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 July 31, 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 1-6370
FRENCH FRAGRANCES, INC.
(Exact name of registrant as specified in its charter)
Florida 59-0914138
(State of incorporation) (IRS Employer
Identification No.)
14100 N.W. 60th Avenue, Miami Lakes, Florida 33014
(Address of principal executive offices) (zip code)
(305) 818-8000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [ X ] No [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
Outstanding at
Class September 8, 1997
---------------------------- -----------------
Common stock, $.01 par value 13,453,115 shares
<PAGE>
FRENCH FRAGRANCES, INC.
INDEX TO FORM 10-Q
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets -
July 31, 1997 and January 31,1997
Consolidated Statements of Income -
Three and Six Months Ended July 31, 1997 and 1996
Consolidated Statements of Cash Flows -
Six Months Ended July 31, 1997 and 1996
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II - OTHER INFORMATION
Item 2. Changes in Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K
Signatures
<PAGE>
<PAGE>
<TABLE>
FRENCH FRAGRANCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
January 31, 1997 July 31, 1997
---------------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 855,969 $ 21,501,819
Accounts receivable, net 33,762,541 35,329,788
Inventories 67,989,322 88,267,482
Advances on inventory purchases 3,441,020 6,545,917
Prepaid expenses and other assets 2,167,790 5,083,561
----------- -----------
Total current assets 108,216,642 156,728,567
----------- -----------
Investment in unconsolidated affiliate 2,104,218 --
----------- -----------
Restricted cash and investments 1,314,602 --
----------- -----------
Property and equipment, net 13,817,203 16,293,729
----------- -----------
Other assets:
Exclusive brand licenses and trademarks, net 45,126,465 44,455,192
Senior note offering costs, net -- 3,738,983
Deferred income taxes, net 955,805 1,030,403
Other intangibles and other assets 843,109 1,353,512
----------- -----------
Total other assets 46,925,379 50,578,090
----------- -----------
Total assets $172,378,044 $223,600,386
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 39,631,301 $ --
Accounts payable - trade 37,329,059 31,900,410
Other payables and accrued expenses 10,600,000 6,753,914
Current portion of capital lease,
installment loans, mortgage and term note 1,308,370 1,775,203
Due to affiliates, net 1,613,989 293,032
----------- -----------
Total current liabilities 90,482,719 40,722,559
----------- -----------
Long-term liabilities:
Secured subordinated debentures 10,435,035 --
Subordinated debentures 11,080,000 7,080,000
Convertible subordinated debentures 5,460,000 5,460,000
Mortgage note 5,824,231 5,771,142
Term notes 3,285,915 1,449,273
Senior notes -- 115,000,000
Capital lease and installment loans 1,130,000 1,070,000
----------- -----------
Total liabilities 127,697,900 176,552,974
----------- -----------
Commitments
Shareholders' equity:
Convertible, redeemable preferred stock,
Series B, $.01 par value (liquidation
preference of $.01 per share); 350,000
shares authorized; 316,005 and 309,231
shares issued and outstanding, respectively 3,160 3,092
Convertible, redeemable preferred stock,
Series C, $.01 par value (liquidation
preference of $.01 per share); 571,429
shares authorized; 571,429 and 553,320
shares issued and outstanding, respectively 5,714 5,533
Common stock, $.01 par value, 50,000,000
shares authorized; 13,249,152 and 13,315,485
shares issued and outstanding, respectively 132,492 133,155
Additional paid-in capital 29,185,161 29,438,980
Retained earnings 15,353,617 17,466,652
----------- -----------
Total shareholders' equity 44,680,144 47,047,412
----------- -----------
Total liabilities and shareholders' equity $172,378,044 $223,600,386
=========== ===========
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
FRENCH FRAGRANCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
Three Months Six Months
Ended Ended
July 31, July 31,
1996 1997 1996 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales $23,802,106 $35,635,233 $43,118,599 $70,737,271
Cost of Sales 15,237,358 23,604,396 28,693,346 47,202,852
---------- ---------- ---------- ----------
Gross Profit 8,564,748 12,030,837 14,425,253 23,534,419
Operating Expenses
Warehouse and shipping 1,004,213 1,437,726 1,809,724 2,747,764
Selling, general and
administration 4,051,881 5,520,776 7,154,215 10,677,429
Depreciation and
amortization 994,935 1,155,488 1,527,236 2,262,802
---------- ---------- ---------- ----------
Total operating
expenses 6,051,029 8,113,990 10,491,175 15,687,995
---------- ---------- ---------- ----------
Income from Operations 2,513,719 3,916,847 3,934,078 7,846,424
Other Income (Expense)
Interest expense, net (1,810,562) (3,076,502) (3,009,391) (4,818,942)
Other income 186,164 164,781 325,710 202,448
---------- ---------- ---------- ----------
Other Income
(expense), net (1,624,398) (2,911,721) (2,683,681) (4,616,494)
---------- ---------- ---------- ----------
Income Before Equity in
Earnings of Unconsoli-
dated Affiliate and
Provisions for Income
Taxes 889,321 1,005,126 1,250,397 3,229,930
Equity in Earnings of
Unconsolidated Affiliate,
50% Owned 150,966 -- 242,435 134,508
---------- ---------- ---------- ----------
Income Before Income
Taxes 1,040,287 1,005,126 1,492,832 3,364,438
Provision for Income
Taxes 363,648 392,980 523,849 1,251,403
---------- ---------- ---------- ----------
Net Income $ 676,639 $ 612,146 $ 968,983 $ 2,113,035
========== ========== ========== ==========
<PAGE>
Earnings per common
share equivalent:
Primary $0.06 $0.04 $0.08 $0.14
==== ==== ==== ====
Fully diluted $0.06 $0.04 $0.08 $0.14
==== ==== ==== ====
Weighted average number
of common share
equivalents:
Primary 12,281,453 15,447,880 11,728,719 15,537,374
========== ========== ========== ==========
Fully diluted 12,281,453 15,572,870 11,883,575 15,635,918
========== ========== ========== ==========
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
FRENCH FRAGRANCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Six Months Ended
July 31,
1996 1997
------------ ------------
<S> <C> <C>
Cash Flow from Operating Activities
Net Income $ 968,983 $ 2,113,035
Adjustments to reconcile net income to
cash provided by (used in) operating
activities:
Depreciation and amortization 1,527,236 2,262,802
Amortization of senior note offering costs -- 79,546
Equity in earnings of unconsolidated
affiliate (242,435) (134,508)
Change in assets and liabilities net
of effects from the acquisitions:
Increase in accounts receivable (7,343,295) (805,042)
Increase in inventories (23,226,128) (17,472,522)
Decrease (increase) in prepaid expenses
