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 June 30, 1999
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
Identification
Incorporation or Organization) 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
9,149,325 (as of August 11, 1999)
<PAGE>
PIERCING PAGODA, INC.
INDEX
PAGE
PART I - FINANCIAL INFORMATION NUMBER
Item 1. Financial Statements
Consolidated balance sheets as of
June 30, 1999 (unaudited) and March 31, 1999 3
Consolidated statements of operations for the
three months 4
ended June 30, 1999 and 1998(unaudited)
Consolidated statements of cash flows for
the three months ended June 30, 1999 and 5
1998(unaudited)
Notes to consolidated financial statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 14
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities and Use of Proceeds 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security
Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PIERCING PAGODA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
June 30, March 31,
1999 1999
---------- -----------
Assets (Unaudited)
<S> <C> <C>
Current assets
Cash $ 3,638 $ 4,068
Accounts receivable 4,508 4,674
Inventory 53,843 53,685
Deposits for inventory purchases 2,162 707
Prepaid expenses and other current assets 802 1,337
Prepaid income taxes 342 131
Deferred tax assets 2,335 2,213
---------- -----------
Total current assets 67,630 66,815
Property, fixtures and equipment, net 35,057 34,293
Goodwill, net 20,121 20,199
Other assets 1,953 1,993
========== ===========
$ 124,761 $ 123,300
========== ===========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 4,615 $ 3,934
Current installments of long-term debt and 428 432
revolving line of credit
Income taxes payable - 125
Accrued expenses and other current 13,122 14,753
liabilities
---------- -----------
Total current liabilities 18,165 19,244
Long-term debt, less current installments 27,827 25,169
Deferred tax liabilities 3,670 3,476
Other liabilities 849 920
---------- -----------
Total liabilities 50,511 48,809
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,
authorize 15,000,000 shares. Issued 9,143,100
shares and 9,133,901 at June 30, 1999 and
March 31, 1999, respectively. 92 92
Additional paid-in capital 40,976 40,906
Retained earnings 33,182 33,493
---------- -----------
Total stockholders' equity 74,250 74,491
---------- -----------
$ 124,761 $ 123,300
========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
PIERCING PAGODA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three months
ended
June 30,
-----------------
1999 1998
------- --------
<S> <C> <C>
Net sales $58,154 $48,018
Cost of goods sold and
occupancy expenses, (excluding
depreciation on kiosks and
store fixtures) 32,665 26,633
------- --------
Gross profit 25,489 21,385
Selling, general and
administrative expenses,
(including depreciation on kiosks
and store fixtures) 25,348 20,755
------- --------
Income from operations 141 630
Interest and other income 41 96
Interest expense 702 563
------- --------
Earnings (loss) before income (520) 163
taxes
Income tax expense (benefit) (209) 61
======= ========
Net income (loss) ($311) $ 102
======= ========
Basic earnings (loss) per share ($0.03) $ 0.01
======= ========
Diluted earnings (loss) per share ($0.03) $ 0.01
======= ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
PIERCING PAGODA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three months ended
June 30,
---------------------
1999 1998
--------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) ($ 311) $ 102
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization 1,983 1,483
Other changes in other assets 20 15
Deferred income taxes 72 45
Change in operating assets and liabilities
net of effects of acquisitions:
Accounts receivable 166 210
Inventory (158) (4,936)
Deposits for inventory purchases (1,455) (416)
Prepaid expenses and other current assets 535 (81)
Prepaid income taxes (211) (244)
Accounts payable 681 1,962
Accrued expenses and other current
liabilities (1,631) (992)
Income taxes payable (125) (296)
Other liabilities (71) (46)
--------- ----------
Net cash used in operating activities (505) (3,194)
Cash flows from investing activities:
Additions to property, fixtures and equipment (2,296) (3,693)
Payments for purchase of businesses (298) (135)
Noncurrent deposits, net (42) (88)
--------- ----------
Net cash used in investing activities (2,636) (3,916)
Cash flows from financing activities:
Repayments of long-term debt (146) (9)
Revolving line of credit, net 2,800 3,700
Loan fees paid (13) (98)
Proceeds from issuance of long-term debt - 2,565
Net proceeds from issuance of common stock
under employee share plans 70 129
--------- ----------
Net cash provided by financing activities 2,711 6,287
--------- ----------
Net decrease in cash (430) (823)
Cash at beginning of period 4,068 2,699
========= ==========
Cash at end of period $3,638 $1,876
========= ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PIERCING PAGODA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In thousands)
(Unaudited)
Three months ended
June 30,
---------------------
1999 1998
--------- ----------
Supplemental disclosures of cash flow information:
Cash paid during the period for:
<S> <C> <C>
Interest $ 703 $ 505
========= ==========
Income taxes, net $ 55 $ 617
========= ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 Summary of significant accounting policies
The accompanying consolidated financial statements of Piercing Pagoda,
Inc. and subsidiaries (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 its wholly owned
subsidiaries. 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, 1999. 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.
