<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 MARCH 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 0-21878
CYRK, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 04-3081657
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3 POND ROAD, GLOUCESTER, MASSACHUSETTS 01930
(Address of principal executive offices)
(Zip Code)
(978) 283-5800
(Registrant's telephone number, including area code)
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
----- -----
At April 30, 1998, 14,734,326 shares of the Registrant's common stock were
outstanding.
<PAGE> 2
CYRK, INC.
FORM 10-Q
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION PAGE NUMBER
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets -
March 31, 1998 and December 31, 1997 3
Consolidated Statements of Operations - For the
three months ended March 31, 1998 and 1997 4
Consolidated Statements of Comprehensive Income -
For the three months ended March 31, 1998 and 1997 5
Consolidated Statements of Cash Flows - For the
three months ended March 31, 1998 and 1997 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 1. Legal Proceedings 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
CYRK, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share data)
<TABLE>
<CAPTION>
March 31, 1998 December 31, 1997
-------------- -----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 61,148 $ 42,513
Accounts receivable:
Trade, less allowance for doubtful accounts of $3,782
at March 31, 1998 and $3,801 at December 31, 1997 87,281 95,388
Officers, stockholders and related parties 233 228
Inventories 72,075 46,317
Prepaid expenses and other current assets 9,462 10,649
Deferred and refundable income taxes 12,055 9,746
-------- --------
Total current assets 242,254 204,841
Property and equipment, net 16,367 16,268
Excess of cost over net assets acquired, net 76,264 77,483
Investments in and advances to affiliates 8,411 9,506
Other assets 5,990 5,747
-------- --------
$349,286 $313,845
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 25,099 $ 20,826
Accounts payable:
Trade 60,776 57,690
Affiliates 155 180
Accrued expenses and other current liabilities 78,608 64,831
Accrued restructuring expenses 13,922 --
-------- --------
Total current liabilities 178,560 143,527
Long-term obligations 9,547 9,611
Deferred income taxes 704 704
-------- --------
Total liabilities 188,811 153,842
-------- --------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value; 1,000,000 shares authorized; none issued -- --
Common stock, $.01 par value; 50,000,000 shares authorized;
14,725,326 shares issued and outstanding at March 31, 1998 and
13,688,038 shares issued and outstanding at December 31, 1997 147 137
Additional paid-in capital 130,424 119,840
Retained earnings 30,758 40,609
Accumulated other comprehensive income:
Cumulative translation adjustment (854) (583)
-------- --------
Total stockholders' equity 160,475 160,003
-------- --------
$349,286 $313,845
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE> 4
CYRK, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
For the three months
---------------------------
ended March 31,
---------------------------
1998 1997
-------- -------
<S> <C> <C>
Net sales $169,142 $97,188
Cost of sales 138,834 80,323
-------- -------
Gross profit 30,308 16,865
Selling, general and administrative expenses 30,234 11,136
Goodwill amortization expense 818 121
Restructuring expense 15,486 -
-------- -------
Operating income (loss) (16,230) 5,608
Interest income (566) (861)
Interest expense 614 555
Equity in loss of affiliates, net 419 307
-------- -------
Income (loss) before income taxes (16,697) 5,607
Income tax provision (benefit) (6,846) 3,364
-------- -------
Net income (loss) $ (9,851) $ 2,243
======== =======
Earnings (loss) per common share - basic $ (0.69) $ 0.21
======== =======
Earnings (loss) per common share - diluted $ (0.69) $ 0.21
======== =======
Weighted average shares outstanding - basic 14,310 10,807
======== =======
Weighted average shares outstanding - diluted 14,310 10,912
======== =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE> 5
CYRK, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
For the three months
---------------------------
ended March 31,
---------------------------
1998 1997
-------- -------
<S> <C> <C>
Net income (loss) $ (9,851) $ 2,243
-------- -------
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments (271) 77
