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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JULY 31, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-26732
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GADZOOKS, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 74-2261048
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION) NUMBER)
4121 INTERNATIONAL PARKWAY
CARROLLTON, TX 75007
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 972-307-5555
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(FORMER NAME, FORMER ADDRESS AND FISCAL YEAR, IF CHANGED SINCE LAST REPORT.)
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 7, 1999, the number of shares outstanding of the
registrant's common stock is 8,921,242
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GADZOOKS, INC.
FORM 10-Q
For the Quarter Ended July 31, 1999
INDEX
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PAGE
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets as of July 31, 1999 3
and January 30, 1999
Condensed Statements of Income for the 4
Second Quarter and Six Months Ended
July 31, 1999 and August 1, 1998
Condensed Statements of Cash Flows for the 5
Six Months Ended July 31, 1999 and
August 1, 1998
Notes to Financial Statements 6-7
Item 2. Management's Discussion and Analysis 8-12
of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures 12
About Market Risk
Statement Regarding Forward-Looking Disclosures 13
PART II. OTHER INFORMATION 14
SIGNATURE PAGE 15
INDEX TO EXHIBITS 16-19
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PART I - FINANCIAL INFORMATION
GADZOOKS, INC.
CONDENSED BALANCE SHEETS
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(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
JULY 31, JANUARY 30,
1999 1999
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ASSETS
Current assets:
Cash and cash equivalents $ 5,651 $ 16,353
Short-term investments 6,000 --
Accounts receivable 2,625 3,002
Inventory 40,467 34,404
Other current assets 2,691 1,987
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57,434 55,746
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Leaseholds, fixtures and equipment, net 31,132 30,696
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$ 88,566 $ 86,442
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 17,417 $ 18,149
Accrued expenses & other current liabilities 6,052 5,968
Income taxes payable 708 --
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24,177 24,117
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Accrued rent 2,510 2,294
Shareholders' equity:
Common stock 89 89
Additional paid-in capital 42,264 42,198
Retained earnings 19,641 17,855
Treasury stock (115) (111)
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61,879 60,031
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$ 88,566 $ 86,442
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</TABLE>
The accompanying notes are an integral part of these financial statements.
3
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GADZOOKS, INC.
CONDENSED STATEMENTS OF INCOME
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(In thousands, except per share data)
(Unaudited)
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SECOND QUARTER ENDED SIX MONTHS ENDED
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JULY 31, AUGUST 1, JULY 31, AUGUST 1,
1999 1998 1999 1998
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Net sales $ 58,078 $ 48,202 $ 109,543 $ 93,228
Cost of goods sold including buying,
distribution and occupancy costs 42,412 35,916 79,869 68,240
------------ ------------ ------------ ------------
Gross profit 15,666 12,286 29,674 24,988
Selling, general and administrative expenses 13,900 11,429 27,099 22,049
------------ ------------ ------------ ------------
Operating income 1,766 857 2,575 2,939
Interest income, net 115 113 259 298
------------ ------------ ------------ ------------
Income before income taxes 1,881 970 2,834 3,237
Provision for income taxes 696 364 1,049 1,214
------------ ------------ ------------ ------------
Net income $ 1,185 $ 606 $ 1,785 $ 2,023
============ ============ ============ ============
Net income per share
Basic $ 0.13 $ 0.07 $ 0.20 $ 0.23
============ ============ ============ ============
Diluted $ 0.13 $ 0.07 $ 0.20 $ 0.22
============ ============ ============ ============
Average shares outstanding
Basic 8,906 8,836 8,900 8,815
============ ============ ============ ============
Diluted 9,116 9,071 9,055 9,083
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
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GADZOOKS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
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(In thousands)
(Unaudited)
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SIX MONTHS ENDED
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JULY 31, AUGUST 1,
1999 1998
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CASH FLOWS FROM OPERATING ACTIVITIES :
Net income $ 1,785 $ 2,023
Adjustments to reconcile net income to cash
used in operating activities :
Depreciation 2,763 2,095
Changes in operating assets and liabilities (6,113) (10,074)
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NET CASH USED IN OPERATING ACTIVITIES (1,565) (5,956)
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CASH FLOWS FROM INVESTING ACTIVITIES :
Capital expenditures, net (3,199) (5,165)
Sales (purchases) of short-term investments, net (6,000) 8,557
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NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (9,199) 3,392
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CASH FLOWS FROM FINANCING ACTIVITIES :
Issuance of common stock 66 485
Purchase of treasury stock (73) (110)
Sale of treasury stock under employee stock purchase plan 69 58
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NET CASH PROVIDED BY FINANCING ACTIVITIES 62 433
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Net decrease in cash and cash equivalents (10,702) (2,131)
Cash and cash equivalents at beginning of period 16,353 9,755
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5,651 $ 7,624
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
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GADZOOKS, INC.