and other current assets 1,006,460 (5,517,357)
Increase (decrease) in accounts payable 6,592,573 (4,946,146)
Decrease in other payables and
accrued expenses (588,100) (4,749,689)
Decrease in due to affiliate, net (977,166) (1,015,612)
----------- -----------
Net cash used in operating activities (22,281,872) (30,189,493)
----------- -----------
Cash Flows from Investing Activities
Cash payment for acquisition of unconsolidated
affiliate, net of cash acquired -- (1,745,768)
Receipt of restricted cash for capital
improvements -- 1,314,602
Cash portion of purchase of exclusive
brand license (18,974,638) --
Additions to property and equipment,
net of disposals (666,649) (3,055,589)
----------- -----------
Net cash used in investing activities (19,641,287) (3,486,755)
----------- -----------
Cash Flows from Financing Activities
Proceeds from stock offering 18,071,825 --
Proceeds from the grant of stock purchase
warrants 40,000 --
Proceeds from the issuance of preferred
stock 5,714 --
Proceeds from the issuance of secured
subordinated debentures 3,000,035 --
Proceeds from the issuance of senior notes, net -- 111,550,000
Payments to retire subordinated debentures -- (14,394,475)
Proceeds from converstion of preferred stock -- 213,674
Advances from unconsolidated affiliate, net 523,369 798,894
Proceeds from term loans 8,960,000 --
Payments on term loans (9,833,333) (4,333,333)
Net proceeds from (payments on) short-term debt 18,506,649 (39,367,096)
Payments on capital lease and installment loans (110,477) (81,145)
Payment of loans from shareholders (410,000) --
Proceeds from bridge and inventory loans 7,000,000 --
Payment of bridge and inventory loans (7,000,000) --
Proceeds from mortgage 4,000,000 --
Payments on mortgage (9,168) (68,421)
----------- -----------
Net cash provided by financing activities 42,744,614 54,318,098
----------- -----------
Net Increase in Cash and Cash Equivalents 821,455 20,645,850
Cash and Cash Equivalents at Beginning of Period 123,960 855,969
----------- -----------
Cash and Cash Equivalents at End of Period $ 945,415 $ 21,501,819
=========== ===========
Supplemental Disclosure of Cash Flow
Information:
Interest paid during the period $ 2,354,167 $ 2,821,796
=========== ===========
Income taxes paid during the period $ 853,441 $ 4,651,700
=========== ===========
See Notes to Consolidated Financial Statements
/TABLE
<PAGE>
<PAGE>
FRENCH FRAGRANCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BUSINESS AND BASIS OF PRESENTATION
French Fragrances, Inc. (the "Company") is a manufacturer,
distributor and marketer of prestige designer fragrances and
related cosmetic products, primarily to mass-market retailers in
the United States.
The consolidated financial statements included herein have
been prepared by the Company pursuant to the rules and
regulations of the Securities and Exchange Commission (the
"Commission") for interim financial information. As such
financial statements do not include all of the information and
footnotes required by generally accepted accounting principles
for complete financial statements, they should be read in
conjunction with the financial statements and related footnotes
included in the Company's Annual Report on Form 10-K for the year
ended January 31, 1997, filed with the Commission.
The consolidated balance sheet of the Company as of
January 31, 1997 is audited. The other consolidated financial
statements are unaudited, but in the opinion of management
contain all adjustments (consisting of normal recurring
adjustments) necessary to present fairly the consolidated balance
sheet of the Company as of July 31, 1997, the consolidated
statements of income of the Company for the three and six months
ended July 31, 1997 and 1996, and the consolidated statements of
cash flow for the six months ended July 31, 1997 and 1996.
Operating results for the three and six months ended July 31,
1997 are not necessarily indicative of the results for the full
fiscal year.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Earnings per Share - Earnings per share is based on the
weighted average number of common shares outstanding as
calculated under the treasury stock method and includes the
effect of the issuance of shares in connection with the assumed
exercise of dilutive stock options and warrants and the assumed
conversion of dilutive convertible preferred stock. Fully
diluted earnings per share reflects additional dilution due to
the use of the market price at the end of the period when higher
than the average market price for the period, including the
assumed conversion of the convertible subordinated debentures
with corresponding adjustments for interest expense, net of tax.
<PAGE>
<PAGE>
FRENCH FRAGRANCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
In February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards Number 128
"Earnings per Share" ("SFAS 128") which changes the method of
calculating earnings per share. SFAS 128 requires the
presentation of "basic" earnings per share and "diluted"
earnings per share on the face of the income statement. Basic
earnings per share is computed by dividing the net income
available to common shareholders by the weighted average shares
of outstanding common stock. The calculation of diluted earnings
per share is similar to basic earnings per share except that the
denominator includes dilutive common stock equivalents such as
stock options and warrants. The statement is effective for
financial statements for periods ending after December 31, 1997.
The Company will adopt SFAS 128 in the fourth quarter of fiscal
1998, as early adoption is not permitted. The pro forma basic
earnings per share and diluted earnings per share calculated in
accordance with SFAS 128 for the three and six months ended
July 31, 1996 and 1997, are as follows:
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
July 31, July 31,
1996 1997 1996 1997
------------- -------------
<S> <C> <C> <C> <C>
Pro forma basic earnings
per share $0.06 $0.05 $0.09 $0.16
Pro forma diluted earnings
per share $0.06 $0.04 $0.08 $0.14
</TABLE>
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Segments of an Enterprise - In June 1997, the Financial
Accounting Standards Board issued Statement of Financial
Accounting Standards No. 131 ("SFAS No. 131"), Disclosure about
Segments of an Enterprise and Related Information. The statement
is effective for financial statements for periods beginning after
December 15, 1997, and requires information about operating
segments in annual financial statements and selected information
about operating segments in interim financial reports issued to
shareholders. It also demands for related disclosure about
products and services, geographical areas, and major customers.
