SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER 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
Commission File Number 0-21764
SUPREME INTERNATIONAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
FLORIDA 59-1162998
(State or other jurisdiction of (IRS Employer Identification
Incorporation or organization) Number)
3000 N.W. 107 AVENUE
MIAMI, FLORIDA 33172
(Address of principle executive offices) (Zip Code)
Registrant's telephone number, including area code: (305) 592-2830
Former name, former address and 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 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 [ ]
The number of shares outstanding of the registrant's common stock is 6,712,374
(as of September 10, 1998).
<PAGE>
SUPREME INTERNATIONAL CORPORATION
INDEX
PART I: FINANCIAL INFORMATION
ITEM 1:
Consolidated Balance Sheets
as of July 31, 1998 (Unaudited) and January 31, 1998 1
Consolidated Statements of Operations (Unaudited)
for the three and six months ended July 31, 1998 and July 31, 1997 2
Consolidated Statements of Cash Flows (Unaudited)
for the six months ended July 31, 1998 and July 31, 1997 3
Notes to Consolidated Financial Statements 4
ITEM 2:
Management's Discussion and Analysis
of Financial Condition and Results of Operations 6
PART II: OTHER INFORMATION 10
Signature 12
<PAGE>
<TABLE>
<CAPTION>
SUPREME INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JULY 31, 1998 JANUARY 31, 1998
------------- ----------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 532,433 $ 1,010,256
Accounts receivable, Net 35,068,218 35,502,607
Inventories 40,648,893 35,799,388
Deferred income taxes 872,000 872,000
Other current assets 4,157,231 2,253,328
------------ ------------
Total current assets 81,278,775 75,437,579
PROPERTY AND EQUIPMENT, NET 7,999,918 4,899,656
INTANGIBLE ASSETS, NET 19,280,033 19,716,064
OTHER 345,092 1,313,747
------------ ------------
TOTAL $108,903,818 $101,367,046
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 3,575,655 $ 4,048,325
Accrued expenses 2,270,781 1,692,225
Borrowings under credit facilities 3,000,000
Other current liabilities 1,457,080 813,477
------------ ------------
Total current liabilities 7,303,516 9,554,027
LONG TERM DEBT 42,327,043 36,658,174
------------ ------------
Total liabilities 49,630,559 46,212,201
------------ ------------
STOCKHOLDERS' EQUITY:
Preferred stock - $.01 par value; 1,000,000
shares authorized; no shares issued or outstanding
Common stock - $.01 par value; 15,000,000
shares authorized; 6,707,374 and 6,555,681 shares
issued and outstanding as of July 31, 1998 and
January 31, 1998, respectively 67,074 65,556
Additional paid-in-capital 28,022,753 27,598,618
Retained earnings 31,183,432 27,490,671
------------ ------------
Total stockholders' equity 59,273,259 55,154,845
------------ ------------
TOTAL $108,903,818 $101,367,046
============ ============
</TABLE>
See Notes to consolidated financial statements.
1
<PAGE>
<TABLE>
<CAPTION>
SUPREME INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JULY 31, JULY 31, JULY 31, JULY 31,
1998 1997 1998 1997
--------------- ----------------- ---------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
Net Sales $49,320,644 $42,037,105 $109,405,836 $90,877,818
Royalty Income 981,760 1,051,275 2,003,544 2,163,107
----------- ----------- ------------ -----------
TOTAL REVENUES 50,302,404 43,088,380 111,409,380 93,040,925
COST OF SALES 36,567,206 32,550,086 82,145,563 69,551,025
----------- ----------- ------------ -----------
GROSS PROFIT 13,735,198 10,538,294 29,263,817 23,489,900
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 11,084,521 8,613,073 21,612,024 17,365,416
----------- ----------- ------------ -----------
OPERATING INCOME 2,650,677 1,925,221 7,651,793 6,124,484
INTEREST EXPENSE 977,828 602,111 1,863,987 1,306,015
----------- ----------- ------------ -----------
INCOME BEFORE INCOME
TAX PROVISION 1,672,849 1,323,110 5,787,806 4,818,469
INCOME TAX PROVISION 620,078 496,577 2,095,045 1,842,244
----------- ----------- ------------ -----------
NET INCOME $ 1,052,771 $ 826,533 $ 3,692,761 $ 2,976,225
----------- ----------- ------------ -----------
NET INCOME PER SHARE:
BASIC $ 0.16 $ 0.13 $ 0.56 $ 0.45
DILUTED $ 0.15 $ 0.12 $ 0.55 $ 0.45
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING:
BASIC 6,703,135 6,534,431 6,643,318 6,532,483
DILUTED 6,832,821 6,663,828 6,760,950 6,660,839
</TABLE>
See Notes to consolidated financial statements.
