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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
\X\ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 30, 1996
OR
\ \ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-12740
NEW WEST EYEWORKS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 34-1589514
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(State of incorporation) (I.R.S. Employer Identification No.)
2104 West Southern Avenue, Tempe, Arizona 85282
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(Address of principal executive offices) (Zip Code)
(602) 438-1330
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(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
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, $0.01 par value: 3,763,036 (as of March 30, 1996)
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NEW WEST EYEWORKS, INC.
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<CAPTION>
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INDEX Page
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PART I--FINANCIAL INFORMATION...................................... 3
Item 1. Financial Statements...................................... 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..................... 7
PART II--OTHER INFORMATION......................................... 12
Item 1. Legal Proceedings......................................... 12
Item 6. Exhibits and Reports on Form 8-K.......................... 12
</TABLE>
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NEW WEST EYEWORKS, INC.
PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NEW WEST EYEWORKS, INC.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
MARCH 30, DECEMBER 30,
1996 1995
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(UNAUDITED)
ASSETS
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Current Assets:
Cash and cash equivalents $ 183,000 $ 241,000
Accounts receivable 1,099,000 999,000
Inventory 3,487,000 3,132,000
Other current assets 125,000 78,000
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Total current assets 4,894,000 4,450,000
Property and equipment, net 6,751,000 6,656,000
Goodwill 573,000 596,000
Other assets 32,000 32,000
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Total assets $ 12,250,000 $ 11,734,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,880,000 $ 5,755,000
Accrued expenses 2,528,000 3,096,000
Deferred warranty revenues 331,000 348,000
Notes payable and capital lease obligations,
current portion 914,000 235,000
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Total current liabilities 9,653,000 9,434,000
Liability for closed store leases 42,000 57,000
Notes payable and capital lease obligations 271,000 321,000
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Total liabilities 9,966,000 9,812,000
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Stockholders' equity:
Series A 6% Cumulative Convertible Preferred
Stock, $1,000 par value, 3,960 shares
authorized, issued and outstanding 3,960,000 3,960,000
Series B 6% Cumulative Convertible Preferred
Stock, $1,000 par value, 1,500 shares
authorized, issued and outstanding 1,500,000 1,500,000
Common stock, $0.01 par value, 5,000,000 shares
authorized, 3,763,036 shares issued
and outstanding 38,000 38,000
Paid-in capital 10,070,000 10,070,000
Accumulated deficit (13,284,000) (13,646,000)
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Total stockholders' equity
2,284,000 1,922,000
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Total liabilities and stockholders' equity $ 12,250,000 $ 11,734,000
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
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NEW WEST EYEWORKS, INC.
NEW WEST EYEWORKS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
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<CAPTION>
THREE MONTHS ENDED
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(Unaudited)
MARCH 30, APRIL 1,
1996 1995
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Net sales $11,504,000 $10,815,000
Cost of sales 5,800,000 5,264,000
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Gross profit 5,704,000 5,551,000
5,121,000 5,085,000
Selling, general and administrative expenses ----------- -----------
Operating income 583,000 466,000
Interest income 4,000
Interest expense 36,000 8,000
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Income before income taxes 547,000 462,000
Income tax expense 104,000 133,000
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Net income 443,000 329,000
Dividends accrued on preferred stock (81,000) (81,000)
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Net income applicable to holders of common stock $ 362,000 $ 248,000
=========== ===========
Net income per common and common equivalent shares $ 0.10 $ 0.07
=========== ===========
Weighted average number of common and common
equivalent shares outstanding 3,763,000 3,763,000
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
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NEW WEST EYEWORKS, INC.
