LESLIES POOLMART INC - 10-Q Quarterly Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the Quarterly Period Ended December 28, 2002

or

o	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 0-18741

LESLIE’S POOLMART, INC.
(Exact name of registrant as specified in its charter)

Delaware		95-4620298
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

3925 E. Broadway Road Phoenix, Arizona 85040
(Address of principal executive offices)

Registrant’s telephone number, including area code: (602) 366-3999

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all documents and reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for 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 o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes o

No x

The number of shares of the registrant’s Common Stock outstanding at February 11, 2003 was 7,080,438 shares.

LESLIE’S POOLMART, INC.
AND SUBSIDIARIES

FORM 10-Q

For the Quarterly Period Ended December 28, 2002

INDEX

			Page

Part I. Financial Information

	Item 1.	Financial Statements

		Consolidated Balance Sheets as of December 28, 2002 (unaudited) and September 28, 2002	1

		Consolidated Statements of Operations for the 13 weeks ended December 28, 2002 (unaudited) and December 29, 2001 (unaudited)	2

		Consolidated Statements of Cash Flows for the 13 weeks ended December 28, 2002 (unaudited) and December 29, 2001 (unaudited)	3

		Notes to Consolidated Financial Statements (unaudited)	4

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	6

	Item 4.	Controls and Procedures	8


Part II. Other Information			9

Signatures			9

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Leslie’s Poolmart, Inc.

Consolidated Balance Sheets

Amounts In Thousands, except share amounts

			December 28, 2002			September 28, 2002

				(unaudited)
Assets
Current assets:
	Cash and cash equivalents		$	2,620		$	17,996
	Accounts and other receivables, net			5,013			7,398
	Inventories			66,651			55,540
	Prepaid expenses and other current assets			1,548			1,235
	Deferred tax assets			7,678			7,678

		Total current assets		83,510			89,847

Property, plant and equipment, at cost, net of accumulated depreciation				40,487			42,744
Goodwill, net				7,564			7,564
Deferred financing costs, net				907			1,080
Other assets				466			529

Total assets			$	132,934		$	141,764

Liabilities and Stockholders’ Equity
Current liabilities:
	Accounts payable		$	24,170		$	19,572
	Accrued expenses			24,294			27,402
	Income taxes payable			2,125			8,225
	Current maturities of long-term debt			—			14

		Total current liabilities		50,589			55,213

Line of credit borrowings				3,923			—
Other long-term liabilities				3,459			2,121
Senior notes				90,000			90,000
Deferred tax liabilities				1,812			1,812

	Total liabilities			149,783			149,146

Commitments and contingencies				—			—

Preferred Stock, $0.001 par value; Authorized – 2,000,000 shares;
	Issued and outstanding – 45,616 Series A at December 28, 2002 and 45,517 Series A at September 28, 2002			45,616			45,517

Stockholders’ equity (deficit):
Common stock, $0.001 par value, Authorized 12,000,000 shares;
	Issued and outstanding 7,065,438 shares at December 28, 2002 and September 28, 2002, respectively			1			1
	Stock subscriptions receivable			(450	)		(450	)
	Paid-in capital			(45,278	)		(45,278	)
	Retained deficit			(16,738	)		(7,172	)

		Total stockholders’ deficit		(62,465	)		(52,899	)

Total liabilities and stockholders’ equity (deficit)			$	132,934		$	141,764

See accompanying notes to consolidated financial statements.

Leslie’s Poolmart, Inc.

Consolidated Statements of Operations

Amounts In Thousands

		13 Weeks Ended

		December 28, 2002			December 29, 2001

			(unaudited)			(unaudited)
Sales		$	35,897		$	30,882
Cost of merchandise and services sold, including warehousing and transportation expenses, and related occupancy costs			20,099			17,768

	Gross profit		15,798			13,114

Selling, general and administrative expenses			26,499			25,103
Amortization of goodwill			—			62

	Operating loss		(10,701	)		(12,051	)

Other (income) expense:
	Interest expense		2,545			2,669
	Interest income		(3	)		(8	)
	Loss on disposal of fixed assets		111			31

Total other expense			2,653			2,692

Net loss before taxes			(13,354)			(14,743	)

Income tax benefit			(5,226	)		(5,749	)

	Net loss		(8,128	)		(8,994	)

Series A Preferred Stock dividends and accretion			1,438			1,273

Loss applicable to common stockholders		$	(9,566	)	$	(10,267	)

See accompanying notes to consolidated financial statements.

Leslie’s Poolmart, Inc.

Consolidated Statements of Cash Flows

Amounts in Thousands

			13 Weeks Ended

			December 28, 2002			December 29, 2001

				(unaudited)			(unaudited)
Operating activities:
	Net loss		$	(8,128	)	$	(8,994	)
	Adjustments to reconcile net loss to net cash used in operating activities:
		Depreciation and amortization		2,274			2,121
		Amortization of loan fees and discounts		173			164
		Allowance for doubtful accounts		93			10
		Loss on disposition of assets		111			31
	Changes in operating assets and liabilities
		Accounts and other receivables		2,292			3,645
		Inventories		(11,111	)		(1,699	)
		Prepaid expenses and other current assets		(313	)		(545	)
		Other assets		62			56
		Accounts payable and accrued expenses		1,490			(8,449	)
		Income taxes		(6,100	)		(5,764	)

	Net cash used in operating activities			(19,157	)		(19,536	)

Investing activities:
		Purchase of property, plant and equipment		(131	)		(828	)
		Proceeds from disposition of property, plant and equipment		3			14

	Net cash used in investing activities			(128	)		(814	)

Financing activities:
		Net line of credit borrowings		3,923			16,705
		Payments of long-term debt		(14	)		(18	)
		Proceeds from issuance of common stock, net		—			17

	Net provided by financing activities			3,909			16,704

Net decrease in cash and cash equivalents

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