2
<PAGE>
<TABLE>
<CAPTION>
SUPREME INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED
---------------------------------------------------
JULY 31, JULY 31,
1998 1997
----------------- -----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income 3,692,761 2,976,225
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,033,240 1,053,076
Changes in operating assets and liabilities:
Accounts receivable, net 434,389 622,201
Inventories (4,849,505) 2,217,482
Other current assets (1,903,903) (736,895)
Other assets 968,655 (565,113)
Accounts payable and accrued expenses 105,888 (2,882,148)
Other current liabilities 643,603 (291,212)
---------- ----------
Net cash provided by operating activities: 125,128 2,393,616
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (3,612,354) (870,629)
Payment on purchase of intangible assets (85,119) (347,416)
---------- ----------
Net cash used in investing activities: (3,697,473) (1,218,045)
---------- ----------
CASH FLOW FROM FINANCING ACTIVITIES:
Decrease in borrowings under credit facilities (3,000,000) (6,812,629)
Net proceeds from long-term debt 5,668,869 5,736,102
Proceeds from exercise of stock options 425,653 57,500
---------- ----------
Net cash provided by (used in)
financing activities: 3,094,522 (1,019,027)
---------- ----------
NET (DECREASE) INCREASE IN CASH (477,823) 156,544
CASH AT BEGINNING OF YEAR 1,010,256 755,798
---------- ----------
CASH AT END OF PERIOD $ 532,433 $ 912,342
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $1,863,811 $1,382,125
Income taxes $1,307,023 $2,545,382
</TABLE>
See Notes to consolidated financial statements
3
<PAGE>
SUPREME INTERNATIONAL CORPORATION AND SUBSIDIARIES
ITEM 1. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. GENERAL
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions for Form 10-Q and therefore do not include
all information and footnotes necessary for a fair presentation of financial
position, results of operations and changes in cash flows in conformity with
generally accepted accounting principles. The unaudited consolidated financial
statements should be read in conjunction with the audited financial statements
and related notes included in the Registrant's Annual Report on Form 10-K for
the year ended January 31, 1998. In the opinion of management, the unaudited
consolidated financial statements contain all adjustments necessary for a fair
presentation of the interim periods presented and all adjustments are of a
normal and recurring nature. The results of operations for the three and six
months ended July 31, 1998 are not necessarily indicative of the results which
may be expected for the entire fiscal year.
Certain amounts of the prior period have been reclassified to conform to the
current periods' presentation.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130 ("SFAS No. 130"), REPORTING COMPREHENSIVE
INCOME. SFAS No. 130 requires that all components of comprehensive income be
reported on one of the following: (1) the statement of income; (2) the statement
of changes in stockholders' equity, or (3) a separate statement of comprehensive
income. Comprehensive income is comprised of net income and all changes to
stockholders' equity, except those due to investments by stockholders (changes
in paid-in capital) and distribution to stockholders (dividends). SFAS No. 130
is effective for fiscal years beginning after December 15, 1997. The Company
adopted this statement with no significant impact on its consolidated financial
statements.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131 ("SFAS No. 131"), DISCLOSURE ABOUT
SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION. SFAS No. 131 changes the way
public companies report information about segments of their business in their
annual financial statements and requires them to report selected segment
information in their quarterly reports issued to shareholders. SFAS No. 131 also
requires entity-wide disclosure about products and services an entity provides,
the foreign countries in which it holds assets and reports revenues, and its
major customers. SFAS No. 131 is effective for fiscal years beginning after
December 15, 1997, but is not required to be applied to interim financial
statements in the initial year of its application. The Company will adopt this
standard for the fiscal year ending January 31, 1999.
