U.S. Securities and Exchange Commission
Washington, D.C. 20549
------------------------------------
FORM 10-Q/A
(Amendment No. 1 to 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 0-10593
CANDIE'S, INC.
(Exact name of registrant as specified in its charter)
Delaware 11-2481903
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2975 Westchester Avenue
Purchase, NY 10577
(Address of principal executive offices) (Zip Code)
(914) 694-8600
(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 periods 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 practicable date.
Common Stock, $.001 Par Value -- 15,276,841 shares as of September 11, 1998
<PAGE>
INDEX
FORM 10-Q/A
(Amendment No. 1)*
CANDIE'S, INC. and SUBSIDIARIES
Page
-----
Part I. Financial Information
Item 1. Financial Statements - (Unaudited)
Condensed Consolidated Balance Sheets - July 31, 1998
and January 31, 1998................................................... 3
Condensed Consolidated Statements of Income - Three and Six Months
Ended July 31, 1998 and 1997........................................... 4
Condensed Consolidated Statement of Stockholders' Equity -
Six Months Ended July 31, 1998......................................... 5
Condensed Consolidated Statements of Cash Flows -
Six Months Ended July 31, 1998 and 1997................................ 6
Notes to Condensed Consolidated Financial Statements................... 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ........................................ 10
Item 3. Quantitative and Qualitative Disclosures about Market Risk......... 12
Part II. Other Information
Item 1. Legal Proceedings.................................................. 13
Item 2. Changes in Securities.............................................. 13
Item 6. Exhibits and Reports on Form 8-K................................... 13
Signatures ............................................................... 14
Index to Exhibits........................................................... 15
* This amended Form 10-Q is being filed to reflect the restatement of certain
previously reported financial information as more fully described in Note F of
Notes to Condensed Consolidated Financial Statements contained herein. Portions
of Part I-Item 1.-"Financial Statements", Part I-Item 2-"Management's Discussion
and Analysis of Financial Condition and Results of Operations" and Exhibit
27-"Financial Data Schedule" have been amended to reflect the restatement. The
remaining information in this amended Form 10-Q has not been updated to reflect
any changes in information that may have occurred subsequent to the date of the
reporting period to which the Form 10-Q relates.
2
<PAGE>
Part I. Financial Information
Candie's, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
July 31, January 31,
1998 1998
---------- ----------
(Unaudited) (Note)
(Restated) (Restated)
(000's omitted,
except share data)
<S> <C> <C>
Assets
Current Assets
Cash ......................................................... $ 360 $ 367
Accounts receivable, net ..................................... 5,362 1,397
Inventories .................................................. 18,534 17,664
Due from factors and trade receivables ....................... 28,559 --
Refundable and prepaid income taxes .......................... 143 143
Deferred income taxes ........................................ 389 520
Prepaid advertising and other ................................ 2,380 764
Other current assets ......................................... 707 604
---------- ----------
Total Current Assets ............................................... 56,434 21,459
Property and equipment, at cost:
Furniture, fixtures and equipment ............................ 2,250 1,810
Less: Accumulated depreciation and amortization .............. 1,163 959
---------- ----------
1,087 851
Other assets:
Deferred income taxes ........................................ 4,105 2,423
Intangibles .................................................. 4,735 4,860
Other ........................................................ 702 319
---------- ----------
9,542 7,602
---------- ----------
Total Assets ....................................................... $ 67,063 $ 29,912
========== ==========
Liabilities and Stockholders' Equity
Current Liabilities:
Due to factor, net ........................................... $ -- $ 900
Accounts payable and accrued expenses ........................ 11,028 5,401
Revolving notes payable - bank ............................... 17,216 --
Bankers acceptance - net ..................................... 4,876 --
---------- ----------
Total Current Liabilities .......................................... 33,120 6,301
Long-term liabilities .............................................. 76 61
Stockholders' Equity
Preferred stock, $.01 par value
--authorized 5,000,000 shares;
none issued and outstanding
Common stock, $.001 par value
--authorized 30,000,000 shares;
issued and outstanding:
14,178,364 and 12,425,014 shares ........... 14 12
Additional paid-in capital ......................................... 31,957 23,453
Retained earnings* ................................................. 1,896 85
---------- ----------
33,867 23,550
---------- ----------
Total Liabilities and Stockholders' Equity ......................... $ 67,063 $ 29,912
========== ==========
</TABLE>
* Accumulated since February 28, 1993, deficit eliminated of $27,696
Note: The balance sheet at January 31, 1998 has been derived from the audited
financial statements at that date.
