UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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 September 30, 1997
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 0-24860
PIERCING PAGODA, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 23-1894725
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
3910 Adler Place
Bethlehem, PA 18017
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (610) 691-0437
N/A
(Former Name, Former Address and Former 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 [ ]
The number of shares outstanding of the registrant's common stock is
6,045,599 (as of November 7, 1997)
<PAGE>
PIERCING PAGODA, INC.
INDEX
PAGE
PART I - FINANCIAL INFORMATION NUMBER
Item 1. Financial Statements
Consolidated balance sheets as of
September 30, 1997 and March 31, 1997 3
Consolidated statements of operations for the three
months ended September 30, 1997 and 1996 and six
months ended September 30, 1997 and 1996 4
Consolidated statements of cash flows for the six
months ended September 30, 1997 and 1996 5
Notes to consolidated financial statements 7
Item 2. Management's discussion and analysis of financial
condition and results of operations 9
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PIERCING PAGODA, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
September 30, March 31,
1997 1997
------------- -----------
Assets (Unaudited)
Current assets
<S> <C> <C>
Cash $ 2,719 $ 4,119
Accounts receivable 811 2,233
Inventory 50,944 43,109
Deposits for inventory purchases 5,737 850
Prepaid expenses and other current assets 547 757
Prepaid income taxes 2,656 1,494
Deferred tax assets 1,721 1,530
------------- -----------
Total current assets 65,135 54,092
Property, fixtures and equipment, net 25,087 22,572
Other assets 6,372 3,077
============= ===========
$ 96,594 $ 79,741
============= ===========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 5,458 $ 3,668
Current installments of long-term debt 234 234
Accrued expenses and other current liabilities 9,352 9,541
------------- -----------
Total current liabilities 15,044 13,443
Long-term debt, less current installments 25,772 26,690
Deferred tax liabilities 493 1,550
Other liabilities 687 536
------------- -----------
Total liabilities 41,996 42,219
Commitments and contingencies
Stockholders' equity
Preferred stock, par value $.01 per share,
authorized 3,000,000 shares. None issued. - -
Common stock, par value $.01 per share,
authorized
15,000,000 shares. Issued 6,041,724 shares 61 53
and 5,273,994
at September 30, 1997 and March 31, 1997,
respectively.
Additional paid-in capital 40,106 22,588
Retained earnings 14,431 14,881
------------- -----------
Total stockholders' equity 54,598 37,522
------------- -----------
$96,594 $ 79,741
============= ===========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
PIERCING PAGODA, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
September 30, September 30,
1997 1996 1997 1996
---------- --------- -------- ---------
<S> <C> <C> <C> <C>
Net sales $ 42,877 $ 32,439 $ 85,750 $ 62,683
Cost of goods sold and occupancy
expenses, (excluding depreciation
on kiosks) 24,099 18,723 48,865 36,186
---------- --------- -------- ---------
Gross profit 18,778 13,716 36,885 26,497
Selling, general and administrative
expenses, (including depreciation
on kiosks) 18,445 13,477 36,299 25,898
---------- --------- -------- ---------
Income from operations 333 239 586 599
Interest and other income 105 74 208 134
Interest expense 682 487 1,525 848
---------- --------- -------- ---------
Loss before income taxes (244) (174) (731) (115)
Income tax benefit (91) (69) (281) (45)
========== ========= ======== =========
Net loss $ (153) $ (105) $ (450) $ (70)
========== ========= ======== =========
Loss per share $ (0.02) $ (0.02) $ (0.08) $ (0.01)
========== ========= ======== =========
Weighted average common shares and
equivalent shares outstanding 6,195 5,370 5,849 5,369
========== ========= ======== =========
</TABLE>
See accompanying notes to consolidated financial statements
4
<PAGE>
PIERCING PAGODA, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six months ended
September 30,
-------------------------
1997 1996
------------ -----------
Cash flows from operating activities:
<S> <C> <C>
Net loss $ (450) $ (70)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 2,512 1,639
(Gain) loss on disposal of property, fixtures
and equipment (2) 48
Other changes in other assets (20) (85)
Deferred income taxes 604 -
Change in operating assets and liabilities
net of effects of acquisitions:
Accounts receivable 1,422 (83)
Inventory (5,468) (11,993)
Deposits for inventory purchases (4,887) (3,070)
Prepaid expenses and other current assets 210 170
