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 SEPTEMBER 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 September 30, 1998, a total of 18,145,395 shares of the Registrant's
Common Stock, $0.01 par value, were outstanding.
Manually Signed Original
Exhibit Index on Page 16
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MIKASA, INC.
TABLE OF CONTENTS
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of 3
September 30, 1998 and December 31, 1997
Consolidated Statements of Income 4
for the three months ended September 30,
1998 and 1997, and nine months ended
September 30, 1998 and 1997
Consolidated Statements of Cash Flows 5
for the nine months ended September 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 6. Exhibits and Reports on Form 8-K 14
Signatures 15
2
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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)
September 30, December 31,
1998 1997
------------- ------------
(Unaudited)
ASSETS
Cash and cash equivalents $ 929 $ 61,218
Accounts receivable trade, net 35,832 25,594
Inventories 189,516 150,417
Prepaid expenses and other current assets 8,218 7,559
--------- ---------
Total current assets 234,495 244,788
Property and equipment, net 127,343 119,723
Notes receivable and other assets 802 886
Intangible assets, net 4,819 5,036
--------- ---------
Total assets $ 367,459 $ 370,433
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable $ 36,263 $ 11,632
Accounts payable 11,501 22,084
Other current liabilities 27,729 27,642
--------- ---------
Total current liabilities 75,493 61,358
Deferred income taxes 2,983 2,983
Notes payable 100,000 110,000
--------- ---------
Total liabilities 178,476 174,341
--------- ---------
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 issued and outstanding 18,145 shares in
1998 and 18,359 shares in 1997 49,667 49,532
Cumulative translation adjustment (2,920) (1,205)
Retained earnings 184,844 187,470
--------- ---------
231,591 235,797
Less treasury stock, 4,148 shares in 1998
and 3,921 shares in 1997, at cost 42,608 39,705
--------- ---------
Total stockholders' equity 188,983 196,092
--------- ---------
Total liabilities and stockholders' equity $ 367,459 $ 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 Months For The Nine Months
Ended September 30, Ended September 30,
-------------------- -------------------
1998 1997 1998 1997
--------- --------- --------- -------
Net sales $104,053 $100,689 $263,555 $256,939
Cost of sales 54,121 52,392 138,778 137,970
-------- -------- -------- --------
Gross profit 49,932 48,297 124,777 118,969
Selling, general and
administrative expenses 40,117 36,276 117,226 103,228
Restructuring charge -- -- 2,400 --
-------- -------- -------- --------
Income from operations 9,815 12,021 5,151 15,741
Interest expense, net 2,363 723 4,951 1,310
-------- -------- -------- --------
Income before income taxes 7,452 11,298 200 14,431
Income tax provision 2,881 4,452 78 5,707
-------- -------- -------- --------
Net income $ 4,571 $ 6,846 $ 122 $ 8,724
======== ======== ======== ========
Basic and diluted net income per
share of common stock $ 0.25 $ 0.37 $ 0.01 $ 0.48
======== ======== ======== ========
Weighted average number of
shares of common stock
outstanding and diluted shares
of common stock 18,264 18,475 18,296 18,423
======== ======== ======== ========
Cash dividends per share of
common stock $ 0.05 $ 0.05 $ 0.15 $ 0.15
======== ======== ======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
4
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MIKASA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
For The Nine Months Ended
September 30,
--------------------------
1998 1997
-------------- ----------
Cash flows from operating activities:
Net income $ 122 $ 8,724
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 7,064 4,819
Changes in operating assets and liabilities (61,801) (47,347)
-------- --------
Net cash used in operating activities (54,615) (33,804)
-------- --------
Cash flows from investing activities:
Capital expenditures (14,403) (38,457)
Decrease in notes receivable 199 182
Net cash used in investing activities (14,204) (38,275)
-------- --------
Cash flows from financing activities:
Long-term (repayments) borrowings under note
agreements (10,000) 60,000
Net increases (decreases) in short term borrowings 24,631 (439)
Purchase of treasury stock (2,902) --
Sale of common stock from exercise of stock options 135 --
Dividends paid (2,749) (1,836)
-------- --------
Net cash provided by financing activities 9,115 57,725
-------- --------
Effect of exchange rate changes on cash
and cash equivalents (585) (89)
-------- --------
Net decrease in cash and cash equivalents (60,289) (14,443)
Cash and cash equivalents, beginning of period 61,218 42,287
-------- --------
Cash and cash equivalents, end of period $ 929 $ 27,844
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
MIKASA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands, except per share data)
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 nine months ended September 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 nine months ended September 30, 1998, income taxes have been
provided at an estimated annual rate of 39.0% of income before taxes. For the
nine months ended September 30, 1997, income taxes have been provided at an
estimated annual rate of 39.5% of income before taxes.