See notes to condensed consolidated financial statements.
3
<PAGE>
Candie's, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(Unaudited)
Three Months Ended Six Months Ended
July 31, July 31,
------------------- -------------------
1998 1997 1998 1997
-------- -------- -------- --------
(Restated) (Restated)
(000's omitted, except per share data)
Net revenues ...................... $ 38,350 $ 29,726 $ 61,708 $ 46,587
Cost of goods sold ................ 28,603 23,088 45,712 34,862
-------- -------- -------- --------
Gross profit ...................... 9,747 6,638 15,996 11,725
Selling and administrative expenses 7,182 4,264 12,520 7,681
-------- -------- -------- --------
Operating income .................. 2,565 2,374 3,476 4,044
Other expenses:
Interest expense - net ............ 223 254 497 528
Other - net ....................... -- 30 -- 98
-------- -------- -------- --------
223 284 497 626
-------- -------- -------- --------
Income before income taxes ........ 2,342 2,090 2,979 3,418
Provision (credit) for income taxes 913 (105) 1,168 400
-------- -------- -------- --------
Net income ........................ $ 1,429 $ 2,195 $ 1,811 $ 3,018
======== ======== ======== ========
Earnings per common share:
Basic .................... $ 0.10 $ 0.20 $ 0.13 $ 0.29
======== ======== ======== ========
Diluted .................. $ 0.09 $ 0.17 $ 0.11 $ 0.23
======== ======== ======== ========
Weighted average number of common
shares outstanding:
Basic .................... 14,174 11,153 13,920 10,564
======== ======== ======== ========
Diluted................... 16,363 13,150 16,191 12,845
======== ======== ======== ========
See notes to condensed consolidated financial statements.
4
<PAGE>
Candie's, Inc. and Subsidiaries
Condensed Consolidated Statement of Stockholders' Equity
(Unaudited)
Six Months Ended July 31, 1998
(000's omitted)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-In Retained
Shares Amount Capital Earnings Total
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balances at January 31, 1998, as Restated ..... 12,425 $ 12 $ 23,453 $ 85 $ 23,550
Exercise of stock options and warrants ..... 1,737 2 8,207 -- 8,209
Issuance of common stock to retirement plan 16 -- 78 -- 78
Tax benefit from exercise of stock options -- -- 219 -- 219
Net income ................................. -- -- -- 1,811 1,811
---------- ---------- ---------- ---------- ----------
Balances at July 31, 1998, as Restated ........ 14,178 $ 14 $ 31,957 $ 1,896 $ 33,867
========== ========== ========== ========== ==========
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
Candie's, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended
--------------------
July 31, July 31,
1998 1997
--------------------
(Restated)
(000's omitted)
OPERATING ACTIVITIES:
Net cash used in operating activities ................... (30,037) (7,153)
--------------------
INVESTING ACTIVITIES:
Purchases of property and equipment ................ (349) (42)
--------------------
Net cash used in investing activities ................... (349) (42)
--------------------
FINANCING ACTIVITIES:
Proceeds from exercise of stock options and warrants 8,287 7,199
Revolving notes payable - bank ..................... 17,216 --
Bankers acceptance - net ........................... 4,876 --
--------------------
Net cash provided by financing activities ............... 30,379 7,199
--------------------
(DECREASE) INCREASE IN CASH ............................. (7) 4
Cash at beginning of period ............................. 367 389
--------------------
Cash at end of period ................................... $ 360 $ 393
====================
See notes to condensed consolidated financial statements.
6
<PAGE>
Candie's, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
July 31, 1998
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and six month periods ended July
31, 1998 are not necessarily indicative of the results that may be expected for
a full fiscal year.
For further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report on Form 10-K for the
year ended January 31, 1998.