Management is in the process of evaluating the impact of SFAS No.
131 on its consolidated financial statements. <PAGE>
<PAGE>
FRENCH FRAGRANCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3. INVESTMENT IN UNCONSOLIDATED AFFILIATE
Investment in unconsolidated affiliate at January 31, 1997
represents the shareholder's equity (adjusted for the unamortized
exclusive distribution agreements corresponding to the brands
described below) corresponding to the Company's then 49.99%
interest in Fine Fragrances, Inc. ("Fine Fragrances"), a
fragrance distribution company which distributed on an exclusive
basis in the Unites States and Canada the Salvador Dali, Laguna,
Dalissime, Salvador, Dalimix, Taxi, Cafe and Watt brands
manufactured by COFCI, S.A. ("COFCI"). Prior to May 1997, the
Company's investment in Fine Fragrances was accounted for under
the equity method.
In May 1997, the Company used approximately $4,226,000 of
the net proceeds from a private placement (the "Offering") of
$115,000,000 principal amount of 10-3/8% Senior Notes Due 2007,
Series A (the "Series A Senior Notes") to acquire the 50.01%
interest of Fine Fragrances that the Company did not own (the
"Fine Fragrances Interest") from an unaffiliated third party and
to repay Fine Fragrances' credit line (see Note 10). The
purchase price for the Fine Fragrances Interest was $2,000,000,
plus an additional $1,000,000 which is to be paid over time based
on 5% of the net sales of COFCI products sold by Fine Fragrances
or the Company, with any unpaid balance due 30 days after the
third anniversary of the consummation of the transaction. As a
result of this acquisition, since May 1997, Fine Fragrances
became a wholly-owned subsidiary of the Company and the
operations of Fine Fragrances have been consolidated with those
of the Company. The brands manufactured by COFCI are distributed
by the Company under new ten year agreements.
NOTE 4. SHORT-TERM DEBT
In May 1997, the Company used approximately $48,595,000 of
the net proceeds from the Offering to repay all amounts
outstanding under its credit facility and terminated such
facility. Concurrently with the closing of the Offering, the
Company entered into a new stand-by credit facility (the "New
Credit Facility") with the same lender which provides for
borrowings on a revolving basis of up to $40,000,000, with a
$3,000,000 sublimit for letters of credit. Borrowings under the
New Credit Facility are limited to eligible accounts receivable
and inventories. Borrowings under the New Credit Facility will
be secured by a first priority lien on all of the Company's
accounts receivable and inventory. The Company's obligations
under the new credit facility will rank pari passu in right of
payment with the Senior Notes. The New Credit Facility contains <PAGE>
<PAGE>
FRENCH FRAGRANCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4. SHORT-TERM DEBT - Continued
several covenants, the more significant of which are that
the Company maintain a minimum level of equity and meet certain
debt-to-equity, interest coverage and liquidity ratios. The New
Credit Facility also includes a prohibition on the payment of
dividends and other distributions to shareholders and
restrictions on the incurrence of additional non-trade
indebtedness. At July 31, 1997, no borrowings were outstanding
under the New Credit Facility.
NOTE 5. SUBORDINATED DEBENTURES
In May 1997, the Company used approximately $10,428,000 of
the net proceeds from the Offering to redeem its outstanding 8%
Secured Subordinated Debentures Due 2005 Series I and Series II
(plus accrued interest) which were issued in connection with the
March 1995 acquisition of a long-term license for the Geoffrey
Beene brands and the March 1996 acquisition of the Halston
brands. The Company also used approximately $3,982,000 of the
net proceeds from such offering to pay accrued interest and
purchase, at a discount, an 8.5% Subordinated Debenture Due 1999
in the principal amount of $4,000,000 which was issued in
connection with the acquisition of the assets of Fragrance
Marketing Group, Inc. in May 1996.
NOTE 6. INCOME TAXES
The provision for income taxes for the three and six months
ended July 31, 1997 was calculated based upon the estimated tax
rate of 39% for the full fiscal year ending January 31, 1998.
NOTE 7. RELATED PARTY TRANSACTIONS
At July 31, 1997, the Company had $293,032 outstanding in
advances from National Trading Manufacturing, Inc., a company
which is wholly-owned by the Chairman of the Company ("National
Trading"), which advances are reflected on the balance sheet as
Due to affiliates, net. Due to affiliates, net at January 31,
1997 includes advances from Fine Fragrances, net of repayments
and management fees, of $1,095,345 and advances from National
Trading of $518,644. As a result of the acquisition in May 1997
of the Fine Fragrances Interest, the management agreement
pursuant to which the Company was performing management services
on behalf of Fine Fragrances was terminated, Fine Fragrances
credit facility was terminated and advances from Fine Fragrances
to the Company were canceled. Accordingly, there were no related
party transactions between the Company and Fine Fragrances for
the three months ended July 31, 1997. See Note 3.
<PAGE>
<PAGE>
FRENCH FRAGRANCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7. RELATED PARTY TRANSACTIONS - Continued
In April 1997, the Company terminated various monitoring
agreements it had with affiliates of the Company. Pursuant to
these agreements, the affiliates provided financial advisory
services to the Company for annual fees totaling $275,000.
These agreements were replaced by a one-year consulting agreement
with E.S.B. Consultants, Inc. ("ESB"), a Company wholly-owned by
the President of the Company, pursuant to which ESB provides
financial advisory and management services for a fee of $300,000.
The President does not draw a separate salary from the Company.
NOTE 8. STOCK OPTION PLANS
During the six months ended July 31, 1997, the Company
granted options for 30,000 shares at an exercise price of $8.38
per share and options for 7,500 shares at an exercise price of
$9.38 under the Company's 1995 Stock Option Plan. In addition,
the Company granted options for 30,000 shares at an exercise
price of $9.38 per share under the Company's Non-Employee
Director Stock Option Plan.
