<PAGE> 1
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, 2000
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.)
One Mikasa Drive, Secaucus, New Jersey 07096
------------------------------------------ ---------
(Address of principal executive offices) (Zip Code)
(201) 867-9210
--------------
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, 2000, a total of 16,985,445 shares of the Registrant's Common
Stock, $0.01 par value, were outstanding.
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MIKASA, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of 3
June 30, 2000 and December 31, 1999
Consolidated Statements of Income 4
for the three months ended June 30,
2000 and 1999, and six months ended
June 30, 2000 and 1999
Consolidated Statements of Cash Flows 5
for the six months ended June 30,
2000 and 1999
Notes to Consolidated Financial 6
Statements
Item 2. Management's Discussion and Analysis 9
of Financial Condition and Results of
Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risks 14
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
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MIKASA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
------------------- -------------------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 10,566 $ 45,650
Trade accounts receivable, net 24,115 29,684
Inventories 170,524 155,204
Deferred income taxes 4,349 4,375
Prepaid expenses and other current assets 3,362 3,129
------------ ------------
Total current assets 212,916 238,042
Property and equipment, net 124,366 127,665
Intangible assets, net 4,570 4,740
Other assets 866 956
------------ ------------
Total assets $ 342,718 $371,403
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings $ 11,256 $ 11,514
Accounts payable 12,596 18,113
Accrued expenses 23,719 25,807
Income tax payable -- 7,507
------------ ------------
Total current liabilities 47,571 62,941
Deferred income taxes 5,977 5,977
Notes payable 80,000 90,000
------------ ------------
Total liabilities 133,548 158,918
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 16,985 and 17,179 shares
at June 30, 2000 and December 31, 1999, respectively 49,937 49,937
Cumulative translation adjustment 101 748
Retained earnings 214,483 215,265
------------ ------------
264,521 265,950
Less treasury stock, 5,334 and 5,141 shares at June 30,
2000 and December 31, 1999, respectively, at cost (55,351) (53,465)
------------ ------------
Total stockholders' equity 209,170 212,485
------------ ------------
Total liabilities and stockholders' equity $342,718 $371,403
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 4
MIKASA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
For The Three Months Ended For The Six Months Ended
June 30, June 30,
---------------------------------- ----------------------------------
2000 1999 2000 1999
---------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Net sales $83,894 $ 86,819 $164,239 $167,154
Cost of sales 42,235 46,294 84,639 89,684
---------- ----------- ----------- -----------
Gross profit 41,659 40,525 79,600 77,470
Selling, general and administrative expenses 38,749 38,636 75,282 75,941
---------- ----------- ----------- -----------
Income from operations 2,910 1,889 4,318 1,529
Interest expense, net 1,384 1,584 2,848 3,151
---------- ----------- ----------- -----------
Income (loss) before income taxes 1,526 305 1,470 (1,622)
Income tax provision (benefit) 588 122 566 (634)
---------- ----------- ----------- -----------
Net income (loss) $ 938 $ 183 $ 904 $ (988)
========== =========== =========== ============
Basic and diluted net income (loss) per
share of common stock $ 0.06 $ 0.01 $ 0.05 $ (0.06)
========== =========== =========== ============
Weighted average number of shares
of common stock outstanding
and dilutive securities 16,989 17,655 17,031 17,735
========== =========== =========== ============
Cash dividends per share of
Common stock $ 0.05 $ 0.05 $ 0.10 $ 0.10
========== =========== =========== ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE> 5
MIKASA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
For The Six Months Ended
June 30,
---------------------------------------------
2000 1999
------------------ -------------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 904 $ (988)
Adjustments to reconcile net income (loss) to net
cash used in operating activities:
Depreciation and amortization 6,579 6,241
Net changes in operating assets and liabilities (25,354) (2,580)
-------------- -------------
Net cash (used in) provided by operating activities (17,871) 2,673
Cash used in investing activities:
Capital expenditures (3,246) (4,065)
-------------- -------------
Cash flows (used in) from financing activities:
Repayments under long-term note agreements (10,000) (10,000)
Net (decrease) increase in short-term borrowings (261) 1,470
Purchase of treasury stock (1,886) (3,972)
Sale of common stock from exercise of stock options -- 10
Dividends paid (1,711) (1,763)
-------------- -------------
Net cash used in financing activities (13,858) (14,255)
Effect of exchange rate changes on cash
and cash equivalents (109) (87)
-------------- -------------
Net decrease in cash and cash equivalents (35,084) (15,734)
Cash and cash equivalents, beginning of period 45,650 39,792
-------------- -------------
Cash and cash equivalents, end of period $ 10,566 $ 24,058
============== =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE> 6
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. (the
"Company") include its wholly-owned and majority-owned subsidiaries. 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 three and six months ended June 30, 2000 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2000.
