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 JUNE 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________ TO
______________
Commission File Number 1-13066
MIKASA, INC.
(Exact name of Registrant as specified in its charter)
Delaware 33-0099676
-------------------------- -------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
20633 South Fordyce Ave., Long Beach, California 90810
------------------------------------------------ -------
(Address of principal executive offices) (Zip Code)
(310) 886-3700
--------------
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 .....
As of June 30, 1998, a total of 18,206,695 shares of the
Registrant's Common Stock, $0.01 par value, were outstanding.
Exhibit Index on Page 16
Page 1 of 17
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MIKASA, INC.
TABLE OF CONTENTS
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of 3
June 30, 1998 and December 31, 1997
Consolidated Statements of Income 4
for the three months ended June 30,
1998 and 1997, and six months ended
June 30, 1998 and 1997
Consolidated Statements of Cash Flows 5
for the six months ended June 30, 1998
and 1997
Notes to Consolidated Financial 6
Statements
Item 2. Management's Discussion and Analysis 7
of Financial Condition and Results of
Operations
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
Page 2 of 17
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MIKASA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
June 30, December 31,
1998 1997
---------- ------------
(Unaudited)
ASSETS
Cash and cash equivalents $ 2,028 $ 61,218
Accounts receivable trade, net 20,956 25,594
Inventories 180,931 150,417
Prepaid expenses and other current assets 10,551 7,559
--------- ---------
Total current assets 214,466 244,788
Property and equipment, net 125,358 119,723
Notes receivable and other assets 829 886
Intangible assets, net 4,892 5,036
--------- ---------
Total assets $ 345,545 $ 370,433
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable $ 17,016 $ 11,632
Accounts payable 14,496 22,084
Other current liabilities 24,259 27,642
--------- ---------
Total current liabilities 55,771 61,358
Deferred income taxes 2,983 2,983
Notes payable 100,000 110,000
--------- ---------
Total liabilities 158,754 174,341
--------- ---------
Preferred stock, undesignated, $0.01 par value;
authorized 20,000 shares; none issued and
outstanding -- --
Common stock, $0.01 par value; authorized 80,000
shares; 18,207 shares issued and outstanding 49,667 49,532
Cumulative translation adjustment (2,186) (1,205)
Retained earnings 181,185 187,470
--------- ---------
228,666 235,797
Less treasury stock, 4,087 shares, at cost 41,875 39,705
--------- ---------
Total stockholders' equity 186,791 196,092
--------- ---------
Total liabilities and stockholders' equity $ 345,545 $ 370,433
========= =========
The accompanying notes are an integral part of these
consolidated financial statements.
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MIKASA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
For The Three For The
Months Ended Six Months Ended
June 30, June 30,
----------------- -----------------
1998 1997 1998 1997
---- ---- ---- ----
Net sales $ 83,292 $ 83,142 $ 159,502 $ 156,250
Cost of sales 42,779 45,242 84,657 85,578
--------- --------- --------- ---------
Gross profit 40,513 37,900 74,845 70,672
Selling, general and
administrative expenses 39,239 34,891 77,109 66,952
Restructuring charge 2,400 -- 2,400 --
--------- --------- --------- ---------
Income (loss) from operations (1,126) 3,009 (4,664) 3,720
Interest expense, net 1,939 371 2,588 587
--------- --------- --------- ---------
Income (loss) before income
taxes (3,065) 2,638 (7,252) 3,133
Income tax provision (benefit) (1,159) 1,064 (2,803) 1,255
--------- --------- --------- ---------
Net income (loss) $ (1,906) $ 1,574 $ (4,449) $ 1,878
========= ========= ========= =========
Basic and diluted net income
(loss) per share of common
stock $ (0.10) $ 0.09 $ (0.24) $ 0.10
========= ========= ========= =========
Weighted average number of
shares of common stock
outstanding and diluted
shares of common stock 18,393 18,425 18,453 18,397
========= ========= ========= =========
Cash dividend per share of
common stock $ 0.05 $ 0.05 $ 0.10 $ 0.10
========= ========= ========= =========
The accompanying notes are an integral part of these
consolidated financial statements.
