<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1996
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 0-19540
---------
CUSTOM CHROME, INC.
- --------------------------------------------------------------------------------
(Exact name or registrant as specified in its charter)
Delaware 94-171638
- --------------------------------------------------------------------------------
(State or other jurisdiction IRS Employer Identification
or incorporation or organization)
16100 Jacqueline Court, Morgan Hill, California 95037
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number including area code 408-778-0500
------------
- --------------------------------------------------------------------------------
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 practicable date.
Outstanding at
Class October 31, 1996
----- ----------------
Common Stock, $.001 par value 5,261,453
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CUSTOM CHROME, INC.
FORM 10-Q
FOR THE NINE-MONTH PERIOD ENDED OCTOBER 31, 1996
PART I. FINANCIAL INFORMATION PAGE NO.
- ------- --------------------- --------
Item 1. Condensed Consolidated Financial Statements
Consolidated Balance Sheets at
October 31, 1996 and January 31, 1996 3
Consolidated Statements of Operations for the
three and nine month periods ended October 31,
1996 and 1995 4
Consolidated Statements of Cash Flows for the
nine month periods ended October 31, 1996 and 1995 5
Note to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 6. Exhibits and Reports on Form 8-K 12
Signature 13
Exhibit 11 Statement Regarding Computation of Earnings Per Share
Exhibit 27 Financial Data Schedule
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CUSTOM CHROME, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
October 31, January 31,
1996 1996
------------ -----------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................................. $ 1,093 $ 312
Accounts receivable, net.............................................. 11,407 9,529
Merchandise inventories............................................... 44,844 51,165
Deferred income taxes................................................. 2,115 2,115
Prepaid income taxes.................................................. 555 1,709
Deposits and prepaid expenses......................................... 2,448 2,564
------- -------
62,462 67,394
Property and equipment, net............................................. 14,909 14,066
Other assets............................................................ 8,046 8,252
------- -------
$85,417 $89,712
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt and
capital lease obligations............................................ $ 297 $ 263
Bank borrowings....................................................... 2,508 14,766
Accounts payable...................................................... 2,295 4,587
Accrued expenses and other liabilities................................ 1,748 2,068
------- -------
6,848 21,684
Long-term debt and capital lease obligations............................ 19,282 19,489
Deferred income taxes................................................... 567 567
Shareholders' equity:
Common stock, $.001 par value: 20,000,000
shares authorized: 5,261,453 and 5,090,385
shares issued and outstanding........................................ 6 5
Additional paid-in capital............................................ 31,150 27,761
Retained earnings..................................................... 27,564 20,206
------- -------
58,720 47,972
------- -------
Commitments and contingencies
$85,417 $89,712
======= =======
See accompanying note to condensed consolidated financial statements.
</TABLE>
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CUSTOM CHROME, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended For the nine months ended
October 31, October 31,
1996 1995 1996 1995
------------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Sales, net............................. $26,193 $23,574 $87,177 $74,018
Cost of sales.......................... 15,739 13,965 51,507 42,921
------- ------- ------- -------
Gross profit.......................... 10,454 9,609 35,670 31,097
------- ------- ------- -------
Operating expenses:
Selling, general and administrative... 6,895 6,287 20,468 18,054
Product development................... 455 434 1,409 1,353
------- ------- ------- -------
7,350 6,721 21,877 19,407
------- ------- ------- -------
Operating income..................... 3,104 2,888 13,793 11,690
Interest expense....................... 519 362 1,551 1,040
------- ------- ------- -------
Income before income taxes........... 2,585 2,526 12,242 10,650
Income taxes........................... 1,011 972 4,884 3,919
------- ------- ------- -------
Net income........................... $ 1,574 $ 1,554 $ 7,358 $ 6,731
======= ======= ======= =======
Per share data:
Net income per share................. $ 0.30 $ 0.30 $ 1.38 $ 1.30
======= ======= ======= =======
Weighted average shares outstanding.... 5,310 5,258 5,341 5,184
======= ======= ======= =======
</TABLE>
See accompanying note to condensed consolidated financial statements.