NEW WEST EYEWORKS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
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(Unaudited)
MARCH 30, APRIL 1,
1996 1995
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CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
Net income $ 443,000 $ 329,000
Adjustments to reconcile net income to net cash from
(used in) operating activities:
Depreciation and amortization 300,000 269,000
Changes in assets and liabilities:
Accounts receivable (100,000) (229,000)
Inventory (355,000) (334,000)
Other current assets (47,000) (12,000)
Accounts payable 125,000 1,000
Accrued expenses (568,000) 69,000
Deferred warranty revenues (17,000) (37,000)
Other assets and liabilities (15,000) (8,000)
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Net cash from (used in) operating activities (234,000) 48,000
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CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Purchase of property and equipment (372,000) (357,000)
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Net cash used in investing activities (372,000) (357,000)
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CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Proceeds from issuance of debt 700,000
Payment of debt (71,000) (36,000)
Payment of preferred stock dividends (81,000) (81,000)
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Net cash from (used in) financing activities 548,000 (117,000)
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NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (58,000) (426,000)
--------- ----------
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 241,000 1,000,000
--------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 183,000 $ 574,000
========= ==========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
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NEW WEST EYEWORKS, INC.
NOTES TO CONSOLIDATED FINANCIAL INFORMATION
1. The unaudited consolidated financial information presented herein has
been prepared in accordance with the instructions to Form 10-Q and
Regulation S-X and does not include all of the information and note
disclosures required by generally accepted accounting principles.
Therefore, this information should be read in conjunction with the
consolidated financial statements and notes thereto included in the Form
10-K of New West Eyeworks, Inc. (the "Company") for the year ended
December 30, 1995. This information reflects all adjustments that are,
in the opinion of management, necessary for a fair statement of the
results for the interim periods reported. These adjustments are of a
normal and recurring nature.
2. The results of operations for the period ended March 30, 1996 are not
necessarily indicative of the results to be expected for the full year.
3. Income per common and common equivalent share is computed using the
weighted average number of common and common equivalent shares
outstanding during the period. Fully diluted earnings per share,
assuming the conversion of the Company's Series A and B 6% Cumulative
Convertible Preferred Stock as of the beginning of the period, have not
been presented, as the impact of such conversion is insignificant in
1995 and 1996.
4. In August 1995, the Company sold certain equipment for an aggregate
sales price of $505,000 and simultaneously leased the equipment back
over a term of three years with monthly payments of $16,000. The sale
was recorded as a financing transaction with no associated gain or loss
recognized. The equipment includes modular fixtures, optical equipment
and manufacturing equipment purchased by the Company in late 1994 and
early 1995.
5. To fund the Company's expansion and advertising needs in early 1996, two
bridge loans were executed with Mesirow Capital Partners VI, a common
and preferred stockholder, and Ronald E. Weinberg, Chairman of the
Board, totaling $700,000. The loans were scheduled to mature on April
30, 1996. The maturity dates on the loans were extended to May 18, 1996.
The loans bear interest at an annual rate of 15% and are secured by a
deed of trust on the Company's executive office building and optical
laboratory facilities in Tempe, Arizona.
6. As a result of the settlement agreement entered into between the Company
and Saatchi & Saatchi North America, Inc., the Company agreed to pay
Saatchi & Saatchi $1.0 million, $250,000 of which was paid in February
1996. The balance of $750,000 is to be paid in seven installments of
$107,142.85 by April 30, May 31, June 28, July 31, August 30, September
30, and October 31, 1996. These costs were recorded as being incurred by
the Company in 1995 and are reflected in accounts payable in the
accompanying consolidated balance sheet as of March 30, 1996.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Unless otherwise stated, references in this report to the first quarter
of 1996 and 1995 relate to the periods ended March 30, 1996 and April 1, 1995.
OVERVIEW
Since the hiring of new management in 1991, New West Eyeworks, Inc.
(the "Company") has redirected its business by implementing a new merchandising
strategy, improving its operating efficiency, emphasizing its managed optical
care program and successfully entering new markets. The Company has achieved 17
consecutive quarters of positive comparable store sales growth including an 8.2%
increase in the first quarter of 1996 compared to the first quarter of 1995.
The Company opened nine stores and closed 20 unprofitable or
underperforming stores, mostly in host locations, in 1995. The Company
anticipates opening 10 to 15 stores in 1996. In the first quarter of 1996, the
Company opened four stores in malls in Iowa and one store in a Fred Meyer, Inc.
