<PAGE>
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, 1998
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 August 19, 1998
---------------------------- -----------------
Common stock, $.01 par value 13,812,704 shares
<PAGE>
FRENCH FRAGRANCES, INC.
INDEX TO FORM 10-Q
PART I - FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Consolidated Balance Sheets -
January 31, 1998 and July 31, 1998
Consolidated Statements of Income -
Three and Six Months Ended July 31, 1997 and 1998
Consolidated Statements of Cash Flows -
Six Months Ended July 31, 1997 and 1998
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K
Signatures
<PAGE>
<TABLE>
FRENCH FRAGRANCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
January 31, 1998 July 31, 1998
---------------- --------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 7,667,119 $ 1,317,179
Accounts receivable, net 53,412,248 70,646,929
Inventories 90,425,910 140,435,824
Advances on inventory purchases 6,978,285 6,395,335
Prepaid expenses and other assets 3,936,529 4,209,856
------------ ------------
Total current assets 162,420,091 223,005,123
------------ ------------
Property and equipment, net 19,501,742 20,168,990
------------ ------------
Other assets:
Exclusive brand licenses and trademarks, net 42,776,017 41,096,844
Senior note offering costs, net 3,756,911 4,696,835
Deferred income taxes, net 838,633 838,633
Other intangibles and other assets 3,359,891 10,289,586
------------ ------------
Total other assets 50,731,452 56,921,898
------------ ------------
Total assets $232,653,285 $300,096,011
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt $ -- $ 13,526,000
Accounts payable - trade 24,393,878 35,426,186
Other payables and accrued expenses 12,454,835 8,604,269
Current portion of long-term liabilities 3,100,108 3,597,824
Due to affiliates, net 294,136 294,136
------------ ------------
Total current liabilities 40,242,957 61,448,415
------------ ------------
Long-term liabilities:
Senior notes, net 115,000,000 157,550,651
Subordinated debentures, net 7,131,873 8,257,517
Convertible subordinated debentures 4,960,633 4,778,643
Mortgage note 5,682,041 5,612,211
Capital lease 1,010,000 960,000
------------ ------------
Total liabilities 174,027,504 238,607,437
------------ ------------<PAGE>
Commitments and contingencies (Note 7)
Shareholders' equity:
Convertible, redeemable preferred stock,
Series B, $.01 par value (liquidation
preference of $.01 per share); 350,000
shares authorized; 279,877 and 271,596
shares issued and outstanding, respectively 2,799 2,716
Convertible, redeemable preferred stock,
Series C, $.01 par value (liquidation
preference of $.01 per share); 571,429
shares authorized; 525,490 and 511,355
shares issued and outstanding, respectively 5,255 5,114
Common stock, $.01 par value, 50,000,000
shares authorized; 13,623,734 and 13,812,704
shares issued and outstanding, respectively 136,238 138,127
Additional paid-in capital 30,786,503 31,633,413
Retained earnings 27,694,986 29,709,204
------------ ------------
Total shareholders' equity 58,625,781 61,488,574
------------ ------------
Total liabilities and shareholders' equity $232,653,285 $300,096,011
============ ============
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<TABLE>
FRENCH FRAGRANCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
July 31, July 31,
1997 1998 1997 1998
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Net sales $35,635,233 $61,899,682 $70,737,271 $108,445,976
Cost of sales 23,604,396 43,481,703 47,202,852 76,710,833
----------- ----------- ----------- ------------
Gross profit 12,030,837 18,417,979 23,534,419 31,735,143
Operating expenses
Warehouse and shipping 1,437,726 2,213,298 2,747,764 4,102,056
Selling, general and
administration 5,520,776 6,632,114 10,677,429 12,488,786
Depreciation and amortization 1,155,488 1,835,143 2,262,802 3,431,258
----------- ----------- ----------- ------------
Total operating expenses 8,113,990 10,680,555 15,687,995 20,022,100
----------- ----------- ----------- ------------
Income from operations 3,916,847 7,737,424 7,846,424 11,713,043
Other Income (expense)
Interest expense, net (3,076,502) (4,963,273) (4,818,942) (8,500,597)
Other income 164,781 38,971 202,448 87,675
----------- ----------- ----------- ------------
Other Income (expense), net (2,911,721) (4,924,302) (4,616,494) (8,412,922)
----------- ----------- ----------- ------------
Income before equity in earnings
of unconsolidated affiliate and
provisions for income taxes 1,005,126 2,813,122 3,229,930 3,300,121
Equity in earnings of
unconsolidated affiliate,
50% Owned -- -- 134,508 --
----------- ----------- ----------- ------------
Income before income taxes 1,005,126 2,813,122 3,364,438 3,300,121
Provision for income taxes 392,980 1,102,646 1,251,403 1,285,903
----------- ----------- ----------- ------------
Net income $ 612,146 $ 1,710,476 $ 2,113,035 $ 2,014,218