NOTES TO FINANCIAL STATEMENTS
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(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying condensed financial statements contain all adjustments
(consisting of only normal recurring accruals) necessary to present
fairly the financial position as of July 31, 1999 and January 30, 1999,
and the results of operations and cash flows for the second quarter and
six months ended July 31, 1999 and August 1, 1998. The results of
operations for the second quarter and six months then ended are not
necessarily indicative of the results to be expected for the full
fiscal year. The condensed balance sheet as of January 30, 1999 is
derived from audited financial statements. The condensed financial
statements should be read in conjunction with the financial statement
disclosures contained in the Company's Annual Report on Form 10-K for
the fiscal year ended January 30, 1999.
2 LONG-TERM OBLIGATIONS
On May 14, 1999, the Company renewed and revised its existing credit
facility with Wells Fargo Bank. The revised facility provides an
unsecured revolving line of credit totaling $10 million. The total
amount available to borrow pursuant to the credit agreement is limited
to 150% of cash flow (as defined in the credit agreement) for the
trailing 12-month period. Amounts borrowed under the revolving line
bear interest at the lesser of either Prime Rate or 195 basis points
above LIBOR. The Company pays commitment fees of 0.50% on the unused
portion of the revolving line of credit. The credit agreement also
provides for the issuance of letters of credit that are generally used
in connection with international merchandise purchases. Outstanding
letters of credit issued by the bank reduce amounts otherwise available
for borrowing under the revolving line of credit. The credit facility
subjects the Company to various restrictions on the incurrence of
additional indebtedness, acquisitions, loans to officers and stock
repurchases. The covenants also require the Company to maintain certain
tangible net worth, working capital, net income and fixed charge
coverage minimums as well as certain other ratios. Amounts available to
borrow under the line of credit, as limited by the cash flow multiple,
totaled $8.1 million at July 31, 1999. No borrowings were outstanding
under the revolving line at July 31, 1999. As of July 31, 1999, letters
of credit in the amount of $0.1 million were issued and outstanding.
Any amount borrowed under the revolving line of credit will become due
on June 1, 2000, the date the credit agreement matures.
6
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GADZOOKS, INC.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
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(UNAUDITED)
3. CONTINGENCY
A lawsuit was filed on August 19, 1998 in the United States District
Court for the Northern District of Texas on behalf of purchasers of the
publicly traded securities of the Company within the inclusive period
of July 9, 1998 through July 22, 1998 alleging misleading and
incomplete public disclosures regarding the Company's sales results.
The Company believes the lawsuit is without merit and intends to defend
it vigorously. The liability, if any, associated with this matter is
not determinable at this time. While an adverse resolution of this case
could negatively impact earnings in the year of disposition, it is the
opinion of management that the ultimate resolution of the matter will
not have a materially adverse effect on the Company's financial
position or results of operations.
7
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Management's Discussion and Analysis of Financial
Condition and Results of Operations
GENERAL
Gadzooks is a mall-based specialty retailer of casual apparel and related
accessories for young men and women principally between the ages of 13 and 19.
As of July 31, 1999, the Company had opened 12 new stores since the beginning of
the fiscal year and operated 324 stores in 32 states east of the Rocky
Mountains.
The Company's business is subject to seasonal influences with slightly higher
sales during the Christmas holiday, back-to-school, and spring break seasons.
Management's discussion and analysis should be read in conjunction with the
Company's financial statements and the notes related thereto.