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CUSTOM CHROME, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the nine months ended
October 31,
1996 1995
---------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income................................................... $ 7,358 $ 6,731
Adjustments to reconcile net income to net cash provided
(used) by operating activities:
Depreciation and amortization............................. 1,551 1,392
Deferred income taxes..................................... -- 42
Changes in items affecting operations:
Accounts receivable...................................... (1,878) (1,022)
Merchandise inventories.................................. 6,321 (17,175)
Deposits & prepaid expenses.............................. 1,261 (1,464)
Accounts payable, accrued expenses & other liabilities... (2,612) 633
-------- --------
Net cash provided (used) by operating activities............... 12,001 (10,863)
-------- --------
Cash flows from investing activities:
Additions to property and equipment.......................... (2,179) (3,003)
-------- --------
Cash flows from financing activities:
Bank (repayment) borrowings, net............................. (12,258) 3,817
Borrowing (repayment) on capital lease obligations and
long-term debt.............................................. (173) 43
Issuance of common stock..................................... 3,390 1,049
-------- --------
Net cash provided by (used in) financing activities............ (9,041) 4,909
-------- --------
Net change in cash and cash equivalents........................ 781 (8,957)
-------- --------
Cash and cash equivalents at beginning of period............... 312 8,957
-------- --------
Cash and cash equivalents at end of period..................... $ 1,093 $ 0
======== ========
Supplemental disclosures of cash paid during the period:
Interest..................................................... $ 1,229 $ 657
======== ========
Income taxes................................................. $ 3,094 $ 3,865
======== ========
</TABLE>
See accompanying note to condensed consolidated financial statements.
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<PAGE>
NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
---------------------------------------------------------------
Note 1 - Basis of Presentation
- ------------------------------
The accompanying unaudited interim condensed consolidated financial statements
have been prepared in conformity with generally accepted accounting principles,
consistent with those applied in and should be read in conjunction with, the
audited consolidated financial statements for the fiscal year ended January 31,
1996 included in the Annual Report on Form 10-K filed by Custom Chrome, Inc.
(the "Company") with the Securities and Exchange Commission.
The interim financial information is unaudited, but reflects all normal
recurring adjustments which are, in the opinion of management, necessary to
provide a fair statement of results for the interim periods presented. The
results for the interim periods are not necessarily indicative of results to be
expected for the fiscal year.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This Quarterly Report on Form 10-Q contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. The last
paragraph under "Liquidity and Capital Resources" contains forward looking
statements. Actual results could differ materially from those projected in the
forward-looking statements as a result of the risk factors set forth below under
"Factors That May Affect Future Results."
RESULTS OF OPERATIONS
Comparison of the three and nine month periods ended October 31, 1996 and 1995
- ------------------------------------------------------------------------------
Net sales increased 11.1% to $26,193,000 for the three months ended October
31, 1996 from $23,574,000 for the same period of the prior fiscal year. Net
sales increased 17.8% to $87,177,000 for the nine months ended October 31, 1996
from $74,018,000 , for the same period of the prior fiscal year. Sales growth
was primarily a result of higher shipment levels to customers who initiated
business with the Company last year and in the current year, and improved growth
in sales to customers in the Western United States. Sales growth was lower in
the most current three months compared to the nine month period presented, due
to lower growth in shipments to international customers and to customers
located in the Eastern and Mid-Western United States. International sales
growth is lower due to poor general economic conditions in the Company's major
export markets (Germany, Japan, and Canada). Furthermore, the Company's
products are principally sold for use in outdoor leisure activities. The
Company's products are principally sold for use in an outdoor leisure activity.
These products are ultimately sold to Harley-Davidson motorcycle enthusiasts
whose motivation to enhance and customize their motorcycle is impacted by
attendance at the many enthusiast gatherings and rallies held principally in the
warmer weather months in the Spring and Summer of the year. Many of these
events and gatherings were adversely effected by the poor weather conditions in
the abovementioned locations and, as such, the Company believes there was an
adverse effect on its sales of products, which continued throughout the season.
Gross profit increased 8.8% to $10,454,000 for the three months ended October
31, 1996 from $9,609,000 for the same period of the prior fiscal year. Gross
profit increased 14.7% to $35,670,000 for the nine month period ended October
31, 1996 when compared to the same period of the prior fiscal year. The
increase in both periods over the prior year comparable amounts was principally
the result of higher shipment levels. Gross profit as a percentage of sales was
39.9% and 40.9% respectively, in the three and nine month periods ended October
31, 1996, compared with 40.8% and 42.0%, respectively, in the respective periods
of the prior fiscal year. The decrease in gross profit as a percentage of sales
in the current three and nine month period was the result of sales discounts and
sales price decreases related to sales and marketing initiatives to stimulate
sales growth in response to poor weather conditions in some of the Company's
markets. Additionally in the current year periods, the mix of domestically
sourced products as a proportion of total sales increased. These products are
generally non-proprietary and are sold at gross margins which are lower than the
Company's average gross margin for its proprietary products.