4
<PAGE>
2. INVENTORIES
Inventories are stated at lower of cost or market on a first-in first-out basis
and consist of:
JULY 31, 1998 JANUARY 31, 1998
(UNAUDITED)
Finished goods $37,607,016 $31,972,723
Raw materials and in process 575,441 1,204,841
Merchandise in transit 2,466,436 2,621,824
----------- -----------
Total $40,648,893 $35,799,388
=========== ===========
3. LETTERS OF CREDIT FACILITIES
JULY 31, 1998 JANUARY 31, 1998
(UNAUDITED)
Total letter of credit facilities $60,000,000 $60,000,000
Borrowings - (3,000,000)
Outstanding letters of credit (28,191,200) (26,673,016)
----------- -----------
Total Available $31,808,800 $30,326,984
=========== ===========
4. EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 ("SFAS No. 128"), EARNINGS PER SHARE,
which changes the method of calculating earnings per share. SFAS No. 128
requires the presentation of "basic" net income per share and "diluted" net
income per share on the face of the income statement. Basic net income per share
is computed by dividing net income by the weighted average shares of outstanding
common stock. The calculations of diluted net income per share is similar to
basic earnings per share except that the denominator includes dilutive potential
common stock. The dilutive potential common stock included in the Company's
computation of diluted net income per share includes the effects of stock
options and warrants, as determined using the treasury stock method. SFAS No.
128 was effective for financial statements for periods ending after December 15,
1997. The Company adopted SFAS No. 128 in the fourth quarter of fiscal 1998 and
restated its net income per share for prior periods presented to give effect to
SFAS No. 128. The weighted average number of shares for stock options in the
diluted weighted average shares outstanding were 117,632 and 128,356 for the six
months ended July 31, 1998 and 1997 respectively, and 129,686 and 129,397 for
the three months ended July 31, 1998 and 1997, respectively.
5
<PAGE>
5. STOCKHOLDERS' EQUITY
The following is a schedule of the activity in common stock and additional
paid-in capital:
COMMON STOCK
-------------------------- ADDITIONAL
SHARES AMOUNT PAID-IN CAPITAL
------ ------ ---------------
Balance, February 1, 1998 6,555,681 $65,556 $27,598,618
Exercise of stock options 151,693 1,518 424,135
--------- ------- -----------
Balance, July 31, 1998 6,707,374 $67,074 $28,022,753
========= ======= ===========
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITON
AND RESULTS OF OPERATIONS
Supreme International Corporation (the "Company") cautions readers that certain
important factors may affect the Company's actual results and could cause such
results to differ materially from any forward-looking statements which may be
deemed to have been made in this report or which are otherwise made by or on
behalf of the Company. For this purpose, any statements contained in this report
that are not statements of historical fact may be deemed to be forward-looking
statements. Without limiting the generality of the foregoing, words such as
"may", "will", "expect", "believe", "anticipate", "intend", "could", "would",
"estimate", or "continue" or the negative other variations thereof or comparable
terminology are intended to identify forward-looking statements. Factors which
may affect the Company's results include, but are not limited to, risk related
to fashion trends; the retail industry; reliance on key customers; contract
manufacturing; foreign sourcing; imports and export restrictions; competition;
seasonality; rapid expansion of business; dependence on key personnel and other
factors discussed herein and in the Company's filings with the Securities and
Exchange Commission (the "Commission").
RESULTS OF OPERATIONS
THREE AND SIX MONTHS ENDED JULY 31, 1998 AS COMPARED TO THREE AND SIX MONTHS
ENDED JULY 31, 1997.
Revenue for the three and six months ended July 31, 1998 increased $7.2 million,
or 16.7% and $18.4 million, or 19.7%, respectively, to $50.3 million and $111.4
million from $43.1 million and $93.0 million. The increase in revenue were
principally the result of the growth in net sales.