NOTE 9. SHAREHOLDERS' EQUITY
A schedule of the transactions in the common stock
and the preferred stock of the Company and the additional paid-in
capital accounts during the six months ended July 31, 1997 is as
follows:
<TABLE>
<CAPTION>
Preferred Stock Additional
Series B Series C Common Stock Paid-in
Shares Amount Shares Amount Shares Amount Capital
---------------- ---------------- --------------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
January 31, 1997 316,005 $3,160 571,429 $5,714 13,249,152 $132,492 $29,185,161
Issuance of
Common Stock
upon conversion
of Series B and
Series C
convertible
preferred stock (6,774) (68) (18,109) (181) 66,333 663 253,819
------- ------ ------- ------ ---------- -------- -----------
Balance at
July 31, 1997 309,231 $3,092 553,320 $5,533 13,315,485 $133,155 $29,438,980
======= ====== ======= ====== ========== ======== ===========
/TABLE
<PAGE>
<PAGE>
FRENCH FRAGRANCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10. SENIOR NOTE OFFERING
In May 1997, the Company, consummated the private placement
of $115,000,000 principal amount of 10-3/8% Senior Notes, due
2007, Series A. Approximately $48,595,000 of the net proceeds
from the sale of the Senior Notes was used to repay all of the
outstanding indebtedness under the Company's credit facility and
approximately $14,410,000 of the net proceeds was used to repay
subordinated debentures of the Company (see Notes 4 and 5). In
addition, the Company applied approximately $4,226,000 to the
acquisition of the Fine Fragrances Interest and the repayment of
all of the outstanding indebtedness under Fine Fragrances' credit
facility (see Note 3). The balance of the net proceeds from the
Offering has been and will continue to be used to provide the
Company with additional working capital support, as well as
increased operational and financial flexibility to take advantage
of expansion opportunities, through acquisitions or new product
distribution arrangements. In July 1997, the Series A Senior
Notes were exchanged for an equivalent principal amount of
10-3/8% Senior Notes due 2007, Series B (the "Series B Senior
Notes") which contain identical terms to the Series A Senior
Notes but have been registered under the Securities Act of 1933,
as amended.
The Indenture pursuant to which the Series A Senior Notes
(and the Series B Senior Notes following their exchange for the
Series A Senior Notes) were issued (the "Indenture") provides
that such notes will be senior unsecured obligations of the
Company and will rank senior in payment to all existing and
future subordinated indebtedness of the Company and pari passu in
right of payment with all existing and future senior indebtedness
of the Company, including indebtedness under the New Credit
Facility. The Indenture generally limits the ability of the
Company to (i) incur additional indebtedness, (ii) pay any
dividend or make any distribution on account of its capital stock
or other equity interest, (iii) purchase or redeem any capital
stock or equity interest of the Company, (iv) make any principal
payment, purchase or redeem subordinated indebtedness except at
scheduled maturities, or (v) make certain investments; in each
case subject to the satisfaction of a fixed charge coverage ratio
and, in certain cases, also a net income test. In addition, the
Indenture generally limits the ability of the Company to create
liens, merge or transfer or sell assets. The Indenture also
provides that the holders of the Series B Senior Notes have the
option to require the Company to repurchase their notes in the
event there is a change of control in the Company (as defined in
the Indenture).
<PAGE>
<PAGE>
FRENCH FRAGRANCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10. SENIOR NOTE OFFERING - Continued
The following unaudited information presents the Company's
pro forma operating data for the fiscal year ended January 31,
1997 and the six months ended July 31, 1997 as if the Offering of
the Series A Senior Notes and the acquisition of Fine Fragrances
had been consummated at the beginning of the period presented and
include certain adjustments to the historical consolidated
statement of income of the Company to give effect to the Offering
and the use of proceeds relating thereto. The unaudited pro
forma financial data are not indicative of the results of
operations that would have been achieved had the Offering been
consummated prior to the period in which it was completed, or
that might be attained in the future.
<TABLE>
<CAPTION>
Fiscal Year Six Months
Ended Ended
January 31, 1997 July 31, 1997
<S> <C> <C>
Net sales $147,762 $72,687
Cost of sales 98,495 48,253
------- ------
Gross profit 49,267 24,434
Operating expenses 29,680 16,111
------- ------
Income from operations 19,587 8,323
Interest expense, net (13,829) (6,920)
Other income and equity in
earnings of unconsolidated
affiliate 1,213 204
------- ------
Income before income taxes 6,971 1,607
Provision for income taxes 2,373 577
------- ------
Net income $ 4,598 $ 1,030
======= ======
</TABLE>
<PAGE>
<PAGE>
FRENCH FRAGRANCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11. SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING AND
INVESTING ACTIVITIES
FFI incurred the following non-cash financing and investing
activities for the six months ended July 31, 1996 and 1997.
<TABLE>
<CAPTION>
July 31, 1996 July 31, 1997
------------- -------------
<S> <C> <C>
HBI Note issued in connection with the
Halston Acquisition $ 2,000,000
==========
7.5% Convertible Debentures issued in
connection with the Exchange Offer $ 5,460,000
==========
Redemption of 8% Debentures used to
pay for conversion of preferred stock $ 786,500 $ 40,559
========== =========
COFCI note issued in connection with
acquisition of unconsolidated affiliate $1,000,000
=========
Acquisition of FMG assets:
Fair value of assets acquired excluding
inventory $14,552,489
==========
8.5% Debentures issued, net of discount $11,080,000
==========
Warrants issued $ 20,000
==========
Liabilities assumed $ 3,107,328
==========
Discharge of receivable and inventory
transferred $ 1,544,489
==========
Inventory acquired for other than cash $ 1,199,332
==========
Acquisition of unconsolidated affiliate:
Book value of assets acquired,
excluding inventory $2,296,051
=========
Liabilities assumed $3,156,895
=========
Inventory acquired $2,805,638
=========
/TABLE
<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This discussion should be read in conjunction with the Notes
to Consolidated Financial Statements contained herein and
Management's Discussion and Analysis of Financial Condition and
Results of Operations appearing in the Company's Form 10-K for
the year ended January 31, 1997. The results of operations for
an interim period may not give a true indication of results for
the year. In the following discussions, all comparisons are with
the corresponding items in the prior year.