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MIKASA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
For The Six Months Ended
June 30,
------------------------
1998 1997
---- ----
Cash flows from operating activities:
Net income (loss) $ (4,449) $ 1,878
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization 4,198 2,960
Changes in operating assets and liabilities (40,525) (24,927)
-------- --------
Net cash used in operating activities (40,776) (20,089)
-------- --------
Cash flows from investing activities:
Capital expenditures (9,808) (28,058)
Decrease in notes receivable 199 117
-------- --------
Net cash used in investing activities (9,609) (27,941)
-------- --------
Cash flows from financing activities:
Long-term (repayments) borrowings under note
agreements (10,000) 30,000
Net decreases in short-term borrowings 5,384 (283)
Purchase of treasury stock (2,170) --
Sale of common stock from exercise of stock options 135 --
Dividends paid (1,837) (918)
-------- --------
Net cash (used in) provided by financing
activities (8,488) 28,799
-------- --------
Effect of exchange rate changes on cash
and cash equivalents (317) 11
-------- --------
Net decrease in cash, cash equivalents and
short-term investments (59,190) (19,220)
Cash, cash equivalents and short-term
investments, beginning of period 61,218 42,287
-------- --------
Cash, cash equivalents and short-term
investments, end of period $ 2,028 $ 23,067
======== ========
The accompanying notes are an integral part of these
consolidated financial statements.
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MIKASA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands)
1. Interim Financial Statements:
The accompanying consolidated financial statements of Mikasa, Inc. and
its wholly-owned and majority-owned subsidiaries (the "Company") have not been
audited by independent accountants, except for the balance sheet as of December
31, 1997. In the opinion of management, all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation have been
included. Operating results for the six months ended June 30, 1998 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1998.
2. Income Taxes:
For the six months ended June 30, 1998, income taxes have been provided
at an estimated annual rate of 38.7% of income before taxes. For the six months
ended June 30, 1997, income taxes have been provided at an estimated annual
rate of 40.0% of income before taxes.
3. Accounts Receivable, Trade:
Receivables are net of allowances for uncollectible accounts of $696 at
June 30, 1998 and $740 at December 31, 1997.
4. Property and Equipment:
Property and equipment, at cost, are net of accumulated depreciation and
amortization of $33,347 at June 30, 1998 and $29,775 at December 31, 1997.
5. Intangible Assets:
Intangible assets are net of accumulated amortization of $2,545 at
June 30, 1998 and $2,401 at December 31, 1997.
6. Declaration of Dividend:
On July 1, 1998, the Company declared a quarterly dividend of $0.05 per
share or $912 on its common stock to stockholders of record on July 10, 1998
payable on July 20, 1998.
7. Restructuring Charge:
For the second quarter ended June 30, 1998, the Company recognized an
estimated $2,400 non-recurring pre-tax charge related to the consolidation of
its east coast warehousing operations into its Charleston, South Carolina
facility.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
The following table sets forth certain financial and operations data for
the periods indicated:
Three Months Ended
June 30,
----------------------------------
1998 1997
---------------- ---------------
(In thousands, except operations data)
Net Sales by Channel of Distribution:
Direct to consumers $ 47,826 $ 45,574
Retail accounts 27,257 30,474
International 8,209 7,094
-------- --------
Total $ 83,292 $ 83,142
======== ========
Operations Data:
Stores open at beginning of period 150 137
U. S. stores opened during period -- 4
Canadian store opened during period 1 --
Stores closed during period (1) --
-------- --------
Stores open at end of period (1) 150 141
======== ========
Percentage decrease in comparable
store net sales (1.2%) (0.3%)
(1) Stores in Canada open at end of
period were 5 in 1998 and 1 in 1997
As Of June 30,
----------------------------------
1998 1997
---------------- ---------------
Total U. S. store gross square footage 1,437,300 1,333,500
- -------------
Three Months Ended June 30, 1998 Compared to Three Months Ended June 30, 1997
Net Sales. Net sales for the three months ended June 30, 1998 (the
"current period") were $83.3 million, an increase of $0.2 million or 0.2% over
net sales of $83.1 million for the three months ended June 30, 1997 (the "prior
period"). This increase is primarily attributable to an increase in sales of
$2.3 million through the Company's direct to consumers channel of distribution.
This increase in net sales was primarily attributable to an increase in number
of units sold rather than prices. Sales from relocated and retail stores opened
Page 7 of 17
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for less than twelve months accounted for $4.5 million of the retail sales
growth. This sales increase was partially offset by the decrease in comparable
store sales and the sales foregone from the stores closed in the last twelve
months. Sales through the retail account channel of distribution decreased $3.2
million and sales through the international channel increased $1.1 million.