3. Accounts Receivable, Trade:
Receivables are net of allowances for uncollectible accounts of $693 at
September 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 $36,623 at September 30, 1998 and $29,775 at December 31, 1997.
5. Intangible Assets:
Intangible assets are net of accumulated amortization of $2,658 at
September 30, 1998 and $2,401 at December 31, 1997.
6. Declaration of Dividend:
On October 5, 1998, the Company declared a quarterly dividend of $0.05 per
share or $907 on its common stock to stockholders of record on October 15,1998,
payable on October 26, 1998.
6
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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
September 30,
--------------------------
1998 1997
------------ ------------
Net Sales by Channel of Distribution:
Direct to consumers $ 52,763 $ 49,733
Retail accounts 42,966 44,390
International 8,324 6,566
---------- ----------
Total $ 104,053 $ 100,689
========== ==========
Operations Data:
Stores open at beginning of period 150 141
U. S. stores opened during period 1 3
Canadian store opened during period 1 -
Store closed during period (1) 0
---------- ----------
Stores open at end of period (1) 151 144
========== ==========
Percentage increase (decrease) in comparable store
net sales 1.1% (1.8%)
(1) Stores in Canada open at end of period were 5
in 1998 and 1 in 1997
As Of September 30,
---------------------------
1998 1997
------------ -------------
Total U. S. store gross square footage 1,440,600 1,383,000
- - -----------
Three Months Ended September 30, 1998 Compared to Three Months Ended
September 30, 1997
Net Sales. Net sales for the three months ended September 30, 1998 (the
"current period") were $104.1 million, an increase of $3.4 million or 3.3% from
net sales of $100.7 million for the three months ended September 30, 1997 (the
"prior period"). This increase in net sales was primarily attributable to an
increase in number of units sold rather than prices. Sales from new retail
stores opened for less than twelve months accounted for $3.8 million of the
retail sales growth. This sales increase was partially offset by the sales
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<PAGE>
foregone from the stores closed in the last twelve months. Sales through the
retail account channel of distribution decreased $1.4 million and sales through
the international channel of distribution increased $1.8 million.
Gross Profit. Gross profit for the current period was $49.9 million, an
increase of $1.6 million or 3.4% over the prior period's gross profit of $48.3
million. Gross profit as a percentage of net sales was 48.0% in both the current
period and the prior period.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses in the current period were $40.1 million, an increase of
$3.8 million or 10.6% over the prior period of $36.3 million. As a percentage of
net sales, such expenses increased to 38.6% in the current period from 36.0% in
the prior period. During the current period, expenses associated with new retail
stores opened less than twelve months accounted for $2.9 million of the expense
increase. Included in this amount are certain pre-opening expenses of $0.5
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 $2.4 million associated with the Company's new
Charleston, South Carolina distribution facility. These expenses were partially
offset by decreased expenses from the Company's Secaucus, New Jersey warehouse
as its distribution function combines into the Charleston facility.
Income from Operations. Income from operations in the current period was
$9.8 million, a decrease of $2.2 million or 18.4% from the prior period's income
from operations of $12.0 million. This decrease was primarily attributable to
the additional expenses of new stores and the startup costs associated with the
Charleston, South Carolina facility.