RESULTS OF OPERATIONS
Three Months Ended July 31, 1997 Compared to the Three Months
Ended July 31, 1996
- -------------------------------------------------------------
Net sales. Net sales increased $11.8 million, or 50%, to
$35.6 million for the three months ended July 31, 1997 from $23.8
million for the three months ended July 31, 1996. The increase
in net sales was primarily attributable to (i) the increased
selection of prestige fragrance brands that are distributed by
the Company on a non-exclusive basis through direct purchase
relationships with manufacturers or other sources ("Distributed
Brands"), (ii) the addition of the net sales of COFCI, S.A.
fragrance products following the May 1997 acquisition (the "Fine
Acquisition") of the 50.01% interest of Fine Fragrances, Inc.
that the Company did not own (which was previously accounted for
under equity in earnings of unconsolidated affiliate, 50% owned),
and (iii) increased sales of the Geoffrey Beene fragrance brands.
See Note 3 to Notes to Consolidated Financial Statements. The
increase in net sales represents both an increase in the volume
of products sold to existing customers, as well as sales to new
customers. Management believes that increased sales during the
three months ended July 31, 1997, resulted primarily from the
Company's ability to provide its customers with a larger
selection of products and a continuous, direct supply of
products, and the growth in sales of customized gift sets.
Gross Profit. Gross profit increased $3.5 million, or 41%,
to $12.0 million for the three months ended July 31, 1997 from
$8.5 million for the three months ended July 31, 1996. The
increase in gross profit was primarily attributable to the
increase in product sales from the Geoffrey Beene, the COFCI
brands and the Distributed Brands. Gross margins decreased from
36.0% to 33.8% primarily as a result of an increase in sales of
certain Distributed Brands which typically sell at lower margins,
which was partially offset by the increase in gross margins and
sales of Geoffrey Beene and COFCI brands.
<PAGE>
<PAGE>
Warehouse and Shipping Expense. Warehouse and shipping
expenses increased $434,000, or 43%, to $1,438,000 for the three
months ended July 31, 1997 from $1,004,000 for the three months
ended July 31, 1996. The increase resulted from the increase in
net sales.
SG&A. Selling, general and administrative expenses
increased $1.5 million, or 36%, to $5.5 million for the three
months ended July 31, 1997 from $4.0 million for the three months
ended July 31, 1996. The increase in selling, general and
administrative expenses was primarily a result of an increase in
advertising and promotional expenses for the Halston and Geoffrey
Beene brands and the addition of sales and administrative
personnel. Selling, general and administrative expenses for the
three months ended July 31, 1997 also increased as a result of
the termination of the management fees derived from Fine
Fragrances following the Fine Acquisition.
Depreciation and Amortization. Depreciation and
amortization increased $160,000, or 16%, to $1,155,000 for the
three months ended July 31, 1997 from $995,000 for the three
months ended July 31, 1996. The increase was primarily
attributable to the amortization of the costs from the Debt
Offering and the depreciation of costs related to (i) the
renovation of, and move to, the Miami Lakes facility (including
new machinery and equipment) and (ii) new tools and molds
necessary for the manufacture of products.
Interest Expense, Net. Interest expense, net of interest
income, increased $1,266,000, or 70% to $3,077,000 for the three
months ended July 31, 1997 from $1,811,000 for the three months
ended July 31, 1996. This increase was primarily due to the
increase in average debt outstanding resulting from the May 1997
offering (the "Debt Offering") of $115,000,000 principal amount
of 10-3/8% Senior Notes Due 2007, Series A (the "Series A Senior
Notes"), which was partially offset by the increase in interest
income resulting from the investment of the excess proceeds from
the Offering. See "Financial Condition."
Net Income. Net income decreased $65,000, or 10%, to
$612,000 for the three months ended July 31, 1997 from $677,000
for the three months ended July 31, 1996, as a result of the
increase in interest expenses which were partially offset by the
increase in net sales and gross profit.
Net Income Per Share. Net income per share decreased to
$0.04 for the three months ended July 31, 1997, compared to $0.06
per share for the three months ended July 31, 1996, primarily as
a result of the decrease in net income and the increase in the
number of outstanding shares following the Company's public
offering of 3,364,000 shares of common stock in July 1996 (the
"Stock Offering").
<PAGE>
<PAGE>
EBITDA. EBITDA (operating income, plus depreciation and
amortization) increased $1,563,000, or 45%, to $5,072,000 for the
three months ended July 31, 1997 from $3,509,000 for the three
months ended July 31, 1996. The EBITDA margin decreased to 14.2%
for the three months ended July 31, 1997 from 14.7% for the three
months ended July 31, 1996. The increase in EBITDA is primarily
attributable to the increase in gross profit and the decrease in
selling, general and administrative expenses as a percentage of
net sales. The decrease in EBITDA margin is primarily
attributable to the decrease in gross margin discussed above,
partially offset by the decrease in selling, general and
administrative expenses as a percentage of net sales.
Six Months Ended July 31, 1997 Compared to the Six Months Ended
July 31, 1996
- ---------------------------------------------------------------
Net sales. Net sales increased $27.6 million, or 64%, to
$70.7 million for the six months ended July 31, 1997 from $43.1
million for the six months ended July 31, 1996. The increase in
net sales was primarily attributable to (i) the increased
selection of Distributed Brands, (ii) the acquisition of the
Halston fragrance brands in March 1996, (iii) the addition of the
net sales of the COFCI fragrance products following the Fine
Acquisition in May 1997, and (iv) the acquisition of exclusive
distribution agreements for the fragrance brands formerly
distributed by Fragrance Marketing Group, Inc. ("FMG") in May
1996 (the "FMG Acquisition"). The increase in net sales
represents both an increase in the volume of products sold to
existing customers, as well as sales to new customers.
Management believes that increased sales have resulted from the
Company's ability to provide its customers with a larger
selection of products and a continuous, direct supply of
products, and the growth in sales of customized gift sets.
Gross Profit. Gross profit increased $9.1 million, or 63%,
to $23.5 million for the six months ended July 31, 1997 from
$14.4 million for the six months ended July 31, 1996. The
increase in gross profit was primarily attributable to the
product sales from the Halston, Geoffrey Beene, COFCI brands, the
brands formerly distributed by FMG and the Distributed Brands.
Gross margins decreased from 33.5% to 33.3% primarily as a result
of a higher percentage of sales of certain Distributed Brands,
which
typically sell at lower margins than sales of the Halston and
Geoffrey Beene products.