Gross Profit. Gross profit for the current period was $40.5 million, an
increase of $2.6 million or 6.9% over the prior period's gross profit of $37.9
million. Gross profit as a percentage of net sales increased to 48.6% in the
current period from 45.6% in the prior period. The gross profit increase as a
percentage of net sales was due to improved margins in the current period from
all channels of distribution over the prior period and the heavier weighting of
higher margin retail store business.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses, excluding the restructuring charge, were $39.2 million
in the current period, an increase of $4.3 million or 12.5% over the prior
period. As a percentage of net sales, such expenses increased to 47.1% in the
current period from 42.0% in the prior period. During the current period,
expenses associated with relocated and new retail stores open less than twelve
months accounted for $3.4 million of the expense increase. Included in this
amount are certain preopening expenses of $0.6 million for stores opened during
the quarter and other stores expected to open in 1998. This follows the
Company's practice to expense all costs associated with new store openings at
the time incurred. Operating expenses were impacted by the startup costs of $2.6
million associated with the Company's new Charleston, South Carolina
distribution facility.
Restructuring Charge. A restructuring charge of $2.4 million was accrued
during the current period for expenses expected in connection with the
consolidation of the Company's east coast warehousing operations, credit and
customer service functions with its Charleston, South Carolina facility. The
consolidation is anticipated to be completed by the end of the first quarter
1999.
Income (Loss) from Operations. Loss from operations in the current
period was ($1.1) million, a decrease of $4.1 million from the prior period's
income from operations of $3.0 million. This decrease was primarily attributable
to the additional expenses of new stores with overall flat sales results,
startup costs associated with the Charleston, South Carolina facility and the
one time restructuring charge of $2.4 million, partially offset by the increase
in gross profit as a percentage of net sales. Additionally, the combined effect
of higher anticipated operating expenses associated with the Company's expanded
retail store base and anticipated lower seasonal sales in the second quarter
contributed to the effect on income from operations.
Interest Expense, Net. Net interest expense was $1.9 million in the
current period, an increase of $1.5 million from the prior period net interest
expense of $0.4 million. The increase is primarily due to recognition of
interest expense in the current period attributable to the Company's Charleston,
South Carolina facility, which interest had been capitalized in prior periods
during construction.
Page 8 of 17
<PAGE>
Six Months Ended June 30, 1998 Compared to Six Months Ended June 30, 1997
Net Sales. Net sales for the six months ended June 30, 1998 (the
"current period") were $159.5 million, an increase of $3.3 million or 2.1% over
net sales of $156.2 million for the six months ended June 30, 1997 (the "prior
period"). This increase is primarily attributable to an increase in sales of
$7.4 million through the Company's direct to consumers channel of distribution.
This increase in net sales was primarily attributable to an increase in number
of units sold rather than prices. Sales from relocated and retail stores opened
for less than twelve months accounted for $10.1 million of the retail sales
growth. This sales increase was partially offset by the slight decrease in
comparable store sales and the sales foregone from the stores closed in the last
twelve months. Sales through the retail account channel of distribution
decreased $6.5 million and sales through the international channel increased
$2.4 million.
Gross Profit. Gross profit for the current period was $74.8 million, an
increase of $4.1 million or 5.9% over the prior period's gross profit of $70.7
million. Gross profit as a percentage of net sales increased to 46.9% in the
current period from 45.2% in the prior period. The gross profit increase as a
percentage of net sales was due to improved margins in the current period from
all channels of distribution over the prior period and the heavier weighting of
higher margin retail store business.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses excluding the restructuring charge, were $77.1 million
in the current period, an increase of $10.1 million or 15.2% over the prior
period. As a percentage of net sales, such expenses increased to 48.3% in the
current period from 42.9% in the prior period. Expenses from retail stores
opened for less than twelve months accounted for $6.8 million of the expense
increase. Included in this amount are certain preopening expenses of $0.7
million for stores opened during the period and other stores expected to open in
1998. This follows the Company's practice to expense all costs associated with
new store openings at the time incurred. Operating expenses were impacted by the
startup costs of $4.3 million associated with the Company's new Charleston,
South Carolina distribution facility.
Restructuring Charge. A restructuring charge of $2.4 million was accrued
during the current period for expenses expected in connection with the
consolidation of the Company's east coast warehousing operations, credit and
customer service functions with its Charleston, South Carolina facility. The
consolidation is anticipated to be completed by the end of the first quarter
1999.