In June 1998, the Company's Board of Directors authorized a
three-for-two stock split effected in the form of a stock dividend payable
to shareholders of record on July 31, 1998, payable on August 13, 1998.
Stockholders' equity has been restated to give retroactive recognition to
the stock split for all periods presented by reclassifying from additional
paid-in capital to common stock the par value of the additional shares
arising from the split. In addition, all share and per share amounts have
been restated to reflect the stock split.
Operating results for the three-month period ended June 30, 1999 are
not necessarily indicative of the results that may be expected for the
entire fiscal year.
Note 2 Earnings Per Share
The following weighted average number of shares of common stock were
used in the calculations for earnings (loss) per share. The diluted
weighted average number of shares includes the net shares that would be
issued upon the exercise of outstanding stock options, using the treasury
stock method.
1999 1998
Basic 9,143,105 9,088,398
Dilutive effect of
outstanding stock options,
using the treasury stock
method (1) - 367,098
---------- ---------
Diluted 9,143,105 9,455496
(1) For the period ended June 30, 1999, the dilutive effect of
outstanding stock options was not considered in the calculation of diluted
loss per share because their effects were anti-dilutive.
<PAGE>
Basic earnings (loss) per share is computed by dividing income
available to common stockholders by the weighted average number of common
shares outstanding during the period. Diluted earnings per share is
computed by dividing income available to common stockholders by the
weighted average number of common shares outstanding during the period
increased to include the number of additional common shares that would have
been outstanding if the dilutive potential common shares had been issued.
Note 3 Property, Fixtures and Equipment
A summary of major classes of property, fixtures and equipment follows
(in thousands):
<TABLE>
<CAPTION>
June 30, March 31,
1999 1999
------------ ----------
<S> <C> <C>
Land $ 688 $ 688
Furniture and fixtures 5,397 5,043
Kiosks 32,192 30,681
Buildings and improvements 7,294 7,283
Computer equipment, software
and other equipment 12,042 11,622
------------ -----------
57,613 55,317
Less accumulated depreciation
an amortization 22,556 21,024
============ ===========
$ 35,057 $ 34,293
============ ===========
</TABLE>
Note 4 Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities are summarized as
follows (in thousands):
<TABLE>
<CAPTION>
June 30, March 31,
1999 1999
------------ ---------
<S> <C> <C>
Accrued payroll, vacation
and related taxes $ 5,084 $ 6,254
Sales tax payable 893 719
Accrued rents payable 989 1,089
Liability under jewelry
club program 1,040 989
Liability under lifetime
guarantee program 1,321 1,321
Accrued store closure costs 941 1,250
Other accrued expenses 2,854 3,131
========== =========
$ 13,122 $ 14,753
========== =========
</TABLE>
During the period ended June 30, 1999, the Company closed 11 stores,
including 8 stores for which anticipated closure costs had been accrued at
March 31, 1999. In addition, the Company made payments to settle 17
outstanding lease obligations which had also been accrued at March 31,
1999. Accordingly, the Company's accrual for store closure costs was
reduced to reflect the payments towards these obligations.
