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United States
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, 1999
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 0-22532
ULTIMATE ELECTRONICS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 84-0585211
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
321 WEST 84TH AVENUE, SUITE A, THORNTON, COLORADO 80260
(Address of principal executive offices, zip code)
(303) 412-2500
(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
--- ---
The number of outstanding shares of common stock as of December 6, 1999 was
10,584,143.
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ULTIMATE ELECTRONICS, INC.
FORM 10-Q
INDEX
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Page No.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets as of October 31, 1999
(unaudited) and January 31, 1999 ........................................... 3
Consolidated Statements of Operations for the three and nine months ended
October 31, 1999 (unaudited) and October 31, 1998 (unaudited) .............. 4
Condensed Consolidated Statements of Cash Flows for the nine months ended
October 31, 1999 (unaudited) and October 31, 1998 (unaudited) .............. 5
Notes to Condensed Consolidated Financial Statements (unaudited) ........... 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations ...................................................... 7
Item 3. Quantitative and Qualitative Disclosures About Market Risk ................. 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings .......................................................... 12
Item 2. Changes in Securities ...................................................... 12
Item 3. Defaults Upon Senior Securities ............................................ 12
Item 4. Submission of Matters to a Vote of Security Holders ........................ 12
Item 5. Other Information .......................................................... 12
Item 6. Exhibits and Reports on Form 8-K ........................................... 13
</TABLE>
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ULTIMATE ELECTRONICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share data)
<TABLE>
<CAPTION>
October 31, January 31,
1999 1999
------------ -----------
(Unaudited)
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ 26,755 $ 4,421
Accounts receivable, net 19,013 17,814
Merchandise inventories 59,094 46,908
Other assets 2,782 1,087
-------- --------
Total current assets 107,644 70,230
Property and equipment, net 46,340 46,636
Property under capital leases, including related
parties, net 1,506 1,729
Goodwill, net 2,095 2,300
Other assets 1,002 1,009
-------- --------
Total assets $158,587 $121,904
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 42,636 $ 29,888
Other current liabilities 16,299 13,602
-------- --------
Total current liabilities 58,935 43,490
Revolving line of credit - 13,188
Bonds payable 13,000 13,000
Term loans 79 330
Capital lease obligations, including related parties 1,784 1,841
Deferred tax liability 2,370 2,380
Commitments
Stockholders' equity:
Preferred stock, par value $.01 per share
Authorized shares - 10,000,000
No shares issued and outstanding - -
Common stock, par value $.01 per share
Authorized shares - 15,000,000
Issued and outstanding shares: 10,238,393 and 8,160,796
at October 31, 1999 and January 31, 1999 102 81
Additional paid-in capital 64,864 33,912
Retained earnings 17,453 13,682
-------- --------
Total stockholders' equity 82,419 47,675
-------- --------
Total liabilities and stockholders' equity $158,587 $121,904
======== ========
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements.
3
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ULTIMATE ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
October 31, October 31,
------------------------- --------------------------
1999 1998 1999 1998
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
Sales $ 94,481 $ 79,441 $ 261,093 $ 221,505
Cost of goods sold 65,981 55,038 182,597 156,939
--------- --------- --------- ---------
Gross profit 28,500 24,403 78,496 64,566
Selling, general and administrative expenses 24,710 21,451 70,524 62,824
--------- --------- --------- ---------
Income from operations 3,790 2,952 7,972 1,742
Interest expense, net 591 978 1,979 3,176
--------- --------- --------- ---------
Income (loss) before income taxes 3,199 1,974 5,993 (1,434)
Income tax expense (benefit) 1,185 724 2,222 (531)
--------- --------- --------- ---------
Net income (loss) $ 2,014 $ 1,250 $ 3,771 $ (903)
========= ========= ========= =========
Earnings (loss) per share - Basic $ . 24 $ . 15 $ . 46 $ (.11)
Earnings (loss) per share - Diluted $ . 22 $ . 15 $ . 42 $ (.11)
Weighted average shares outstanding - Basic 8,454 8,152 8,277 8,147
Weighted average shares outstanding - Diluted 9,159 8,160 8,962 8,147
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements.