Warehouse and Shipping Expense. Warehouse and shipping
expenses increased $938,000, or 52%, to $2,748,000 for the six
months ended July 31, 1997 from $1,810,000 for the six months
ended July 31, 1996. The increase resulted from the increase in
net sales.
<PAGE>
<PAGE>
SG&A. Selling, general and administrative expenses
increased $3.5 million, or 49%, to $10.7 million for the six
months ended July 31, 1997 from $7.2 million for the six months
ended July 31, 1996. The increase in selling, general and
administrative expenses was primarily a result of an increase in
advertising and promotional expenses for the Halston and Geoffrey
Beene brands and the addition of sales, marketing and
administrative personnel.
Depreciation and Amortization. Depreciation and
amortization increased $736,000, or 48%, to $2,263,000 for the
six months ended July 31, 1997 from $1,527,000 for the six months
ended July 31, 1996. The increase was primarily attributable to
increased amortization of trademarks and exclusive license
agreements resulting from the Halston Acquisition and the FMG
Acquisition, the amortization of the costs from the Debt Offering
and the depreciation of costs related to (i) the renovation of,
and move to, the Miami Lakes facility (including new machinery
and equipment) and (ii) tools and molds acquired in the Halston
Acquisition and in connection with the manufacture of products.
Interest Expense, Net. Interest expense, net of interest
income, increased $1,810,000, or 60% to $4,819,000 for the six
months ended July 31, 1997 from $3,009,000 for the three months
ended July 31, 1996. This increase was primarily due to the
increase in average debt outstanding resulting from (i) the
Offering of the Series A Senior Notes, (ii) the Halston
Acquisition, (iii) the FMG Acquisition and (iv) increased
borrowings during the three months ended April 30, 1997 under the
revolving portion of the Company's bank credit facility to
accommodate increased working capital requirements, including the
increased inventory levels needed to support higher net sales.
The increase in interest expense, net of interest income, was
partially offset by the increase in interest income resulting
from the investment of the excess proceeds from the Debt
Offering.
Net Income. Net income increased $1,144,000, or 118%, to
$2,113,000 for the six months ended July 31, 1997 from $969,000
for the six months ended July 31, 1996, primarily as a result of
the increase in net sales which were partially offset by higher
interest, selling, general and administrative and amortization
expenses.
Net Income Per Share. Net income per share increased to
$0.14 for the six months ended July 31, 1997, compared to $0.08
per share for the six months ended July 31, 1996, primarily as a
result of the increase in net income, which was partially offset
by the increased number of outstanding shares to give effect to
the Stock Offering in July 1996.
<PAGE>
<PAGE>
EBITDA. EBITDA (operating income, plus depreciation and
amortization) increased $4,648,000, or 85%, to $10,109,000 for
the six months ended July 31, 1997 from $5,461,000 for the six
months ended July 31, 1996. The EBITDA margin increased to 14.3%
for the six months ended July 31, 1997 from 12.7% for the six
months ended July 31, 1996. The increases in EBITDA and EBITDA
margin were primarily attributable to the decrease in selling,
general and administrative expenses as a percentage of net sales.
FINANCIAL CONDITION
In May 1997, the Company consummated the Debt Offering of
$115,000,000 principal amount of the Series A Senior Notes. See
Note 10 to Notes to Consolidated Financial Statements. In July
1997, the Series A Senior Notes were exchanged for an equivalent
principal amount of 10-3/8% Senior Notes due 2007, Series B (the
"Series B Senior Notes") which contain identical terms to the
Series A Senior Notes but have been registered under the
Securities Act of 1933, as amended. Approximately $48,595,000 of
the net proceeds from the sale of the Series A Senior Notes was
used to repay all of the outstanding indebtedness under the
Company's credit facility (including amounts outstanding under a
term loan issued in connection with the acquisition of a
long-term license for the Geoffrey Beene fragrance brands in
March 1995 (the "Geoffrey Beene Acquisition") and such credit
facility was terminated. Approximately $10,428,000 of the net
proceeds was used to repay the Company's 8% Secured Subordinated
Debentures Series I and II (plus accrued interest) which were
issued in connection with the Geoffrey Beene Acquisition and the
Halston Acquisition. Approximately $3,982,000 of the net
proceeds ws used to pay accrued interest and purchase, at a
discount, an 8.5% Subordinated Debenture due 1999 which was
issued in connection with the FMG Acquisition. In addition,
approximately $4,226,000 of the net proceeds was used for the
Fine Acquisition and to repay Fine Fragrances' bank credit line.
The balance of the net proceeds from the Debt Offering has been
used during the three months ended July 31, 1997 for working
capital support and for purchases of Distributed Brands on
favorable terms. At July 31, 1997, the Company had available to
it approximately $21.5 million of unused proceeds from the Debt
Offering which it expects to continue to use for additional
working capital support, as well as increased operational and
financial flexibility to take advantage of expansion
opportunities, through acquisitions or new product distribution
arrangements.
The Indenture pursuant to which the Series A Senior Notes
(and the Series B Senior Notes following their exchange for the
Series A Senior Notes) were issued (the "Indenture") provides
that such notes will be senior unsecured obligations of the
Company and will rank senior in payment to all existing and
future subordinated indebtedness of the Company and pari passu in
right of payment with all existing and future senior indebtedness<PAGE>
<PAGE>
of the Company, including indebtedness under the New Credit
Facility. The Indenture generally limits the ability of the
Company to (i) incur additional indebtedness, (ii) pay any
dividend or make any distribution on account of its capital stock
or other equity interest, (iii) purchase or redeem any capital
stock or equity interest of the Company, (iv) make any principal
payment, purchase or redeem subordinated indebtedness except at
scheduled maturities, or (v) make certain investments, in each
case, subject to the satisfaction of a fixed charge coverage
ratio and, in certain cases, also a net income test. In
addition, the Indenture generally limits the ability of the
Company to create liens, merge or transfer or sell assets. The
Indenture also provides that the holders of the Series B Senior
Notes have the option to require the Company to repurchase their
notes in the event there is a change of control in the Company.
Concurrently with the closing of the Debt Offering, the
Company entered into a new stand-by credit facility (the "New
Credit Facility") with Fleet National Bank ("Fleet") which
provides for borrowings on a revolving basis of up to $40 million
(including up to $3 million in commercial letters of credit) for
general corporate purposes, including working capital needs and
acquisitions, subject to certain borrowing base limitations.