Selling, general and administrative expenses increased 9.7% to $6,895,000 and
13.4% to $20,468,000, respectively, for the three and nine months ended October
31, 1996. The increase in both periods over the prior year comparable amounts
was principally a result of higher compensation related to staff additions to
support the Company's growth, higher advertising and promotion costs, including
increased freight incentives and higher
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warehousing costs, including equipment leasing and depreciation costs.
Product development expenses increased 4.8% to $455,000 for the three months
ended October 31, 1996 from $434,000 for the same period of last year. Product
development expenses increased 4.1% to $1,409,000 for the nine months ended
October 31, 1996 from $1,353,000 for the same period of last year. These
expenses as a percentage of sales were 1.7% and 1.6%, respectively, for the
three and nine month periods ended October 31, 1996, respectively, compared with
1.8% for the comparable periods of last year. The dollar increase in product
development expenses in the three and nine month periods is due to the Company's
continued its emphasis on the introduction of new proprietary products.
Interest expense increased 43.4% to $519,000 for the three months ended
October 31, 1996 from $362,000 for the same period in the prior fiscal year.
Interest expense increased 49.1% to $1,551,000 for the nine months ended October
31, 1996 from $1,040,000 for the same period last year. The increase in both
periods was due to higher average borrowings in the current periods to support
higher working capital requirements.
The Company's effective income tax rate was 39.1% and 39.9% for the three and
nine months ended October 31, 1996 as compared to 38.5% and 36.8%, respectively,
for the same periods of in the prior fiscal year. The reduced income tax rate
in the last fiscal year was due to the recognition of state income tax refunds
from prior years as the result of filing amended tax returns with revised income
allocation bases.
LIQUIDITY AND CAPITAL RESOURCES
The Company maintains a $15,000,000 working capital line of credit and a
$10,000,000 foreign exchange facility with a bank, which expires on June 30,
1997. The Company uses the working capital line of credit, which is subject to
certain restrictions and covenants, for seasonal cash requirements, which
typically peak during the Company's fourth fiscal quarter when inventories are
increased in anticipation of sales in the first and second fiscal quarters.
Borrowings under the working capital line of credit bear interest at the bank's
prime rate. Under the working capital line of credit, the bank will create
short term fixed borrowings at the Company's request which bear interest at
fixed offshore short term rates (equivalent to LIBOR). The Company was
contingently liable under letters of credit in the amount of $478,000 at October
31, 1996.
On December 19, 1994 the Company issued $15,000,000 in Senior Secured Notes to
a life insurance company, which are repayable, as to principal, in five annual
payments in the years 1997 to 2001. The Notes carry an interest rate of 8.01%
and are secured by substantially all of the assets of the Company. Proceeds
from the issuance of the Notes are being used to support the Company's working
capital requirements and other corporate purposes.
In the nine month period ended of October 31, 1996, the Company made capital
expenditures of $2,179,000 for an expansion to its Louisville, Kentucky
distribution location, tooling for new products, computer equipment and for
equipment purchases at its warehouses in Visalia, CA, Louisville, KY and
Harrisburg, PA.
Net cash provided by operating activities in the nine months ended October 31,
1996, was $12,001,000 compared with $10,863,000 used by operating activities in
the prior year. Net cash provided by operations in the current nine months
primarily resulted from net income derived from the Company's operations and
merchandise inventory reductions as a result of sales in the period.
Additionally $3,390,000 cash was provided to the Company in the period by the
proceeds from the exercise of stock options by Company employees.
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The Company believes that cash flow from operations and funds from its working
capital line of credit will be adequate to meet its capital cash requirements
for the foreseeable future.
FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS
DEPENDENCE ON, AND COMPETITION WITH, HARLEY-DAVIDSON
The Company is the largest independent supplier of aftermarket parts and
accessories for Harley-Davidson motorcycles. The Company's past success has
depended, and the Company's future growth depends, in large part on the
popularity of Harley-Davidson motorcycles and the continued success of Harley-
Davidson in maintaining a significant market share for motorcycle sales and the
number of units sold in the super heavyweight class. In particular, the
Company's continued growth in earnings is in large part dependent upon
continuing demand for Harley-Davidson motorcycles and upon Harley-Davidson's
ability to meet such demand. In recent years, many other motorcycle
manufacturers have experienced fluctuations in market share and number of units
sold. If the market for new Harley-Davidson motorcycles were to decline or if
the popularity of existing Harley-Davidson were to decrease, the Company's
business, including earnings, could be materially adversely affected.