4
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ULTIMATE ELECTRONICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(amounts in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
October 31,
-----------------------------
1999 1998
----------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities $ 9,319 $ 6,201
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (4,348) (1,068)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net paydown on revolving line of credit (13,188) (2,549)
Principal payments on term loans and capital lease
obligations (422) (446)
Proceeds from issuance of stock 30,744 -
Proceeds from exercise of stock options 229 21
-------- --------
Net cash provided by (used in) financing activities 17,363 (2,974)
-------- --------
Net increase in cash and cash equivalents 22,334 2,159
Cash and cash equivalents at beginning of period 4,421 2,006
-------- --------
Cash and cash equivalents at end of period $ 26,755 $ 4,165
======== ========
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements.
5
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ULTIMATE ELECTRONICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
OCTOBER 31, 1999
1. SIGNIFICANT ACCOUNTING POLICIES
BACKGROUND
Ultimate Electronics, Inc. is a leading specialty retailer of home
entertainment and consumer electronics. As of December 3, 1999, the Company
operates thirty-one stores, including ten stores in Colorado under the
trade name SoundTrack, thirteen stores in Idaho, Iowa, Nevada, New Mexico,
Oklahoma, South Dakota and Utah under the trade name Ultimate Electronics
and eight stores in Minnesota under the trade name Audio King.
The Company's unaudited condensed consolidated financial statements have
been prepared by the Company in accordance with generally accepted
accounting principles for interim financial reporting and the regulations
of the Securities and Exchange Commission for quarterly reporting.
Accordingly, they do not include all information and footnotes required by
generally accepted accounting principles for complete financial statements.
In the opinion of the Company, the statements include all adjustments,
consisting only of normal recurring adjustments, which are necessary for a
fair presentation of the financial position, results of operations and cash
flows for the interim periods. Operating results for the three and nine
month periods ended October 31, 1999 are not necessarily indicative of the
results that may be expected for the year ending January 31, 2000. Seasonal
fluctuations in sales of the Company's products result primarily from the
purchasing patterns of individual consumers during the holiday shopping
season. These patterns tend to moderately concentrate sales in the latter
half of the year, particularly in the fourth quarter. For further
information, refer to the financial statements and footnotes thereto
included in the Company's Annual Report on Form 10-K for the year ended
January 31, 1999 and other filings with the Securities and Exchange
Commission.
PRINCIPLES OF CONSOLIDATION
The unaudited condensed consolidated financial statements include the
accounts of all subsidiaries. All intercompany accounts and transactions
have been eliminated upon consolidation.
2. PUBLIC STOCK OFFERING
On October 22, 1999, the Company completed a public offering (the
"Offering") for the sale of 2,000,000 shares of its common stock at the
Offering price of $16.50 per share. The Company received proceeds from the
Offering of approximately $30.7 million, net of all offering costs. On
November 9, 1999, the underwriters exercised their overallotment option
related to the Offering. As a result, the Company issued an additional
337,500 shares of its common stock at a price of $16.50 per share. The
Company received proceeds from the sale of these shares of approximately
$5.3 million, net of all offering costs. The shares issued related to the
overallotment option brought the total shares issued in the Offering to
2,337,500 and the total proceeds received by the Company to approximately
$36.0 million, net of all offering costs.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's discussion and analysis of financial condition and
results of operations and the financial statements and accompanying
notes contain statements that are not historical facts but are
forward-looking statements that involve risks and uncertainties that
could cause future results to vary materially from projected
results. Such statements address activities, events or developments
that the Company expects, believes, projects, intends, estimates,
plans or anticipates will, should, could or may occur, including
reference to future profitability and steps being taken to achieve
that result. Factors that could cause actual results to differ
materially from the Company's projections, forecasts, estimates and
expectations include, but are not limited to: risks related to the
Company's ability to open and operate new stores; the Company's
ability to profitably relocate and/or expand existing stores and the
willingness of vendors to permit product sales over the internet;
significant competition, including new competition from internet
retailers; seasonal fluctuations in the Company's business; changes
in trade regulations and currency fluctuations; risks regarding
increases in promotional activities of competitors; the presence or
absence of new products or product features in the Company's
merchandise categories; changes in the distribution strategy of the
Company's vendors; changes in vendor support for advertising and
promotional programs; changes in the Company's merchandise sales
mix; the results of financing efforts; fluctuations in consumer
demand and preferences; the risks associated with Year 2000 Issues
and general economic conditions. Please refer to a discussion of
these and other factors in the Company's Annual Report on Form 10-K
for the year ended January 31, 1999 and other filings with the
Securities and Exchange Commission. The Company disclaims any intent
or obligation to update publicly these forward-looking statements,
whether as a result of new information, future events or otherwise.