Income (Loss) from Operations. Loss from operations in the current
period was ($4.7) million, a decrease of $8.4 million from the prior period's
income from operations of $3.7 million. This decrease was primarily attributable
to the additional expenses of new stores, startup costs associated with the
Charleston, South Carolina facility and the one time restructuring charge of
$2.4 million, partially offset by the increase in gross profit as a percentage
of net sales. Additionally, the combined effect of higher anticipated operating
expenses associated with the Company's expanded retail store base and
anticipated lower seasonal sales in the second quarter contributed to the effect
on income from operations.
Page 9 of 17
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Interest Expense, Net. Net interest expense was $2.6 million in the
current period, an increase of $2.0 million from the prior period net interest
expense of $0.6 million. The increase is primarily due to recognition of
interest expense in the second quarter 1998 attributable to the Company's
Charleston, South Carolina facility, which interest had been capitalized in
prior periods during construction.
Liquidity and Capital Resources
Historically, the Company has used cash from operations, an equity
offering and debt financing to fund working capital requirements and capital
expenditures. In June 1997, the Company placed $60 million in unsecured, senior
notes with a group of insurance companies at an interest rate of 7.38% per annum
payable semi-annually that mature on June 4, 2007. Principal payments of $15.0
million per year will be due annually commencing in June 2004. The Company also
has outstanding $50.0 million in unsecured senior notes with a group of
insurance companies which bear interest at the rate of 6.66% per annum payable
semi-annually that mature in May 2003. Principal payments on these notes of
$10.0 million per year are due annually with the first payment made in May 1998.
The Company also has a $50.0 million unsecured revolving credit facility
provided by two banks. The maturity date of the revolving credit facility is May
19, 2001, subject to automatic extensions in one year increments at the end of
each commitment year, unless either bank delivers a notice of intention not to
extend the maturity date. As of June 30, 1998, $11.7 million had been used for
letters of credit under the revolving credit facility, and $5.4 million had been
used for capital expenditures and working capital needs. The balance of $32.9
million was unused and available at June 30, 1998. The Company's senior note and
revolving credit agreements contain certain financial covenants including
restrictions on cash distributions to stockholders which could limit the
Company's future ability to pay cash dividends.
The Company had working capital of $158.7 million at June 30, 1998 and
working capital of $183.4 million at December 31, 1997. Net cash used in
operating activities was $40.8 million and $20.1 million in the six months ended
June 30, 1998 and 1997, respectively. The increase in net cash used in operating
activities in the six months ended June 30, 1998 compared to the same period of
1997 is primarily attributable to the net loss in the six months ended June 30,
1998, an increase in inventory and decrease in accounts payable and accrued
expenses partially offset by a decrease in accounts receivable.
Net cash used in investing activities was $9.6 million and $27.9 million
in the six months ended June 30, 1998 and 1997, respectively. The Company made
capital expenditures of $9.8 million and $28.1 million in the six months ended
June 30, 1998 and 1997, respectively (consisting primarily of expenditures for
construction of the new distribution center in South Carolina, new retail
stores' fixtures and leasehold improvements, distribution facilities' fixtures
and renovation of existing stores).
Pursuant to the Company's previously announced common stock repurchase
program of up to $10 million of common stock, the Company has purchased 165,500
shares in the first six months of 1998 at a total cost of $2.2 million.
Certain monetary assets and liabilities of the Company are in foreign
currencies and may be subject to foreign exchange risk. Foreign currency
exchange losses have not in the past had a material effect on the Company's
financial condition since these assets and liabilities are not material to its
Page 10 of 17
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consolidated monetary assets and liabilities. As such, these items have not been
hedged by the Company.
The Company's inventory purchases in 1997 were approximately 23% from
Japanese factories and approximately 30% from factories in Germany and Austria
combined. The significant portion of the inventory purchases in foreign
currencies exposes the Company to foreign currency fluctuations which can affect
the Company's gross profit margin. To hedge against foreign currency swings, the
Company has strategies in place which are intended to minimize the adverse
impact of foreign currency on its business. These strategies are: (i) Currency
risk sharing arrangements with certain of the Company's suppliers; (ii) Forward
exchange contract coverage on part of its German mark related purchases; (iii)
Sourcing of products in currencies other than Japanese and German where
feasible; and (iv) Converting certain purchases from foreign currency to U.S.
dollar denominations. The currency risk sharing arrangements are intended to
minimize the impact of currency swings by the equal sharing of currency
exposures against inventory purchases denominated in Japanese yen between the
suppliers and the Company. Future fluctuations of the U.S. dollar in relation to
foreign currencies can impact earnings in future periods.
