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 April 2, 2005
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 0-18741
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 ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨ No x
The number of shares of the registrant’s Common Stock outstanding at May 16, 2005 was 40,034,500 shares.
AND SUBSIDIARIES
FORM 10-Q
For the Quarterly Period Ended April 2, 2005
INDEX
| Page | ||||
| Part I. Financial Information |
||||
| Item 1. |
Financial Statements |
|||
| Consolidated Balance Sheets as of April 2, 2005 (unaudited) and October 2, 2004 |
1 | |||
| 2 | ||||
| 3 | ||||
| 4 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
8 | ||
| Item 3. |
13 | |||
| Item 4. |
13 | |||
| Part II. Other Information |
||||
| Item 1. |
14 | |||
| Item 2. |
14 | |||
| Item 6. |
14 | |||
| 15 | ||||
PART I - FINANCIAL INFORMATION
| Item 1. | Financial Statements |
Consolidated Balance Sheets
(Dollar amounts in thousands)
| April 2, 2005 |
October 2, 2004 |
|||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 6,605 | $ | 20,839 | ||||
| Accounts and other receivables, net |
6,194 | 10,505 | ||||||
| Inventories |
94,419 | 54,765 | ||||||
| Prepaid expenses and other current assets |
2,566 | 1,404 | ||||||
| Deferred tax assets |
22,111 | 6,981 | ||||||
| Total current assets |
131,895 | 94,494 | ||||||
| Property, plant and equipment, at cost, net of accumulated depreciation |
39,928 | 40,603 | ||||||
| Goodwill, net |
7,460 | 7,460 | ||||||
| Deferred financing costs, net |
7,466 | 1,811 | ||||||
| Other assets |
475 | 468 | ||||||
| Total assets |
$ | 187,224 | $ | 144,836 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 62,250 | $ | 22,247 | ||||
| Accrued expenses |
25,899 | 30,643 | ||||||
| Income taxes payable |
— | 8,250 | ||||||
| Total current liabilities |
88,149 | 61,140 | ||||||
| Revolving commitment |
53,125 | — | ||||||
| Other long term liabilities |
3,179 | 16,917 | ||||||
| Redeemable preferred stock, $0.001 par value; authorized 1,000,000 shares, Issued and outstanding 41,000 Series A at April 2, 2005 and 46,316 at October 2, 2004 |
41,000 | 46,316 | ||||||
| Senior notes |
172,771 | 59,495 | ||||||
| Deferred tax liabilities |
59 | 59 | ||||||
| Total liabilities |
358,283 | 183,927 | ||||||
| Commitments and contingencies |
— | — | ||||||
| Stockholder’s equity (deficit): |
||||||||
| Common stock, $0.001 par value, authorized 50,000,000 shares, |
40 | 7 | ||||||
| Stock subscriptions receivable |
— | (450 | ) | |||||
| Paid-in capital |
(143,682 | ) | (44,714 | ) | ||||
| Retained earnings/(deficit) |
(27,417 | ) | 6,066 | |||||
| Total stockholders’ deficit |
(171,059 | ) | (39,091 | ) | ||||
| Total liabilities and stockholders’ equity (deficit) |
$ | 187,224 | $ | 144,836 | ||||
See accompanying notes to consolidated financial statements.
1
Consolidated Statements of Operations (unaudited)
Amounts In Thousands
| 13 Weeks Ended |
26 Weeks Ended |
|||||||||||||||
| April 2, 2005 |
March 27, 2004 |
April 2, 2005 |
March 27, 2004 |
|||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
| Sales |
$ | 44,836 | $ | 38,848 | $ | 85,774 | $ | 79,668 | ||||||||
| Cost of merchandise sold and services sold, including warehousing and transportation expenses |
23,006 | 20,149 | 44,572 | 42,539 | ||||||||||||
| Gross profit |
21,830 | 18,699 | 41,202 | 37,129 | ||||||||||||
| Selling, general and administrative expenses |
31,896 | 28,626 | 60,694 | 56,357 | ||||||||||||
| Unusual charges |
16,871 | — | 16,871 | — | ||||||||||||
| Operating loss |
(26,937 | ) | (9,927 | ) | (36,363 | ) | (19,228 | ) | ||||||||
| Other expenses/(income): |
||||||||||||||||
| Interest expense |
4,922 | 1,834 | 8,575 | 3,616 | ||||||||||||
| Interest income |
— | (5 | ) | (4 | ) | (10 | ) | |||||||||
| Other expense/(income) |
— | (230 | ) | 23 | 54 | |||||||||||
| Unusual charges |
8,881 | — | 8,881 | — | ||||||||||||
| Total other expense |
13,803 | 1,599 | 17,475 | 3,660 | ||||||||||||
| Loss before income taxes |
(40,740 | ) | (11,526 | ) | (53,838 | ) | (22,888 | ) | ||||||||
| Income tax benefit |
(15,890 | ) | (4,547 | ) | (20,355 | ) | (9,030 | ) | ||||||||
| Net loss |
(24,850 | ) | (6,979 | ) | (33,483 | ) | (13,858 | ) | ||||||||
| Series A Preferred Stock dividends and accretion |
— | (1,756 | ) | — | (3,448 | ) | ||||||||||
| Loss applicable to common shareholders |
$ | (24,850 | ) | $ | (8,735 | ) | $ | (33,483 | ) | $ | (17,306 | ) | ||||
See accompanying notes to consolidated financial statements.