NOTE B -- MERGER
The Company began to license the use of the CANDIE'S(R) trademark from New
Retail Concepts, Inc. ("NRC") in June 1991 and in March 1993 purchased ownership
of the CANDIE'S(R) trademark from NRC together with certain pre-existing
licenses of NRC, a then publicly traded company engaged primarily in the
licensing and sublicensing of fashion trademarks and a significant shareholder
of the Company. NRC's principal shareholder was also the Company's President and
Chief Executive Officer.
Effective August 18, 1998, the Company completed its previously announced merger
with NRC. Each issued and outstanding share of NRC common stock $.01 par value
(the "NRC Common Stock"), and each issued and outstanding option to purchase
shares of NRC Common Stock, prior to the effective date, were converted,
respectively, into 0.405 shares of common stock, $.001 par value of the Company
(the "Candie's Common Stock"), and into options to purchase 0.405 shares of
common stock, respectively.
At the effective date, there were 5,743,639 outstanding shares of NRC Common
Stock and options to purchase 1,585,000 shares of NRC Common Stock. The
5,743,639 shares were converted to 2,326,173 shares of Candie's Common Stock and
the 1,585,000 options were converted into options to purchase 641,925 shares of
Candie's Common Stock. NRC also owned 1,227,696 shares of Candie's Common Stock
and had options and warrants to purchase an additional 800,000 shares of
Candie's Common Stock, all of which were extinguished upon consummation of the
merger.
NOTE C -- FINANCING AGREEMENTS
On May 27, 1998, the Company entered into a three year $35 million revolving
credit facility (the "Facility"). Under certain conditions, including the
addition of a second lender, the Facility may increase to a maximum of $50
million. On August 4, 1998, BankBoston, N.A. ("BankBoston") entered into a
co-lending arrangement and became a participant in the revolving credit facility
with NationsBanc Commercial Corporation ("NationsBanc").
Borrowings under the Facility currently bear interest at 1.75% below the prime
rate (8 1/2% at July 31, 1998) and the Company also has the option to borrow at
either LIBOR plus 1.25% or the banker's acceptance rate plus 1%. These rates are
fixed and subject to an increase or decrease based on certain conditions
beginning in November 1998. The Company pays a commitment fee of 1/4% on the
unused portion of the Facility.
7
<PAGE>
Candie's, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited) - Continued
NOTE C -- FINANCING AGREEMENTS (continued)
Borrowings under the Facility are formula based and available up to the maximum
amount of the Facility. The facility also contains certain financial covenants
including, minimum tangible net worth, certain specified ratios and other
limitations, as defined therein. The Company has granted the lenders a security
interest in substantially all of its assets.
Simultaneously with the above, the Company entered into a new factoring
agreement whereby the Company has the option to sell any or all of its accounts
receivable, principally without recourse, subject to maximum credit limits
established by the lender for individual accounts. Receivables assigned but not
sold to the lender or in excess of such maximum credit limits are subject to
recourse.
NOTE D -- EARNINGS PER SHARE
In 1997, the Financial Accounting Standards Board issued SFAS No. 128, "Earnings
Per Share" SFAS No. 128, which replaced the calculation of primary and fully
diluted earnings per share with basic and diluted earnings per share. Unlike
primary earnings per share, basic earnings per share excludes any dilutive
effects of options, warrants and convertible securities. Diluted earnings per
share is very similar to the previously reported fully diluted earnings per
share. Earnings per share amounts and weighted average shares for 1997 have been
restated in accordance with the SFAS No. 128 requirements.
The following is a reconciliation of the numerator and denominators of the basic
and diluted EPS computations and other related disclosures required by SFAS No.
128:
Three Months Ended Six Months Ended
July 31, July 31,
----------------- -----------------
1998 1997 1998 1997
----------------- -----------------
(Restated) (Restated)
(000's omitted, except per share data)
Numerator:
Numerator for basic and diluted
earnings per share ............. $ 1,429 $ 2,195 $ 1,811 $ 3,018
================= =================
Denominator:
Denominator for basic earnings per
share ........................... 14,174 11,153 13,920 10,564
Effect of dilutive securities .......... 2,189 1,997 2,271 2,281
----------------- -----------------
Denominator for diluted earnings per
share ........................... 16,363 13,150 16,191 12,845
================= =================
Basic earnings per share ............... $ .10 $ .20 $ .13 $ .29
================= =================
Diluted earnings per share ............. $ .09 $ .17 $ .11 $ .23
================= =================
8
<PAGE>
Candie's, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited) - Continued
NOTE D -- EARNINGS PER SHARE (continued)
For the three and six months periods ended July 31, 1998 and 1997, outstanding
options and warrants to purchase 145,000 and 2,307,000 shares of common stock,
respectively, at exercise prices exceeding the average market price of the
common stock were not included in the computation of diluted earnings per share
as the effect would have been anti-dilutive.