The Company also competes with Harley-Davidson in the sale of parts and
accessories for both new and used Harley-Davidson motorcycles to Harley-
Davidson's franchised dealers, most of which are also customers of the Company.
Harley-Davidson has substantially greater financial, marketing, manufacturing
and technical resources than the Company. There can be no assurance that the
Company will be able to compete effectively with Harley-Davidson in the future.
From time to time, the Company and Harley-Davidson have had disputes regarding
alleged infringement of certain of each other's trademarks and patents, and
certain litigation related thereto was settled in 1990. There can be assurance
that other disputes, including those which could lead to litigation regarding
trademarks, patents or other matters, will not occur in the future between the
Company and Harley-Davidson.
In addition, it appears that the Company's stock price has in the past and may
in the future be affected by fluctuations in the price of Harley-Davidson's
stock. Adverse results in any of Harley-Davidson's businesses, including its
non-motorcycle businesses, could adversely affect the price of Harley-Davidson's
stock, which could, in turn, adversely affect the Company's stock price.
COMPETITION
The market for the Company's products is highly competitive. Key competitive
factors in the parts and accessories aftermarket for Harley-Davidson motorcycles
include the ability to promptly fill orders from inventory, the range of unique
products offered and the speed and cost of product delivery. The Company's
competitors include independent distributors ranging in size from small to
large, and the proximity of any distributor to a particular dealer and the
availability of unique products is often a competitive advantage. Accordingly,
even small local distributors may be able to compete effectively against the
Company. In addition, the Company competes with Harley-Davidson in the sales of
parts and accessories to Harley-Davidson franchised dealers. There can be no
assurance that the Company will be able to compete successfully in the future
with small distributors or with Harley-Davidson.
In 1995, the Federal Trade Commission (the "FTC") voted to dissolve a 1954
consent decree against Harley-Davidson which, among other things, had prohibited
Harley-Davidson from imposing exclusive dealing
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requirements upon its dealers. This consent decree was lifted pursuant to the
FTC's "sunset" policy which presumes that decrees which are more than 20 years
old should be eliminated. In response to extensive public comments to the FTC
urging that it keep this consent decree in force, Harley-Davidson reported that
it had no plans to change its dealer agreements in order to require exclusive
dealings. However, there can be no assurance that Harley-Davidson will not
impose such exclusive dealing requirements upon its dealers who now purchase
parts and accessories from Custom Chrome; nor can there be any assurance that,
if Harley-Davidson decided to impose such requirements upon its dealers, that a
legal challenge to prevent such an action would be successful. If Harley-
Davidson is successful in imposing exclusive dealing requirements on its
dealers, it could have a material adverse effect on the Company's business.
DEPENDENCE ON KEY PERSONNEL
The Company's success depends, in part, upon the continued performance of the
Company's Co-founder, Ignatius J. Panzica, who serves as President and Chief
Executive Officer of the Company, and other key executives, including James J.
Kelly, Jr. (Executive Vice President, Finance), R. Steven Fisk (Senior Vice
President, Purchasing, Operations and Product Development), Daniel J. Stern
(Senior Vice President, Sales and Marketing) and Dennis Navarra (Vice President,
Administration). In addition, the Company's success also depends in part on the
continued performance of certain other key employees. Although incentives exist
for these individuals to remain with the Company, the loss of the services of
any one of them could have a material adverse effect on the business of the
Company.
SEASONALITY AND WEATHER
The Company's net sales for its last two quarter of any particular fiscal year
are generally lower than the net sales for the balance of the year. This
decrease in net sales is due to a lower number of orders by dealers in
anticipation of, and during, the cold weather months, during which motorcycle
riding decreases relative to the warm weather months. In particular, the
Company's operating results may be negatively affected by adverse weather
conditions, such as those experienced in the Eastern and Mid-Western United
States and Europe during the winter and spring months of 1996. Any such
decrease has a significant impact on the Company's quarterly earnings during the
last two quarters of its fiscal year because certain operating expenses remain
relatively constant throughout the year. The Company seeks to mitigate this
seasonality through various promotional efforts and incentives, but no assurance
can be given that such seasonality will not have a material adverse affect on
the Company's revenues and earnings during this period.