2. INCOME TAXES:
For the six months ended June 30, 2000, income taxes were provided at
an estimated annual rate of 38.5% of income before income taxes. For the six
months ended June 30, 1999, income tax benefit was estimated using an annual
rate of 39.1% of loss before income taxes.
3. TRADE ACCOUNTS RECEIVABLE:
Trade accounts receivable are net of allowances for uncollectible
accounts of $1,012 at June 30, 2000 and $774 at December 31, 1999.
4. PROPERTY AND EQUIPMENT:
Property and equipment are stated at cost and are net of accumulated
depreciation of $58,219 at June 30, 2000 and $51,824 at December 31, 1999.
5. INTANGIBLE ASSETS:
Intangible assets are net of accumulated amortization of $3,168 at
June 30, 2000 and $2,984 at December 31, 1999.
6. DECLARATION OF DIVIDEND:
On June 27, 2000, the Company declared a quarterly dividend of $0.05
per share or $849 on its common stock to stockholders of record on July 7, 2000,
payable on July 18, 2000.
6
<PAGE> 7
MIKASA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands, except per share data)
7. SEGMENT INFORMATION:
The Company's reportable segments are based on channels of distribution
and geographic operations. Certain of the information reported herein is
reported on the basis of the Company's internal management reporting systems
rather than under generally accepted accounting principles. Specifically, if the
Company were to adjust its accounting to generally accepted accounting
principles, the result would be to increase cost of sales for its Retail
Accounts Group and decrease cost of sales by the identical amount for its Direct
to Consumers Group to adjust for inter-company profits (i.e., for internal
reporting and management purposes, amounts related to all inter-company
inventory profit eliminations result in a higher cost of sales to the Direct to
Consumers Group). Furthermore, since part of the mission of the Company's Direct
to Consumers Group is to liquidate slow moving or out of season products within
the Company's inventories, the allocation of related mark downs for this
activity is inherently subjective and virtually impossible to account for on the
basis of generally accepted accounting principles within segments. The Company
evaluates the performance of its operating segments based on direct operating
income or losses. Each segment records direct expenses related and allocable to
its employees and its operations.
Summarized financial information concerning the Company's reportable
segments as of June 30 are shown in the following table:
<TABLE>
<CAPTION>
For The Three Months Ended For The Six Months Ended
June 30, June 30,
------------------------------------- ----------------------------------
2000 1999 2000 1999
---------------- ----------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Net sales:
Direct to Consumers $ 48,165 $ 50,185 $ 92,854 $ 95,852
Retail Accounts 26,167 28,087 53,004 56,039
--------- --------- -------- ---------
Total U.S. 74,332 78,272 145,858 151,891
International 9,562 8,547 18,381 15,263
--------- --------- -------- ---------
Consolidated $ 83,894 $ 86,819 $164,239 $ 167,154
========= ========= ======== =========
Direct operating income:
Direct to Consumers $ 4,828 $ 3,375 $ 7,584 $ 6,006
Retail Accounts 3,860 4,681 7,725 8,465
--------- --------- -------- ---------
Total U.S. 8,688 8,056 15,309 14,471
International 1,624 968 2,420 1,319
--------- --------- -------- ---------
Consolidated 10,312 9,024 17,729 15,790
U.S. Corporate overhead
Expenses 7,402 7,135 13,411 14,261
--------- --------- -------- ---------
Income from operations 2,910 1,889 4,318 1,529
Interest expense, net 1,384 1,584 2,848 3,151
--------- --------- -------- ---------
Income before income taxes $ 1,526 $ 305 $ 1,470 $ (1,622)
========= ========= ======== =========
</TABLE>
7
<PAGE> 8
MIKASA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands, except per share data)
8. COMPREHENSIVE INCOME (LOSS):
Total comprehensive income (loss) for the three and six months ended
June 30, 2000 and 1999 is as follows:
<TABLE>
<CAPTION>
For The Three Months Ended For The Six Months Ended
June 30, June 30,
---------------------------------- ------------------------------
2000 1999 2000 1999