2
Consolidated Statements of Cash Flows
(Dollar amounts in thousands)
| 26 Weeks Ended |
||||||||
| April 2, 2005 |
March 27, 2004 (restated) |
|||||||
| (unaudited) | (unaudited) | |||||||
| Operating activities: |
||||||||
| Net loss |
$ | (33,483 | ) | $ | (13,858 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
| Depreciation and amortization |
3,228 | 5,403 | ||||||
| Preferred stock dividend and accretion |
5,929 | — | ||||||
| Amortization of loan fees and discounts |
1,980 | 276 | ||||||
| Allowance for doubtful accounts |
183 | 153 | ||||||
| Loss on disposition of assets |
24 | 53 | ||||||
| Deferred income taxes |
(15,130 | ) | (5,323 | ) | ||||
| Changes in operating assets and liabilities |
||||||||
| Accounts and other receivables |
4,128 | 2,835 | ||||||
| Inventories |
(39,654 | ) | (33,053 | ) | ||||
| Prepaid expenses and other current assets |
(1,162 | ) | (1,061 | ) | ||||
| Other assets |
(7 | ) | (7 | ) | ||||
| Accounts payable and accrued expenses |
35,442 | 27,791 | ||||||
| Income taxes payable |
(8,250 | ) | (7,816 | ) | ||||
| Net cash used in operating activities |
(46,743 | ) | (24,607 | ) | ||||
| Investing activities: |
||||||||
| Purchase of property, plant and equipment |
(5,278 | ) | (4,750 | ) | ||||
| Proceeds from disposition of property, plant and equipment |
— | 610 | ||||||
| Net cash used in investing activities |
(5,278 | ) | (4,140 | ) | ||||
| Financing activities: |
||||||||
| Net line of credit borrowings |
53,125 | 25,000 | ||||||
| Preferred stock premium and discount |
1,041 | — | ||||||
| Stock option compensation |
16,070 | — | ||||||
| Proceeds from warrants and options exercised |
4,067 | — | ||||||
| Purchase of common stock |
(158,467 | ) | — | |||||
| Proceeds from issuance of common stock, net of fees |
39,845 | — | ||||||
| Payments of deferred financing cost |
(7,635 | ) | (260 | ) | ||||
| Payment of long term debt |
(55,495 | ) | — | |||||
| Sale of senior notes |
168,742 | — | ||||||
| Preferred stock payment |
(64,506 | ) | — | |||||
| Refinance preferred stock |
41,000 | — | ||||||
| Net cash provided by financing activities |
37,787 | 24,740 | ||||||
| Net decrease in cash and cash equivalents |
(14,234 | ) | (4,007 | ) | ||||
| Cash and cash equivalents at beginning of period |
20,839 | 10,022 | ||||||
| Cash and cash equivalents at end of period |
$ | 6,605 | $ | 6,015 | ||||
See accompanying notes to consolidated financial statements.
3
Leslie’s Poolmart, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(1) Restatement of Previously Issued Financial Statements
Following a review of the Company’s lease accounting, the Company has reclassified tenant improvement allowances from a contra asset in property, plant and equipment, net to accrued expenses in the consolidated balance sheets. The amortization of the tenant improvement allowances has also been reclassified from a reduction of depreciation and amortization expense to a reduction of occupancy expense in the consolidated statements of income. Finally, the receipt of tenant improvement allowances has been reclassified in the consolidated statement of cash flows by increasing purchase of property, plant and equipment, and decreasing net cash used in operating activities. There was no impact to net income and the balance of retained earnings as a result of this restatement.
The following table reflects the effect of the restatement on the Consolidated statements of Cash Flows (in thousands):
| Twenty-six weeks ended March 27, 2004 |
||||||||
| As Previously Reported | ||||||||