DEPENDENCE ON THIRD PARTY AND FOREIGN MANUFACTURING RELATIONSHIPS; TAIWANESE
POLITICAL VOLATILITY
A significant portion of the Company's products are purchased from third party
manufacturers, often through independent trading companies. Although the
Company believes it has close working relationships with its trading companies
and most of its suppliers, the Company does not have long-term arrangements with
these parties, and therefore, cannot be assured that products will be delivered
on a timely basis or on terms favorable to the Company in the future. In
addition, any disruption in the Company's trading company or manufacturing
relationships could result in supply delays. Many of the Company's suppliers
are located in Asia, and, therefore, the Company is subject to certain risks
associated with dealing with foreign suppliers, including currency exchange
fluctuations, trade restrictions and changes in tariff and freight rates.
Moreover, many of the Company's suppliers are located in Taiwan and the
Company's relationships with such suppliers are subject to disruption in the
event of remaining volatility in, or a worsening of, Taiwan's political and
military relationship with the People's Republic of China.
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MANAGEMENT OF GROWTH
The Company's success will depend in part on its ability to manage growth,
both domestically and internationally. Such growth will require the Company to
enhance its operational, management information and financial control systems.
In addition, continued growth will require the Company to increase the personnel
in its sales, marketing and customer support departments. If the Company is
unable to successfully enhance its systems or to hire a sufficient number of
employees with the appropriate levels of experience in a timely manner, the
Company's business, financial condition and results of operations could be
materially and adversely affected.
INTERNATIONAL OPERATIONS
In the fiscal years ended 1996, 1995 and 1994, international sales accounted
for 20%, 17% and 17%, respectively, of the Company's total net sales.
International sales accounted for 19.0% of the Company's total net sales for
nine months ended October 31, 1996. The Company expects that international
sales will continue to represent a significant portion of its net sales in the
future. The Company's results of operations may be adversely affected by
fluctuations in exchange rates, difficulties in collecting accounts receivable,
tariffs and difficulties in obtaining export licenses. Moreover, the Company's
international sales may be adversely affected by lower sales levels that
typically occur during the summer months in Europe and other parts of the world.
International sales and operations are also subject to risks such as the
imposition of governmental controls, political instability, trade restrictions
and changes in regulatory requirements, difficulties in staffing and managing
international operations, generally longer payment cycles and potential
insolvency of international dealers. There can be no assurance that these
factors will not have a material adverse effect on the Company's future
international sales and, consequently, on the Company's business, financial
condition and results of operations.
COMPLIANCE WITH ENVIRONMENTAL LAWS
Both federal and state authorities have various environmental control
requirements relating to air, water and noise pollution that effect the business
operations of the Company and Custom Chrome Manufacturing, Inc. (formerly Santee
Industries, which was acquired by the Company in 1990), which in the past
utilized a chrome-plating and polishing process. The Company endeavors to
ensure that all its facilities comply with applicable environmental
requirements, there can be no assurance that its operations do not violate such
requirements or that any steps taken by the Company to remediate any former
noncompliance with such requirements would not have a material effect on the
Company's operations.
Potential Fluctuations in Quarterly Results
The Company's quarterly operating results have in the past varied and may in
the future vary significantly depending on a number of factors, including the
level of competition, the size, timing, cancellation or rescheduling of
significant orders, product mix; market acceptance of new products; new
product announcements or introductions by the Company or its competitors;
changes in pricing by the Company or its competitors; the ability of the Company
to develop, introduce and market new products and product enhancements on a
timely basis; product manufacturing costs; supply constraints; levels of
expenditures on product development; changes in Company strategy; personnel
changes; general economic trends and other factors. In particular, because
sales of the Company's nonproprietary products generally result in lower gross
margins than do sales of the Company's proprietary products, changes in the mix
of products sold in any quarter toward nonproprietary products will likely
adversely affect gross margins. In addition, the Company has in the past
offered, and may in the future offer, sales price discounts and reductions to
stimulate sales volume growth. Any such discounts and reductions could have a
material adverse effect on the Company's operating results and financial
condition on an annual or quarterly basis.