Interest Expense, Net. Net interest expense was $2.4 million in the
current period, an increase of $1.7 million from the prior period of $0.7
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. The increase also reflects the short-term borrowings to support
the Company's increased inventory levels.
Nine Months Ended September 30, 1998 Compared to Nine Months Ended September 30,
1997
Net Sales. Net sales for the nine months ended September 30, 1998 (the
"current period") were $263.5 million, an increase of $6.6 million or 2.6% over
net sales of $256.9 million for the nine months ended September 30, 1997 (the
"prior period"). This increase in net sales was primarily attributable to an
increase in number of units sold rather than prices. Sales from relocated and
new retail stores opened for less than twelve months accounted for $12.0 million
of the retail sales growth. This sales increase was partially offset by the
sales foregone from the stores closed in the last twelve months. Sales through
the retail account channel of distribution decreased $7.9 million and sales
through the international channel of distribution increased $4.1 million.
Gross Profit. Gross profit for the current period was $124.8 million, an
increase of $5.8 million or 4.9% over the prior period's gross profit of $119.0
million. Gross profit as a percentage of net sales increased to 47.3% in the
current period from 46.3% in the prior period. The gross profit increase as a
percentage of net sales was due to improved margins from all channels of
distribution.
8
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Selling, General and Administrative Expenses. Selling, general and
administrative expenses, excluding the restructuring charge, were $117.2 million
in the current period, an increase of $14.0 million or 13.6% over the prior
period expenses of $103.2 million. As a percentage of net sales, such expenses
increased to 44.5% in the current period from 40.2% in the prior period. During
the current period, expenses associated with new retail stores opened for less
than twelve months accounted for $9.5 million of the expense increase. Included
in this amount are certain pre-opening expenses of $1.2 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
$6.6 million associated with the Company's new Charleston, South Carolina
distribution facility. These expenses were partially offset by decreased
expenses from the Company's Secaucus, New Jersey warehouse as its distribution
function combines into the Charleston 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 from Operations. Income from operations in the current period was
$5.1 million, a decrease of $10.6 million or 67.3% from the prior period's
income from operations of $15.7 million. This represented an increase as a
percentage of net sales to 6.1% in the current period from 5.3% in the prior
period. This decrease was primarily attributable to the additional expenses of
new stores and the startup costs associated with the Charleston, South Carolina
facility, partially offset by the increase in gross profit as a percentage of
net sales.
Interest Expense, Net. Net interest expense was $4.9 million in the
current period, an increase of $3.6 million from the prior period's net interest
expense of $1.3 million. The increase is primarily due to recognition of
interest expense beginning April 1, 1998 attributable to the Company's
Charleston, South Carolina facility, which interest had been capitalized in
prior periods during construction. The increase also reflects short-term
borrowings to support the Company's increased inventory levels.
Liquidity and Capital Resources
- - -------------------------------
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 September 30, 1998, $5.7 million had been used
9
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for letters of credit under the revolving credit facility, and $24.5 million had
been used for capital expenditures and working capital needs. The balance of
$19.8 million was unused and available at September 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 $159.0 million at September 30, 1998
and working capital of $183.4 million at December 31, 1997. Net cash used in
operating activities was $54.6 million and $33.8 million for the nine months
ended September 30, 1998 and 1997, respectively. The increase in net cash used
in operating activities in the nine months ended September 30, 1998 compared to
the same period of 1997 is primarily attributable to the substantially lower
level of net income in the nine months ended September 30, 1998, an increase in
inventory and decrease in accounts payable and accrued expenses.
Net cash used in investing activities was $14.2 million and $38.3 million
in the nine months ended September 30, 1998 and 1997, respectively. The Company
made capital expenditures of $14.4 million and $38.5 million in the nine months
ended September 30, 1998 and 1997, respectively (consisting primarily of the
expenditures for construction of the new distribution center in South Carolina,
fixtures and leasehold improvements for new stores, improvements to distribution
facilities and renovation of existing retail stores).