Net sales for the three and six months ended July 31, 1998 increased to $49.3
million, or 17.3% and $109.4 million, or 20.4%, respectively, from $42.0 million
and $90.9 million. The increase in both the three and six month period is
reflected primarily in the sales growth of the Munsingwear brand and to a lesser
extent, an increase in sales of the Natural Issue brand. These increases were
slightly offset by declines in other Supreme brands. Private label sales also
decreased slightly for both the three and six month periods from the comparable
periods in 1997. Net sales for the Munsingwear brand were approximately $14.7
million for the three months ended July 31, 1998 compared with
6
<PAGE>
approximately $8.1 million for the comparable period in 1997. For the six month
period ended July 31, 1998 the Munsingwear brand accounted for approximately
$33.9 million of net sales compared to $18.8 million in the same period a year
ago.
Within revenues, the Company also reported royalty income of $1.0 million for
the three months ended July 31, 1998 compared to $1.1 million for the same
period a year ago. For the six months ended July 31, 1998 royalty income was
$2.0 million compared to $2.2 million for the same period a year ago. The
decrease of 6.6% and 7.4% in royalty income for the three and six months ended
July 31, 1998, from the comparable periods in 1997, was primarily due to the
Company's relationship with a customer which shifted from a primarily license
basis to a primarily sales basis.
Cost of sales for the three and six month periods ended July 31, 1998 increased
$4.0 million, or 12.3% and $12.6 million, or 18.1% to $36.6 million and $82.1
million, respectively, from $32.6 million and $69.6 million, reflecting the
increased level of sales. As a percentage of net sales, cost of sales decreased
slightly to 74.1% for the three months ended July 31, 1998 from 77.4% for the
same period a year ago. For the six month period ended July 31, 1998, cost of
sales as a percentage of net sales decreased to 75.1% from 76.5% during the six
months ended July 31, 1997. The decline in the cost of sales as a percentage of
net sales is a reflection of the shift in our product mix to more branded
product as well as sourcing opportunities that arose during the Asian crisis.
Gross profit was $13.7 million and $29.3 million for the three and six months
ended July 31, 1998 compared to $10.5 million and $23.5 million for the same
period a year ago. The increases in gross profit reflect the improvement in cost
of sales.
Selling, general and administrative expenses increased $2.5 million, or 28.7%
and $4.3 million, or 24.5% for the three and six months ended July 31, 1998 to
$11.1 million and $21.6 million from $8.6 million and $17.3 million,
respectively, from the year ago periods. As a percentage of net sales, selling,
general and administrative expenses were 22.5 % and 19.8 % for the three and six
months ended July 31, 1998 compared to 20.5% and 19.1% in the comparable periods
a year ago. The increase in selling, general and administrative expenses for the
three months ended July 31, 1998 is primarily attributable to increased
marketing costs, costs associated with recent acquisitions and expenses
associated with other opportunities that the Company is reviewing. Although the
Company believes that it will achieve greater efficiencies in its new corporate
and warehouse facility during the balance of the fiscal year ending January 31.
1999, it will continue to incur expense related to start up costs of acquired
licenses and the exploration of additional acquisition opportunities.
Interest expense increased $385,000 and $536,000 for the three and six months
ended July 31, 1998, respectively, to $978,000 and $1.9 million from $602,000
and $1.3 million from July 31, 1997. The increase resulted from additional
indebtedness incurred to support the increase in inventory which resulted from
the sales growth. The average indebtedness during the six month period ended
July 31, 1998 was $43.9 million and the average interest rate was 7.5%.