Sales for any future quarter are not predictable with any significant degree
of certainty. The Company generally operates with limited order backlog because
its products typically are shipped shortly after orders are received, generally
on the same day. As a result, product sales in any quarter are generally
dependent on orders booked and shipped in that quarter. The Company's customers
generally have the right to cancel orders at any time and to return the
Company's products for a refund, and the cancellation of orders already placed
and the return of products could have an adverse effect on the Company's
operating results in any quarter. As a result, if sales levels are below
expectations, net income may be disproportionately affected. Due to all of the
foregoing factors, the Company believes that period-to-period comparisons of its
results of operations are not necessarily meaningful and should not be relied
upon as an indicator of future performance. It is possible that in some future
quarter the Company's operating results may be below the expectations of public
market analysts and investors. In such event, the price of the Company's Common
Stock would likely be materially and adversely affected.
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CUSTOM CHROME, INC.
PART II. OTHER INFORMATION
- -------- -----------------
Item 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Stockholders was held on
September 18, 1996. The results of the voting were as follows:
Proposal 1: Election of the Board of Directors of the Company.
Nominee Votes For Votes Withheld
------- --------- --------------
Ignatius J. Panzica 4,913,344 719
James J. Kelly, Jr. 4,913,344 719
Lionel M. Allan 4,913,344 719
Joseph F. Keenan 4,913,036 1,027
Joseph Piazza 4,913,344 719
Proposal 2: Adoption of the Company's 1996 Employee Stock
Purchase Plan and the reservation of 150,000 shares
of Common Stock for issuance thereunder.
Votes for: 4,530,537
Votes Against: 363,176
Votes Abstaining: 3,650
Broker Nonvotes: 16,700
Proposal 3: Ratification of KPMG Peat Marwick LLP as independent
auditors of the Company for the year ending
January 31, 1997.
Votes for: 4,910,758
Votes Against: 1,205
Votes Abstaining: 2,100
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
Exhibit 11 - Statement Regarding Computation of Earnings Per
Share
Exhibit 27 - Financial Data Schedule
b. Reports on Form 8-K
None.
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SIGNATURE
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.
CUSTOM CHROME, INC.
Date: December 15, 1996 /s/ James J. Kelly, Jr.
----------------- --------------------------------------
James J. Kelly, Jr.
Executive Vice President, Finance
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
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EXHIBIT 11
CUSTOM CHROME, INC.
STATEMENT REGARDING COMPUTATION OF
EARNINGS PER SHARE
<TABLE>
<CAPTION>
For the three months For the nine months
ended October 31 ended October 31
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net income............................... $1,574,000 $1,554,000 $7,358,000 $6,731,000
========== ========== ========== ==========
Weighted Average Shares Outstanding:
Common stock.......................... 5,261,000 5,073,000 5,232,000 5,035,000
Common stock equivalents.............. 49,000 185,000 109,000 149,000
---------- ---------- ---------- ----------
Weighted average shares outstanding... 5,310,000 5,258,00 5,341,000 5,184,000
========== ========== ========== ==========
Net income per share..................... $ 0.30 $ 0.30 $ 1.38 $ 1.30
========== ========== ========== ==========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
*Identify the financial statement(s) to be referenced in the legend: Custom
Chrome Inc.'s Consolidated Financial Statements for the respective periods
listed.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> JAN-31-1997 JAN-31-1997
<PERIOD-START> AUG-01-1996 FEB-01-1996
<PERIOD-END> OCT-31-1996 OCT-31-1996
<CASH> 1,093 1,093
<SECURITIES> 0 0
<RECEIVABLES> 11,407 11,407
<ALLOWANCES> 0 0
<INVENTORY> 44,844 44,844
<CURRENT-ASSETS> 62,462 62,462
<PP&E> 14,909 14,909
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 85,417 85,417
<CURRENT-LIABILITIES> 6,848 6,848
<BONDS> 19,282 19,282
0 0
0 0
<COMMON> 31,156 31,156
<OTHER-SE> 27,564 27,564
<TOTAL-LIABILITY-AND-EQUITY> 85,417 85,417
<SALES> 26,193 87,177
<TOTAL-REVENUES> 26,193 87,177
<CGS> 15,739 51,507
<TOTAL-COSTS> 22,634 71,075
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 519 1,551
<INCOME-PRETAX> 2,585 12,242
<INCOME-TAX> 1,011 4,884
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,574 7,358
<EPS-PRIMARY> .30 1.38
<EPS-DILUTED> .30 1.38
</TABLE>