=========== =========== =========== ============
Earnings per common share:
Basic $0.05 $0.12 $0.16 $0.15
===== ===== ===== =====
Diluted $0.04 $0.10 $0.14 $0.12
===== ===== ===== =====
Weighted average number of
common shares:
Basic 13,283,242 13,805,442 13,267,038 13,737,282
=========== =========== =========== ============
Diluted 16,206,213 17,750,557 16,295,707 17,684,462
=========== =========== =========== ============
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<TABLE>
FRENCH FRAGRANCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
July 31,
----------------------------
1997 1998
------------ ------------
<S> <C> <C>
Cash flows from operating activities
Net Income $ 2,113,035 $ 2,014,218
Adjustments to reconcile net income to
cash used in operating activities:
Depreciation and amortization 2,262,802 3,431,258
Amortization of financing costs,
discounts and premiums 79,546 264,641
Equity in earnings of unconsolidated
affiliate (134,508) --
Change in assets and liabilities net of
effects from the acquisitions:
Increase in accounts receivable (805,042) (17,234,681)
Increase in inventories (17,472,522) (39,449,337)
(Increase) decrease in advances on
inventory purchases (3,104,897) 582,950
Increase in prepaid expenses and other
current assets (2,412,460) (383,637)
(Decrease) increase in accounts payable (4,946,146) 471,730
Decrease in other payables and accrued
expenses (4,749,689) (3,845,238)
Decrease in due to affiliate, net (1,015,612) --
------------ ------------
Net cash used in operating activities (30,185,493) (54,148,096)
------------ ------------
Cash flows from investing activities
Cash portion of purchase of intangible assets -- (5,150,000)
Cash payment for acquisition of unconsolidated
affiliate, net of cash acquired (1,745,768) --
Receipts of restricted cash for capital
improvements 1,314,602 --
Additions to property and equipment,
net of disposals (3,055,589) (1,649,583)
------------ ------------
Net cash used in investing activities (3,486,755) (6,799,583)
------------ ------------
Cash flows from financing activities
Proceeds from the exercise of employee
stock options -- 117,480
Proceeds from the exercise of stock
purchase warrants -- 275,000<PAGE>
Proceeds from the issuance of senior
notes, net 111,550,000 41,500,000
Payments to retire subordinated debentures (14,394,475) (500,000)
Proceeds from conversion of preferred stock 213,674 268,778
Advances from unconsolidated affiliate, net 798,894 --
Payments on term loans (4,333,333) (475,336)
(Payments on) net proceeds from short-term debt (39,367,096) 13,526,000
Payments on capital lease and installment loans (81,145) (50,000)
Payments on facility mortgage note (68,421) (64,183)
------------ ------------
Net cash provided by financing activities 54,318,098 54,597,739
------------ ------------
Net increase (decrease) in Cash and Cash
Equivalents 20,645,850 (6,349,940)
Cash and Cash Equivalents at Beginning of Period 855,969 7,667,119
------------ ------------
Cash and Cash Equivalents at End of Period $ 21,501,819 $ 1,317,179
============ ============
Supplemental Disclosure of Cash Flow Information:
Interest paid during the period $ 2,821,796 $ 7,138,983
============ ============
Income taxes paid during the period $ 4,651,700 $ 5,426,475
============ ============
See Notes to Consolidated Financial Statements.
/TABLE
<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, 1998, filed with the Commission.
The consolidated balance sheet of the Company as of
January 31, 1998 is audited. The other consolidated financial
statements are unaudited, but in the opinion of management
contain all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the consolidated balance
sheet of the Company as of July 31, 1998, the consolidated
statements of income of the Company for the three and six months
ended July 31, 1998 and 1997, and the consolidated statements of
cash flow for the six months ended July 31, 1998 and 1997.
Operating results for the three and six months ended July 31,
1998 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 for the six months
ended July 31, 1997 and 1998 have been calculated in accordance
with Statement of Financial Accounting Standards No. 128 Earnings
per Share ("SFAS 128"). SFAS 128, which was adopted by the
Company in the fourth quarter of fiscal 1998 and 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 potential common stock such as stock options,
warrants and convertible securities. In addition, for the
<PAGE>
FRENCH FRAGRANCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
diluted earnings per share calculation, the interest incurred on
the convertible securities, net of tax, must be added back to net
income. Such amounts were $63,984 and $56,737 for the three
months ended July 31, 1997 and 1998, respectively, and $127,969
and $111,923 for the six months ended July 31, 1997 and 1998,
respectively.