Unrealized holding gains arising during period - 31
-------- -------
Other comprehensive income (loss), before tax (271) 108
Income tax expense (benefit) related to items of
other comprehensive income (loss) (111) 65
-------- -------
Other Comprehensive income (loss), net of tax (160) 43
-------- -------
Comprehensive income (loss) $(10,011) $ 2,286
======== =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE> 6
CYRK, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
For the three months
--------------------------------
ended March 31,
--------------------------------
1998 1997
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (9,851) $ 2,243
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 2,253 817
Realized loss (gain) on sale of investments (215) 28
Provision for doubtful accounts 271 30
Equity in loss of affiliates 634 307
Increase (decrease) in cash from changes
in working capital items:
Accounts receivable 7,780 12,021
Inventories (25,777) 19,396
Prepaid expenses and other current assets 1,178 755
Refundable income taxes (2,309) -
Accounts payable 3,046 (2,355)
Accrued expenses and other current liabilities 27,523 690
-------- -------
Net cash provided by operating activities 4,533 33,932
-------- -------
Cash flows from investing activities:
Purchase of property and equipment (1,543) (1,121)
Repayments from affiliates, net 676 492
Purchase of investments - (3,337)
Proceeds from sale of investments 529 4,009
Other, net (371) (211)
-------- -------
Net cash used in investing activities (709) (168)
-------- -------
Cash flows from financing activities:
Proceeds from (repayments of) short-term borrowings, net 4,273 (3,946)
Decrease in long-term obligations (64) -
Proceeds from issuance of common stock 10,594 221
-------- -------
Net cash provided by (used in) financing activities 14,803 (3,725)
-------- -------
Effect of exchange rate changes on cash 8 (3)
-------- -------
Net increase in cash and cash equivalents 18,635 30,036
Cash and cash equivalents, beginning of year 42,513 44,224
-------- -------
Cash and cash equivalents, end of period $ 61,148 $74,260
======== =======
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 509 $ 449
======== =======
Income taxes $ 1,350 $ 1,947
======== =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
6
<PAGE> 7
CYRK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The accompanying unaudited financial statements have been prepared by the
Company pursuant to the rules and regulations of the Securities and
Exchange Commission regarding interim financial reporting. Accordingly,
they do not include all of the information and footnotes in accordance with
generally accepted accounting principles for complete financial statements
and should be read in conjunction with the audited financial statements
included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997. In the opinion of management, the accompanying unaudited
financial statements contain all adjustments, consisting only of those of a
normal recurring nature, necessary for fair presentation of the Company's
financial position, results of operations and cash flows at the dates and
for the periods presented.
The operating results for the three months ended March 31, 1998 are not
necessarily indicative of the results to be expected for the full year.
Certain prior period amounts have been reclassified to conform with the
current period presentation.
2. Inventories
Inventories consist of the following (in thousands):
March 31, 1998 December 31, 1997
-------------- -----------------
Raw materials $17,332 $10,807
Work in process 15,554 5,033
Finished goods 39,189 30,477
------ -------
$72,075 $46,317
======= =======
3. Short-Term Borrowings
At March 31, 1998, the Company was contingently liable for letters of
credit used to finance the purchase of inventory in the aggregate amount of
$14.6 million. Such letters of credit expire at various dates through June
1998. As of March 31, 1998, the Company was in violation of certain
financial covenants associated with its primary domestic line of credit
which have been waived by the bank.
4. Private Placement
In February 1998, the Company issued 975,610 shares of its common stock and
a warrant to purchase up to 100,000 shares of its common stock in a private
placement, resulting in net proceeds of approximately $10.0 million which
will be used for general corporate purposes.