<PAGE>
Note 5 Litigation
On October 19, 1998, a lawsuit was filed, purportedly as a class
action, against the Company and certain of its executive officers in the
U.S. District Court of the Eastern District of Pennsylvania. The lawsuit
alleges, among other things, that the Company and certain of its officers
made materially false and misleading statements and/or failed to disclose
material information regarding the Company's business performance and
prospects. On January 4, 1999, the Company filed a motion to dismiss the
suit, after which the plaintiffs filed an amended complaint. The Company
currently has pending before the court a motion to dismiss the amended
complaint. The Company believes that the lawsuit has no merit and intends
to contest the case vigorously if its motion to dismiss is unsuccessful.
Although the ultimate outcome of the lawsuit cannot be determined,
management does not believe the outcome of the lawsuit will have a material
adverse effect on the financial position, results of operations or cash
flows of the Company. However, there can be no assurance as to the ultimate
resolution of this matter.
<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 licensed the use of its store name and concept (the "Florida
Licensee"). On August 31, 1998, the Company acquired all of the outstanding
common stock of the Florida Licensee and now operates all the stores
previously owned by the Florida Licensee. Beginning on September 1, 1998
net sales consist entirely of sales generated by the Company's retail
stores. 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 and amortization of goodwill.
Results of operations
Three months ended June 30, 1999 and 1998
Consolidated net sales increased $10.2 million, or 21%, from $48.0
million for the three months ended June 30, 1998 to $58.2 million for the
three months ended June 30, 1999. This increase was due primarily to net
sales generated by new stores opened or acquired by the Company and a $2.8
million, or 6%, increase in comparable store net sales. There were a total
of 934 stores open at June 30, 1999 compared to 812 at June 30, 1998, an
increase of 15%. The average jewelry units sold per comparable store during
the quarter increased 8% to 2,600 for the three months ended June 30, 1999
compared to 2,400 at June 30, 1998. The average price per jewelry unit sold
increased slightly to $24.97 for the three months ended June 30, 1999
compared to $24.78 for the three months ended June 30, 1998. The increase
in average jewelry units sold primarily reflects increased unit volume
caused by greater promotional activity during the current period.
Gross profit increased $4.1 million, or 19%, from $21.4 million for
the three months ended June 30, 1998 to $25.5 million for the three months
ended June 30, 1999. The Company's gross profit margin decreased from 44.5%
for the three months ended June 30, 1998 to 43.8% for the three months
ended June 30, 1999. This decrease is primarily due to a greater amount of
promotional activity, partially offset by lower occupancy costs and other
expenses and the the elimination of wholesale sales to the Florida
Licensee. The Company increased the amount of its promotional activity in
the quarter to increase the sell-through of selected merchandise in
anticipation of the introduction of new merchandise styles in the first,
second and third fiscal quarters. However, in August of 1998, the Company
acquired its sole licensee and began operating the former licensee's 22
stores as its own. As a result, the sales of these stores are now reflected
as the Company's own retail sales rather than wholesale sales to the
licensee. Wholesale sales to the licensee produced a lower gross margin
than the Company's own retail net sales.
Selling, general and administrative expenses increased $4.5 million,
or 21.6%, from $20.8 million for the three months ended June 30, 1998 to
$25.3 million for the three months ended June 30, 1999. As a percentage of
net sales, selling, general and administrative expenses increased from
43.2% for the three months ended June 30, 1998 to 43.6% for the three
months ended June 30, 1999. The increase in selling, general and
administrative expenses primarily reflects higher store payroll costs due
to the increase in the number of stores operated by the Company compared to
the previous year, higher administrative expenses to support new stores and
higher amortization expense, primarily due to goodwill incurred in
connection with the Company's acquisitions of its Florida Licensee in
August of 1998 and 104 locations from Sedgwick Sales, Inc. in July of 1998.
