SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 10-Q/A
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 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 0-23669
SHOE PAVILION, INC.
(Exact name of Registrant as Specified in its Charter)
Delaware 94-3289691
(State or Other Jurisdiction of Incorporation (IRS Employer
or Organization) Identification Number)
3200-F Regatta Boulevard, Richmond, California 94804
(Address of principal executive offices) (Zip Code)
(510) 970-9775
(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 [ ]. No [X].
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock outstanding as of March 31, 1998 6,800,000 shares
1
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
The following financial statements and related financial information are
filed as part of this report:
Shoe Pavilion, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
($000, except per share data) March 31 December 31 March 31
1998 1997 1997
---------- ----------- --------
(Restated)
(Note 3)
ASSETS
Current assets
Cash $ 218 $ 395 $ 398
Inventories 22,208 19,795 13,878
Prepaid expenses and other 414 73 156
---------- ----------- --------
Total current assets 22,840 20,263 14,432
Property and equipment, net 2,016 2,075 1,399
Other assets 639 308 42
---------- ----------- --------
Total assets $25,495 $22,646 $15,873
========== =========== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 6,755 $ 5,921 $ 3,902
Accrued expenses 936 843 994
Line of credit 1,987 7,387 5,503
Current portion of long-term obligations 16 68 87
---------- ----------- --------
Total current liabilities 9,694 14,219 10,486
Deferred rent 913 896 414
Long-term obligations, less current portion 230 203 161
Stockholders' equity
Common stock- $.001 par value: 15,000,000 shares authorized;
issued; 6,800,000, 4,500,000, 4,500,000 7 4 4
Preferred stock- $.001 par value; 1,000,000 shares authorized;
no shares issued or outstanding - - -
Additional paid-in capital 13,968 812 563
Retained earnings 683 6,512 4,245
---------- ----------- --------
Total stockholders' equity 14,658 7,328 4,812
---------- ----------- --------
Total liabilities and stockholders' equity $25,495 $22,646 $15,873
========== =========== ========
2
Shoe Pavilion, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
(In thousands, except per share and operating data)
Three Months Ended
March 31
---------------------
1998 1997
---------- --------
(Restated)
(Note 3)
Net sales $11,451 $8,155
Cost of sales and related occupancy expenses 7,641 5,475
---------- --------
Gross profit 3,810 2,680
Selling, general and administrative expenses 3,008 2,034
---------- --------
Income from operations 802 646
Interest and other, net 117 113
---------- --------
Income before taxes 685 533
Income tax provision (benefit) (337) 37
---------- --------
NET INCOME $ 1,022 $ 496
========== ========
Earnings per share
Basic $0.19 $0.11
Diluted $0.19 $0.11
Weighted average shares outstanding
Basic 5,420 4,500
Diluted 5,433 4,500
PRO FORMA
Historical income before taxes on income $685 $533
Pro forma provision for income taxes 258 201
---------- --------
Pro forma net income $427 $332
========== ========
Pro forma earnings per share
Basic $0.07
Diluted $0.07
Pro forma weighted average shares outstanding
Basic 6,183
Diluted 6,196
Stores Open at end of period 56 47
See notes to condensed consolidated financial statements.
3
Shoe Pavilion, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Three Months Ended
March 31
---------------------
1998 1997
---------- ---------
(Restated)
(Note 3)
Operating activities
Net income $ 1,022 $ 496
Adjustments to reconcile net income to net cash
used by operating activities
Depreciation 175 124
Deferred taxes (485) -
Cash provided (used) by changes in:
Inventories (2,413) (392)
Prepaid expenses and other current assets (341) (90)
Accounts payable 834 (1,792)
Accrued expenses 93 221
Other assets 154 (25)
Deferred rent 17 (24)
---------- ---------
Net cash provided (used) by operating activities (944) (1,482)
Investing activities
Purchase of property and equipment, net (116) (149)
Financing activities
Net proceeds from initial public offering 14,108 0
(Payment) Proceeds (to) from line of credit (5,400) 2,103
Principal payments on long-term obligations (25) (18)
Principal payments on capital leases 0 (8)
Distributions paid to stockholder (7,800) (250)
---------- ---------
Net cash provided by financing activities 883 1,827
---------- ---------
NET (DECREASE) INCREASE IN CASH (177) 196
CASH, BEGINNING OF PERIOD 395 202
---------- ---------
CASH, END OF PERIOD $ 218 $ 398
========== =========
Interest paid $ 118 $ 98
Income taxes paid 33 65
See notes to condensed consolidated financial statements.