RESULTS OF OPERATIONS
Sales for the three months ended October 31, 1999 increased 19% to
$94.5 million from $79.4 million for the three months ended October
31, 1998. Sales for the nine months ended October 31, 1999 were
$261.1 million, an 18% increase from sales of $221.5 million for the
same period in the prior year. Sales of comparable stores were up 19%
and 18%, respectively, for the three and nine months ended October
31, 1999. Sales of new technology products such as DVD, HDTV and
digital camcorders were the primary drivers of comparable store sales
growth in the current year. Beginning in November 1998, the Company
began mailing a 70 to 80 page full color catalog to its customer base
and prospective customers on a quarterly basis. The catalog, along
with refinements to the Company's merchandising and sales systems and
a favorable consumer electronics market, contributed to the increase
in comparable store sales in the current year.
Gross profit for the three months ended October 31, 1999 increased
17% to $28.5 million (30.2% of sales) from $24.4 million (30.7% of
sales) for the three months ended October 31, 1998. Gross profit for
the nine months ended October 31, 1999 increased 22% to $78.5 million
(30.1% of sales) from $64.6 million (29.1% of sales) for the nine
months ended October 31, 1998. Gross margins for the current year
third quarter reflect a higher mix of television, DVD and camcorder
sales compared to the same period in the prior year. For the nine
months ended October 31, 1999, the improved gross margins were
primarily the result of increased sales in the Company's higher
margin core categories including audio and mobile electronics coupled
with reduced sales of low margin computers. The prior year's margin
was negatively impacted by $700,000 in increased inventory reserves
recorded in the first quarter of fiscal 1999 associated with the
decision to reduce the Company's computer assortment.
Selling, general and administrative expenses for the three months
ended October 31, 1999 increased 15% to $24.7 million (26.2% of
sales) from $21.5 million (27.0% of sales) for the three months ended
October 31, 1998. Selling, general and administrative expenses for
the nine months ended October 31, 1999 increased to $70.5 million
(27.0% of sales) from $62.8 million (28.3% of sales) for the nine
months
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ended October 31, 1998. The decrease in selling, general and
administrative expenses as a percentage of sales was primarily due to
the leveraging of the Company's fixed expenses against the 19% and
18% comparable store sales increases that the Company achieved in the
three and nine month periods of the current year as well as the
continued focus on cost control measures.
As a result of the foregoing, the Company recorded income from
operations of $3.8 million (4.0% of sales) for the three months ended
October 31, 1999, compared to income from operations of $3.0 million
(3.7% of sales) for the three months ended October 31, 1998. Income
from operations for the nine months ended October 31, 1999 was $8.0
million (3.1% of sales) compared to income from operations of $1.7
million (0.8% of sales) for the nine months ended October 31, 1998.
Net interest expense decreased to $591,000 and $2.0 million for the
three and nine months ended October 31, 1999 from $1.0 million and
$3.2 million for the three and nine months ended October 31, 1998.
This decrease was due primarily to lower average amounts outstanding
under the Company's revolving line of credit as well as a reduction
in the interest rate associated with the change in the line of credit
from Norwest Bank to Foothill Capital Corporation on September 30,
1998. The Company used a portion of the proceeds from the Offering to
pay off $6.8 million then outstanding under its line of credit on
October 22, 1999.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company's primary sources of liquidity for funding
expansion and growth have been net cash from operations, revolving
credit lines, term debt and issuances of common stock. The Company's
primary capital requirements are directly related to expenditures for
new store openings and the relocation and/or remodeling of existing
store locations, including preopening expenses and additional
inventory for new or relocated stores, as well as working capital to
support the Company's inventory requirements and selling, general and
administrative expenses. The Company currently operates a total of 31
stores in nine states.