("Fred Meyer") host store in Oregon. The Iowa stores represent the Company's
first entry into the Midwestern United States. The Company also closed two
stores located in strip centers in Oregon and one store located in a Fred Meyer
host store in Alaska, bringing the number of stores to 141 as of March 30, 1996.
The Company expects that its operating margins initially may be
adversely affected by increased operating costs associated with new store
openings. In accordance with the Company's accounting policy, advertising
expenditures to support new stores and other store pre-opening costs are
expensed as they are incurred.
RESULTS OF OPERATIONS
FIRST QUARTER 1996 COMPARED TO FIRST QUARTER 1995
Net sales increased $689,000 or 6.4% to $11.5 million during the first
quarter of 1996 from $10.8 million during the first quarter of 1995. Revenues
during the first quarter of 1995 included $622,000 in sales from unprofitable or
underperforming host stores which were closed during 1995. If prior-year sales
from these closed retail outlets were excluded from 1995 revenues, the Company
would have posted a 12.9% year-to-date improvement in net sales ($11.5 million
vs. $10.2 million). The net sales increase in the first quarter of 1996 was
primarily attributable to an increase of 8.2% in comparable store sales. The
comparable store sales increase was primarily due to increases in units sold and
sales generated under the Alexis Vision Plan, the Company's managed optical care
division. The comparable store sales increase in the first quarter of 1996 at
the Company's stores in malls and strip shopping centers was partially offset by
a lower rate of comparable store sales growth in the Company's host stores.
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Gross profit increased $153,000 to $5.7 million during the first
quarter of 1996, a 2.8% increase over gross profit of $5.6 million during the
first quarter of 1995. The gross profit margin decreased to 49.6% in the first
quarter of 1996 from 51.3% in the first quarter of 1995. This decrease was
primarily due to increased sales under the Alexis Vision Plan, which sales,
consistent with the Company's practice, are generally at a discount from the
Company's everyday value prices.
Selling, general and administrative expenses remained steady at $5.1
million during the first quarter of 1996 and the first quarter of 1995. As a
percentage of sales, these expenses decreased to 44.5% during the first quarter
of 1996, from 47.0% during the first quarter of 1995. This decrease was
primarily due to decreased advertising expenses resulting from a change by the
Company in its advertising agency in the fourth quarter of 1995 and an
administrative restructuring affected by the Company in late 1995 that resulted
in the elimination or consolidation of several management positions. The costs
for the restructuring were recorded in 1995.
Interest expense increased by $28,000 to $36,000 in the first quarter
of 1996 from $8,000 in the first quarter of 1995 as a result of increased
capital lease obligations and two bridge loans from Mesirow Capital Partners VI
and Mr. Weinberg.
Income tax expense decreased by $29,000 to $104,000 in the first
quarter of 1996 over income tax expense of $133,000 in the first quarter of
1995, primarily due to the Company's expectation that it will be able to utilize
a larger portion of its net operating loss carryforwards in 1996.
As a result of the foregoing, net income increased by $114,000 to
$443,000 in the first quarter of 1996 over net income of $329,000 in the first
quarter of 1995.
Dividends were accrued and paid on the Company's convertible 6%
cumulative preferred stock, Series A, par value $1,000 per share, and the
Company's convertible 6% cumulative preferred stock, Series B, par value $1,000
per share, in the aggregate amount of $81,000 in each of the first quarter of
1996 and the first quarter of 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company requires liquidity and working capital primarily for
operations and the opening of new stores, and, to a lesser extent, management
information systems and optical laboratory equipment to support store growth and
improve operating efficiencies. The Company's primary sources of funds are cash
flow from operations, lease financing of equipment, vendor trade credit, and
shareholder loans. The Company is currently attempting to negotiate a credit
facility with a large regional bank.