Segments of an Enterprise - In June 1997, the Financial
Accounting Standards Board issued SFAS No. 131, Disclosures about
Segments of an Enterprise and Related Information. SFAS No. 131
changes the way public companies report information about
segments of their business in their annual financial statements
and requires them to report selected segment information in their
quarterly reports issued to shareholders. SFAS No. 131 also
requires entity wide disclosures about the products and services
an entity provides, the foreign countries in which it holds
assets and reports revenues, and its major customers. SFAS 131
is effective for fiscal years beginning after December 15, 1997.
The adoption of SFAS 131 for the Company's fiscal year ended
January 31, 1999 is not expected to have a material impact on the
Company's consolidated financial statement presentation.
NOTE 3. J. P. FRAGRANCES ACQUISITION; SENIOR NOTE OFFERING
In March 1998, the Company consummated the acquisition (the
"JPF Acquisition") of certain assets of J.P. Fragrances, Inc.
("JPF"), a distributor of prestige fragrance products, including
inventory, returns, contract rights, accounts receivable, books
and records, fixed assets (including furniture and warehouse
materials and equipment), claims, intangible rights (including
non-compete agreements) and goodwill (collectively, the "Acquired
Assets"). The Company also assumed approximately $10.6 million
of certain trade and other payables of JPF. In addition to the
assumption of the payables, the purchase price for the Acquired
Assets consisted of approximately $37.3 million in cash and a
subordinated debenture of $3.0 million (the "Debenture"). The
cash portion of the purchase price was financed from available
cash from operations and the Company's revolving credit facility
(the "Credit Facility") with Fleet National Bank ("Fleet"). The
Debenture is non-interest bearing, with the principal amount
being payable in three equal annual installments if, and only if,
certain conditions relating to the fragrance business of JPF (the
<PAGE>
FRENCH FRAGRANCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3. J. P. FRAGRANCES ACQUISITION; SENIOR NOTE OFFERING -
Continued
"JPF Business") are achieved by the Company, including achieving
certain gross profit thresholds from the JPF Business. The
Debenture has been recorded net of its discount of $485,528
calculated using an effective rate of 9.38%. The discount will
be amortized using the effective rate over the life of the
Debenture. As a result of the JPF Acquisition, the Company
acquired approximately $30.4 million of inventory, $12.1 million
of accounts receivable and $263,000 of fixed assets (consisting
primarily of office and warehouse furniture and equipment).
Other intangibles and other assets at July 31, 1998 includes
approximately $7.2 million of contract rights, intangible rights
(including non-compete agreements) and goodwill acquired as part
of the JPF Acquisition.
In April 1998, the Company consummated the private placement
under Rule 144A (the "Note Offering") pursuant to the Securities
Act of 1933, as amended (the "Act"), of $40.0 million principal
amount of 10-3/8% Senior Notes due 2007, Series C (the "Series C
Senior Notes"). The Series C Senior Notes were sold at 106.5% of
their principal amount and had substantially similar terms to the
Company's existing 10-3/8% Senior Notes due 2007, Series B (the
"Series B Senior Notes"), which the Company issued in July 1997.
The notes are recorded net of a premium of $2.6 million. The
premium is being amortized over the life of the notes using the
effective interest method. During the quarter ended July 31,
1998, the Company amortized $46,942 of premium against interest
expense. The net proceeds of approximately $41.4 million from
the sale of the notes were used to repay outstanding borrowings
under the Credit Facility and other indebtedness to Fleet, which
was used for the JPF Acquisition, as well as for working capital
purposes. In August 1998, the Series C Senior Notes were
exchanged for an equivalent principal amount of 10-3/8% Senior
Notes due 2007, Series D (the "Series D Senior Notes") containing
identical terms to the Series C Senior Notes, but which have been
registered under the Act.
The Indenture pursuant to which the Series D 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
<PAGE>
FRENCH FRAGRANCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3. J. P. FRAGRANCES ACQUISITION; SENIOR NOTE OFFERING -
Continued
indebtedness under the Credit Facility and the Series B Senior
Notes. 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 D 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).
The following unaudited information presents the Company's
pro forma operating data for the six months ended July 31, 1998
and 1997 as if the JPF Acquisition and the Note Offering had been
consummated at the beginning of each of the periods presented and
include certain adjustments to the historical consolidated
statements of income of the Company to give effect to the
acquisition of the net assets of JPF, the payment of the purchase
price and the increased amortization of intangible assets as a
result of the JPF Acquisition and the related issuance of Series
C Senior Notes by the Company to finance the purchase price for
the JPF Acquisition. The unaudited pro forma financial data are
not indicative of the results of operations that would have been
achieved had the JPF Acquisition and the Note Offering been
consummated prior to the periods in which they were completed, or
that might be attained in the future.