5. Restructuring
On February 13, 1998, the Company announced a plan to restructure its
worldwide operations. The plan reflects the Company's strategy to focus on
its core business in the promotional marketing industry. The Company
intends to consolidate certain operating facilities, discontinue certain
divisions of its apparel business and eliminate approximately 450 positions
or 28% of its worldwide work force. The majority of the eliminated
positions will affect the screen printing and embroidery business in
Gloucester, Massachusetts. As of March 31, 1998, approximately 55% of
anticipated employee terminations have occurred. In the first quarter of
1998 the Company has recorded a charge to operations of $15.5 million
primarily related to asset write-downs ($11.3 million), employee
termination costs ($2.8 million), lease cancellations ($1.1 million) and
other related exit costs ($.3 million). This charge has had the effect of
reducing after tax earnings by $9.1 million or $0.64 per share. The Company
anticipates the restructuring will be completed during 1998 and once
completed is expected to yield annualized cost savings of $9 to $12
million. A summary of activity in the restructuring accrual is as follows
(in thousands):
Balance at January 1, 1998 $ --
Restructuring provision 15,486
Employee termination costs
and other cash payments (928)
Non-cash asset write-downs (636)
-------
Balance at March 31, 1998 $13,922
=======
7
<PAGE> 8
6. Income Taxes
The effective tax rate for the quarter ended March 31, 1998 was 41% as
compared to an effective tax rate of 60% for the year ended December 31,
1997. The effective rate of 41% represents the estimated federal and state
tax benefit expected to be realized as a result of the restructuring charge
recorded in the current quarter.
7. Litigation
The Company and certain of its officers and directors were named as
defendants in a putative class action filed on October 18, 1995 in the
United States District Court for the Southern District of New York ( Barry
Hallet, Jr. v. Li & Fung, et al., Docket No. 95 Civ. 8917). On March 4,
1998, with the assistance of a professional mediator, all parties to the
litigation reached an agreement to settle the case. The settlement
agreement has been preliminarily approved by the Federal District Court and
notice of the settlement agreement has been distributed to all class
members. A hearing on the final approval has been scheduled by the Court
for June 26, 1998. The settlement agreement called for a cash contribution
by the Company of $4.0 million into escrow on April 7, 1998; other parties
and various insurance carriers have also contributed to the settlement. In
the opinion of management, after consideration of amounts accrued, this
settlement does not have a material adverse effect on the Company's
financial condition or results of operations.
8. Earnings Per Share Disclosure
The following is a reconciliation of the numerators and denominators of the
basic and diluted EPS computation for "income (loss) available to common
stockholders" and other related disclosures required by Statement of
Financial Accounting Standards No. 128, "Earnings per Share" (in thousands,
except share data):
<TABLE>
<CAPTION>
For the Quarters Ended March 31,
1998 1997
--------------------------------------- ----------------------------------------
Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
--------------------------------------- ----------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS:
Income (loss) available to
common stockholders $(9,851) 14,310,300 $(0.69) $2,243 10,807,401 $0.21
====== =====
Effect of Dilutive Securities:
Common stock equivalents -- 104,200
----------------------- ------------------------
Diluted EPS:
Income (loss) available to common
stockholders and assumed
conversions $(9,851) 14,310,300 $(0.69) $2,243 10,911,601 $0.21
======================= ====== ========================= =====
</TABLE>
For the quarter ended March 31, 1998, 638,345 of common stock equivalents
and contingently and non-contingently issuable shares related to acquired
companies were not included in the computation of diluted EPS because to do
so would have been antidilutive.
9. New Accounting Standards
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information" ("SFAS 131"). SFAS 131 specifies new
guidelines for determining a company's operating segments and related
requirements for disclosure. The Company is in the process of evaluating
the impact of the new standard on the presentation of the financial
statements and the disclosures therein. The Statement will become effective
for fiscal years beginning after December 15, 1997. The Company will adopt
the new standard for the fiscal year ending December 31, 1998.
8
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following is a discussion of the financial condition and results of
operations of the Company for the three month period ended March 31, 1998 as
compared to the same period in the previous year. This discussion should be read
in conjunction with the Consolidated Financial Statements of the Company and
related Notes included elsewhere in this Form 10-Q.