NOTE E -- SUBSEQUENT EVENT - PROPOSED ACQUISITION
Effective August 7, 1998, the Company entered into an agreement in principle to
acquire Michael Caruso & Co., Inc. ("Caruso"), owner and marketer of BONGO(R)
branded jeanswear and apparel products, in exchange for shares of Candie's, Inc.
common stock. Under the terms of the agreement, the Company will acquire the
BONGO(R) and trademark as well as certain other trademarks and the existing
license agreements for kids' and large size jeanswear. The parties anticipate
that the transaction will be consummated in September 1998.
NOTE F -- RESTATEMENT
During the course of the audit of the Company's financial statements for the
year ended January 31, 1999, and the re-audit of the financial statements for
the year ended January 31, 1998, the Company became aware of certain required
adjustments primarily in inventory valuation, accounts receivable/due from
factor balances as of July 31, 1998. The financial statements for the quarter
ended July 31, 1998 have been restated to reflect these adjustments, as
summarized below:
Three Six
Months Ended Months Ended
July 31, 1998 July 31, 1998
Net income, as previously reported ............... $ 3,361 $ 4,416
----------- -----------
Adjustments - Increase (Decrease):
Inventory valuation ......................... -- 550
Revenues (gross profit effect) .............. (36) (57)
Receivable reserves ......................... (2,758) (4,436)
Other ....................................... (375) (345)
Tax effect on these adjustments ............. 1,237 1,683
----------- -----------
(1,932) (2,605)
=========== ===========
Net income, as adjusted .......................... $ 1,429 $ 1,811
=========== ===========
Per share amounts:
Basic:
As previously reported ...................... $ .24 $ .32
Adjustments ................................. (.14) (.19)
----------- ===========
As adjusted ................................. $ .10 $ .13
=========== ===========
Diluted:
As previously reported ...................... $ .21 $ .27
Adjustments ................................. (.12) (.16)
=========== ===========
As adjusted ................................. $ .09 $ .11
=========== ===========
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995. The statements which are not historical facts contained in this Quarterly
Report on Form 10-Q are forward looking statements that involve a number of
known and unknown risks, uncertainties and other factors, all of which are
difficult or impossible to predict and many of which are beyond the control of
the Company, which may cause the actual results, performance or achievements of
the Company to be materially different from any future results, performance or
achievements expressed or implied by such forward looking statements.
Such factors include, but are not limited to, uncertainty regarding continued
market acceptance of current products and the ability to successfully develop
and market new products particularly in light of rapidly changing fashion
trends, the impact of supply and manufacturing constraints or difficulties
particularly in light of the Company's dependence on foreign manufacturers,
uncertainties relating to customer plans and commitments, competition,
uncertainties relating to economic conditions in the markets in which the
Company operates, the ability to hire and retain key personnel, the ability to
obtain additional capital if required, the risks of uncertainty of trademark
protection and other risks detailed below and in the Company's Securities and
Exchange Commission filings, and the uncertainty regarding the timing of the
proposed acquisition of Michael Caruso & Co., Inc. and the ability to
successfully integrate its operations into the Company's operations.
The words "believe", "expect", "anticipate", and "seek" and similar expressions
identify forward-looking statements. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date
the statement was made.
Results of Operations (Restated)
Revenues. Net revenues increased by $8.7 million or 29% to $38.4 million in
the three months ended July 31, 1998, from $29.7 million in the comparable
period of the prior year. Net revenues increased by $15.1 million or 32.5% to
$61.7 million in the six months ended July 31, 1998, from $46.5 million in the
same period in 1997. The increase was primarily due to increased brand awareness
and consumer acceptance of the Company's products due to the Company's increased
sales and marketing efforts coupled with increased sales in all product
categories, the successful introduction of children's footwear products and, in
part, increased selling prices.