<TABLE>
<CAPTION>
Six Months Ended July 31,
1997 1998
------------ ------------
<S> <C> <C>
Net Sales $104,405,077 $122,040,911
Net Income $ 1,524,770 $ 1,727,342
Net Income per Basic Share $0.11 $0.13
Net Income per Diluted Share $0.10 $0.10
</TABLE>
<PAGE>
FRENCH FRAGRANCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4. SHORT-TERM DEBT
The Credit Facility with Fleet 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 Credit Facility are
limited to eligible accounts receivable and inventories and are
secured by a first priority lien on all of the Company's accounts
receivable and inventory. The Company's obligations under the
Credit Facility rank pari passu in right of payment with the
Series B Senior Notes and the Series D Senior Notes. The Credit
Facility contains 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 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, 1998, the outstanding balance under
the Credit Facility was $13.5 million and there was approximately
$2.9 million in outstanding letters of credit.
NOTE 5. SUBORDINATED DEBENTURES
The subordinated debentures as of January 31, 1998 represent
the 8.5% Subordinated Debentures due May 2004 issued in
connection with the May 1996 acquisition of the assets of
Fragrance Marketing Group, Inc. (the "8.5% Debentures"). The
subordinated debentures as of July 31, 1998 represent the 8.5%
Debentures and the Debenture issued as part of the JPF
Acquisition. See Note 3.
NOTE 6. 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, 1998 is as follows:
<PAGE>
FRENCH FRAGRANCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6. SHAREHOLDERS' EQUITY - CONTINUED
<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, 1998 279,877 $2,799 525,490 $5,255 13,623,734 $136,238 $30,786,503
Issuance of common
stock upon
exercise of stock
options 35,600 356 117,124
Issuance of common
stock upon
exercise of
warrants 54,258 543 274,457
Issuance of common
stock upon
conversion of 7.5%
convertible
debentures 26,016 260 187,055
Issuance of common
stock upon
conversion
of Series B
convertible
preferred stock (8,281) (83) 58,961 589 194,065
Issuance of common
stock upon
conversion
of Series C
convertible
preferred stock (14,135) (141) 14,135 141 74,209
------- ------ ------- ------ ---------- -------- -----------
Balance at
July 31, 1998 271,596 $2,716 511,355 $5,114 13,812,704 $138,127 $31,633,413
======= ====== ======= ====== ========== ======== ===========
</TABLE>
<PAGE>
FRENCH FRAGRANCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7. COMMITMENTS AND CONTINGENCIES
The Company is a party to a number of pending legal actions,
proceedings and claims. While any litigation contains an element
of uncertainty, management of the Company, believes based upon
the advice of counsel, that the outcome of such actions,
proceedings or claims pending or known to be threatened, will
not have a material adverse effect on the Company's consolidated
financial position or results of operations.
In May 1998, the Company entered into a lease with an
unaffiliated third party for approximately 48,000 square feet of
a warehouse facility to accommodate the additional inventory
requirements associated primarily with the promotional sets which
will arrive in anticipation of the peak business season. The
lease has an initial term of 30 months with the Company having an
option to extend for an additional term of 30 months. The future
minimum lease payments for the fiscal years ended January 31,
1999, 2000 and 2001 are approximately $206,000, $274,000, and
$206,000, respectively.
NOTE 8. FINE FRAGRANCES ACQUISITION
In May 1997, the Company acquired (the "Fine Fragrances
Acquisition") the 50.01% interest of Fine Fragrances, Inc. ("Fine
Fragrances") that the Company did not own from an unaffiliated
third party. Fine Fragrances was a fragrance distribution
company which prior to May 1997, was 49.99% owned by the Company
and distributed, on an exclusive basis in the United States and
Canada, the Salvador Dali, Taxi, Cafe and Watt brands
manufactured by COFCI, S.A. ("COFCI"). The purchase price
included $2 million in cash, plus $1 million to be paid over time
based on 5% of the Company's net sales of COFCI products. As a
result of this acquisition, Fine Fragrances became a wholly-owned
subsidiary of the Company and the operations of Fine Fragrances
were consolidated with those of the Company. In connection with
this acquisition, the Company entered into new 10 year
distribution agreements for the COFCI brands.
NOTE 9. INCOME TAXES
The provision for income taxes for the three and six-month
periods ended July 31, 1998 was calculated based upon the
estimated tax rate of 39% for the full fiscal year ending
January 31, 1999.