Prepaid income taxes (1,081) (255)
Accounts payable 1,790 7,432
Accrued expenses and other current liabilities (249) (348)
Other liabilities (89) 57
------------ -----------
Net cash used in operating activities (5,708) (6,558)
Cash flows from investing activities:
Additions to property, fixtures and equipment (4,267) (5,070)
Payments for purchase of businesses (7,948) -
Proceeds from disposal of property, fixtures and
equipment 38 19
Noncurrent deposits, net (26) 15
------------ -----------
Net cash used in investing activities (12,203) (5,036)
Cash flows from financing activities:
Repayments of long-term debt (18) (10)
Revolving line of credit, net (900) 11,445
Loan fees paid (16) -
Proceeds from issuance of long-term debt - 400
Net proceeds from issuance of common stock under
employee stock plans 256 171
Proceeds from issuance of common stock, net 17,189 -
------------ -----------
Net cash provided by financing activities 16,511 12,006
------------ -----------
Net increase (decrease) in cash (1,400) 412
Cash at beginning of period 4,119 1,864
============ ===========
Cash at end of period $ 2,719 $ 2,276
============ ===========
</TABLE>
5
<PAGE>
PIERCING PAGODA, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six months ended
September 30,
-------------------------
1997 1996
------------ -----------
Supplemental disclosures of cash flow information:
Cash paid during the period for:
<S> <C> <C>
Interest $ 1,401 $ 801
============ ===========
Income taxes, net $ 277 $ 210
============ ===========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 Summary of significant accounting policies
The accompanying consolidated financial statements of Piercing Pagoda,
Inc. and subsidiary (the "Company") have been prepared in accordance
with the instructions to Form 10-Q and do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. These consolidated
financial statements include the results of operations for Piercing
Pagoda, Inc. and a wholly owned subsidiary. All intercompany
transactions have been eliminated in consolidation. These consolidated
financial statements should be read in conjunction with the Company's
consolidated financial statements and notes thereto for the year ended
March 31, 1997. The financial information included herein is unaudited;
however, the information reflects all adjustments (consisting solely of
normal recurring adjustments) that are, in the opinion of management,
necessary for a fair presentation of the financial position, results of
operations and cash flows for the interim periods.
Operating results for the three-month and six-month periods ended
September 30, 1997 are not necessarily indicative of the results that
may be expected for the entire fiscal year.
Note 2 Property, Fixtures and Equipment
A summary of major classes of property, fixtures and equipment follows
(in thousands):
<TABLE>
<CAPTION>
September 30, March 31,
1997 1997
------------- -------------
<S> <C> <C>
Land $ 688 $ 688
Furniture and fixtures 3,522 3,054
Kiosks 22,701 19,832
Building and improvements 4,116 4,037
Computer equipment, software and
other equipment 8,654 7,396
------------- -------------
39,681 35,007
Less accumulated depreciation and
amortization 14,594 12,435
============= =============
$ 25,087 $ 22,572
============= =============
</TABLE>
7
<PAGE>
Note 3 Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities are summarized as
follows (in thousands):
<TABLE>
<CAPTION>
September 30, March 31,
1997 1997
-------------- -----------
<S> <C> <C>
Accrued payroll, vacation and
related taxes $ 4,141 $ 4,160
Sales tax payable 671 704
Accrued rents payable 504 1,091
Liability under jewelry club
program 975 747
Liability under lifetime guarantee
program 1,411 1,211
Other accrued expenses 1,650 1,628
============== ===========
$ 9,352 $ 9,541
============== ===========
</TABLE>
Note 4 Purchase of businesses
In April 1997, the Company purchased substantially all the operations
of Silver and Gold Connection, Inc., an independent kiosk retailer
("Silver and Gold"). Silver and Gold had operated approximately 46
kiosk locations selling primarily gold and silver jewelry. The purchase
agreement provides for the payment of $4.7 million for the kiosk
locations, leases and store fixtures. The Company also acquired all of
Silver and Gold's inventory for approximately $2.8 million. The excess
of the net assets acquired over their fair value of approximately $3.0
million has been recorded as goodwill and is being amortized over 15
years. In connection with the acquisition, the Company entered into a
non-competition agreement with the principal stockholder of Silver &
Gold which provides for annual payments of $60,000 to be made over a
five year period.