Net cash provided by operations was $9.3 million for the nine months
ended October 31, 1999 compared to $6.2 million for the nine months
ended October 31, 1998.
On October 22, 1999, the Company completed a public offering for the
sale of 2,000,000 shares of its common stock at the Offering price of
$16.50 per share. The Company received proceeds from the Offering of
approximately $30.7 million, net of all offering costs. On November
9, 1999, the underwriters exercised their overallotment option
related to the Offering. As a result, the Company issued an
additional 337,500 shares of its common stock at a price of $16.50
per share. The Company received proceeds from the sale of these
shares of approximately $5.3 million, net of all offering costs. The
shares issued related to the overallotment option brought the total
shares issued in the Offering to 2,337,500 and the total proceeds
received by the Company to approximately $36.0 million, net of all
offering costs. A portion of the proceeds from the Offering was
used by the Company to pay off $6.8 million then outstanding under
its revolving line of credit. The remaining proceeds have been
invested by the Company in highly liquid, short-term government
treasury backed securities.
In March 1995, the Company issued $13.0 million aggregate principal
amount of 10.25% First Mortgage Bonds and received net proceeds of
$12.3 million. The proceeds of the bond offering were used to fund a
substantial portion of the construction of the Company's warehouse,
offices, service and store facility in Thornton, Colorado. Interest
accrues at a rate of 10.25% per year until maturity or earlier
redemption. The Company is required to redeem $3.25 million aggregate
principal amount of the bonds (reduced to the extent of the bonds
previously purchased or redeemed by the Company) on January 31, 2002
and on January 31 of each of the three years thereafter, at a
redemption price equal to par plus accrued interest to the date of
redemption. The bonds are redeemable at par on or after March 31,
2000 and are secured
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by the Company's Thornton facility. The Company intends to use a
portion of the proceeds from the Offering to redeem all of the
outstanding mortgage bonds on or after March 31, 2000.
The Company intends to expand into select metropolitan areas in the
Rocky Mountain, Midwest and Southwest regions with 30,000 to 36,000
square foot stores. In certain smaller markets, the store size may be
as small as 20,000 square feet. With the exception of the Thornton
Facility, all stores are leased. The Company opened its 31st store,
a new 36,000 square foot store in Davenport, Iowa on December 3,
1999. For fiscal 2001, the Company expects to open six to eight
new stores, primarily in the Phoenix metropolitan area, and eight
to twelve additional stores in fiscal 2002. At the present time,
two leases and/or contracts have been signed for next year and the
Company has entered into letters of intent and is negotiating
leases for the remaining sites. The Company currently anticipates
opening some of the Phoenix stores late in the second quarter of
fiscal 2001 and additional Phoenix stores prior to the holiday
selling season of fiscal 2001.
The Company continues to analyze new store opportunities in existing
markets to replace or expand some of its smaller locations. In
November 1999, the Company completed construction to expand a
Minneapolis, Minnesota store from 9,700 to 18,000 square feet. On
December 2, 1999, the Company relocated and expanded its Sioux Falls,
South Dakota store from 3,200 to 22,000 square feet. In the second
quarter of fiscal 2001, the Company plans to relocate a 9,300 square
foot store located in the Minneapolis / St. Paul area to a 35,000
square foot store. The Company's Fort Collins, Colorado store is also
expected to be expanded from 16,600 to 22,000 square feet in fiscal
2001. The Company also expects to relocate and expand its Arvada,
Colorado store within the next 18 months and will be analyzing
opportunities in the Minneapolis / St. Paul area over the next few
years to relocate and/or expand a number of those locations.
The cost of these future stores is anticipated to average $3.0
million. Leasehold improvements, fixtures and equipment are expected
to average $1.9 million, depending upon tenant allowances. The
inventory requirement for the Company's new stores is expected to
average approximately $1.5 million, approximately $750,000 of which
is financed through trade credit. Preopening expenses for new stores
are expected to average $350,000, and include such items as
advertising prior to opening, recruitment and training of new
employees and other costs of opening stores. In the event of
relocations of existing stores, preopening costs are expected to
average $150,000 and will be higher if the Company is forced to
terminate existing store leases prior to their maturity.