4
Notes to Financial Statements
1. Basis of Presentation
General - The accompanying unaudited condensed consolidated financial statements
have been prepared form the records of the Company without audit, and in the
opinion of management, include all adjustments necessary to present fairly the
financial position at March 31, 1998 and 1997 and the interim results of
operations and cash flows for the three months then ended. The balance sheet
as of December 31, 1997, presented herein, has been derived from the audited
financial statements of the Company for the year then ended.
Accounting policies followed by the Company are described in Note 2 to the
audited consolidated financial statements for the year ended December 31, 1997,
included in the Company's prospectus dated February 23, 1998. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted for purposes of the condensed consolidated interim
financial statements. The condensed consolidated financial statements should be
read in conjunction with the audited consolidated financial statements,
including the notes thereto, for the year ended December 31, 1997.
The results of operations for the three-month periods presented herein are not
necessarily indicative of the results to be expected for the full year.
Public Offering - On February 27, 1998 the Company sold 2,300,000 shares of its
common stock for net proceeds of $14,107,651. In connection with the offering,
the Company terminated its status as an S corporation and recorded deferred
taxes of $485,000.
New Accounting Pronouncement - The Company adopted Statement of Financial
Accounting Standards (SFAS) No. 130, Reporting Comprehensive Income during the
quarter ended March 31, 1998. SFAS 130 requires that an enterprise report, by
major components and as a single total, the change in its net assets during the
period from nonowner sources. As the Company has no nonowner sources,
comprehensive income and net income are the same.
2. Pro Forma Information
The objective of the pro forma information is to show what the significant
effects on the historical information might have been had the Company not been
treated as an S Corporation for tax purposes prior to the February 23, 1998, the
effective date of the Company's initial public offering.
Income Taxes - The pro forma information presented on the condensed consolidated
statements of income reflects a provision for income taxes at an effective rate
of 38.0% for the quarter ended March 31, 1998 and 1997.
Pro Forma Net Income Per Share - Pro forma basic net income per share is based
on the weighted average number of shares of common stock outstanding during the
period plus the estimated number of shares offered by the Company (1,271,650
shares) which were necessary to fund the $7,800,000 distribution paid to the
Company's stockholder upon termination of the Company's status as an S
Corporation. Pro forma diluted net income per share is calculated using the
number of shares used in the basic calculation plus the dilutive effect of stock
options outstanding during the period.
3. Restatement
Subsequent to the issuance of the Company's condensed consolidated financial
statements for the quarter ended March 31, 1998, the Company determined that the
effect of recording the $485,000 deferred tax asset resulting from the
termination of the Company's status as an S corporation should have been
recorded as a deduction to tax
5
expense rather than directly to additional paid-in capital. As a result,
additional paid-in capital, retained earnings, income taxes and net income have
been restated from amounts previously reported as follows:
(In thousands) As Previously As
Reported Restated
------------- -----------
At March 31, 1998:
Additional paid-in capital $14,453 $13,968
Retained Earnings 198 683
For the quarter ended March 31, 1998:
Income tax provision (benefit) 148 (337)
Net income $537 $1,022
6
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 on the 17th day of March 1999.
SHOE PAVILION, INC., as Registrant
By /s/ Dmitry Beinus
-----------------------------------------
Dmitry Beinus
Chairman and Chief Executive Officer
By /s/ Gary A. Schwartz
-----------------------------------------
Gary A. Schwartz
Vice President and Chief Financial Officer
7
INDEX TO EXHIBITS
Exhibit Number Description
- -------------- -----------
27.1 Financial Data Schedule