Income before the income tax provision for the three and six months ended July
31, 1998 was $1.7 million and $5.8 million compared to $1.3 million and $4.8
million during the comparable period a year ago. Net income for the three and
six months ended July 31,
7
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1998 was $1.1 million and $3.7 million compared to $827,000 and $3.0 million for
the same period a year ago. Basic net income per common share was computed using
the basic weighted shares outstanding of 6,703,135 and 6,534,431 for the three
months ended July 31, 1998 and 1997, respectively and 6,643,318 and 6,532,483
for the six month period ended July 31, 1998 and 1997 respectively. Diluted net
income per common share was computed using the diluted weighted shares
outstanding of 6,832,821 and 6,663,828 for the three months ended July 31, 1998
and 1997, respectively, and 6,760,950 and 6,660,839 for the six month period
ended July 31, 1998 and 1997, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Company entered into a revolving credit agreement (the "Revolving Credit
Agreement") in March 1998 with a group of banks giving it the right to borrow
$55 million or a portion thereof for its general corporate purposes. This
revolving credit agreement expires in April 2001 and replaced the previous
revolving credit agreement which expired in October 1997. Borrowings are limited
under the terms of a borrowing base calculation which generally restricts the
outstanding balance to 85% of eligible receivables plus 50% of eligible
inventories, as defined. For 120 days beginning August 1, 1998, the revolving
credit agreement was amended to increase the advance rate on inventories to 60%
and to allow an additional $5 million in borrowings secured by intangible
assets. Interest on borrowings is variable, at the Company's option, based on
LIBOR plus 1.5% or the bank's prime rate. The agreement contains certain
covenants, the most restrictive of which requires the Company to maintain
certain financial and net worth ratios. In addition, the agreement restricts the
payment of dividends. The agreements are secured by the Company's assets. The
outstanding balance under these revolving credit agreements as of July 31, 1998
and 1997 amounted to $42.3 million and $30.9 million, respectively.
The Company also maintains three letters of credit facilities totaling $60.0
million. The letters of credit are secured by the consignment of merchandise in
transit under each letter of credit. Indebtedness under these facilities bears
interest at variable rates substantially equal to the lenders' specified base
lending rates minus 1.0% per annum. As of July 31, 1998, there was $38.1 million
available under these facilities.
Cash decreased $0.5 million during the six-month period ended July 31, 1998.
Such decrease reflects cash used in investing activities of $3.7 million
(primarily due to the purchase of property and equipment) partially offset by
cash provided by financing activities of $3.1 million (due to increased
borrowings of debt and proceeds from the exercising of certain stock options)
and cash provided by operating activities of $0.1 million. The net cash provided
by operating activities primarily reflects net income of $3.7 million and
depreciation and amortization of $1.0 million, partially offset by cash used for
operating assets and liabilities of $4.6 million. The cash used for operating
assets and liabilities of $4.6 million primarily reflects an increase in
inventories of $4.8 million and an increase in other assets of $1.9 million
partially offset by a decrease in other assets of $1.0 million, current
liabilities of $0.7 million and accounts receivable of $0.4 million.
8
<PAGE>
Working capital (current assets less current liabilities) was $74.0 million and
$65.9 million at July 31, 1998 and January 31, 1998, respectively. Such amount
represents an increase in working capital of $8.1 million from January 31, 1998
primarily due to an increase in inventories and other current assets. The
current ratio (current assets divided by current liabilities) was 11.1:1 and
7.9:1 at July 31, 1998 and January 31, 1998, respectively.
Management believes that the combination of borrowing availability under the
Revolving Credit Agreement, existing working capital and funds anticipated to be
generated from operating activities will be sufficient to meet the Company's
anticipated operating and capital needs in the foreseeable future.
YEAR 2000 ISSUES
The Company has undertaken a study of its functional application systems to
determine their compliance with year 2000 issues and, to the extent of
noncompliance, the required remediation. As a result of such study, the Company
believes the majority of its systems are year 2000 compliant. However, certain
systems, which are significant to the Company, require remediation. The Company
currently estimates it will complete the required remediation, including
testing, by December 31, 1998. To date, the expenses incurred by the Company in
order to become year 2000 compliant, including computer software costs, have
been $0.2 million and the current additional estimated cost to complete such
remediation is expected to be $0.2 million. Such costs, other than software,
have been and will continue to be expensed as incurred.
An assessment of the readiness of year 2000 compliance of third party entities
with which the Company has relationships, such as its banking institutions,
customers, payroll processors and others is ongoing. The Company has inquired,
or is in the process of inquiring, of the significant aforementioned third party
entities as to their readiness with respect to year 2000 compliance and to date
has received indications that many of them are either compliant or in the
process of remediation. The Company will continue to monitor these third party
entities to determine the impact on the business of the Company and the actions
the Company must take, if any, in the event of non-compliance by any of these
third parties. The Company's initial assessment of compliance by third party is
that there is not a material business risk to the Company posed by any such
noncompliance and, as such, the Company has not yet developed any related
contingency plans.