Note 5 Secondary Offering
On June 30, 1997, the Company completed a secondary offering of 650,000
shares of its common stock. The transaction resulted in net proceeds
(after offering expenses) to the Company of approximately $14.9 million
which was used to repay indebtedness under the Company's revolving line
of credit. Subsequently, in July 1997, the underwriters of the offering
exercised their option to purchase an additional 97,500 shares of stock
from the Company resulting in additional proceeds (after underwriting
discounts and commissions) to the Company of approximately $2.3
million.
8
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Background
The Company's consolidated net sales are comprised primarily of sales
generated by the Company's stores and, to a much lesser extent,
wholesale sales primarily to an independent store operator in Florida
to which the Company licenses the use of its store name and concept
(the "Florida Licensee"). Cost of goods sold and occupancy expenses
include the cost of merchandise, rent and occupancy and the cost of
preparing merchandise for sale. Selling, general and administrative
expenses include store and supervisory payroll, corporate overhead and
non-occupancy store expenses including depreciation of kiosks.
Results of operations
Three months ended September 30, 1997 and 1996
Consolidated net sales increased $10.5 million, or 32% from $32.4
million for the three months ended September 30, 1996 to $42.9 million
for the three months ended September 30, 1997. This increase was due
primarily to net sales generated by new stores opened or acquired by
the Company which were not in the Company's comparable store base.
Comparable store sales declined $432,000 or 1.4% due primarily to a
planned reduction in promotional activity during the quarter and to the
impact of new and acquired stores which operate in the same mall as the
Company's comparable stores. Of the Company's 499 comparable stores,
approximately 125 operate in malls with a new or acquired companion
store which opened within the last 18 months. There were a total of 769
stores open at September 30, 1997 compared to 565 at September 30,
1996, an increase of 36%. In addition, wholesale sales to the Florida
licensee increased to $707,000 for the three months ended September 30,
1997 from $555,000 in the three months ended September 30, 1996. This
increase reflects increased sales volume at the Florida Licensee's
stores and the purchase of inventory for additional locations operated
by the Florida Licensee versus the prior year. The average jewelry
units sold per store decreased 4% to 2,400 for the three months ended
September 30, 1997 compared to 2,500 for the three months ended
September 30, 1996. The average price per jewelry unit sold increased
slightly to $22.96 for the three months ended September 30, 1997
compared to $22.72 for the three months ended September 30, 1996. The
decrease in jewelry units sold and increase in average price per
jewelry unit reflect the planned reduction in promotional activity
during the period as compared to the previous year.
Gross profit increased $5.1 million, or 37%, from $13.7 million for the
three months ended September 30, 1996 to $18.8 million for the three
months ended September 30, 1997. The Company's gross profit margin
improved to 43.8% for the three months ended September 30, 1997 versus
42.3% for the three months ended September 30,
9
<PAGE>
1996. The increase in gross profit dollars was attributable primarily
to the Company's increased net sales. Gross profit margin improved
primarily due to improved merchandise margins caused by a reduction in
promotional activities and lower merchandise costs to the Company. This
was partially offset by increases in rent and occupancy as a percentage
of net sales due to the large number of newer stores operated by the
Company and a decline in comparable store net sales.