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
From time to time, the Company may provide forward-looking information such as
forecasts of expected future performance or statements about the Company's plans
and objectives. These forward-looking statements are based largely on the
Company's expectations and are subject to a number of risks and uncertainties,
certain of which are beyond the Company's control. The Company wishes to caution
readers that actual results may differ materially from those expressed in any
forward-looking statements made by, or on behalf of, the Company as a result of
factors described in the Company's Amended Cautionary Statement for Purposes of
the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of
1995, filed as Exhibit 99.3 to the Company's 1997 Annual Report on Form 10-K
which is incorporated herein by reference.
GENERAL
The Company is a full-service, integrated provider of marketing and promotional
products and services. As such, the Company generates revenue from the sale of
promotional products and the development of marketing programs. The majority of
the Company's revenue is derived from the sale of promotional products to
consumer product companies seeking to promote their brand and build customer
loyalty.
Historically, the Company's business has been heavily concentrated with two
customers, Philip Morris Incorporated ("Philip Morris") and Pepsi-Cola Company
("Pepsi"). Purchases of promotional products by Philip Morris and Pepsi in 1997
accounted for 16% and 21% of net sales, respectively. Net sales to Philip Morris
and Pepsi accounted for 11% and 3%, respectively, of total net sales in the
first three months of 1998.
As a part of its continuing effort to diversify its customer base and broaden
its capability, the Company completed the acquisition of two providers of
promotional services and products during the second quarter of 1997. These
transactions were completed through mergers of these providers with and into
wholly-owned subsidiaries of the Company. On April 7, 1997, the Company acquired
Tonkin, Inc. ("Tonkin"), a Monroe, Washington provider of custom promotional
programs and licensed promotional products. On June 9, 1997, the Company
acquired Simon Marketing, Inc. ("Simon"), a Los Angeles-based global marketing
and promotion agency and provider of custom promotional products. Simon's
business is heavily concentrated with McDonald's Corporation ("McDonald's"). Net
sales to McDonald's accounted for 36% of the Company's total net sales in 1997
and 58% of the Company's total net sales for the first quarter of 1998.
The Company's business with McDonald's, Philip Morris and Pepsi (as well as
other promotional customers) is based upon purchase orders placed from time to
time during the course of promotions. There are no written agreements which
commit them to make a certain level of purchases. The actual level of purchases
depends on a number of factors, including the duration of the promotion and
consumer redemption rates. Consequently, the Company's level of net sales is
difficult to predict accurately and can fluctuate greatly from quarter to
quarter. The Company expects that a significant percentage of its net sales in
1998 will be to McDonald's and Philip Morris. The Company's agreements with
Pepsi were terminated in December 1997 and the Company expects sales to Pepsi in
1998 to be minimal.
While the Company has been seeking new major promotional customers in an effort
to replace the 1997 Pepsi revenues of $117.1 million, it is very unlikely that
sales to new customers, or increased sales to existing customers, in 1998 will
materially reduce the revenue shortfall caused by the termination of the Pepsi
agreements. Therefore, while the restructuring described below will help
mitigate the impact of the loss of Pepsi revenues on 1998 earnings, the Company
expects to report operating losses for the balance of the year.
Philip Morris solicits competitive bids for its promotional programs. The
Company's profit margin depends, to a great extent, on its competitive position
when bidding and its ability to manage its costs after being awarded bids.
Increased competition is expected to continue and may adversely impact the
Company's profit margin on Philip Morris promotions in the future. Recent
negotiations between state attorneys general and certain tobacco companies,
including Philip Morris, as well as recent federal regulations, would result in
a ban on promotional programs relating to tobacco products and would have a
material adverse effect on the Company's business with Philip Morris and its
results of operations.