The Company has three primary distribution centers in the United States,
located in Charleston, South Carolina, Secaucus, New Jersey and Long Beach,
California. While the Secaucus facility is owned, the Long Beach facility is
leased pursuant to a lease expiring in January 2000. The Company also leases
additional off-site warehouse space on a short-term and mid-term basis in
separate buildings to augment each of these primary facilities. Construction of
the Company's 590,000 square foot distribution facility in Charleston, South
Carolina commenced in the second quarter of 1996 and was completed in the latter
part of 1997. The facility is ramping up its operation. In the second quarter
1998 the Company announced plans to consolidate its east coast warehousing
operations, credit and customer service functions with the Charleston, South
Carolina facility and accrued a $2.4 million restructuring charge in connection
with the planned consolidation. The Company is evaluating its alternatives
regarding the utilization of the Secaucus facility post consolidation. The
Company began depreciation of this new facility in the second quarter 1998 which
also impacted earnings. The new facility should also over time enable the
Company to eliminate the need for offsite facilities in Long Beach and
accommodate substantially increased volume. The Company believes that the use of
state of the art distribution technology in the new facility and relief from
inefficiencies resulting from overcrowding of existing facilities should provide
long-term benefits. However, transition costs are currently negatively impacting
operating results and are expected to continue to impact operating results in
the mid-term.
During the second quarter of 1998, the Company opened one retail store
in Canada and closed one retail store in the United States to end the quarter
with 150 stores. The number of states in which the Company operates stores is 42
and the number of Canadian provinces is 3. The Company plans to continue to
pursue expansion of its store network in the United States and Canada. Present
plans include opening between 10 and 15 new retail stores in each of 1998 and
1999. Each store requires a commitment of inventory, fixtures, equipment and
pre-opening store expenses.
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The Company currently estimates that its aggregate capital expenditures
and initial investments (including inventory) in 1998 and 1999 will approximate
up to $40 million. This includes the expansion of the retail store network,
expansion of its international operations and the balance of capital
expenditures for the new distribution facility in Charleston, South Carolina. In
each of these cases, there can be no assurance that the Company's capital
expenditures will not exceed this estimated amount.
Future Developments
The Company adopted Financial Accounting Standards Board Statement No.
130, Reporting Comprehensive Income ("SFAS 130"), and Disclosures about Segments
of an Enterprise and Related Information ("SFAS 131") in the first quarter of
1998. SFAS No. 130 establishes new standards for reporting and displaying
comprehensive income and its components. SFAS 131 requires disclosure of certain
information regarding operating segments, products and services, geographic
areas of operation and major customers; however, the disclosure provisions of
SFAS 131 do not apply to interim financial statements in the initial year of its
adoption and no such disclosures are included in these interim unaudited
condensed financial statements. The adoption of these Statements did not have a
material impact on the Company's consolidated financial statements.
Year 2000 Compliance
Many installed computer systems are coded to accept only two digit
entries in the date code field. As the year 2000 approaches, these code fields
will need to accept four digit entries to distinguish years beginning with "19"
from those beginning with "20." As a result, in less than two years, computer
systems used by many companies may need to be upgraded to comply with such year
2000 requirements. The Company is assessing its internal management information
systems in order to identify and modify those systems that are not year 2000
compliant. The Company expects such modifications will be made on a timely basis
and does not believe that the cost of such modifications will have a material
effect on the Company's operating results or financial condition. There can be
no assurance, however, that there will not be a delay in, or increased costs
associated with, the implementation of such changes, and the Company's inability
to implement such changes could have an adverse effect on future results of
operations.
Seasonality and Quarterly Fluctuations
Historically, the Company's operations have been seasonal, with higher
sales and net income occurring in the third and fourth quarters, reflecting
increased demand during the year-end holiday selling season. Since the biggest
retail selling season is the year-end holiday season, and as more of the
Company's principal department store customers adopt electronic data interchange
which allows them to defer shipments until later in the selling season, future
sales are expected to be more heavily weighted toward the third and fourth
quarters. In addition, the Company's retail stores experience a similar seasonal
selling pattern, however, sales are more heavily weighted toward the fourth
quarter. As a result, as the Company increases the number of stores, the shift
of sales volume toward the latter part of the year is expected to continue.