-------------- --------------- ------------ -------------
<S> <C> <C> <C> <C>
Net income (loss) $938 $183 $904 $(988)
Other comprehensive income (loss):
Foreign currency translation adjustment (318) 238 (647) 161
--------- --------- -------- ---------
Comprehensive income (loss) $620 $421 $257 $(827)
========= ========= ======== =========
</TABLE>
8
<PAGE> 9
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:
<TABLE>
<CAPTION>
Three Months Ended
June 30,
-----------------------------------------
2000 1999
------------------ ------------------
(In thousands, except operations data)
<S> <C> <C>
NET SALES BY CHANNEL OF DISTRIBUTION:
Direct to consumers $ 48,165 $ 50,185
Retail accounts 26,167 28,087
International 9,562 8,547
------------- -----------
Total $ 83,894 $ 86,819
============= ===========
OPERATIONS DATA:
Stores open at beginning of period 164 159
U.S. Stores opened during period 3 4
Stores closed during period -- (3)
------------- -----------
Stores open at end of period (1) 167 160
============= ===========
(1) Stores in Canada open at end of period were 6
in 2000 and 1999
Percentage decrease in comparable store net sales (4.4%) (0.2%)
</TABLE>
<TABLE>
<CAPTION>
As Of June 30,
-----------------------------------------
2000 1999
------------------ ------------------
<S> <C> <C>
Total U.S. store gross square footage 1,565,000 1,495,600
</TABLE>
----------------
Three Months Ended June 30, 2000 Compared to Three Months Ended June 30, 1999
Net Sales. Net sales for the three months ended June 30, 2000 (the
"current period") were $83.9 million, a decrease of $2.9 million or 3.3% lower
than net sales of $86.8 million for the three months ended June 30, 1999 (the
"prior period"). This decrease in net sales in the current period was
attributable to a combination of factors. First, the Company's retail accounts
channel of distribution provided a decrease of $1.9 million from the prior
period. Second, the Company's direct to consumers channel of distribution, where
sales are generally consummated at higher price levels than in the retail
accounts channel, provided a decrease of $2.0 million of sales from the prior
period. This decrease is primarily attributable to sales foregone in the current
period of $1.5 million from stores closed, while the decline in comparable store
sales was offset by new store sales. The decrease in domestic sales was
partially offset by an increase in sales through the international channel of
distribution of $1.0 million.
Gross Profit. Gross profit for the current period was $41.7 million, an
increase of $1.2 million or 3.0% over the prior period's gross profit of $40.5
million. Gross profit as a percentage of net sales increased to 49.7% in the
current period from 46.7% in the prior period. The gross profit increase as a
percentage of net sales was primarily due to improved margins from the direct to
consumers channel of distribution.
9
<PAGE> 10
Selling, General and Administrative Expenses. Selling, general and
administrative expenses in the current period were $38.7 million, an increase
of $0.1 million or 0.3% compared to $38.6 million in the prior period. As a
percentage of net sales, such expenses increased to 46.2% in the current period
from 44.5% in the prior period. During the current period, $1.8 million in
expenses were added for ongoing operating expenses of the new stores opened in
the United States during the last twelve months and certain pre-opening
expenses for these stores and other stores expected to open in 2000. It is the
Company's practice to expense all costs associated with new store openings as
incurred. During the current period, savings of $1.0 million in expenses were
recognized from the stores closed in the last twelve months.
Income from Operations. Income from operations in the current period
was $2.9 million, an increase of $1.0 million or 52.6% from the prior period's
$1.9 million. As a percentage of net sales, this represented an increase to 3.5%
in the current period from 2.2% in the prior period.
Interest Expense, Net. Net interest expense was $1.4 million in the
current period, a decrease of $0.2 million from the prior period of $1.6
million. The decrease resulted from the loan repayments of the Company's
long-term debt.