Selling, general and administrative expenses increased $4.9 million, or
36%, from $13.5 million for the three months ended September 30, 1996
to $18.4 million for the three months ended September 30, 1997. As a
percentage of net sales, selling, general and administrative expenses
increased from 41.5% for the three months ended September 30, 1996 to
43.0% for the three months ended September 30, 1997. The increase in
dollars was attributable primarily to the increase in the number of new
and acquired stores and the pre-opening costs for new stores, as well
as higher supervisory and administrative expenses to support the
current and expected growth in stores. The increase in selling, general
and administrative expenses as a percentage of net sales primarily
reflects higher expenses associated with new stores opened and acquired
by the Company. This was partially offset by improvements in corporate
overhead as a percentage of net sales, reflecting leverage over a
larger sales base. Depreciation and amortization expense increased 52%
to $1.3 million in the three months ended September 30, 1997 from
$858,000 in the three months ended September 30, 1996 due primarily to
capital expenditures for new stores and the upgrading of kiosks in
existing locations.
Interest expense increased $195,000, or 40%, from $487,000 for the
three months ended September 30, 1996 to $682,000 for the three months
ended September 30, 1997, and as a percentage of net sales increased
from 1.5% for the three months ended September 30, 1996 to 1.6% for the
three months ended September 30, 1997. The increase in interest expense
was due primarily to higher average balances on the Company's revolving
line of credit and an increase in fees paid under the Company's gold
consignment arrangements.
As a result of the foregoing, the Company's net loss increased from
$105,000 for the three months ended September 30, 1996 to $153,000 for
the three months ended September 30, 1997.
Six months ended September 30, 1997 and 1996
Consolidated net sales increased $23.1 million, or 37%, from $62.7
million for the six months ended September 30, 1996 to $85.8 million
for the six months ended September 30, 1997. This increase was
primarily due to an increase in the average number of stores open for
the six months ended September 30, 1997, as compared to the six months
ended September 30, 1996 and a $1.4 million, or 2%, increase in
comparable store net sales. There were a total of 769 stores open at
September 30, 1997 compared to 565 at September 30, 1996, an increase
of 36%. The average jewelry units sold per store increased 2% to 5,000
for the six months ended September 30, 1997 compared to 4,900 for the
six months ended September 30, 1996. The average price per jewelry unit
10
<PAGE>
sold was relatively unchanged at $23.46 for the six months ended
September 30, 1997 compared to $23.60 for the six months ended
September 30, 1996.
Gross profit increased $10.4 million, or 39%, from $26.5 million for
the six months ended September 30, 1996 to $36.9 million for the six
months ended September 30, 1997. The Company's gross profit margin
improved from 42.3% for the six months ended September 30, 1996 to
43.0% for the six months ended September 30, 1997. The increase in
gross profit dollars was attributable to the Company's increase in net
sales. Gross profit margin improved primarily due to improved
merchandise margins caused by a recent reduction in promotional
activities and overall lower merchandise costs to the Company. This was
partially offset by increases in rent and occupancy as a percentage of
net sales due to the large number of newer stores operated by the
Company.
Selling, general and administrative expenses increased $10.4 million,
or 40%, from $25.9 million for the six months ended September 30, 1996
to $36.3 million for the six months ended September 30, 1997. As a
percentage of net sales, selling, general and administrative expenses
increased from 41.3% for the six months ended September 30, 1996 to
42.3% for the six months ended September 30, 1997. The increase in
dollars was attributable primarily to the increase in the number of new
and acquired stores and the pre-opening costs for new stores, as well
as higher supervisory and administrative expenses to support the
current and expected growth in stores. The increase in selling, general
and administrative expenses as a percentage of net sales primarily
reflects higher expenses associated with new stores opened and acquired
by the Company. This was partially offset by improvements in corporate
overhead as a percentage of net sales, reflecting leverage over a
larger sales base. Depreciation and amortization expense increased 56%
to $2.5 million in the six months ended September 30, 1997 from $1.6
million in the six months ended September 30, 1996 due primarily to
capital expenditures for new and acquired stores and the upgrading of
kiosks in existing locations.