9
<PAGE> 10
At March 31, 1998, the Company had written purchase orders for $301.9 million as
compared to $51.3 million at March 31, 1997. The comparative increase in the
Company's backlog is the result of the Simon and Tonkin acquisitions. The
Company's purchase orders are generally subject to cancellation with limited
penalty and are therefore not necessarily indicative of future revenues or
earnings.
CORPORATE RESTRUCTURING
On February 13, 1998, the Company announced a plan to restructure its worldwide
operations. The plan reflects the Company's strategy to focus on its core
business in the promotional marketing industry. The Company intends to
consolidate certain operating facilities, discontinue certain divisions of its
apparel business and eliminate approximately 450 positions or 28% of its
worldwide work force. The majority of the eliminated positions will affect the
screen printing and embroidery business in Gloucester, Massachusetts. In the
first quarter of 1998 the Company has recorded a charge to operations of $15.5
million for asset write-downs, employee termination costs, lease cancellations
and other related exit costs associated with the restructuring. The Company
anticipates the restructuring will be completed during 1998 and once completed
is expected to yield annulized cost savings of $9 to $12 million. See notes to
consolidated financial statements.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997
Net sales increased $71.9 million, or 74%, to $169.1 million in the first
quarter ended March 31, 1998 from $97.2 million in the first quarter of 1997.
The increase in net sales was primarily attributable to revenues associated with
Simon and Tonkin. Promotional product sales in the first quarter of 1998 totaled
$163.4 million, or an increase of 89%, as compared to $86.6 million in the first
quarter of 1997. Net sales related to the Company's private label and Cyrk brand
business in the first quarter of 1998 totaled $5.8 million, or a decrease of
46%, as compared to $10.6 million in the first quarter of 1997. This comparative
decrease in sales of the Company's private label and Cyrk brand business is a
direct result of the Company's strategy to focus on its core business in the
promotional marketing industry.
Gross profit increased $13.4 million, or 80%, to $30.3 million in the first
quarter of 1998 from $16.9 million in the first quarter of 1997. As a percentage
of net sales, the first quarter gross profit increased to 17.9% in 1998 from
17.4% in 1997. This increase was due principally to more favorable margins
associated with the Company's diversified customer base and the increased sales
mix in the promotional industry segments characterized by higher gross margins.
Selling, general and administrative expenses totaled $31.1 million at March 31,
1998 as compared to $11.3 million in the first quarter of 1997. As a percentage
of net sales, selling, general and administrative costs totaled 18.4% as
compared to 11.6% in the first quarter of 1997. The Company's increased spending
was primarily attributable to its expanded global sales and operations.
In connection with its February 1998 announcement to restructure worldwide
operations, the Company recorded a restructuring charge of $15.5 million
attributable to asset write-downs, employee termination costs, lease
cancellations and other related exit costs. See notes to consolidated financial
statements.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at March 31, 1998 was $63.7 million compared to $61.3 million at
December 31, 1997. The primary sources of cash provided by operations were
principally related to a decrease in accounts receivable and an increase in
accrued expenses (of which $13.9 million is related to the first quarter
restructuring charge) totaling $35.3 million, which was partially offset by an
increase in inventory of $25.8 million. Trade accounts receivable declined to
$87.3 million at March 31, 1998 from $95.4 million at December 31, 1997,
primarily as a result of reduced sales in the first quarter of 1998 compared to
the fourth quarter of 1997. The increase in inventories was primarily due to a
higher level of inventory purchases related to promotional customer orders.
Net cash used in investing activities was $.7 million, which was primarily
attributable to $1.5 million for purchases of property and equipment, which were
partially offset by $.7 of repayments of advances from an affiliate. In the
first quarter of 1997, net cash used by investing activities was $.2 million,
which included $1.1 million for additions to property and equipment, which was
partially offset by $.7 million of net sales of investments.
10
<PAGE> 11
The Company expects to make cash payments of approximately $4.0 million for
employee termination costs, lease buyouts and other exit costs associated with
its plan to restructure its operations.