RESULTS OF OPERATIONS
Second Quarter Ended July 31, 1999 Compared to Second Quarter Ended August 1,
1998
Net sales increased approximately $9.9 million, or 20.5 percent, to $58.1
million during the second quarter of fiscal 1999 from $48.2 million during the
comparable quarter of fiscal 1998. Comparable store sales increased 6.5 percent
for the second quarter of fiscal 1999. The increase in comparable store sales
was primarily due to increased sales in the men's and junior categories, and, to
a lesser extent, increased sales in the footwear category. The balance of the
sales increase was attributable to new stores not yet included in the comparable
store sales base. A store becomes comparable after it has been open for 14 full
fiscal months.
Gross profit increased approximately $3.4 million to $15.7 million during the
second quarter of fiscal 1999 from $12.3 million during the comparable quarter
of fiscal 1998. As a percentage of net sales, gross profit increased to 27.0
percent from 25.5 percent in the comparable quarter of last year. Gross profit
improvement resulted primarily from an increase in merchandise margin of 80
basis points. Store occupancy costs as a percentage of sales decreased by 50
basis points due to increased leverage resulting from the increase in comparable
store sales. The remaining improvement in margin is due to a decrease in buying
and distribution costs as a percentage of sales as a result of the leveraging of
the distribution center costs over a larger store base.
8
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Selling, general and administrative expenses ("SG&A") increased approximately
$2.5 million to $13.9 million during the second quarter of 1999 from $11.4
million during the comparable quarter of fiscal 1998. The aggregate increase in
SG&A is primarily attributable to additional store expenses as a result of the
Company's expanded store base during the past year and an increase in
administrative costs to support the larger store chain. As a percentage of net
sales, SG&A increased to 23.9 percent during the second quarter of fiscal 1999
from 23.7 percent during the comparable quarter of last year. The increase in
the SG&A percentage is primarily due to expenditures for management information
systems support.
The Company's net interest income increased $2,000 to $115,000 during the second
quarter of fiscal 1999 from $113,000 in the comparable period of last year.
Six Months Ended July 31, 1999 Compared to Six Months Ended August 1, 1998
Net sales increased approximately $16.3 million, or 17.5 percent, to $109.5
million during the first six months of fiscal 1999 from $93.2 million during the
comparable period of fiscal 1998. Comparable store sales increased 1.7 percent
for the first six months of fiscal 1999. The increase in comparable store sales
was primarily due to increased sales in the men's and junior categories, and, to
a lesser extent, increased sales in the footwear category. The balance of the
sales increase was attributable to new stores not yet included in the comparable
store sales base.
Gross profit increased approximately $4.7 million to $29.7 million during the
first six months of fiscal 1999 from $25.0 million during the comparable period
of fiscal 1998. As a percentage of net sales, gross profit increased to 27.1
percent compared to 26.8 percent in the comparable period of last year.
Merchandise margins as a percentage of sales increased by 50 basis points. Store
occupancy costs as a percentage of sales increased by 20 basis points as a
result of lower than expected sales. Buying and distribution costs were flat
when compared to the first six months of 1998.
Selling, general and administrative expenses increased approximately $5.1
million to $27.1 million during the first six months of 1999 from $22.0 million
during the comparable period of fiscal 1998. The aggregate increase in SG&A is
primarily attributable to additional store expenses as a result of the Company's
expanded store base during the past year and an increase in administrative costs
to support the larger store chain. As a percentage of net sales, selling,
general and administrative expenses increased to 24.7 percent of sales during
the first six months of fiscal 1999 from 23.7 percent of sales during the
comparable period of last year. The increase in the SG&A percentage is primarily
due to increased spending for management information systems support.
9
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Net interest income decreased by $39,000 to $259,000 during the first six months
of fiscal 1999 from $298,000 in the comparable period of last year due to the
use of short-term cash investments to fund the Company's continuing expansion.
LIQUIDITY AND CAPITAL RESOURCES
General. The Company's primary uses of cash are financing new store openings and
purchasing merchandise inventories. As a result of a previously announced
slow-down in the Company's new store openings, the Company expects its primary
use of cash for the remainder of the current fiscal year to be the purchase of
merchandise inventory. The Company is currently meeting its cash requirements
through cash flow from operations and short-term investments on-hand.