Depreciation and amortization expense increased 33% to $2.0 million in the
three months ended June 30, 1999 from $1.5 million in the three months
ended June 30, 1998 due primarily to higher amortization of goodwill and
capital expenditures for new stores and the upgrading of kiosks in existing
locations.
Interest expense increased $139,000, or 24.7%, from $563,000 for the
three months ended June 30, 1998 to $702,000 for the three months ended
June 30, 1999, and as a percentage of net sales was unchanged at 1.2% for
the three months ended June 30, 1999 and 1998, respectively. The increase
in interest expense reflects higher average balances on the Company's
revolving line of credit agreement and an increase in the number of ounces
consigned under the Company's gold consignment arrangements.
As a result of the foregoing, the Company's net income decreased from
$102,000 for the three months ended June 30, 1998 to a net loss of $311,000
for the three months ended June 30, 1999.
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 and a revolving
credit facility. The Company's working capital increased to $49.5 million
at June 30, 1999 from $47.6 million at June 30, 1998. At June 30, 1999, the
Company had outstanding borrowings of $22.6 million under its revolving
line of credit and $5.7 million of long-term debt outstanding, including
$428,000 classified as a current liability. In addition, the Company had
consigned 152,834 ounces of gold under its gold consignment program valued
at approximately $39.9 million.
Net cash used in operating activities was $505,000 for the three
months ended June 30, 1999 compared to net cash used in operating
activities of $3.2 million for the same period in the prior year. Net cash
used in operating activities primarily reflects increases in inventory
deposits made to secure production of holiday merchandise and reductions in
accrued expenses, partially offset by depreciation and amortization. Net
cash used in operating activities in the three months ended June 30, 1998
primarily reflects increases in inventory to stock newly acquired and
opened stores as well as to provide initial inventory for the anticipated
opening of 104 locations acquired from Sedgwick Sales, Inc.
Net cash used in investing activities was $2.6 million during the
three months ended June 30, 1999 compared to $3.9 million during the three
months ended June 30, 1998. Net cash used in investing activities primarily
reflects 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 $2.7 million for the
three months ended June 30, 1999 versus $6.3 million during the three
months ended June 30, 1998. Net cash provided by financing activities
during the three months ended June 30, 1999 primarily reflects increased
borrowings under the Company's existing line of credit to fund operations.
The Company's revolving credit facility provides for maximum
borrowings of $105.0 million through a combination of cash advances (which
may not exceed $65 million) and letters of credit (which may not exceed $70
million) to support the Company's gold consignment financing program. At
June 30, 1999, the Company had $38.9 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 borrowings
will be sufficient to fund the Company's currently anticipated capital and
liquidity needs. The Company is currently renegotiating its revolving line
of credit agreement in advance of its expiration and anticipates signing a
new agreement prior to the expiration of the existing revolving credit
facility. The company is also currently considering expanding its gold
consignment program by establishing consignment arrangements with a new
consignment bank.
Year 2000 compliance
The information set forth in this section is a Year 2000 Readiness
Disclosure as defined in the Year 2000 Information Readiness and Disclosure
Act.
The Company is aware of "Year 2000" issues existing in the programming
code of some information technology ("IT") and non-IT systems. The Year
2000 issue may arise because many hardware and software systems only use
two digits to represent the year. As a result, these systems may not be
able to process dates beyond 1999, which may cause errors or failures in IT
or non-IT systems.
The Company relies significantly on both IT and non-IT systems in its
retail outlets as well as at its corporate headquarters and distribution
center. These systems include hardware and software that the Company uses
to conduct its operations, analyze business performance and safeguard
assets. The Company's strategy for addressing Year 2000 compliance has been
to replace or renovate all critical systems identified as non-compliant.
