NOTE: THIS 10Q/A IS BEING FILED DUE TO THE ILLEGIBILITY OF THE ORIGINAL 10Q AND ALL DATA AND INFORMATION ARE IDENTICAL TO THE ORIGINAL FILING.
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.
Form 10Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 1995 Commission File 1-8919
CONAIR CORPORATION
(Exact name of registrant as specified on its charter)
Delaware 11-1950030
(State of other jurisdiction of Incorporation (I.R.S. Identification Number)
or organization)
150 Milford Road, East Windsor, NJ 08520
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (609) 426-1300
|
Not Applicable
Former name, former address and former fiscal year,
if changed since last year
Indicate by check mark whether this 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
Common Stock $100.00 par value
Authorized Shares 5,000
Issued and Outstanding Shares
|
as of April 28, 1995 2,814
CONAIR CORPORATION AND SUBSIDIARIES
INDEX
PART I FINANCIAL INFORMATION
Item 1: Financial Statements
Condensed Consolidated Balance Sheets
March 31, 1994 (Unaudited),
December 31, 1994 and March 31,
1995 (Unaudited) -1-
Condensed Consolidated Statements of Operations
Three months ended March 31, 1994
and 1995 (Unaudited) -2-
Condensed Consolidated Statements of Cash Flows
Three months ended March 31, 1994
and 1995 (Unaudited) -3-
Notes to Condensed Consolidated Financial
Statements (Unaudited) -4-
Item 2: Management's Discussion and Analysis
of Financial Condition and Results
of Operations -6-
PART II OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K -9-
|
CONAIR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands except share information)
ASSETS
3/31/94 12/31/94 3/31/95
CURRENT ASSETS (Unaudited) Note (Unaudited)
Cash, including cash equivalents of
$3,687, $17,176 and $4,575, respectively $ 4,546 $23,702 $ 8,421
Accounts receivable, net 62,845 80,616 81,548
Inventories (Note 2) 105,788 104,220 141,206
Prepaid expenses 1,298 1,610 2,571
Deferred income taxes 2,885 2,040 2,406
177,362 212,188 236,152
PROPERTY, PLANT AND EQUIPMENT, Net 64,669 66,992 76,223
INVESTMENT AND OTHER ASSETS
Investments in affiliated companies 1,026 464 304
Excess of cost over net assets of
acquired companies 73,196 70,575 96,573
Deferred expenses and other assets 13,693 12,485 13,242
87,915 83,524 110,119
$329,946 $362,704 $422,494
|
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and other current
liabilities $ 48,107 $50,649 $ 71,502
Income taxes 4,079 8,611 5,568
Current portion of long-term debt 3,625 6,275 7,406
Notes payable - Banks - - 5,412
55,811 65,535 89,888
OTHER LIABILITIES
Long-term debt 101,115 100,405 133,052
Deferred income taxes 19,860 21,310 21,858
120,975 121,715 154,910
STOCKHOLDERS' EQUITY
Convertible preferred stock,
$1.00 par value:
Authorized 10,000 shares
Issued and outstanding - 5,000 shares 5 5 5
Common stock, $100.00 par value;
Authorized - 5,000 shares;
Issued and outstanding - 2,814 281 281 281
Reduction for ESOP loan guarantee (5,000) - -
Additional paid-in capital 7,633 7,633 7,633
Cumulative translation adjustments 130 (18) 653
Retained earnings 150,111 167,553 169,124
153,160 175,454 177,696
$329,946 $362,704 $422,494
NOTE: The balance sheet at December 31, 1994, has been taken from the
audited financial statements at that date.
|
See notes to the condensed consolidated financial statements.
CONAIR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended March 31, 1994 and 1995
(in thousands)
(unaudited)
1994 1995
NET SALES $95,575 $113,826
COST AND EXPENSES:
Cost of goods sold 63,761 75,367
Selling, general and administrative 27,401 32,735
91,162 108,102
INCOME FROM OPERATIONS 4,413 5,724
INTEREST:
Interest expense 1,598 2,323
Interest income (51) (124)
1,547 2,199
INCOME BEFORE INCOME TAXES 2,866 3,525
Income tax provision 1,263 1,579
NET INCOME $1,603 $1,946
|
See notes to the condensed consolidated financial statements.