Gross Profit. Gross profit margins increased to 25.4% in the three months
ended July 31, 1998 from 22.3% in the comparable period of the prior year. Gross
profit margins increased to 25.9% in the six months ended July 31, 1998 from
25.2% in the same period in 1997. The increase was primarily attributable to
changes in product mix.
Operating Expenses. Selling and administrative expenses increased by $2.9
million or 68% to $7.2 million in the three months ended July 31, 1998 from $4.3
million in the comparable period of the prior year. As a percentage of net
revenues, selling and administrative expenses increased 4.4% to 18.7% for the
three months ended July 31, 1998 from 14.3% for the comparable period of the
prior year. Selling and administrative expenses increased by $4.8 million or 63%
to $12.5 million in the six months ended July 31, 1998 from $7.7 million in the
comparable period of the prior year. As a percentage of net revenues, selling
and administrative expenses increased 3.8% to 20.3% for the six months ended
July 31, 1998 from 16.5% for the comparable period of the prior year. These
increases reflect costs which are directly associated with the increase in net
revenues, coupled with the costs incurred in implementing the Company's
strategic plan to strengthen its management team and infrastructure, which the
Company believes has created the foundation for future growth.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - Continued
Interest Expense. Interest expense for the second quarter of fiscal 1999
was $223,000, compared to $254,000 for the second quarter of fiscal 1998.
Interest expense for the six months ended July 31, 1998 was $497,000, compared
to $528,000 for the comparable period in the previous year. The decrease
resulted from lower average borrowings and to a lesser extent lower interest
rates under the Company's new revolving credit facility.
Net Income. As a result of the foregoing, net income decreased to
$1,429,000 in the three months ended July 31, 1998, compared to net income of
$2,195,000 in the corresponding period a year ago. Net income decreased to
$1,811,000 for the six months ended July 31, 1998, compared to net income of
$3,018,000 for the same period in 1997.
Earnings Per Share. Earnings per share in the three months ended July 31,
1998 was $.09 on a diluted basis, which reflects an additional 3.2 million
weighted average shares outstanding, compared to $.17 per diluted share in the
comparable quarter of the prior year. Earnings per share in the six months ended
July 31, 1998 was $.11 on a diluted basis, which reflects an additional 3.3
million weighted average shares outstanding, compared to $.23 per diluted share
in the same period in 1997. The prior year's computation of earnings per share
has been restated to comply with the requirements of SFAS No. 128. The increase
in the weighted average shares outstanding for the 1998 periods was primarily
the result of the exercise of approximately 1.7 million warrants and options
since the beginning of fiscal 1999.
Liquidity and Capital Resources (Restated)
Working capital increased approximately $8.2 million to $23.3 million at July
31, 1998 from $15.1 million at January 31, 1998. The current ratio at July 31,
1998 was approximately 1.7 to 1. Inventory levels at July 31, 1998 increased by
$800,000 to $18.5 million from $17.7 million at January 31, 1998.
The Company has relied in the past primarily upon revenues generated from
operations, borrowings from its factor and sales of securities to finance its
liquidity and capital needs. Net cash used in operating activities totaled $30.0
million for the six months ended July 31, 1998, compared to $7.2 million for the
six months ended July 31, 1997.
Capital expenditures were $349,000 for the six months ended July 31, 1998,
compared to $42,000 for the six months ended July 31, 1997.
During the six month period ended July 31, 1998 (up to and including February
23, 1998), substantially all of the Company's outstanding Class C warrants
("Warrants") were exercised and the Company received aggregate proceeds of
approximately $7.16 million from the exercise of such Warrants. The proceeds
were used to repay short-term borrowings. Each Warrant entitled the holder
thereof to purchase one share of Common Stock at an exercise price of $5.00. In
addition, the Company received proceeds of approximately $1.12 million in
connection with the issuance of common stock relating to the exercise of
outstanding stock options and certain underwriters' warrants.