EFFECTS OF INFLATION AND FOREIGN CURRENCY FLUCTUATIONS
The Company does not believe that inflation or foreign currency fluctuations
significantly affected its results of operations for the three or six months
ended July 31, 1998 and 1997.
9
<PAGE>
PART II: OTHER INFORMATION
ITEM 1. Legal Proceedings
Not applicable
ITEM 2. Changes in Securities
Not applicable.
ITEM 3. Defaults Upon Senior Securities
Not applicable
ITEM 4. Submission of Matters to a Vote of Security Holders
(a) On July 31, 1998 the Company held its Annual Meeting
of Shareholders ( the "Meeting")
(b) Not applicable
(c) At the Meeting, the following matters were
voted upon:
(i) APPROVAL OF AN AMENDMENT TO COMPANY'S ARTICLES OF INCORPORATION TO CREATE A
CLASSIFIED BOARD OF DIRECTORS.
For 3,413,925 Against 803,009 Abstain 4,006 Not voted 1,408,546
--------- ------- ----- ---------
(ii) ELECTION OF DIRECTORS
The following table sets forth the name of each nominee and the voting with
respect to each nominee for director.
FOR WITHHOLD AUTHORITY
--- ------------------
George Feldenkreis 5,371,746 257,740
--------- -------
Oscar Feldenkreis 5,371,746 257,740
--------- -------
Ronald L. Buch 5,371,746 257,740
--------- -------
Gary Dix 5,371,746 257,740
--------- -------
Salomon Hanono 5,371,746 257,740
--------- -------
Richard W. McEwen 5,371,746 257,740
--------- -------
Leonard Miller 5,371,746 257,740
--------- -------
10
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(iii) APPROVAL OF AMENDMENT TO COMPANY'S ARTICLE OF INCORPORATION.
Approval of an Amendment to the Company's Articles of Incorporation to
increase the number of authorized shares of the Company's Common Stock to
30,000,000.
For 4,824,732 Against 801,254 Abstain 3,500
--------- ------- -----
(iv) APPROVAL OF AMENDMENT TO COMPANY'S ARTICLES OF INCORPORATION.
Approval of an Amendment to the Company's Article of Incorporation to add
to the Company's authorized capital stock 30,000,000 shares of Class A Common
Stock, par value $.01 per share, having a one-tenth per share.
For 5,012,211 Against 593,021 Abstain 5,600 Not Voted 18,654
--------- ------- ----- ------
(v) APPROVAL OF AMENDMENT TO 1993 STOCK OPTION PLAN
Approval of the Amendment to the Company's 1993 Stock Option Plan to
increase the number of shares of Common Stock issuable under the Plan to 900,000
shares.
For 4,159,187 Against 36,783 Abstain 6,316 Not Voted 1,427,200
--------- ------ ----- ---------
(vi) RATIFICATION OF APPOINTMENT OF ACCOUNTANTS
Ratification of Appointment of Deloitte & Touche LLP as the Company's
independent public accountants for the year ending January 31, 1999.
For 5,624,292 Against 36,783 Abstain 1,356
--------- ------ -----
ITEM 5. Other Information
Not applicable
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule (for SEC only)
(b) Reports on Form 8-K - None
11
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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.-
Date: September 14, 1998 By: /S/ ROSEMARY B. TRUDEAU
-------------------------
Vice President of Finance
12
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
27.1 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1999
<PERIOD-START> FEB-01-1998
<PERIOD-END> JUL-31-1998
<CASH> 532,433
<SECURITIES> 0
<RECEIVABLES> 35,068,218
<ALLOWANCES> 0
<INVENTORY> 40,648,893
<CURRENT-ASSETS> 81,278,775
<PP&E> 7,999,918
<DEPRECIATION> 0
<TOTAL-ASSETS> 108,903,818
<CURRENT-LIABILITIES> 7,303,516
<BONDS> 0
0
0
<COMMON> 67,074
<OTHER-SE> 59,206,185
<TOTAL-LIABILITY-AND-EQUITY> 108,903,818
<SALES> 109,405,836
<TOTAL-REVENUES> 111,409,380
<CGS> 82,145,563
<TOTAL-COSTS> 82,145,563
<OTHER-EXPENSES> 21,612,024
<LOSS-PROVISION> 0
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