On September 30, 1998, the Company executed a three-year $40 million
credit agreement with Foothill Capital Corporation, a wholly owned
subsidiary of Norwest Bank. Borrowings under the Company's revolving
line of credit are limited to the lesser of $40 million or 80% of
eligible inventory and a portion of accounts receivable. As of
October 31, 1999, the entire $40 million facility was available to
the Company and no amounts were outstanding. Borrowings bear
interest, payable monthly, based on a blend of LIBOR plus 2.0% and
Norwest Bank's prime rate minus 0.375%. Borrowings are secured by
inventories, accounts receivable, equipment and intangibles. The
facility includes negative covenants which limit the Company's
ability to, among other things, subject to various exceptions, incur
indebtedness, create liens, enter into mergers and consolidations,
pay dividends, repurchase the Company's capital stock, issue
guarantees, sell or transfer assets, consign inventory, prepay or
retire any debt owed to third parties, make investments or engage in
transactions with affiliates. The facility also contains covenants
requiring that the Company maintains specified levels of gross
margin, inventory and tangible net worth and not exceed specified
levels of capital expenditures. The Company was in compliance with
all borrowing covenants at October 31, 1999.
The Company believes that its cash flow from operations and available
borrowings under its current credit facility, along with the proceeds
from the Offering, will be sufficient to fund the Company's
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operations, debt repayment and expansion through fiscal 2001. To fund
the capital requirements for its anticipated expansion plans beyond
fiscal 2001, the Company may be required to seek additional
financing, which may take the form of increased borrowing capacity
under credit facilities, or possibly additional debt or equity
financings. The Company may also re-mortgage its Thornton facility.
There can be no assurance that the Company will be able to obtain
such funds on favorable terms, if at all.
SEASONALITY
The Company's business is affected by seasonal consumer buying
patterns. As is the case with many other retailers, the Company's
sales and profits have been greatest in the fourth quarter (which
includes the holiday selling season). Due to the importance of the
holiday shopping season, any factors negatively impacting the
holiday selling season could have a material adverse effect on the
Company's financial condition and results of operations. Operating
results are dependent upon a number of factors, including
discretionary consumer spending, which is affected by local,
regional or national economic conditions affecting disposable
consumer income, such as employment, business conditions, interest
rates and taxation. The Company's quarterly results of operations
may fluctuate significantly as a result of a number of factors,
including, but not limited to:
- the timing of new or relocated and expanded stores;
- expenses related to relocation and expansion;
- unexpected changes in volume related rebates from
manufacturers;
- the success of new stores; and
- the impact of new stores on existing stores.
As the Company has opened additional stores or relocated and
expanded stores within markets it already serves, sales at existing
stores have been adversely affected. Such adverse effects may occur
in the future. The Company's quarterly operating results also may be
affected by increases in merchandise costs, price changes in
response to competitive factors, new and increased competition and
product availability.
YEAR 2000
Until recently, most computer programs were written to store only two
digits of date-related information in order to more efficiently
handle and sort data. As a result, these programs were unable to
properly distinguish between dates occurring in the year 1900 and
dates occurring in the year 2000. This is referred to as the "Year
2000 Issue". During fiscal 1999, the Company reviewed all
applications and equipment to evaluate the Company's exposure to the
Year 2000 Issue. The required modifications to existing systems were
identified, and plans were developed for upgrades or remediation. The
Company completed these upgrades and remediation in November 1999.
The Company's primary information system software is provided by
Tyler Retail Systems, Inc. ("Tyler") of Clearwater, Florida. This
software operates the vast majority of the Company's systems and has
been evaluated by Tyler for Year 2000 compliance. Tyler has stated to
the Company that the Tyler system is Year 2000 compliant.
Other items found in the Company's review were few in number and were
replaced to the extent necessary to ensure Year 2000 compliance. The
costs of the evaluation, replacements and upgrades were not material
to the financial condition or operation of the Company.