Interest expense increased $677,000, or 80%, from $848,000 for the six
months ended September 30, 1996 to $1.5 million for the six months
ended September 30, 1997, and as a percentage of net sales increased
from 1.4% for the six months ended September 30, 1996 to 1.8% for the
six months ended September 30, 1997. The increase in interest expense
was due primarily to higher average balances on the Company's revolving
line of credit agreement and an increase in fees paid under the
Company's gold consignment arrangements.
As a result of the foregoing, the Company's net loss increased from
$70,000 for the six months ended September 30, 1996 to a net loss of
$450,000 for the six months ended September 30, 1997.
11
<PAGE>
Liquidity and capital resources
The Company's primary ongoing short-term capital requirements have been
to fund an increase in inventory and to fund capital expenditures and
working capital (mostly inventory) for new and acquired stores. The
Company's long-term liquidity requirements relate principally to the
maturity of its long-term debt in July of 2000, operating lease
commitments and store expansion. The Company's primary sources of
liquidity have been funds provided from operations, a gold consignment
program, bank borrowings and in June of 1997, an offering of the
Company's common stock. On June 30, 1997, the Company completed a
public offering of 650,000 shares of its common stock. Subsequently, in
July 1997, the underwriters of the offering exercised their option to
purchase an additional 97,500 shares of stock from the Company. The
total transaction resulted in net proceeds (after offering expenses) to
the Company of approximately $17.2 million which was used to repay
indebtedness under the Company's revolving line of credit. The
Company's working capital increased to $50.1 million at September 30,
1997 from $13.0 million at September 30, 1996. At September 30, 1997,
the Company had outstanding borrowings of $23.3 million under its
revolving line of credit and $2.7 million of long-term debt
outstanding, including $234,000 classified as a current liability. In
addition, the Company had consigned 107,078 ounces of gold under its
gold consignment program valued at approximately $35.6 million.
Net cash used in operating activities was $5.7 million for the six
months ended September 30, 1997 compared to $6.6 million for the same
period in the prior year. Net cash used in operating activities
primarily reflects increases in inventory and deposits for inventory in
anticipation of the year-end holiday shopping season. These were
partially offset by depreciation and amortization, a reduction in
accounts receivable and an increase in accounts payable.
Net cash used in investing activities was $12.2 million during the six
months ended September 30, 1997 compared to $5.0 million during the six
months ended September 30, 1996. Net cash used in investing activities
primarily reflects the purchase of substantially all the operations of
Silver and Gold Connection in April 1997 and the addition of property,
fixtures and equipment in connection with the opening of new stores and
the renovation of existing stores.
Net cash provided by financing activities was $16.5 million for the six
months ended September 30, 1997 versus $12.0 million during the six
months ended September 30, 1996. During the six months ended September
30, 1997, the Company completed a secondary offering of its common
stock, raising net proceeds of approximately $17.2 million which was
used to repay a portion of existing indebtedness.
The Company's revolving credit facility provides for maximum borrowings
of $75 million through a combination of cash advances (which may not
exceed $45 million) and letters of credit (which may not exceed $55
million) to support the Company's gold consignment financing program.
At September 30, 1997, the Company had $14.6 million available to be
borrowed under its revolving credit facility and was in compliance with
covenants contained in the agreement. The Company believes that the
expected cash flows from operations, its gold consignment program and
bank
12
<PAGE>
borrowings will be sufficient to fund the Company's currently
anticipated capital and liquidity needs.
Seasonality
The Company's business is highly seasonal. Due to the impact of the
year-end holiday shopping season, the Company experiences a substantial
portion of its annual net sales and profitability in its third fiscal
quarter (ending December 31st). The Company has generally experienced
lower net sales in each of the first, second and fourth quarters and
lower net income or net losses in each of those quarters.
The Company's results of operations may fluctuate significantly from
quarter to quarter as a result of a variety of factors, including
fluctuations in the price of gold, the amount and timing of
acquisitions and new store openings, the integration of recently
acquired and newly opened stores into the operations of the Company,
the timing of promotions, and changes in national and regional economic
conditions.
Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a safe
harbor for forward-looking statements. A number of the matters and
subject areas discussed in "Management's Discussion and Analysis of
Financial Condition and Results of Operations," are not limited to
historical or current facts and deal with potential future
circumstances and developments. Prospective investors are cautioned
that such forward-looking statements are only predictions and that
actual events or results may differ materially. A variety of factors
could cause the Company's actual results to differ materially from the
expected results expressed in the Company's forward-looking statements,
including, without limitation: the Company's ability to secure suitable
store sites on a timely basis and on satisfactory terms; the Company's
ability to hire, train and retain qualified personnel, the availability
of adequate capital resources and the successful integration of new
stores into the Company's existing operations; the Company's ability to
successfully implement and improve management information systems,
procedures and controls on a timely basis and in such a manner as is
necessary to accommodate the increased number of transactions and
customers and the increased size of the Company's operations;
fluctuations in quarterly net sales, and, in particular, third quarter
net sales; fluctuations in gold prices; competitive conditions;
economic conditions affecting disposable consumer income, such as
employment, business conditions, interest rates and taxation, as well
as trends with respect to mall shopping generally and the ability of
mall anchor tenants and other attractions to generate customer traffic
in the vicinity of the Company's stores; and the possibility of the
enactment of legislation, or the modification of existing or pending
legislation, in jurisdictions in which the Company operates, that would
adversely affect the Company's ear piercing or other activities.
13
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material legal proceedings against the Company
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On September 17, 1997, the Registrant held its Annual Meeting of
Stockholders. The stockholders approved the following proposals:
To elect two directors to hold office until the 2000 Annual Meeting of
Stockholders and until his successor has been duly elected and
qualified.
Director For Against
Richard H. Penske 5,169,441 606
Alan R. Hoefer 5,169,395 652
To approve the amendment to the Company's 1994 Stock Option Plan.
For Against Abstain
5,126,579 37,352 6,116
To ratify the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors for the 1998 fiscal year.
For Against Abstain
5,168,417 1,000 630
ITEM 5. OTHER INFORMATION
None.
14
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
11 Statement regarding computation of net loss per common
share and common share equivalent.
27 Financial Data Schedule.
b) Reports on Form 8-K
During the quarter ended September 30, 1997, no reports on Form
8-K were filed.
15
<PAGE>
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.
PIERCING PAGODA, INC.
(Registrant)
Date: November 7, 1997 /s/ John F. Eureyecko
John F. Eureyecko
President,
Chief Operating Officer
(Principal Financial Officer)
Date: November 7, 1997 /s/ Brandon R. Lehman
Brandon R. Lehman
Treasurer
(Principal Accounting Officer)
16
<PAGE>
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Page
11 Statement regarding computation of net loss per
common share and common share equivalent 18
27 Financial Data Schedule 19
17
<PAGE>
Exhibit 11 - Statement regarding computation of net loss per common share
and common share equivalent.
<TABLE>
<CAPTION>
(In thousands, except per share data) Three months Six months
ended ended
September 30, September 30,
1997 1997
---------------- -------------
<S> <C> <C>
Average shares outstanding 5,996 5,659
Net effect of dilutive stock options, based
on the treasury stock method 199 190
================ =============
Total shares used in computation 6,195 5,849
================ =============
Net loss $(153) $(450)
================ =============
Net loss per common share and
common share equivalent $(0.02) $(0.08)
================ =============
</TABLE>
18
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 2,719
<SECURITIES> 0
<RECEIVABLES> 811
<ALLOWANCES> 0
<INVENTORY> 50,944
<CURRENT-ASSETS> 65,135
<PP&E> 39,681
<DEPRECIATION> 14,594
<TOTAL-ASSETS> 96,594
<CURRENT-LIABILITIES> 15,044
<BONDS> 25,772
0
0
<COMMON> 61
<OTHER-SE> 54,537
<TOTAL-LIABILITY-AND-EQUITY> 96,594
<SALES> 85,750
<TOTAL-REVENUES> 85,750
<CGS> 48,865
<TOTAL-COSTS> 48,865
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,525
<INCOME-PRETAX> (731)
<INCOME-TAX> (281)
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</TABLE>