CONAIR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three months ended March 31,
1994 1995
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $1,603 $ 1,946
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation 1,655 1,916
Amortization of goodwill 633 663
Amortization of deferred expenses and other assets 616 655
Deferred income taxes 349 379
Tax benefit on dividends paid to ESOP 44 -
Other, net 116 147
Changes in operating assets and liabilities,
net of acquisition:
Accounts receivable 7,399 12,716
Inventories (20,372) (21,224)
Prepaid expenses 455 (153)
Accounts payable and other current liabilities 7,093 3,413
Income taxes (2,677) (4,256)
(3,086) (3,798)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (21,639) ( 4,155)
Cost of acquisition, net of cash acquired - (34,315)
(21,639) (38,470)
CASH FLOW FROM FINANCING ACTIVITIES:
Increase in short-term debt - 765
Increase in long-term debt 20,000 27,000
Reduction of long-term debt (6,460) (589)
Dividends declared (125) (375)
13,415 26,801
EFFECT OF EXCHANGE RATE CHANGES ON CASH - 186
DECREASE IN CASH AND CASH EQUIVALENTS (11,310) (15,281)
CASH AND CASH EQUIVALENTS,
January 1, 15,856 23,702
CASH AND CASH EQUIVALENTS,
March 31, $ 4,54 $ 8,421
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the quarter for:
Interest $ 1,417 $ 2,125
Income taxes $ 3,547 $ 4,985
Acquisition of a business:
Fair value of assets acquired $ - $39,277
Cash Paid $ - $34,315
Liabilities assumed $ - $ 4,962
|
See notes to the condensed consolidated financial statements.
CONAIR CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. FINANCIAL STATEMENTS
The accompanying financial information is submitted in response to the requirements of Form 10Q and does not purport to be financial statements prepared in accordance with generally accepted accounting principles, as they do not include all disclosures which might be associated with such financial statements. In the opinion of management, these financial statements include all adjustments, consisting only of normal recurring accruals, necessary for a fair statement of the results for the interim periods presented.
2. INVENTORIES
Inventories are summarized as follows:
March 31, December 31, March 31,
1994 1994 1995
Components and raw materials $ 12,676 $ 12,728 $ 16,117
Finished goods 93,112 91,492 125,089
$ 105,788 $104,220 $141,206
3.ACQUISITION
On February 18, 1995, the Company acquired 100% of the share capital of
Babyliss S.A. ("Babyliss") for approximately $38,000,000 which purchase
price is subject to a maximum downward adjustment of approximately
$4,000,000 based on the terms of the agreement. Babyliss is a
manufacturer and marketer of personal care appliance products
principally in France, the United Kingdom, Germany, Belgium,
the Netherlands and Spain. Through its distributors,
Babyliss products are also marketed in Scandinavia and
several non-European markets including North America, Africa
and East Asia. In connection with this acquisition, the Company
increased its bank revolving credit line by $37,500,000.
This additional debt has mandatory principal repayments
of $5,000,000 on December 15, 1996; $7,500,000 on December 15, 1997;
$10,000,000 on each of December 15, 1998 and December 15, 1999
and $5,000,000 on March 15, 2000. The interest rate on this facility
is variable and is subject to change based on the leverage and
operating performance of the Company. Approximately, $5,200,000
of additional costs are expected to be incurred relating to the
acquisition of Babyliss which includes the buyout of minority
interest shareholders of several subsidiaries of Babyliss.
This acquisition will be accounted for by the purchase method of
accounting. The excess of the purchase price over the estimated
fair value of the net assets acquired of approximately $25,700,000
will be amortized on a straight line basis over 30 years.
The purchase price allocation is based on preliminary estimates of
the fair value of the net assets acquired and is subject to
adjustment as additional information becomes available.
4. PROPERTY, PLANT AND EQUIPMENT
On February 28, 1995, the Company exercised its option to purchase the
portion of its Stamford, Connecticut executive office facility leased
to Leandro P. Rizzuto. The Company intends to pay the option price of
$4,000,000 with $1,012,000 in cash and $2,988,000 through the sale to
Mr. Rizzuto of its facility in Phoenix, Arizona. The selling price
of the Phoenix, Arizona facility is based on an independent appraisal.
The Company will lease the Phoenix, Arizona facility from Mr. Rizzuto
until the construction of its new facility in Glendale, Arizona is
completed. The monthly lease payments are based on an independent
appraisal. This transaction was completed on May 11, 1995.
|
CONAIR CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table summarizes net sales of each of the Company's product groups for the three months ended March 31, 1994 and 1995.