Six Months Ended June 30, 2000 Compared to Six Months Ended June 30, 1999
Net Sales. Net sales for the six months ended June 30, 2000 (the
"current period") were $164.2 million, a decrease of $3.0 million or 1.8% from
net sales of $167.2 million for the six months ended June 30, 1999 (the "prior
period"). This decrease in net sales in the current period was attributable to a
combination of factors. First, the Company's retail accounts channel of
distribution provided a decrease of $3.0 million from the prior period. Second,
the Company's direct to consumers channel of distribution, where sales are
generally consummated at higher price levels than in the retail accounts
channel, provided a decrease of $3.0 million of sales from the prior period.
This decrease is primarily attributable to sales foregone in the current period
of $1.9 million from stores closed, while the decline in comparable store sales
was offset by new store sales. The increase in sales through the international
channel of distribution was $3.1 million.
Gross Profit. Gross profit for the current period was $79.6 million, an
increase of $2.1 million or 2.7% over the prior period's gross profit of $77.5
million. Gross profit as a percentage of net sales increased to 48.5% in the
current period from 46.3% in the prior period. The gross profit increase as a
percentage of net sales was primarily due to improved margins from the direct to
consumers channel of distribution.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses in the current period were $75.3 million, a decrease of
$0.6 million or 0.8% compared to the prior period of $75.9 million. As a
percentage of net sales, such expenses increased to 45.8% in the current period
from 45.4% in the prior period. During the current period, $3.3 million in
expenses were added for ongoing operating expenses of the new stores opened in
the United States during the last twelve months and certain pre-opening expenses
for these stores and other stores expected to open in 2000. It is the Company's
practice to expense all costs associated with new store openings as incurred.
During the current period, savings of $1.9 million in expenses were recognized
from the stores closed in the last twelve months. Operating expenses also
reflect decreased expenses from the Company's Secaucus, New Jersey warehouse as
it completed its distribution function transfer to the Charleston, South
Carolina facility in March 1999.
Income from Operations. Income from operations in the current period
was $4.3 million, an increase of $2.8 million or 186.7% from the prior period's
$1.5 million. As a percentage of net sales, this represented an increase to 2.6%
in the current period from 0.9% in the prior period.
Interest Expense, Net. Net interest expense was $2.8 million in the
current period, a decrease of $0.3 million from the prior period net interest
expense of $3.1 million. The decrease resulted from loan repayments of the
Company's long-term debt.
10
<PAGE> 11
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 $60.0 million in unsecured,
senior notes with a group of insurance companies at an interest rate of 7.38%
per annum, payable semi-annually, which 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 $30.0 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, which mature in May 2003. Principal payments on these
notes of $10.0 million per year are due annually in May each year until May
2003. 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. As of June 30, 2000, $4.7 million had been used for letters of credit
under the revolving credit facility. The balance of $45.3 million was unused and
available at June 30, 2000. The Company's senior notes 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 $165.3 million at June 30, 2000 and
working capital of $175.1 million at December 31, 1999. Net cash (used in)
provided by operating activities were $(17.9) million and $2.7 million for the
six months ended June 30, 2000 and 1999, respectively. The increase in net cash
used in operating activities was primarily attributable to an increase in
inventory and a decrease in accounts payable and other current liabilities.
Net cash used in investing activities for capital expenditures were
$3.2 million and $4.1 million in the six months ended June 30, 2000 and 1999,
respectively. These capital expenditures consisted primarily of expenditures for
fixtures and leasehold improvements for new stores, improvements to distribution
facilities and renovation of existing retail stores.
Pursuant to the Company's previously announced common stock repurchase
program of up to $20 million of its common stock, the Company has purchased
1,412,800 shares in the period from January 1, 1998 through June 30, 2000 at a
total cost of $15.7 million. This is in addition to 3,921,300 shares previously
acquired at a cost of $39.7 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 are not
hedged by the Company.
The Company's inventory purchases in 1999 were approximately 20% from
Japanese factories and approximately 31% from German and Austrian factories
combined. The 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 potential foreign currency
swings, the Company has strategies in place which are intended to minimize the
adverse impact of foreign currency fluctuations on its business. These
strategies are: (i) Currency risk sharing arrangements with the Company's
Japanese suppliers; (ii) Forward exchange contract coverage on part of its
German mark related purchases; (iii) Sourcing of products from countries other
than Japan and Germany where feasible; and (iv) Converting certain purchases
from foreign currency to U.S. dollar denominations. The currency risk sharing
arrangements 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.