<PAGE>
FRENCH FRAGRANCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10. 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 per share under the Company's 1995 Stock Option Plan (the
"1995 Plan"). During the six months ended July 31, 1998, the
Company granted options for 500,000 shares at an exercise price
of $12.50 per share under the 1995 Plan. During the six months
ended July 31, 1997 and 1998, the Company granted options for
30,000 shares at an exercise price of $9.38 per share and 30,000
shares at an exercise price of $16.38 per share, respectively,
under the Company's Non-Employee Director Stock Option Plan.
NOTE 11. SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING AND
INVESTING ACTIVITIES
The Company incurred the following non-cash financing and
investing activities for the six months ended July 31, 1997 and
1998:
<TABLE>
<CAPTION>
Six Months Ended
July 31,
1997 1998
------------- -------------
<S> <C> <C>
Redemption of 8% Debentures
used to pay for conversion
of preferred stock $ 40,559
==========
Transactions in connection
with the Fine Fragrances
Acquisition (See Note 8).
Note issued to Seller $1,000,000
==========
Book value of assets acquired,
excluding inventory $2,296,051
==========
Liabilities assumed $3,156,895
==========
Inventory assumed $2,805,638
==========
Conversion of 7.5% convertible
debentures (including accrued
interest) into Common Stock $ 187,315
===========<PAGE>
Transactions in connection
with the JPF Acquisition
(See Note 3):
Issuance of Debenture to Seller $ 2,514,472
===========
Assumption of accounts payables $10,560,577
===========
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
In connection with the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995 (the "Reform Act"), the
Company is hereby providing cautionary statements identifying
important factors that could cause the Company's actual results
to differ materially from those projected in forward-looking
statements (as such term is defined in the Reform Act) made
herein. Any statements that express, or involve discussions as
to, expectations, beliefs, plans, objectives, assumptions or
future events or performance (often, but not always, through the
use of words or phrases such as "will likely result," "are
expected to," "will continue," "is anticipated," "estimated,"
"intends," "plans" and "projection") are not historical facts and
may be forward-looking and, accordingly, such statements involve
estimates, assumptions and uncertainties which could cause actual
results to differ materially from those expressed in the
forward-looking statements. Accordingly, any such statements are
qualified in their entirety by reference to, and are accompanied
by, the following key factors that have a direct bearing on the
Company's results of operations: the absence of contracts with
customers or certain suppliers; the Company's ability to
successfully integrate acquired businesses or new brands into the
Company; the impact of competitive products and pricing; the
substantial indebtedness and debt service obligations of the
Company; changes in the retail industry; and general economic and
business conditions. The Company cautions that the risk factors
described herein could cause actual results or outcomes to differ
materially from those expressed in any forward-looking statements
of the Company and that investors should not place undue reliance
on any such forward-looking statements. Further, any
forward-looking statement speaks only as of the date on which
such statement is made, and the Company undertakes no obligation
to update any forward-looking statement to reflect events or
circumstances after the date on which such statement is made or
to reflect the occurrence of unanticipated events. New factors
emerge from time to time, and it is not possible for management
to predict all of such factors. Further, management cannot
assess the impact of each such factor on the Company's business
or the extent to which any factor, or combination of factors, may
cause actual results to differ materially from those contained in
any forward-looking statements.
<PAGE>
GENERAL
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, 1998. 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, 1998 Compared to the Three Months
Ended July 31, 1997
- ---------------------------------------------------------------
NET SALES. Net sales increased $26.3 million, or 74%, to
$61.9 million for the three months ended July 31, 1998 from $35.6
million for the three months ended July 31, 1997. The increase
in net sales was primarily attributable to 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"). The proportion of the Company's net sales that relates
to Distributed Brands has increased significantly following the
acquisition of the assets of J.P. Fragrances, Inc. in March 1998
(the "JPF Acquisition"). See Note 3 to Notes to Consolidated
Financial Statements. The increase in net sales represents
primarily an increase in the volume of products sold to existing
customers. Management believes that increased sales during the
three months ended July 31, 1998, resulted primarily from the
Company's ability to provide its customers with a larger
selection of products and a continuous, direct supply of
products.
GROSS PROFIT. Gross profit increased $6.4 million, or 53%,
to $18.4 million for the three months ended July 31, 1998 from
$12.0 million for the three months ended July 31, 1997. The
increase in gross profit was primarily attributable to the
increase in product sales from the Distributed Brands. Gross
margins decreased from 33.8% to 29.8% primarily as a result of
the increase in sales of the Distributed Brands, which typically
sell at lower margins than the Company's owned and licensed
brands such as the Halston and Geoffrey Beene lines.
WAREHOUSE AND SHIPPING EXPENSE. Warehouse and shipping
expenses increased $776,000, or 54%, to $2.2 million for the
three months ended July 31, 1998 from $1.4 million for the three
<PAGE>
months ended July 31, 1997. The increase resulted from an
increase in labor, warehouse and freight costs, primarily as a
result of the increase in net sales.