Cash Flows. At July 31, 1999, cash and cash equivalents were $5.7 million, a
decrease of $10.7 million since January 30, 1999. The primary uses of cash were
increased inventory levels of $6.1 million, the purchase of short-term
investments of $6.0 million and capital expenditures of $1.2 million, $1.1
million, and $1.0 million for new stores, store refurbishments and information
systems, respectively. The primary source of cash for the first six months of
fiscal 1999 was net income before depreciation of $4.5 million. The Company
opened 12 new stores during the first six months of 1999 as compared with 55 new
stores in the same period of the prior year.
Credit Facility. On May 14, 1999, the Company renewed and revised its existing
credit facility with Wells Fargo Bank. The revised facility provides an
unsecured revolving line of credit totaling $10 million. The total amount
available to borrow pursuant to the credit agreement is limited to 150% of cash
flow (as defined in the credit agreement) for the trailing 12-month period.
Amounts borrowed under the revolving line bear interest at the lesser of either
Prime Rate or 195 basis points above LIBOR. The Company pays commitment fees of
0.50% on the unused portion of the revolving line of credit. The credit
agreement also provides for the issuance of letters of credit that are generally
used in connection with international merchandise purchases. Outstanding letters
of credit issued by the bank reduce amounts otherwise available for borrowing
under the revolving line of credit. The credit facility subjects the Company to
various restrictions on the incurrence of additional indebtedness, acquisitions,
loans to officers and stock repurchases. The covenants also require the Company
to maintain certain tangible net worth, working capital, net income and fixed
charge coverage minimums as well as certain other ratios. Amounts available to
borrow under the line of credit, as limited by the cash flow multiple, totaled
$8.1 million at July 31, 1999. No borrowings were outstanding under the
revolving line at July 31, 1999. Letters of credit in the amount of $0.1 million
were outstanding as of July 31, 1999. Any
10
<PAGE> 11
amount borrowed under the revolving line of credit will become due on June 1,
2000, the date the credit agreement matures.
Management believes that the Company's working capital, credit facility and cash
flows from operating activities will be sufficient to meet the Company's
operating and capital requirements through the end of fiscal 1999.
Capital Expenditures. The Company estimates that capital expenditures for the
remainder of the year will be approximately $3.0 million for new stores, store
refurbishments/remodels and information systems. The Company anticipates opening
approximately 6 new stores and remodeling 3 existing stores during the remaining
quarters of 1999. The Company estimates that its average capital expenditures to
open a new store, including leasehold improvements and furniture and fixtures,
will be approximately $185,000 (approximately $130,000 net of landlord
construction allowances). The typical cost of initial inventory for a new store
is approximately $100,000; however, the immediate cash requirement for inventory
is partially financed through the Company's payment terms with its vendors.
Pre-opening costs range from $10,000 to $13,000 for travel, hiring and training,
and other miscellaneous costs associated with the setup of a new store prior to
its opening for business. Pre-opening costs are expensed as incurred.
IMPACT OF THE YEAR 2000 ISSUE
The Year 2000 issue is the result of some computer programs having been written
using two digits rather than four to define the applicable year. Any computer
programs that have date sensitive software and use the two digit method of
determining time periods may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in a system failure or miscalculations
causing disruptions.
The Company has received formal communications from the third-party suppliers of
its merchandising, financial and store point-of-sale software systems that
confirm these core systems are Year 2000 compliant.
The Company has assessed and compiled a project list of certain software
developed by the Company requiring modification or replacement in order to
become Year 2000 compliant. Management presently believes that such
modifications or replacements will be both completed and tested no later than
October 1999. However, if such modifications or replacements are not made, or
are not completed timely, the Year 2000 issue could have a negative impact on
the operations of the Company.
11
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In addition, the Company is initiating formal communications with its shipping
companies and formulating a contingency plan to ensure that the delivery of
merchandise to its distribution center and stores will not be affected by the
Year 2000 issue. No vendor represents more than 10% of the Company's sales;
however the Company will be contacting key vendors prior to the holiday season
for clarification on their Year 2000 plans in order to ensure merchandise
receipts will not be disrupted. There can be no guarantee that the systems of
other companies on which the Company's systems or operations rely will be timely
converted or that a failure to convert by another company will not have a
material adverse effect on the Company.