Accordingly, in fiscal 1999, the Company implemented a process to identify,
remediate and test all critical systems. The Company has now substantially
completed the identification and remediation portions of this process. For
the remainder of calendar 1999, the Company will focus its efforts on
testing these systems to ensure Year 2000 compliance as well as developing
contingency plans to address Year 2000 related issues which may occur as a
result of circumstances beyond the Company's control.
The Company has met all costs of its Year 2000 remediation efforts
with existing internal staff resources and has spent less than $500,000 on
hardware and software purchased to specifically address Year 2000 issues.
The cost of these efforts has not been separately tracked or allocated and,
accordingly, the Company cannot precisely determine the expense incurred.
The Company does not anticipate future Year 2000 costs will be material and
will continue to use internal staff supplemented by external resources if
necessary.
The Company expects its own Year 2000 project to be completed on a
timely basis. However, there can be no assurance that the systems of other
companies on which the Company's systems also rely will be compliant. The
Company is seeking confirmation from its primary vendors that they are
developing and implementing plans to become Year 2000 compliant. However,
there can be no assurance that the systems of third parties, which are not
within the control of the Company, will function properly. The failure of
certain primary vendors to be Year 2000 compliant may have an adverse
impact on the Company's performance. The Company is developing contingency
plans as part of its remediation efforts and the Company expects such plans
to be completed by September 30, 1999.
While the Company continues to believe that the Year 2000 matters
discussed above will not have a material impact on its business, financial
condition or results of operations, it remains uncertain whether or to what
extent the Company may be affected.
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.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There were no material changes in market risk exposures that affect the
quantitative and qualitative disclosures presented as of March 31, 1999.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On October 19, 1998, a lawsuit was filed, purportedly as a class action,
against the Company and certain of its executive officers in the U.S.
District Court of the Eastern District of Pennsylvania. The lawsuit alleges,
among other things, that the Company and certain of its officers made
materially false and misleading statements and/or failed to disclose
material information regarding the Company's business performance and
prospects. On January 4, 1999, the Company filed a motion to dismiss the
suit, after which the plaintiffs filed an amended complaint. The Company
currently has pending before the court a motion to dismiss the amended
complaint. The Company believes that the lawsuit has no merit and intends to
contest the case vigorously if its motion to dismiss is unsuccessful.
Although the ultimate outcome of the lawsuit cannot be determined,
management does not believe the outcome of the lawsuit will have a material
adverse effect on the financial position, results of operations or cash
flows of the Company. However, there can be no assurance as to the ultimate
resolution of this matter.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
27 Financial Data Schedule.
b) Reports on Form 8-K
During the quarter ended June 30, 1999, no reports on Form 8-K were
filed.
<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: August 11, 1999 /s/ John F. Eureyecko
John F. Eureyecko
President,
Chief Operating Officer
(Principal Financial Officer)
Date: August 11, 1999 /s/ Brandon R. Lehman
Brandon R. Lehman
Treasurer
(Principal Accounting Officer)
<PAGE>
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Page
27 Financial Data Schedule 18
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> JUN-30-1999
<CASH> 3638
<SECURITIES> 0
<RECEIVABLES> 4508
<ALLOWANCES> 0
<INVENTORY> 53843
<CURRENT-ASSETS> 67630
<PP&E> 57613
<DEPRECIATION> 22556
<TOTAL-ASSETS> 124761
<CURRENT-LIABILITIES> 18165
<BONDS> 27827
0
0
<COMMON> 92
<OTHER-SE> 74158
<TOTAL-LIABILITY-AND-EQUITY> 124761
<SALES> 58154
<TOTAL-REVENUES> 58154
<CGS> 32665
<TOTAL-COSTS> 32665
<OTHER-EXPENSES> 25348
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 702
<INCOME-PRETAX> (520)
<INCOME-TAX> (209)
<INCOME-CONTINUING> (311)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (311)
<EPS-BASIC> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