SG&A. Selling, general and administrative expenses
increased $1.1 million, or 20%, to $6.6 million for the three
months ended July 31, 1998 from $5.5 million for the three months
ended July 31, 1997. Of the increase in SG&A expenses,
approximately $255,000 represented an increase in selling
expenses, primarily as a result of the addition of sales and
marketing personnel and the increase in certain marketing
programs such as the salary support program to increase retail
sell through. General and administrative expenses for the three
months ended July 31, 1998 increased by $858,000, primarily as a
result of addition of administrative personnel (including
information systems consultants) and increased insurance and
legal costs. As a percentage of net sales, SG&A expenses
decreased from 15.4% for the three months ended July 31, 1997 to
10.7% for the three months ended July 31, 1998.
DEPRECIATION AND AMORTIZATION. Depreciation and
amortization increased $680,000, or 59%, to $1.8 million for the
three months ended July 31, 1998 from $1.2 million for the three
months ended July 31, 1997. The increase was primarily
attributable to the amortization of intangibles acquired as a
result of the JPF Acquisition and adjustments to intangibles and
other assets acquired in connection with the acquisition of the
assets of Fragrance Marketing Group in May 1996 (the "FMG
Acquisition"), and increased depreciation from (i) computer
software and equipment relating to the Company's new information
systems, and (ii) capital projects for improvement of warehouse
operations, including a pick sortation system which was completed
in January 1998.
Interest Expense, Net. Interest expense, net of interest
income, increased $1.9 million, or 62% to $5.0 million for the
three months ended July 31, 1998 from $3.1 million for the three
months ended July 31, 1997. This increase was primarily due to
the increase in average debt outstanding resulting from (i) the
May 1997 offering (the "1997 Offering") of $115 million principal
amount of 10-3/8% Senior Notes Due 2007, and (ii) the April 1998
offering (the "1998 Offering") of $40 million principal amount of
10-3/8% Senior Notes Due 2007 incurred to finance the JPF
Acquisition. See "Financial Condition."
NET INCOME. Net income increased $1.1 million, or 179%, to
$1.7 million for the three months ended July 31, 1998 from
$612,000 for the three months ended July 31, 1997, as a result of
<PAGE>
the increase in net sales and gross profit, which were partially
offset by the increase in interest and operating expenses.
EBITDA. EBITDA (operating income, plus depreciation and
amortization) increased $4.5 million, or 89%, to $9.6 million for
the three months ended July 31, 1998 from $5.1 million for the
three months ended July 31, 1997. The EBITDA margin increased to
15.5% for the three months ended July 31, 1998 from 14.2%
for the three months ended July 31, 1997. The increases in
EBITDA and EBITDA margin are primarily attributable to the
increase in gross profit and the decrease in SG&A expenses as a
percentage of net sales, respectively.
Six Months Ended July 31, 1998 Compared to the Six Months Ended
July 31, 1997
- ---------------------------------------------------------------
NET SALES. Net sales increased $37.7 million, or 53%, to
$108.4 million for the six months ended July 31, 1998 from $70.7
million for the six months ended July 31, 1997. The increase in
net sales was primarily attributable to the increase in net sales
of Distributed Brands. The increase in net sales represents
primarily an increase in the volume of products sold to existing
customers. Management believes that increased sales during the
six months ended July 31, 1998, resulted primarily from the
Company's ability to provide its customers with a larger
selection of products and a continuous, direct supply of
products.
GROSS PROFIT. Gross profit increased $8.2 million, or 35%,
to $31.7 million for the six months ended July 31, 1998 from
$23.5 million for the six months ended July 31, 1997. The
increase in gross profit was primarily attributable to the
increase in product sales from the Distributed Brands. Gross
margins decreased from 33.3% to 29.3% primarily as a result of
the increase in sales of the Distributed Brands, which typically
sell at lower margins than the Company's owned and licensed
brands.
WAREHOUSE AND SHIPPING EXPENSE. Warehouse and shipping
expenses increased $1.4 million, or 49%, to $4.1 million for the
six months ended July 31, 1998 from $2.7 million for the six
months ended July 31, 1997. The increase resulted from an
increase in labor, warehouse and freight costs, primarily as a
result of the increase in net sales.
SG&A. SG&A expenses increased $1.8 million, or 17%, to
$12.5 million for the six months ended July 31, 1998 from $10.7
<PAGE>
million for the six months ended July 31, 1997. Of the increase
in SG&A expenses, approximately $455,000 represented an increase
in selling expenses, primarily as a result of the addition of
sales and marketing personnel, the increase in certain marketing
programs such as the salary support program to increase retail
sell through and marketing costs associated with the planned
summer roll out of the Halston line extensions of Halston Ladies
and Z-14 and the planned launch of a Geoffrey Beene ladies brand.