To fund the Company's expansion and advertising needs in early 1996,
two bridge loans were entered into with Mesirow Capital Partners VI, a common
and preferred stockholder, and Mr. Weinberg, Chairman of the Board, totaling
$700,000. William P. Sutter, Jr. is a Vice President of the corporate general
partner of Mesirow Capital Partners VI and a director of the Company. The loans
were scheduled to mature on April 30, 1996. The maturity dates on the loans were
extended to May 18, 1996. The loans bear interest at an annual rate of 15% and
are
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secured by a deed of trust on the Company's executive office building and
optical laboratory facilities in Tempe, Arizona. The Company anticipates that
the shareholder loans will be further extended when they become due on May 18,
and will continue to be extended until replaced with a bank credit facility. The
terms of the loans may be changed upon any such extension of their maturity
date.
The Company has outstanding a lease financing obligation under which
the Company sold certain equipment for an aggregate sales price of $505,000 and
simultaneously leased the equipment back over a term of three years with monthly
payments of $16,000. The sale, which took place in August 1995, was recorded as
a financing transaction with no associated gain or loss.
Short-term trade credit represents a significant source of financing
for inventory. Trade credit arises from the willingness of the Company's vendors
to grant payment terms for inventory purchases. Inventory levels increased
$335,000 from December 30, 1995 to March 30, 1996, as a result of the expansion
of the Company's stay-in-stock program at the retail outlets, the opening of a
contact lens distribution facility in 1995, near Portland, Oregon, to better
service the Company's stores in the Northwest, the expansion of the designer
frame selection at all store locations and seasonality. Although the Company has
negotiated what it believes to be favorable payment terms from its primary
vendors, there is no assurance that the Company will obtain such terms in the
future.
The Company leases all of its retail space and the optical laboratory
and distribution facility near Portland, Oregon. The Company owns its executive
offices and optical laboratory and distribution facility in Tempe, Arizona,
subject to a mortgage with a balance of $32,000 at March 30, 1996. The Tempe
facility also serves as collateral for the two bridge loans with Mesirow Capital
Partners VI and Mr. Weinberg.
The Company anticipates opening 10 to 15 new stores in 1996. Assuming
the Company opens 10 new stores in 1996, including nine new stores in malls and
strip shopping centers and one new store within a Fred Meyer host store, the
Company expects that the costs of the new stores, including furniture, fixtures,
leasehold improvements, inventory and optometric equipment, will be
approximately $1.1 million. Actual costs will vary based upon, among other
matters, geographic location, the size of the store and the extent of the
build-out required at the selected site. In addition, the Company also plans to
spend approximately $250,000 to remodel certain of its existing locations.
Additionally, the Company anticipates upgrading its manufacturing and
distribution equipment in both manufacturing facilities at an expected cost of
$380,000.
Net cash used in operating activities was $234,000 in the first quarter
of 1996 compared to net cash from operating activities of $48,000 in the first
quarter of 1995. The decrease was primarily attributable to a $568,000 decrease
in accrued expenses in the first quarter of 1996 compared to a $69,000 increase
in accrued expenses during the same period in 1995, partially offset by a
$114,000 increase in net income in the first quarter of 1996 compared to the
first quarter of 1995 and a $125,000 increase in accounts payable.
Cash flows used in investing activities, primarily for store expansion
and renovation, were $372,000 in the first quarter of 1996 compared to $357,000
in the first quarter of 1995.
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Cash flows from financing activities were $548,000 in the first quarter
of 1996 compared to cash flows used in financing activities of $117,000 in the
first quarter of 1995. Cash flows from financing activities in the first
quarter of 1996 reflect the two shareholder bridge loans that were executed
in early 1996, totaling $700,000.
The Company believes that cash flow from operations, lease financing
and the outstanding shareholder loans will be sufficient to fund its working
capital needs and store expansion program for the next twelve months. However,
there can be no assurances that the Company will meet its sales targets in which
case the Company will not have sufficient funds to satisfy its working capital
needs and fund its store expansion program. In addition, while the Company would
prefer to replace the outstanding shareholder loans with a bank credit facility
that has a principal amount greater than the outstanding shareholder loans,
there is no assurance that the Company will be able to obtain such a bank credit
facility on terms satisfactory to the Company.
