terminated stock offering and the
recognition of a provision for income taxes as compared to a reduction in the
valuation allowance for deferred tax assets in the comparable periods of the
prior fiscal year.
Page 11
<PAGE> 12
FINANCIAL CONDITION
Historically, our primary sources of capital for working capital,
expansion and growth have been our revolving line of credit, net cash from
operations and vendor credit. Our primary cash requirements are for new store
openings, relocations and upgrades of existing stores, as well as working
capital to support our inventory requirements and SG&A expenses.
Net cash used in operating activities was approximately $1,165,000 for
the nine months ended October 31, 2000 primarily due to cash flows from net
income and increased accrued liabilities, net of an increase in inventory since
January 31, 2000. Working capital was approximately $6,822,000 at October 31,
2000, compared to $13,020,000 in working capital at January 31, 2000 for an
overall decrease of $6,198,000. The increase in current assets of $8,667,000
during the nine month period was primarily related to the $6,645,000 increase in
inventory of which $2,827,000 related to the acquisition of Showcase Home
Entertainment. The net increase in current assets was offset by an overall
increase of $14,865,000 in current liabilities. The net increase in current
liabilities resulted primarily from an increase in borrowings under the
revolving line of credit of $11,219,000, accrued liabilities of $2,802,000 and
cash overdraft of $1,177,000. The increase in the revolving line of credit is
primarily due to the acquisition of Showcase Home Entertainment and capital
expenditures in connection with new stores. The increase in accounts payable and
accrued liabilities is primarily related to obligations assumed in connection
with the Showcase acquisition.
Our $25,000,000 revolving credit facility expires on July 31, 2001. At
October 31, 2000, there was $18,529,000 outstanding under the facility. The
outstanding balance under the revolving credit facility is expected to be
reduced by net cash proceeds from sales in the fourth quarter. This reduction
will increase availability under the revolving credit facility for operating
cash requirements and store expansion. Interest under the revolving credit
facility is based on prime plus 1% and allows for LIBOR pricing options of one,
two, three, or six month periods at 2.00% over the corresponding LIBOR rate for
the respective period. In December 1999, we entered into a three year $5,000,000
term loan agreement payable in monthly installments at an effective interest
rate of 9.96%. At October 31, 2000, there was $3,757,000 outstanding under the
term loan agreement.
We believe that funds generated by operations combined with borrowings
available under the revolving credit facility and vendor credit programs will be
sufficient to satisfy our projected operating cash requirements and store
expansion and relocation plans during fiscal 2001. However, in order to continue
store expansion and upgrades beyond fiscal 2001 or to pursue acquisitions as a
part of our expansion strategy, we may need to seek additional sources of debt
or equity financing.
Page 12
<PAGE> 13
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
our current expectations, beliefs, estimates or intentions concerning our future
performance and operating results, our products, services, markets and industry,
and/or future events relating to or effecting us and our 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 us or our management are intended to identify forward-looking
statements. Our actual results or achievements 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
our business and marketing strategies, our product mix, 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 us, 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, our ability to effectively integrate a new operation with our
exisiting operations, the profitability of a newly acquired entity, a change in
interest rates, exchange rate fluctuations, the seasonality of our business and
the other risks and factors detailed in this Form 10-Q and in our other filings
with the Securities and Exchange Commission. These risks and uncertainties are
beyond our ability to control. In many cases, we cannot predict the risks and
uncertainties that could cause actual results to differ materially from those
indicated by the forward-looking statements.
Page 13
<PAGE> 14
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. On September 14, 2000, the Company filed
a Current Report on Form 8-K in connection with the adoption
of an amendment to its 1997 Common Stock Purchase Rights
Agreement.
Page 14
<PAGE> 15
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 DECEMBER 14, 2000 /s/ PETER BESHOURI
-------------------------------------
Peter Beshouri, Chairman of the
Board, President and Chief
Executive Officer
Date DECEMBER 14, 2000 /s/ KENNETH L. DANIELSON
-------------------------------------
Kenneth L. Danielson, Chief
Financial and Accounting Officer
Page 15
<PAGE> 16
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED
OCTOBER 31, 2000
COMMISSION FILE NUMBER
0-15194
-----------------------------------------------------
SOUND ADVICE, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<PAGE> 17
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
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27. Financial Data Schedule (filed herewith).