General and administrative expenses for the six months ended July
31, 1998 increased by $1.4 million, primarily as a result of
addition of administrative personnel (including information
systems consultants), increased insurance and legal costs and the
consolidation of the operating expenses of Fine Fragrances, Inc.
following the May 1997 acquisition by the Company of the 50.01%
interest of Fine Fragrances that the Company did not own. See
Note 8 to Notes to Consolidated Financial Statements. As a
percentage of net sales, SG&A expenses decreased from 15.1% for
the six months ended July 31, 1997 to 11.5% for the six months
ended July 31, 1998.
DEPRECIATION AND AMORTIZATION. Depreciation and
amortization increased $1.2 million, or 52%, to $3.4 million for
the six months ended July 31, 1998 from $2.3 million for the six
months ended July 31, 1997. The increase was primarily
attributable to the amortization of intangibles acquired as a
result of the JPF Acquisition and adjustments to intangibles and
other assets acquired in connection with the FMG Acquisition, and
increased depreciation from (i) computer software and equipment
relating to the Company's new information systems, and (ii)
capital projects for improvement of warehouse operations,
including a pick sortation system which was completed in January
1998.
INTEREST EXPENSE, NET. Interest expense, net of interest
income, increased $3.7 million, or 77% to $8.5 million for the
six months ended July 31, 1998 from $4.8 million for the three
months ended July 31, 1997. This increase was primarily due to
the increase in average debt outstanding resulting from the 1997
Offering and the 1998 Offering of 10-3/8% Senior Notes Due 2007.
See "Financial Condition."
NET INCOME. Net income decreased $99,000, or 5%, to $2.0
million for the six months ended July 31, 1998 from $2.1 million
for the six months ended July 31, 1997, primarily as a result of
the increase in interest and operating expenses, which were
partially offset by higher net sales and gross profits.
<PAGE>
EBITDA. EBITDA (operating income, plus depreciation and
amortization) increased $5.0 million, or 50%, to $15.1 million
for the six months ended July 31, 1998 from $10.1 million for the
six months ended July 31, 1997. The EBITDA margin decreased to
14.0% for the six months ended July 31, 1998 from 14.3% for
the six months ended July 31, 1997. The increase in EBITDA was
primarily attributable to the increase in sales and gross profit.
The decrease in EBITDA margin was primarily attributable to the
decrease in gross margins as a result of the changing mix of
sales and the additional operating expenses from the JPF
Acquisition.
FINANCIAL CONDITION
In March 1998, the Company consummated the JPF Acquisition.
As a result of the JPF Acquisition, the Company acquired
approximately $30.4 million of inventory, $12.1 million of
accounts receivable and $263,000 of fixed assets (consisting
primarily of office and warehouse furniture and equipment). See
Note 3 to Notes to Consolidated Financial Statements. As a
result of the JPF Acquisition, the Company also acquired
approximately $7.7 million of contract rights, intangible
rights (including non-compete agreements) and goodwill, which
account for the increase in other intangibles and other assets at
July 31, 1998. The Company also assumed approximately $10.6
million of certain trade and other payables of JPF in connection
with the JPF Acquisition. In addition to the assumption of the
payables, the purchase price for the assets of JPF consisted of
approximately $37.3 million in cash and a subordinated debenture
of $3 million (the "Debenture"). The cash portion of the
purchase price was financed from available cash from operations
and the Company's revolving credit facility (the "Credit
Facility") with Fleet National Bank ("Fleet"). The Debenture
is non-interest bearing, with the principal amount being payable
in three equal annual installments if, and only if, certain
conditions relating to the fragrance business of JPF (the "JPF
Business") are achieved by the Company, including achieving
certain gross profit thresholds from the JPF Business.
In April 1998, the Company consummated the private placement
under Rule 144A pursuant to the Securities Act of 1933, as
amended (the "Act"), of $40 million principal amount of 10-3/8%
Senior Notes due 2007, Series C (the "Series C Senior Notes").
The Series C Senior Notes were sold at 106.5% of their principal
amount and had substantially similar terms to the Company's
existing 10-3/8% Senior Notes due 2007, Series B (the "Series B
Senior Notes"), which the Company issued in July 1997. The net
<PAGE>
proceeds of approximately $41.4 million from the sale of the
Notes were used to repay outstanding borrowings under the Credit
Facility to Fleet, which were used for the JPF Acquisition, as
well as for working capital purposes. In August 1998, the Series
C Senior Notes were exchanged for an equivalent principal amount
of 10-3/8% Senior Notes due 2007, Series D (the "Series D Senior
Notes") containing identical terms to the Series C Senior Notes,
but which have been registered under the Act.