The Company will utilize both internal and external resources to modify, or
replace, and test its information systems for Year 2000 compliance. The costs
associated with ensuring Year 2000 compliance will be expensed as incurred. The
Company expects to spend approximately $300,000, to be funded from existing
cash, in order to achieve Year 2000 compliance.
The costs to ensure the Company's systems are Year 2000 compliant and the date
on which such modifications or replacements will be completed are based on
management's best estimates derived from utilizing numerous assumptions of
future events including the continued availability of certain resources, third
party modification plans and other factors. There can be no guarantee that these
estimates will be achieved and the actual results could differ materially from
those plans.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company does not engage in trading market risk sensitive instruments and
does not purchase as investments, as hedges, or for purposes "other than
trading" instruments that are likely to expose the Company to market risk,
whether it be from interest rate, foreign currency exchange, commodity price or
equity price risk. The Company has issued no debt instruments, entered into no
forward or futures contracts, purchased no options and entered into no swaps.
The Company's primary market risk exposure is that of interest rate risk. A
change in LIBOR or the Prime Rate as set by Wells Fargo Bank would affect the
rate at which the Company could borrow funds under its revolving line of credit.
12
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STATEMENT REGARDING FORWARD-LOOKING DISCLOSURES
Certain sections of this Quarterly Report on Form 10-Q, including the preceding
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," may contain various forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Exchange Act, which represent the Company's expectations or beliefs concerning
future events. These forward-looking statements involve risks and uncertainties,
and the Company cautions that these statements are further qualified by
important factors that could cause actual results to differ materially from
those in the forward-looking statements, including, without limitation, those
set forth in the "Risk Factors" section of the Company's Annual Report on Form
10-K for the fiscal year ended January 30, 1999.
13
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PART II - OTHER INFORMATION
Items 1-3 - None
Item 4 - Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Shareholders of the Company was held
on June 17, 1999.
(b) Information regarding the Company's directors is contained
in the Company's Definitive Proxy Statement, which is
attached hereto as Exhibit 22.
(c) G. Michael Machens and Lawrence H. Titus, Jr. were elected
to serve as directors until the Company's 2002 annual
meeting of shareholders according to the following vote:
G. Michael Machens For: 8,323,473 Withheld: 383,558
Lawrence H. Titus, Jr. For: 8,322,641 Withheld: 384,390
The selection of PricewaterhouseCoopers LLP as the Company's
independent accountants for the fiscal year ending January
29, 2000 was ratified by the shareholders according to the
following vote:
For: 8,692,206 Against: 5,275 Withheld: 9,550
(d) None.
Item 5 - None
Item 6 - Exhibits and Reports on Form 8-K
(a) See Index of Exhibits.
(b) 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.
GADZOOKS, INC.
(Registrant)
DATE: September 7, 1999 By: /s/ JAMES A. MOTLEY
-------------------------------
James A. Motley
Vice President - Finance
(Chief Accounting Officer and
Duly Authorized Officer of
the Registrant)
15
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INDEX TO EXHIBITS
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EXHIBIT
NO. DESCRIPTION OF DOCUMENTS
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3.1 Second Restated Articles of Incorporation of the Company (filed as
Exhibit 4.1 to the Company's Form S-8 (No. 33-98038) filed with the
Commission on October 12, 1995 and incorporated herein by
reference).
3.2 Amended and Restated Bylaws of the Company (filed as Exhibit 4.2 to
the Company's Form S-8 (No. 33-98038) filed with the Commission on
October 12, 1995 and incorporated herein by reference).
3.3 First Amendment to the Amended and Restated Bylaws of the Company
(filed as Exhibit 3.3 of the Company's Quarterly Report on Form 10-Q
for the quarter ended August 1, 1998 filed with the Commission on
September 16, 1997 and is incorporated herein by reference).
4.1 Specimen Certificate for shares of Common Stock, $.01 par value, of
the Company (filed as Exhibit 4.1 to the Company's Amendment No. 2
to Form S-1 (No. 33-95090) filed with the Commission on September 8,
1995 and incorporated herein by reference).
4.2 Rights Agreement dated as of September 3, 1998 between the Company
and ChaseMellon Shareholder Services, L.L.C. (filed as Exhibit 1 to
the Company's Form 8-A filed with the Commission on September 4,
1998 and incorporated herein by reference).