11
<PAGE> 12
The Company has two primary distribution centers in the United States,
located in Charleston, South Carolina and Long Beach, California. The
Charleston facility is owned and the Long Beach facility is leased. The Company
also leases additional off-site warehouse space in separate buildings to
augment the Long Beach facility. The Company has its corporate office facility
in Secaucus, New Jersey, which is Company owned. After transfer of the Secaucus
facility's warehouse function to the Company's Charleston distribution
facility, the warehouse portion of the facility was leased to an unrelated
third party in April 1999. The lease term is for 9 years and will provide
annually in excess of $2 million in pre-tax income. The Company's 580,000
square foot distribution facility in Charleston, South Carolina became fully
operational during the latter part of 1998.
During the second quarter of 2000, the Company opened three new retail
stores in the United States to end the quarter with 167 stores, including six
Canadian stores. The Company operates retail stores in 41 U.S. States and in
three Canadian provinces. The Company plans to continue expansion of its retail
store network in the United States and Canada. Present plans include opening up
to four new retail stores in the balance of 2000 and up to ten new retail stores
in 2001.
The Company currently estimates that its aggregate capital expenditures
in 2000 and 2001 will approximate up to $20 million. This includes the expansion
and support of the Company's retail store network and expansion of its
international operations and capital expenditures for the Company's distribution
and office facilities, including system and technology enhancements. In each of
these cases, there can be no assurance that the Company's capital expenditures
will not exceed this estimated amount.
FUTURE DEVELOPMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, Accounting for
Derivative Instruments and Hedging Activities, which was amended in June 2000 by
SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging
Activities. These Statements establish accounting and reporting standards for
derivatives and hedging activities. In accordance with these Statements, all
derivatives must be recognized as assets or liabilities and measured at fair
value. These Statements will be effective for the Company beginning in the first
quarter of 2001. The Company is currently evaluating the requirements of SFAS
No. 133 and SFAS No. 138.
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.
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 principally due to an increased percentage of fixed
expenses that relate to retail stores and the additional incremental expense
from new developing stores.
12
<PAGE> 13
FORWARD-LOOKING INFORMATION
We believe that certain statements or assumptions contained in
Management's Discussion and Analysis constitute "forward-looking" information
(as defined in the Private Securities Litigation and Reform Act of 1995). These
forward-looking statements involve risks, uncertainties and other factors that
may cause our actual results, performance or achievements to vary materially
from our predicted results, performance or achievements. Our factors include,
among others, the impact on future sales and profitability by the Company's
distribution facilities, foreign exchange and foreign purchasing risks, planned
expansion of the Company's retail store network, capital expenditure levels
associated with planned projects, future trends relating to seasonality,
competition from the expansion of retail store networks by our competitors,
increased governmental quotas, tariffs or other restrictions on products the
Company imports, and various other factors referenced in this Quarterly Report
on Form 10-Q. We will not update the forward-looking information to reflect
actual results or changes in factors affecting the forward-looking information.
The forward-looking information referred to above includes, but is not limited
to: (a) expectations regarding the Company's financial condition and liquidity,
as well as future cash flows; (b) expectations regarding capital expenditures;
and (c) expectations regarding sales growth, gross margins, and selling, general
and administrative expenses. In addition to the risks, uncertainties and other
factors referred to above which may cause the actual results, performance or
achievements to vary from predicted results, these estimated amounts are based
on various factors and were derived using numerous important assumptions,
including: 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;
successful completion of programs to improve efficiency of the Company's
distribution facilities; 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; the ability to establish a
successful e-commerce function; and general economic risks and uncertainties.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
None
13
<PAGE> 14
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's Annual Meeting of Stockholders held on
May 24, 2000, the following members were re-elected to the Board of Directors:
Alfred J. Blake
Robert H. Hotz
Joseph S. Muto
The following proposal was approved at the Company's Annual Meeting:
<TABLE>
<CAPTION>
Votes Against or Abstentions
For Withheld
---------- ----------- -----------
<S> <C> <C> <C>
1. Re-election of three of its directors to the
Board of Directors
Alfred J. Blake 15,757,135 26,498
Robert H. Hotz 15,757,146 26,487
Joseph S. Muto 15,757,135 26,498
</TABLE>
There were no broker non-votes.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K
None
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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, 2000 /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
<PAGE> 16
EXHIBIT INDEX
Exhibit No. Description Page
27 Financial Data Schedule 17
16