Amounts borrowed on the revolving portion of the New Credit
Facility mature on May 31, 1999. Loans under the revolving
credit portion of the Credit Facility will bear interest, payable
monthly, at a floating rate ranging from, at the option of the
Company, either (i) 1.75% over LIBOR to 2.25% over LIBOR or (ii)
the prime rate as quoted by Fleet to 0.5% over such prime rate,
and combinations thereof, in each case depending on the ratio of
the Company's total funded debt to its shareholders equity base.
The Company's borrowing availability under the New Credit
Facility is limited to the sum of between 80 to 85% of eligible
accounts receivable and 50% of eligible inventory (up to a
maximum of $20 million). The Company's obligations under the New
Credit Facility will rank pari passu in right of payment with the
Series B Senior Notes and senior in right of payment to all
existing and future subordinated indebtedness of the Company. In
addition, borrowings under the New Credit Facility are secured by
a first priority lien on all of the Company's accounts receivable
and inventory. See Note 4 to Notes to Consolidated Financial
Statements.
The New Credit Facility: restricts the Company's ability to
incur additional non-trade debt (with certain exceptions,
including indebtedness not exceeding $50 million for a fiscal
year issued in connection with certain asset purchases), and to
enter into certain acquisitions, mergers, investments and
affiliated transactions; and prohibits the declaration or payment
of dividends on, or the redemption of, the Company's capital
stock, certain payments on the subordinated debt and the sale of
the Company's interest in its subsidiaries. The New Credit
<PAGE>
<PAGE>
Facility also contains covenants requiring the Company to
maintain a minimum shareholders' equity, a maximum leverage
ratio, and minimum debt service and interest coverage ratios. At
July 31, 1997, the Company had the entire balance of the New
Credit Facility available for additional working capital support
and general corporate purposes.
At July 31, 1997, the Company increased its inventories
significantly in anticipation of sales for the holiday season.
Trade and other payables were significantly reduced as a result
of the Company's application of the net proceeds from the Debt
Offering to outstanding payables. Additional proceeds from the
Debt Offering have been used for advance payments on inventory
purchases.
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
Item 2. Changes in Securities
In May 1997, the Company, consummated the private placement
of $115,000,000 principal amount of 10-3/8% Senior Notes, due
2007, Series A (the "Series A Senior Notes"). In July 1996, the
Series A Notes were exchanged for an equivalent principal amount
of 10-3/8% Senior Notes due 2007, Series B (the "Series B Senior
Notes") which contain identical terms to the Series A Senior
Notes but have been registered under the Securities Act of 1933,
as amended. The Indenture pursuant to which the Series A Senior
Notes (and the Series B Senior Notes following their exchange for
the Series A Senior Notes) were issued (the "Indenture"), among
other things, generally limits the ability of the Company to (i)
pay any dividend or make any distribution on account of its
capital stock or other equity interest or (ii) to purchase or
redeem any capital stock or equity interest of the Company, in
each case, subject to the satisfaction of a fixed charge coverage
ratio and a net income test. Concurrently with the closing of
the senior note offering, the Company entered into a new stand-by
credit facility with a bank (the "New Credit Facility"). The New
Credit Facility prohibits the declaration or payment of dividends
on, or the redemption of, the Company's capital stock. See
"Management's Discussion and Analysis of Financial Condition and
Results of Operations - Financial Condition."
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Shareholders of the Company was
held on June 20, 1997 in Miami Lakes, Florida.
(b) The following directors were elected at the meeting
effective June 20, 1997: Rafael Kravec, J. W. Nevil
Thomas, E. Scott Beattie, Fred Berens, Richard C. W.
Mauran and George Dooley.
(c) The shareholders voted at the Meeting on the matters
set forth below. No broker non-votes were received on
any of the matters voted.
1. The vote on the election of directors to serve
until the next annual meeting of shareholders or
until their successors are duly elected and
qualified.
<PAGE>
<PAGE>
PART II. OTHER INFORMATION - Continued
Item 4. Submission of Matters to a Vote of Security Holders -
(Continued)
<TABLE>
<CAPTION>
Votes Cast
---------------------
Against or
For Withheld
---------- ----------
<S> <C> <C>
J. W. Nevil Thomas 11,205,553 1,712
E. Scott Beattie 11,205,553 1,712
Rafael Kravec 11,205,553 1,712
Fred Berens 11,205,553 1,712
Richard C. W. Mauran 11,205,553 1,712
George Dooley 11,205,553 1,712
</TABLE>
2. The vote on the ratification of the appointment of
Deloitte & Touche LLP as independent auditors of
the Company for the fiscal year ending January 31,
1998 was 11,189,847 for, 1,883 against and 15,535
withheld.
(d) Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Description
- ------- -------------------------------------------------------
2.1 Agreement and Plan of Merger, dated as of May 19, 1995,
by and between the Company and FFI (incorporated herein
by reference to Exhibit 2.1 filed as a part of the
Company's Form 8-K dated November 30, 1995 (Commission
File No. 1-6370)).
3.1 Amended and Restated Articles of Incorporation of the
Company dated March 6, 1996 (incorporated herein by
reference to Exhibit 3.1 filed as a part of the
Company's Form 10-K for the fiscal year ended
January 31, 1996 (Commission File No. 1-6370)).
<PAGE>
<PAGE>
Exhibit
Number Description
- ------- -------------------------------------------------------
3.2 Amendment dated September 19, 1996 to the Amended and
Restated Articles of Incorporation of the Company
(incorporated by reference to Exhibit 4.4 filed as part
of the Company's Form 10-Q for the quarter ended
October 31, 1996 (Commission File No. 1-6370)).
3.3 By-Laws of the Company (incorporated herein by
reference to Exhibit 3.2 filed as a part of the
Company's Form 10-K for the fiscal year ended
January 31, 1996 (Commission File No. 1-6370)).
4.1 Indenture, dated as of May 13, 1997, between the
Company and Marine Midland Bank, as trustee
(incorporated herein by reference to Exhibit 4.1 filed
as a part of the Company's Form 8-K dated May 13, 1997
(Commission File No. 1-6370)).