NET OPERATING LOSS CARRYFORWARDS
As of December 30, 1995, the Company had net operating loss
carryforwards of $7.7 million and $6.9 million for regular tax and alternative
minimum tax purposes, respectively, which begin to expire in 2006. The Company's
initial public offering in 1993 caused the Company to experience an ownership
change as defined by Section 382(g) of the Internal Revenue Code. As a result,
there will be an annual limitation of approximately $1.0 million on the amount
of net operating loss carryforwards generated prior to the ownership change
which can be utilized to offset the Company's future taxable income.
Additionally, capital share transactions among existing shareholders during 1995
may further limit the Company's ability to utilize its operating loss
carryforwards. Future transactions involving the Company's stock (or rights to
acquire such stock) could also cause an ownership change resulting in additional
restrictions on the Company's ability to utilize its net operating loss
carryforwards after the date of such ownership change.
SEASONALITY AND QUARTERLY RESULTS
Historically, the Company's operations have been seasonal, with the
highest sales in a given year occurring first in February, March and April and
then in August, September and, to a lesser extent, in October. The Company has
historically incurred and anticipates that it may continue to incur net losses
and lower net sales during the Company's fourth quarter because of reduced
demand for eyewear during the holiday season.
The Company's results of operations may also fluctuate from quarter to
quarter as a result of the amount and timing of sales contributed by new stores
and the integration of new stores into the operations of the Company, as well as
other factors. The addition of a large number of new stores can therefore
significantly affect quarterly results of operations.
FORWARD-LOOKING STATEMENTS
Statements that are not historical facts, including statements about
management's confidence in the Company's prospects and strategies and its
expectations about the Company's expansion into new markets, growth in existing
markets, acceleration of the growth in
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comparable-store sales, the impact of the Company's advertising program and the
Company's ability to attract new sources of financing, are forward-looking
statements that involve risks and uncertainties. These risks and uncertainties
include, but are not limited to: (1) market acceptance risks, including whether
or not the Company will be able to successfully implement its value-pricing
strategy in new geographic markets, most of which markets include competitors of
the Company that have financial and other resources substantially greater than
that of the Company, and whether or not the Company will be able to conduct a
successful advertising campaign in new and existing markets against
better-financed competitors; (2) laboratory capacity and supply constraints,
including whether or not, as the Company expands into new geographic markets, it
will be able to successfully integrate its new markets into its existing eyewear
laboratory manufacturing and distribution system; (3) a slowdown in the growth
of managed care in the eyewear industry or in the Company's share of such
business, including whether or not federal or state health-care legislation will
have an adverse impact on managed care; (4) the ability of the Company to obtain
financing necessary for its growth, given its recent history of losses; (5) the
ability of the Company to restore sales and comparable-store sales increases in
its locations in Fred Meyer host stores to levels comparable to those prior to
the 1994 strike against Fred Meyer; (6) leasing risks, including whether or not
the Company will be able to lease prime mall and strip-shopping center locations
at attractive rates for its expansion into new markets and to fill out its store
locations in the Company's existing markets; and (7) the impact of government
regulation on the Company's advertising, location and design of stores, and
products sold, on the opticians employed by the Company, and on the relationship
between independent optometrists and the Company, which regulations vary widely
throughout the states in which the Company operates and are subject to frequent
change. These risks and others that are detailed in this Form 10-Q must be
considered by an investor or potential investor in the Company.
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PART II--OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1995, the Company engaged Saatchi & Saatchi North America,
Inc., a Delaware corporation, d/b/a/ Cliff Freeman and Partners (collectively
"Saatchi & Saatchi"), to provide advertising services to the Company. The
Company, after terminating its relationship with Saatchi & Saatchi, filed suit
on December 28, 1995 in the Superior Court of the State of Arizona alleging
breach of contract and failure to use reasonable skill and care and seeking
unspecified damages. On December 29, 1995, Saatchi & Saatchi brought suit
against the Company in the Supreme Court of the State of New York seeking
damages for services provided in the approximate amount of $1.6 million. In
February 1996, the Company and Saatchi entered into a settlement agreement and
agreed to dismiss both lawsuits. Under the terms of the settlement, the Company
agreed to pay Saatchi & Saatchi $1.0 million, and Saatchi & Saatchi agreed to
disburse these funds against production and media costs incurred as a result of
the services provided by Saatchi & Saatchi to the Company and to indemnify the
Company against certain of those costs.