10.1 Purchase Agreement dated as of January 31, 1992 among the Company,
Gerald R. Szczepanski, Lawrence H. Titus, Jr. and the Investors
listed therein (filed as Exhibit 10.1 to the Company's Form S-1 (No.
33-95090) filed with the Commission on July 28, 1995 and
incorporated herein by reference).
10.2 Purchase Agreement dated as of May 26, 1994 among the Company,
Gerald R. Szczepanski, Lawrence H. Titus, Jr. and the Investors
listed therein (filed as Exhibit 10.2 to the Company's Form S-1 (No.
33-95090) filed with the Commission on July 28, 1995 and
incorporated herein by reference).
10.3 Credit Agreement dated as of January 30, 1997 between the Company
and Wells Fargo Bank (Texas), National Association (filed as Exhibit
10.3 to the Company's 1996 Annual Report on Form 10-K filed with the
Commission on April 23, 1997 and incorporated herein by reference).
</TABLE>
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<TABLE>
<S> <C>
10.4 Form of Indemnification Agreement with a schedule of director
signatories (filed as Exhibit 10.5 to the Company's Form S-1 (No.
33-95090) filed with the Commission on July 28, 1995 and
incorporated herein by reference).
10.5 Employment Agreement dated January 31, 1992 between the Company and
Gerald R. Szczepanski, as continued by letter agreement (filed as
Exhibit 10.6 to the Company's Form S-1 (No. 33-95090) filed with the
Commission on July 28, 1995 and incorporated herein by reference).
10.6 1992 Incentive and Nonstatutory Stock Option Plan dated February 26,
1992, and Amendments No. 1 through 3 thereto (filed as Exhibit 10.8
to the Company's Form S-1 (No. 33-95090) filed with the Commission
on July 28, 1995 and incorporated herein by reference).
10.7 1994 Incentive and Nonstatutory Stock Option Plan for Key Employees
dated September 30, 1994 (filed as Exhibit 10.9 to the Company's
Form S-1 (No. 33-95090) filed with the Commission on July 28, 1995
and incorporated herein by reference).
10.8 1995 Non-Employee Director Stock Option Plan (filed as Exhibit 10.10
to the Company's Form S-1 (No. 333-00196) filed with the Commission
on January 9, 1996 and incorporated herein by reference).
10.9 Gadzooks, Inc. Employees' Savings Plan (filed as Exhibit 10.11 to
the Company's Form S-1 (No. 33-95090) filed with the Commission on
July 28, 1995 and incorporated herein by reference).
10.10 Severance Agreement dated September 5, 1996 between the Company and
Gerald R. Szczepanski (filed as Exhibit 10.10 to the Company's 1996
Annual Report on Form 10-K filed with the Commission on April 23,
1997 and incorporated herein by reference).
10.11 Form of Severance Agreement with a schedule of executive officer
signatories (filed as Exhibit 10.11 to the Company's 1996 Annual
Report on Form 10-K filed with the Commission on April 23, 1997 and
incorporated herein by reference).
10.12 Amendment No. 4 to the Gadzooks, Inc. 1992 Incentive and
Nonstatutory Stock Option Plan (filed as Exhibit 10.14 to the
Company's Amendment No. 3 to Form S-1 (No. 33-95090) filed with the
Commission on September 27, 1995 and incorporated herein by
reference).
</TABLE>
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<TABLE>
<S> <C>
10.13 Amendment No. 5 to the Gadzooks, Inc. 1992 Incentive and
Nonstatutory Stock Option Plan dated September 12, 1996 (filed as
Exhibit 10.13 to the Company's 1996 Annual Report on Form 10-K filed
with the Commission on April 23, 1997 and incorporated herein by
reference).
10.14 Amendment No. 1 to the 1994 Incentive and Nonstatutory Stock Option
Plan for Key Employees dated September 12, 1996 (filed as Exhibit
10.14 to the Company's 1996 Annual Report on Form 10-K filed with
the Commission on April 23, 1997 and incorporated herein by
reference).
10.15 Gadzooks, Inc. Employee Stock Purchase Plan (filed as Exhibit 4.5 to
the Company's Form S-8 (No. 333-50639) filed with the Commission on
April 21, 1998 and incorporated herein by reference).