4.2 Credit Agreement, dated as of May 13, 1997, between the
Company and Fleet National Bank (incorporated herein by
reference to Exhibit 4.3 filed as a part of the
Company's Form 8-K dated May 13, 1997 (Commission File
No. 1-6370)).
10.1 Registration Rights Agreement dated as of November 30,
1995, among the Company, Bedford Capital Corporation
("Bedford"), Fred Berens, Rafael Kravec and Eugene
Ramos (incorporated herein by reference to Exhibit 10.1
filed as a part of the Company's Form 10-K for the
fiscal year ended September 30, 1995 (Commission File
No. 1-6370)).
10.2 Amendment dated as of March 20, 1996 to Registration
Rights Agreement dated as of November 30, 1995, among
the Company, Bedford, Fred Berens, Rafael Kravec and
Eugene Ramos (incorporated herein by reference to
Exhibit 10.2 filed as a part of the Company's Form 10-K
for the year ended January 31, 1996 (Commission File
No. 1-6370)).
10.3 Second Amendment dated as of July 22, 1996 to
Registration Rights Agreement dated as of November 30,
1995, among the Company, Bedford, Fred Berens, Rafael
Kravec and the Estate of Eugene Ramos (incorporated by
reference to Exhibit 10.3 filed as part of the
Company's Form 10-Q for the quarter ended July 31, 1996
(Commission File No. 1-6370)).
<PAGE>
<PAGE>
Exhibit
Number Description
- ------- -------------------------------------------------------
10.4 Employment Agreement dated as of April 1, 1997, between
the Company and Rafael Kravec (incorporated herein by
reference to Exhibit 10.4 filed as a part of the
Company's Form 10-K for the fiscal year ended
January 31, 1997 (Commission File No. 1-6370)).
10.5 Chief Operating Officer Compensation Agreement dated as
of April 1, 1997, between the Company and E.S.B.
Consultants, Inc. (incorporated herein by reference to
Exhibit 10.5 filed as a part of the Company's Form 10-K
for the fiscal year ended January 31, 1997 (Commission
File No. 1-6370)).
10.6 Non-Employee Director Stock Option Plan (incorporated
herein by reference to Exhibit 10.4 filed as a part of
the Company's Form 10-K for the fiscal year ended
September 30, 1995 (Commission File No. 1-6370)).
10.7 1995 Stock Option Plan (incorporated herein by
reference to Exhibit 10.5 filed as a part of the
Company's Form 10-K for the fiscal year ended
September 30, 1995 (Commission File No. 1-6370)).
10.8 Lease Agreement, dated as of July 2,1992, between FFI
and National Trading (incorporated herein by reference
to Exhibit 10.13 filed as a part of the Company's Form
10-K for the fiscal year ended September 30, 1995
(Commission File No. 1-6370)).
10.9 Option Agreement, dated July 2, 1992, between FFI and
National Trading and Memorandum of Lease and Option
Agreement related thereto (incorporated herein by
reference to Exhibit 10.14 filed as a part of the
Company's Form 10-K for the fiscal year ended
September 30, 1995 (Commission File No. 1-6370)).
10.10 Amended and Restated Exclusive Trademark License
Agreement, dated February 29, 1980, between
Geoffrey Beene, Inc., and Epocha Distributors, Inc.
(now known as Sanofi Beaute, Inc.) as amended
July 29, 1992 and February 13, 1995 (incorporated
herein by reference to Exhibit 10.15 filed as a part of
the Company's Form 10-K for the fiscal year ended
September 30, 1995 (Commission File No. 1-6370)).
10.11 Asset Purchase Agreement dated as of February 1, 1996,
by and between the Company and Halston-Borghese, Inc.
and its affiliates (incorporated herein by reference to
Exhibit 2.1 filed as a part of the Company's Form 8-K
dated March 20, 1996 (Commission File No. 1-6370)).<PAGE>
<PAGE>
Exhibit
Number Description
- ------- -------------------------------------------------------
10.12 Asset Purchase Agreement dated as of April 17, 1996, by
and between the Company and Fragrance Marketing Group,
Inc. and Rene Garcia and Jose Miguel Norona, including
the forms of Debentures and Seller's Warrant related
thereto(incorporated herein by reference to Exhibit
10.21(a) filed as a part of the Company's Registration
Statement on Form S-1 dated May 3, 1996 (Registration
Statement No. 333-4588)).
10.13 Amendment to Asset Purchase Agreement dated as of
May 14, 1996, by and between the Company and
Fragrance Marketing Group, Inc. and Rene Garcia and
Jose Miguel Norona (incorporated herein by reference to
Exhibit 2.2 filed as a part of the Company's Form 8-K
dated May 14, 1996 (Commission File No. 1-6370)).
10.14 Amendment to Asset Purchase Agreement dated as of
July 1, 1996, by and between the Company and Fragrance
Marketing Group, Inc. and Rene Garcia and Jose Miguel
Norona (incorporated by reference to Exhibit 4.4 filed
as part of the Company's Form 10-Q for the quarter
ended October 31, 1996 (Commission File No. 1-6370)).
27.1 Financial Data Schedule.
The foregoing list omits instruments defining the rights of
holders of long term debt of the Company where the total amount
of securities authorized thereunder does not exceed 10% of the
total assets of the Company. The Company hereby agrees to
furnish a copy of each such instrument or agreement to the
Commission upon request.
(b) Reports on Form 8-K.
A Current Report on Form 8-K dated May 13, 1997, was filed
on May 21, 1997 reporting on the Company's offering of senior
notes and the Company's new credit facility under Item 5. Other
Events.
<PAGE>
<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.
FRENCH FRAGRANCES, INC.
Date: September 9 , 1997 /s/ Rafael Kravec
------------------ -----------------------
Rafael Kravec
Chairman and Chief
Executive Officer
(Principal Executive
Officer)
Date: September 8, 1997 /s/ William J. Mueller
------------------ -----------------------
William J. Mueller
Vice President-Operations,
Chief Financial Officer
(Principal Financial and
Accounting Officer)
<PAGE>
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<RECEIVABLES> 35,843,612
<ALLOWANCES> 513,824
<INVENTORY> 88,267,482
<CURRENT-ASSETS> 151,210,543
<PP&E> 18,397,902
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0
8,625
<COMMON> 133,155
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