From time to time, the Company is also involved in legal matters which
are incidental to its operations. In the opinion of management, the ultimate
resolution of these matters is not anticipated to have a material adverse effect
on the Company's financial condition or results of operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
10.15 Open-End Promissory Note, dated January 16, 1996, from
Mesirow Capital Partners VI
10.16 Open-End Promissory Note, dated January 16, 1996, from
Ronald E. Weinberg
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K
Not applicable.
(c) FINANCIAL DATA SCHEDULE FOR COMMERCIAL AND INDUSTRIAL
COMPANIES
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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.
NEW WEST EYEWORKS, INC.
Date: May 10, 1996 By: /s/ Barry J.Feld
-----------------------------------------
Barry J. Feld
President and Chief Executive Officer
Date: May 10, 1996 By: /s/ Robert W. Regas
------------------------------------------
Robert W. Regas
Vice President-Finance and Administration
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NEW WEST EYEWORKS, INC.
EXHIBIT INDEX
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<TABLE>
<CAPTION>
<S> <C>
10.15 Open-End Promissory Note, dated January 16, 1996,
from Mesirow Capital Partners VI
10.16 Open-End Promissory Note, dated January 16, 1996,
from Ronald E. Weinberg
27 Financial Data Schedule
</TABLE>
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EXHIBIT 10.15
OPEN-END PROMISSORY NOTE
$500,000.00 Tempe, Arizona
January 16, 1996
FOR VALUE RECEIVED, NEW WEST EYEWORKS, INC., an Arizona corporation and
ALEXIS HOLDING COMPANY, INC., an Arizona corporation (hereinafter referred to as
"Makers"), jointly and severally promise to pay to the order of MESIROW CAPITAL
PARTNERS VI ("Lender"), 350 N. Clark Street, Chicago, IL 60610, Attn: William P.
Sutter, Jr., or at such other place as the Lender may designate in writing, the
principal sum of FIVE HUNDRED THOUSAND DOLLARS ($500,000.00), or so much thereof
as may be advanced by Lender and remain unpaid, with interest on the unpaid
balance at the rate of fifteen percent (15%) per annum.
The principal and any accrued unpaid interest shall be due and payable
on April 30, 1996. Makers may prepay this Note, in full or in part, at any time
without penalty. This Note is secured by a deed of trust ("Deed of Trust") on
certain real property owned by Alexis Holding Company, Inc. ("Real Property") as
described in the Deed of Trust.
It is agreed that time is of the essence in the performance of all
obligations hereunder, and under the Deed of Trust. It shall be an Event of
Default hereunder if the undersigned shall: (i) fail to make any payment
hereunder when due; (ii) fail to pay all taxes, assessments other fees and dues
which may be or become a lien upon the Real Property when the same become due
and before any delinquency occurs or any penalty is assessed thereon; (iii) fail
to keep the Real Property in good condition; and (iv) fail to perform any of the
other terms, covenants or conditions of this Note or of the Deed of Trust.
Upon the occurrence of an Event of Default as set forth above, then the
outstanding principal balance hereof, and all accrued interest thereon, shall at
once become due and payable at the option of Lender without further notice or
demand, and Lender shall have such remedies as are available to it at law or in
equity. The entire unpaid principal sum shall bear interest, from the date of
occurrence of such Event of Default and after judgment and until collection, at
a rate of fifteen percent (15%) per annum.
Makers hereby waives diligence, presentment, demand, protest and notice
of every kind whatsoever; and hereby consents to an unlimited number of
extensions or modifications of the time of any payment hereunder before or after
maturity at Lender's sole discretion without notice to Makers, and that the
obligations evidenced hereby shall not be discharged by reason of any such
extensions and/or modifications. The failure of Lender to exercise any of its
rights hereunder shall not constitute a waiver of the same or of any other right
in that or any subsequent instance.