On May 27, 1998, the Company entered into a three year $35 million revolving
credit facility (the "Facility"). Under certain conditions, including the
addition of a second lender, the Facility may increase to a maximum of $50
million. On August 4, 1998, BankBoston, N.A. ("BankBoston") entered into a
co-lending arrangement and became a participant in the revolving credit facility
with NationsBanc Commercial Corporation ("NationsBanc").
Borrowings under the Facility currently bear interest at 1.75% below the prime
rate (8 1/2% at July 31, 1998) and the Company also has the option to borrow at
either LIBOR plus 1.25% or the banker's acceptance rate plus 1%. These rates are
fixed and subject to an increase or decrease based on certain conditions
beginning in November 1998. The Company pays a commitment fee of 1/4% on the
unused portion of the Facility.
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - Continued
Borrowings under the Facility are formula based and available up to the maximum
amount of the Facility. The facility also contains certain financial covenants
including, minimum tangible net worth, certain specified ratios and other
limitations, as defined therein. The Company has granted the lenders a security
interest in substantially all of its assets.
Cash requirements fluctuate from time to time due to seasonal requirements,
including the timing of receipt of merchandise and various other factors. The
Company believes that it will be able to satisfy its ongoing cash requirements
for the foreseeable future, including requirements for its expansion, primarily
with cash flow from operations, supplemented by borrowings under the Facility.
Year 2000 Issues
The Company has assessed the issues associated with its existing computer system
with respect to a two-digit year value as the year 2000 approaches and is in the
process of implementing a new computer system which it believes addresses such
issues. The Company also believes that implementation of this system is not a
material event or uncertainty that would cause expected financial information
not to be indicative of future operating results or financial condition.
Concurrently with the development and implementation of plans to resolve Year
2000 issues relating to the Company's systems and software, the Company is also
reviewing the possible impact of the Year 2000 problem on its customers and
suppliers. The Company has not completed its assessment of its exposure to risks
relating to the Year 2000 issues of third parties with which it has a material
relationship.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
12
<PAGE>
PART II. Other Information
Item 1. Legal Proceedings
The Company is party to certain litigation incurred in the normal
course of business. While any litigation has an element of
uncertainty, the Company believes that the final outcome of any of
these matters will not have a material adverse effect on the Company's
financial position or future liquidity.
Item 2. Changes in Securities
During the quarter ended July 31, 1998, the Company issued five-year
options to purchase an aggregate of 115,000 shares of its common stock
at an average exercise price of $6.96. The foregoing options were
acquired by the holders for investment in private transactions exempt
from registration by Sections 2(a)(3) or 4(2) of the Securities Act of
1933.
Item 6. Exhibits and Reports on Form 8-K
A. Exhibit 27 - Financial Data Schedule
B. Reports on Form 8-K
None during the three months ended July 31, 1998
13
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amended report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CANDIE'S, INC.
----------------------------
(Registrant)
Date October 4, 1999 /s/ Neil Cole
--------------------------- ----------------------------
Neil Cole
Chief Executive Officer on
Behalf of the Registrant.
Date October 4, 1999 /s/ Frank Marcinowski
--------------------------- ----------------------------
Frank Marcinowski
Vice President and
Chief Financial Officer
14
<PAGE>
Index to Exhibits
Exhibit
Numbers Description
- ------- -----------
27 Financial Data Schedule
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q AT
JULY 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1999
<PERIOD-END> JUL-31-1998
<CASH> 360
<SECURITIES> 0
<RECEIVABLES> 33,921
<ALLOWANCES> 0
<INVENTORY> 18,534
<CURRENT-ASSETS> 56,434
<PP&E> 2,250
<DEPRECIATION> 1,163
<TOTAL-ASSETS> 67,063
<CURRENT-LIABILITIES> 33,120
<BONDS> 0
0
0
<COMMON> 14
<OTHER-SE> 33,853
<TOTAL-LIABILITY-AND-EQUITY> 67,063
<SALES> 61,708
<TOTAL-REVENUES> 61,708
<CGS> 45,712
<TOTAL-COSTS> 45,712
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 497
<INCOME-PRETAX> 2,979
<INCOME-TAX> 1,168
<INCOME-CONTINUING> 1,811
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,811
<EPS-BASIC> .13
<EPS-DILUTED> .11
</TABLE>