The Company is also in communication with third parties with whom it
does significant business in order to assess their Year 2000
compliance and minimize the potential for adverse consequences, if
any, that could result from failure of such entities to address this
issue. The Company's major vendors have
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communicated to the Company that they will be Year 2000 compliant by
December 31, 1999. However, the Company cannot assure that its
vendors products will be Year 2000 compliant. While the Company
believes that its vendors are responsible for the Year 2000
functionality of the products they supply for resale, any significant
disruption to the Company's supply of goods could have a material
adverse effect on the Company's business, results of operations and
financial condition. In the event of any Year 2000 failure by
third-party product suppliers, the Company plans to pursue
alternative suppliers for Year 2000 compliant products. However, the
Company anticipates its competitors will be similarly impacted in
any such event. In the event the Company is not able to operate
normally after December 31, 1999, the Company has not identified
a near-term economically feasible alternative for operations
support. The most likely worst case scenario would be that the
Company would be required to resort to manual or other processing
methods. These methods are the standard procedures used during any
utility, communication or other processing outage. Year 2000 Issues
present risks that are outside of the control of the Company,
including, but not limited to, the potential for significant volumes
of product returns due to widespread product failure, the failure of
utility companies to provide electricity, the failure of
telecommunication companies to provide voice and data transfer
services, the failure of financial services companies to process
transactions or transfer funds and the failure of third-party vendors
or suppliers to become Year 2000 compliant.
The Company can make no assurances that Year 2000 issues will not
have an adverse effect on the Company's business, financial
condition, or future operations. The information provided in this
disclosure constitutes a "Year 2000 Readiness Disclosure" under the
Year 2000 Information and Readiness Disclosure Act of 1998.
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ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
OUTSTANDING DEBT OF THE COMPANY. As of October 31, 1999, the Company
had outstanding debt of approximately $13.1 million, $13.0 million of
which bears interest at an annual fixed rate of 10.25%. A
hypothetical 10.0% decrease in interest rates would not have a
material impact on the Company. Increases in interest rates could,
however, increase interest expense associated with future borrowings
by the Company, if any. For example, the Company frequently effects
borrowings under its $40.0 million revolving line of credit for
general corporate purposes, capital expenditures and other purposes
related to expansion of the Company's capacity. Borrowings under the
$40.0 million line of credit bear interest based on a blend of LIBOR
plus 2.0% and Norwest Bank's prime rate minus 0.375%. The Company had
no outstanding borrowings under this credit facility at October 31,
1999. The Company has not hedged against interest rate changes.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
From time to time, the Company is a party to certain legal
proceedings arising in the ordinary course of its business.
Management believes that any resulting liability, individually or in
the aggregate, will either be covered by insurance or will not have a
material adverse effect on the Company's financial condition.
ITEM 2. CHANGES IN SECURITIES.
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On September 29, 1999, a Special Meeting of Stockholders of Ultimate
Electronics, Inc. was held. The matter voted upon and passed at this
meeting was the amendment of the Company's Amended and Restated
Certificate of Incorporation to increase the authorized number of
shares from 20,000,000 to 25,000,000, of which the number of shares
of common stock, each with a par value of $.01, was increased from
10,000,000 to 15,000,000 and the number of shares of preferred
stock, each with a par value of $.01, remained at 10,000,000. The
results of the voting on this matter is outlined in the following
table:
<TABLE>
<CAPTION>
VOTES VOTES VOTES
PROPOSAL FOR AGAINST ABSTAINED
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<S> <C> <C> <C>
Increase the authorized number of 7,221,118 509,735 3,540
shares from 20,000,000 to
25,000,000.
</TABLE>
ITEM 5. OTHER INFORMATION.
None
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
Documents filed with this report:
27 Financial Data Schedule
(b) Reports on Form 8-K:
- Report on Form 8-K dated November, 9, 1999, reporting on
Item 5 a Press Release entitled "Ultimate Electronics
Reports Exercise of Over-allotment Option."
- Report on Form 8-K dated March 23, 1995, reporting on
Item 5 the executed Indenture, dated as of March 23,
1995, between Ultimate Electronics, Inc. and Colorado
National Bank, filed in place of the Form of Indenture
filed with the Commission on March 14, 1995 with
Amendment No. 3 to the Ultimate Electronics, Inc.
Registration Statement on Form S-1 (33-88740).
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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.
Ultimate Electronics, Inc.
Date: December 10, 1999 By: /s/ Alan E. Kessock
----------------------- -----------------------
Alan E. Kessock
Senior Vice President, Chief Financial
Officer, Secretary and a Director
(Principal Financial and Accounting
Officer)
14
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0
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