This Note shall be governed and construed in accordance with the laws
of the State of Arizona. The provisions hereof shall inure to the benefit of,
and shall be binding upon, Makers, Lender and their respective, successors and
permitted assigns. Makers expressly acknowledge that they are jointly and
severally liable for payment of the principal, and any accrued interest, due
under this Note.
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IN WITNESS WHEREOF, Makers have executed and delivered this Note on the
date first set forth above.
NEW WEST EYEWORKS, INC., an Arizona Corporation
By: /s/ Byron S. Krantz
--------------------------------------------------
Byron S. Krantz, Secretary
ALEXIS HOLDING COMPANY, INC., an Arizona Corporation
By: /s/ Bryon S. Krantz
--------------------------------------------------
Byron S. Krantz, Secretary
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EXHIBIT 10.16
OPEN-END PROMISSORY NOTE
$200,000.00
Tempe, Arizona
January 16, 1996
FOR VALUE RECEIVED, NEW WEST EYEWORKS, INC., an Arizona corporation and
ALEXIS HOLDING COMPANY, INC., an Arizona corporation (hereinafter referred to as
"Makers"), jointly and severally, promise to pay to the order of RONALD E.
WEINBERG ("Lender"), having an address c/o Weinberg Capital Corporation, 200
Public Square, Suite 29-2500, Cleveland, Ohio 44114-2301 or at such other place
as the Lender may designate in writing, the principal sum of TWO HUNDRED
THOUSAND DOLLARS ($200,000.00), or so much thereof as may be advanced by Lender
and remain unpaid, with interest on the unpaid balance at the rate of fifteen
percent (15%) per annum.
The principal and any accrued unpaid interest shall be due and payable
on April 30, 1996. Makers may prepay this Note, in full or in part, at any time
without penalty. This Note is secured by a deed of trust ("Deed of Trust") on
certain real property owned by Alexis Holding Company, Inc. ("Real Property") as
described in the Deed of Trust.
It is agreed that time is of the essence in the performance of all
obligations hereunder, and under the Deed of Trust. It shall be an Event of
Default hereunder if the undersigned shall: (i) fail to make any payment
hereunder when due; (ii) fail to pay all taxes, assessments other fees and dues
which may be or become a lien upon the Real Property when the same become due
and before any delinquency occurs or any penalty is assessed thereon; (iii) fail
to keep the Real Property in good condition; and (iv) fail to perform any of the
other terms, covenants or conditions of this Note or of the Deed of Trust.
Upon the occurrence of an Event of Default as set forth above, then the
outstanding principal balance hereof, and all accrued interest thereon, shall at
once become due and payable at the option of Lender without further notice or
demand, and Lender shall have such remedies as are available to it at law or in
equity. The entire unpaid principal sum shall bear interest, from the date of
occurrence of such Event of Default and after judgment and until collection, at
a rate of fifteen percent (15%) per annum.
Makers hereby waives diligence, presentment, demand, protest and notice
of every kind whatsoever; and hereby consents to an unlimited number of
extensions or modifications of the time of any payment hereunder before or after
maturity at Lender's sole discretion without notice to Makers, and that the
obligations evidenced hereby shall not be discharged by reason of any such
extensions and/or modifications. The failure of Lender to exercise any of its
rights hereunder shall not constitute a waiver of the same or of any other right
in that or any subsequent instance.
This Note shall be governed and construed in accordance with the laws
of the State of Arizona. The provisions hereof shall inure to the benefit of,
and shall be binding upon, Makers, Lender and their respective, successors and
permitted assigns. Makers expressly acknowledge that they are jointly and
severally liable for payment of the principal, and any accrued interest, due
under this Note.
17
<PAGE> 2
IN WITNESS WHEREOF, Makers have executed and delivered this Note on the
date first set forth above.
NEW WEST EYEWORKS, INC., an Arizona corporation
By: /s/ Byron S. Krantz
--------------------------------------------------
Byron S. Krantz, Secretary
ALEXIS HOLDING COMPANY, INC., an Arizona corporation
By: /s/ Bryon S. Krantz
--------------------------------------------------
Byron S. Krantz, Secretary
18
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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