Net cash provided by financing activities was $9.1 million and $57.7
million in the nine months ended September 30, 1998 and 1997, respectively. The
Company had short-term borrowings of $24.6 million in the nine months ended
September 30, 1998 and funding from its senior notes of $60.0 million in the
comparable period in 1997. Pursuant to the Company's previously announced common
stock repurchase program of up to $10 million of common stock, the Company has
purchased 265,500 shares during the nine months ended September 30, 1998 at a
total cost of $2.9 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
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. A significant portion of 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 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.
10
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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 Charleston and Secaucus facilities are 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 mid-term basis in
separate buildings to augment the Long Beach facility. Construction of the
Company's 590,000 square foot distribution facility in Charleston, South
Carolina 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 into 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
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 third quarter of 1998, the Company opened one new retail store
in the United States, one new retail store in Canada and closed one retail store
in the United States to end the quarter with 151 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 up to10 new retail
stores in each of 1998 and 1999. Each store requires a commitment of inventory,
fixtures, equipment and pre-opening store expenses.
The Company currently estimates that its aggregate capital expenditures
and initial investments (including inventory) for the balance of 1998 and fiscal
year 1999 will approximate up to $20 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.
11
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Year 2000 Compliance
- - --------------------
Like most companies, the Company is affected by Year 2000 issues. The
Company has developed a program to evaluate and respond to these issues. This
program has been designed to minimize risk to the Corporation's business and its
customers using a standard five phase approach. The five phases include
assessment, planning, remediation, testing and validation.
The Company has completed its assessment of internal systems and has
concluded that, with certain exceptions, its hardware and software are Year 2000
compliant. Exceptions exist with respect to certain local and wide area network
applications software, EDI software and retail point of sale hardware for the
Company's retail store network. Testing is underway to determine whether
replacement of certain retail store network point of sale hardware will be
required. If replacement is required, the Company would incur a cost of
approximately $850,000. The Company is also testing recently received retail
point of sale software and expects installation of this software to be completed
by the second quarter of 1999.
The Company is coordinating the conversion of its EDI software with major
customers and expects to receive a Year 2000 compliant version of EDI software
in November of 1998. As customers convert to new Year 2000 compliant EDI
versions, the Company will convert them to the Company's new EDI software.
The Company has expensed the cost of upgrading of internally generated
software. Based on information available at this time and subject to possible
need to replace retail network point of sale hardware, management believes that
the costs to implement the program will not have a material impact on the
Company's consolidated results of operations, cash flows or financial position
in any period.
Communication with respect to Year 2000 issues with the Company's
customers has been initiated and the Company is in the process of contacting
foreign suppliers. The Company does not have control over these third parties
and as a result, cannot currently estimate to what extent future operating
results may be adversely affected by the failure of these third parties to
successfully address their Year 2000 issues. However, the Company's program
includes actions designed to identify and minimize, where possible, any third
party exposures.
The costs to implement and the time frame contemplated by the program are
based on management's best estimates, which were derived utilizing numerous
assumptions related to future events, including each vendor's ability to modify
proprietary software, unanticipated issues identified in the ongoing compliance
review, and other similar uncertainties. There can be no guarantee that these
estimates of costs or timing, or that the objective of the program, will be
achieved. However, the Company continues to monitor activities related to the
program designed to insure Year 2000 readiness. Contingency plans have not been
developed to date and the need for such plans will be reviewed during 1999.
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
12
<PAGE>
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.
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); whether
unanticipated year 2000 problems will impact the Company's operations; 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.
13
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K
None.
14
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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: November 16, 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 Officer
(Principal Financial and Accounting Officer)
15
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EXHIBIT INDEX
Exhibit No. Description Page
- - ----------- ----------- ----
27 Financial Data Schedule 17
16
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 929
<SECURITIES> 0
<RECEIVABLES> 36,525
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0
0
<COMMON> 18,148
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<CGS> 138,778
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<EXTRAORDINARY> 0
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<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