The Indenture pursuant to which the Series D 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 Credit Facility and the Series B Senior
Notes. 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 D 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).
At July 31, 1998 and in addition to the increases in
inventory associated with the JPF Acquisition, the Company
increased its inventories significantly in anticipation of sales
for the holiday season. The increase in trade payables is
associated with this increase in inventory. Accounts receivable
balances have also increased as a result of the increase in net
sales during the second quarter. At July 31, 1998, the Company
had available $23.6 million under the Credit Facility for general
corporate purposes, including working capital needs and
acquisitions, subject to certain borrowing base limitations.
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Shareholders of the Company was
held on June 25, 1998 in Miami Lakes, Florida.
(b) The following directors were elected at the meeting
effective June 25, 1998: 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.
<TABLE>
<CAPTION>
Votes Cast
Against or
For Withheld
---------- ----------
<S> <C> <C>
J. W. Nevil Thomas 10,700,298 12,515
E. Scott Beattie 10,699,714 13,099
Rafael Kravec 10,700,298 12,515
Fred Berens 10,700,298 12,515
Richard C. W. Mauran 10,700,298 12,515
George Dooley 10,698,714 14,099
</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,
1999 was 10,692,243 for, 1,550 against and 19,020
withheld.
(d) Not applicable.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Description
- ------- ------------------------------------------------------
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)).
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 Indenture dated as of April 27, 1998, 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 April 27,
1998 (Commission File No. 1-6370)).
4.3 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)).
4.4 First Amendment to Credit Agreement and Other
Transaction Documents dated as of December 31, 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 10-K for the fiscal
year ended January 31, 1998 (Commission File No.
1-6370)).
<PAGE>
Exhibit
Number Description
- ------- ------------------------------------------------------
4.5 Letter Agreement dated as of March 23, 1998, between
the Company and Fleet National Bank (incorporated
herein by reference to Exhibit 4.4 filed as a part of
the Company's Form 10-K for the fiscal year ended
January 31, 1998 (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)).
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 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)).
10.6 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)).
<PAGE>
Exhibit
Number Description
- ------- ------------------------------------------------------
10.7 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)).
10.8 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)).
10.9 Asset Purchase Agreement dated as of February 25, 1998,
by and between the Company, J.P. Fragrances, Inc.,
Joseph A. Pappalardo and Gloria Pappalardo
(incorporated herein by reference to Exhibit 2.1 filed
as a part of the Company's Form 8-K dated March 31,
1998 (Commission File No. 1-6370)).
10.10 Amendment to Asset Purchase Agreement dated as of
March 30, 1998, by and between the Company, J.P.
Fragrances, Inc., Joseph A. Pappalardo and Gloria
Pappalardo (incorporated herein by reference to Exhibit
2.2 filed as a part of the Company's Form 8-K dated
March 31, 1998 (Commission File No. 1-6370)).
10.11 Lease Agreement dated as of May 4,1998, between the
Company and Mac Papers, Inc. (incorporated by reference
to Exhibit 10.13 filed as a part of the Company's Form
10-Q for the quarter ended April 30, 1998 (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.
None.
<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: August 19, 1998 /s/ E. Scott Beattie
--------------- -----------------------------
E. Scott Beattie
President and Chief Executive
Officer
(Principal Executive Officer)
Date: August 19, 1998 /s/ William J. Mueller
--------------- -----------------------------
William J. Mueller
Vice President-Operations and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1999
<PERIOD-END> JUL-31-1998
<CASH> 1,317,179
<SECURITIES> 0
<RECEIVABLES> 71,680,586
<ALLOWANCES> 1,033,657
<INVENTORY> 140,435,824
<CURRENT-ASSETS> 223,005,123
<PP&E> 23,943,220
<DEPRECIATION> 3,774,230
<TOTAL-ASSETS> 300,096,011
<CURRENT-LIABILITIES> 61,448,415
<BONDS> 177,159,022
0
7,830
<COMMON> 138,127
<OTHER-SE> 61,342,617
<TOTAL-LIABILITY-AND-EQUITY> 300,096,011
<SALES> 108,445,976
<TOTAL-REVENUES> 108,445,976
<CGS> 76,710,833
<TOTAL-COSTS> 96,732,933
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<LOSS-PROVISION> (30,000)
<INTEREST-EXPENSE> 8,567,763
<INCOME-PRETAX> 3,300,121
<INCOME-TAX> 1,285,903
<INCOME-CONTINUING> 2,014,218
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