In February 1998, the Company issued 975,610 shares of its common stock and a
warrant to purchase up to 100,000 shares of its common stock in a private
placement, resulting in net proceeds of approximately $10.0 million which will
be used for general corporate purposes.
Since inception, the Company has financed its working capital and capital
expenditure requirements through cash generated from operations, public sales of
common stock, bank borrowings and capital equipment leases. Such cash
requirements for 1997 were provided principally by operating activities, and
principally by financing and operating activities for 1998 to date.
The Company currently has available several worldwide bank letters of credit and
revolving credit facilities which expire at various dates beginning in May
1998. As of March 31, 1998, based on the borrowing base formulas prescribed by
these credit facilities, the Company's borrowing capacity was $104.2 million, of
which $24.8 million of short-term borrowings and $15.1 million in letters of
credit were outstanding. Borrowings under these facilities are collateralized by
all assets of the Company.
OUTLOOK: ISSUES AND UNCERTAINTIES
Management believes that the Company's existing cash position, credit
facilities, and its ability to obtain additional financing, combined with
internally generated cash flow, as well as the anticipated proceeds in the
second half of the year from the sale of an equity investment, will satisfy
its liquidity and capital needs through the end of 1998. However, the likelihood
of operating losses for the balance of the year will exert increasing pressure
on its existing cash position. In the event of sustained operating losses, the
Company will incur increasing difficulty in renewing existing credit facilities,
or obtaining additional financing. The Company may seek additional equity
financing during the next twelve months. However, there can be no assurance that
such financing will be available on acceptable terms, and any additional equity
financing could result in additional dilution to existing investors.
11
<PAGE> 12
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company and certain of its officers and directors were named as defendants
in a putative class action filed on October 18, 1995 in the United States
District Court for the Southern District of New York ( BARRY HALLET, JR. v. LI &
FUNG, et al., Docket No. 95 Civ. 8917). On March 4, 1998, with the assistance of
a professional mediator, all parties to the litigation reached an agreement to
settle the case. The settlement agreement has been preliminarily approved by the
Federal District Court and notice of the settlement agreement has been
distributed to all class members. A hearing on the final approval has been
scheduled by the Court for June 26, 1998. The settlement agreement called for a
cash contribution by the Company of $4.0 million into escrow on April 7, 1998;
other parties and various insurance carriers have also contributed to the
settlement. In the opinion of management, after consideration of amounts
accrued, this settlement does not have a material adverse effect on the
Company's financial condition or results of operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - None
(b) No reports on Form 8-K were filed during the quarter for which this report
is filed.
12
<PAGE> 13
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.
Date: May 14, 1998 CYRK, INC.
/s/ Dominic F. Mammola
-----------------------------------------
Dominic F. Mammola
Executive Vice President and Chief
Financial Officer
(duly authorized officer and principal
financial and accounting officer)
13
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 61,148
<SECURITIES> 0
<RECEIVABLES> 91,063
<ALLOWANCES> 3,782
<INVENTORY> 72,075
<CURRENT-ASSETS> 242,254
<PP&E> 33,591
<DEPRECIATION> 17,224
<TOTAL-ASSETS> 349,286
<CURRENT-LIABILITIES> 178,560
<BONDS> 0
0
0
<COMMON> 147
<OTHER-SE> 160,328
<TOTAL-LIABILITY-AND-EQUITY> 349,286
<SALES> 169,142
<TOTAL-REVENUES> 169,142
<CGS> 138,834
<TOTAL-COSTS> 138,834
<OTHER-EXPENSES> 419
<LOSS-PROVISION> 271
<INTEREST-EXPENSE> 614
<INCOME-PRETAX> (16,697)
<INCOME-TAX> (6,846)
<INCOME-CONTINUING> (9,851)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,851)
<EPS-PRIMARY> (0.69)
<EPS-DILUTED> (0.69)
</TABLE>