Page 12 of 17
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The Company's results of operations may also fluctuate from quarter to
quarter in the future as a result of the amount and timing of sales contributed
by, and expenses related to the opening of new retail stores and the integration
of such stores into the operations of the Company, as well as other factors. The
addition of a significant number of retail stores, as is anticipated with the
Company's store expansion program, can therefore significantly affect results of
operations on a quarter-to-quarter basis. As the addition of new stores
continues, operating income for the first and second quarters will be more
impacted by the combination of seasonally lower sales volumes during this period
and increased operating expenses. The increase in operating expenses is expected
to be principally due to an increased percentage of fixed expenses that relate
to retail stores and the additional incremental expense from new developing
stores.
Forward-Looking Information
Certain statements or assumptions in Management's Discussion and
Analysis contain or are based on "forward-looking" information (as defined in
the Private Securities Litigation Reform Act of 1995) that involves risks and
uncertainties inherent in the Company's business. Those statements include
statements related to the impact on future sales and profitability of the effort
to bring the Company's new distribution facility on line, foreign exchange and
foreign purchasing risks, planned expansion of the Company's retail store
network, capital expenditure levels associated with planned projects, year 2000
compliance issues and future trends relating to seasonality. Actual results,
performance levels or achievements may be materially different from any future
results, performance levels or achievements expressed or implied by such
forward-looking information. Actual results, performance levels and achievements
will be dependent upon: the Company's successful performance of internal plans;
its ability to control inventory levels; customer changes in short range and
long range plans; domestic and international competition in the Company's
product areas; whether the Company will be able to accomplish store closures
within the current time table for closure and within the parameters of the loss
provision (which are based on current estimates of closure costs); future
performance of the Company's new distribution facility and successful completion
of programs to improve efficiency of the new facility; continued acceptance of
existing products and the development and acceptance of new products;
performance issues with key suppliers; changes in government import and export
policies; risks related to international transactions and hedging strategies;
and general economic risks and uncertainties.
Page 13 of 17
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PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's Annual Meeting of Shareholders held on May 27, 1998,
the following members were re-elected to the Board of Directors:
George T. Aratani
Anthony F. Santarelli
The following proposals were approved at the Company's Annual Meeting:
Votes Against or
For Withheld Abstentions
---------- ----------- -----------
1. Re-election of three of its
directors to
the Board of Directors
George T. Aratani 16,068,867 136,698
Anthony F. Santarelli 16,069,067 136,498
2. Adoption of the Mikasa, Inc.
1998 Long-Term Stock
Incentive Plan 12,851,910 783,727 381,160
There were 2,188,768 broker non-votes with respect to Item 2 and no broker
non-votes with respect to Item 1 above.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.15 Mikasa, Inc. 1998 Long-Term Stock Incentive Plan,
incorporated by reference to exhibit A filed with
the Registrant's Proxy Statement filed April 22, 1998
27 Financial Data Schedule
(b) Reports on Form 8-K
None.
Page 14 of 17
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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.
MIKASA, INC.
(Registrant)
Date: August 14, 1998 /s/ Raymond B. Dingman
-------------------------------------
Raymond B. Dingman
President and Chief Executive Officer
/s/ Brenda W. Flores
-------------------------------------
Brenda W. Flores
Vice President and Chief Financial Office
(Principal Financial and Accounting Officer)
Page 15 of 17
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description Page
- -------------------------------------------------------------------------------
10.15 Mikasa, Inc. 1998 Long-Term Stock Incentive
Plan, incorporated by reference to exhibit A
filed with the Registrant's Proxy Statement
filed April 22, 1998
27 Financial Data Schedule 17
Page 16 of 17
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 2,028
<SECURITIES> 0
<RECEIVABLES> 21,652
<ALLOWANCES> 696
<INVENTORY> 180,931
<CURRENT-ASSETS> 214,466
<PP&E> 158,705
<DEPRECIATION> 33,347
<TOTAL-ASSETS> 345,545
<CURRENT-LIABILITIES> 55,771
<BONDS> 100,000
0
0
<COMMON> 18,207
<OTHER-SE> 137,124
<TOTAL-LIABILITY-AND-EQUITY> 345,545
<SALES> 159,502
<TOTAL-REVENUES> 159,502
<CGS> 84,657
<TOTAL-COSTS> 164,166
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,588
<INCOME-PRETAX> (7,252)
<INCOME-TAX> (2,803)
<INCOME-CONTINUING> (4,449)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,449)
<EPS-PRIMARY> (0.24)
<EPS-DILUTED> (0.24)
</TABLE>