10.16 Gadzooks, Inc. Deferred Compensation Plan (filed as Exhibit 10.16 to
the Company's 1997 Annual Report on Form 10-K filed with the
Commission on April 27, 1998 and incorporated herein by reference).
10.17 Lease Agreement between Gadzooks, Inc. (Lessee) and CB Midway
International, LTD. (Lessor) dated August 23, 1996 (filed as Exhibit
10.17 to the Company's 1997 Annual Report on Form 10-K filed with
the Commission on April 27, 1998 and incorporated herein by
reference).
10.18 Gadzooks, Inc. 401(k) Plan and Profit Sharing Plan Adoption
Agreement (filed as Exhibit 10.18 to the Company's Quarterly Report
on Form 10-Q filed with the Commission on June 9, 1998, and
incorporated herein by reference).
10.19 Amendment No. 1 to the Credit Agreement between the Company and
Wells Fargo Bank (Texas), National Association, dated June 11, 1998
(filed as Exhibit 10.19 to the Company's Quarterly Report on Form
10-Q filed with the Commission on September 15, 1998 and
incorporated herein by reference).
10.20 Amendment No. 2 to the Credit Agreement between the Company and
Wells Fargo Bank (Texas) National Association, dated May 14, 1999
(filed as Exhibit 10.20 to the Company's Quarterly Report on Form
10-Q filed with the Commission on June 15, 1999 and incorporated
herein by reference).
10.21 Amendment No. 6 to the Gadzooks, Inc. 1992 Incentive and
Non-Statutory Stock Option Plan dated June 18, 1998 (filed as
Exhibit 4.8 to the Company's Form S-8 (No. 333-60869) filed with the
Commission on August 7, 1998 and incorporated herein by reference).
</TABLE>
18
<PAGE> 19
<TABLE>
<S> <C>
10.22 Amendment No. 1 to the Gadzooks, Inc. 1995 Non-Employee Director
Stock Option Plan dated June 18, 1998 (filed as Exhibit 4.10 to the
Company Form S-8 (No. 333-60869) filed with the Commission on August
7, 1998 and incorporated herein by reference).
10.23 Employment Agreement dated July 18, 1998, between the Company and
David Mangini, as continued by letter agreement (filed as Exhibit
10.22 to the Company's Quarterly Report on Form 10-Q filed with the
Commission on September 15, 1998, and incorporated herein by
reference).
10.24 Severance Protection Agreement dated September 1, 1998 between the
Company and Gerald R. Szczepanski (filed as Exhibit 10.24 to the
Company's Quarterly Report on Form 10-Q filed with the Commission on
December 15, 1998 and incorporated herein by reference).
10.25 Severance Protection Agreement dated September 1, 1998 between the
Company and David L. Mangini (filed as Exhibit 10.25 to the
Company's Quarterly Report on Form 10-Q filed with the Commission on
December 15, 1998 and incorporated herein by reference).
22 Definitive Proxy statement pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (filed with the Commission on May 6,
1999, and incorporated herein by reference).
27* Financial Data Schedule
</TABLE>
- --------------------------------------------------------------------------------
* Filed herewith (unless otherwise indicated, exhibits are previously filed).
19
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-29-2000
<PERIOD-START> JAN-31-1999
<PERIOD-END> JUL-31-1999
<CASH> 5,651
<SECURITIES> 6,000
<RECEIVABLES> 2,625
<ALLOWANCES> 0
<INVENTORY> 40,467
<CURRENT-ASSETS> 57,434
<PP&E> 46,953
<DEPRECIATION> 15,821
<TOTAL-ASSETS> 88,566
<CURRENT-LIABILITIES> 24,177
<BONDS> 0
0
0
<COMMON> 89
<OTHER-SE> 61,905
<TOTAL-LIABILITY-AND-EQUITY> 88,566
<SALES> 109,543
<TOTAL-REVENUES> 109,543
<CGS> 79,869
<TOTAL-COSTS> 79,869
<OTHER-EXPENSES> 0
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<INCOME-PRETAX> 2,834
<INCOME-TAX> 1,049
<INCOME-CONTINUING> 1,785
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<NET-INCOME> 1,785
<EPS-BASIC> 0.20
<EPS-DILUTED> 0.20
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