Three Months Ended March 31,
1994 1995
Product Group (in thousands)
Personal Care Appliances $36,769 $ 51,877
Consumer Electronics 24,305 25,194
CUISINART Products 11,782 13,726
Toiletries and Professional Salon Products 22,719 23,029
$95,575 $113,826
|
The following table sets forth for the three months ended March 31, 1994 and 1995 certain consolidated statements of operations data expressed as a percentage of net sales:
Three Months Ended March 31,
1994 1995
Net sales 100.0% 100.0%
Cost of goods sold 66.7 66.2
Gross profit 33.3 33.8
Selling, general and administrative 28.7 28.8
Operating income 4.6 5.0
Interest expense 1.7 2.0
Interest income ( .1) ( .1)
Income before income taxes 3.0 3.1
Income tax provision 1.3 1.4
Net income 1.7 1.7
|
SALES
Net sales for the quarter ended March 31, 1995 increased by 19.1% to $113,826,000 from $95,575,000 in the comparable period of 1994. The Company's personal care appliance products accounted for approximately 83% of this increase. Foreign sales increased approximately 157% principally due to the inclusion of sales of Babyliss and REVLON products which were not sold in the first quarter of 1994. Domestic personal care appliance sales increased approximately 25% primarily due to sales of CONAIR brand hot air curling irons which were not sold in the first quarter of 1994 and increased sales of private label hair dryers. Sales of consumer electronics increased approximately 4% in the first quarter of 1995. Sales of Southwestern Bell FREEDOM PHONE products increased approximately 10% primarily due to increased unit sales of existing products. Sales of other consumer electronics products decreased by approximately 3% primarily due to lower average selling prices on corded phones which was partially offset by higher unit sales of cordless phones. Sales of CUISINART products increased approximately 16% in the first quarter of 1995 primarily due to increased sales of cookware. Sales of toiletries and professional salon products were essentially unchanged in the first quarter of 1995 compared to the first quarter of 1994.
CONAIR CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GROSS MARGINS
Gross margins increased as a percentage of net sales to 33.8% in the quarter ended March 31, 1995 from 33.3% for the comparable period in 1994. This increase was primarily due to changes in the mix of the products sold by the Company, specifically a 41% increase in the sales of personal care appliance products which have relatively higher gross profit margins, compared to a 5% increase in sales of all of the Company's other products. Higher gross margins on sales of CUISINART products also contributed to the improvement in gross margins.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses remained essentially unchanged as a percentage of sales at 28.8% for the quarter ended March 31, 1995 compared to 28.7% for the comparable period in the prior year, but increased by 19.5% to $32,735,000 in the quarter ended March 31, 1995 from $27,401,000 in the first quarter of 1994. The increase of $5,334,000 was primarily due to selling, general and administrative expenses of Babyliss, which were not included in expenses for the first quarter of 1994, increases in variable expenses to support the increase in sales of other products and increases in advertising and promotional expenses.
INTEREST
The Company's interest expense of $2,323,000 in the quarter ended March 31, 1995 increased from $1,598,000 in the first quarter of 1994. The increase of $725,000 was primarily due to an increase in the Company's long-term debt primarily to finance the purchase of its executive office facility and the acquisition of Babyliss.
INCOME TAXES
The Company's effective income tax rate remained essentially unchanged at 44.8% in the quarter ended March 31, 1995 as compared to 44.1% in the corresponding 1994 quarter.
CONAIR CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1995, the Company's working capital was $146,264,000 and its current ratio was 2.6 to 1. The Company's cash balance was $8,421,000 and long-term debt was $133,052,000 at March 31, 1995.
Capital expenditures during 1994 and anticipated capital expenditures during 1995 are higher than in previous years because of certain real estate acquisitions and improvements. Capital expenditures were $29,546,000 in 1994, $20,000,000 of which represents the purchase price of the Company's executive office facility in Stamford, Connecticut. Net capital expenditures for 1995 are anticipated to be approximately $17,000,000, of which approximately $7,000,000 is for the completion of the Company's warehouse and distribution facility in Glendale, Arizona and $1,012,000 is for the exercise of the Company's option to purchase lease rights in its executive office facility in Stamford, Connecticut from Leandro P.Rizzuto, which took place on May 11, 1995 as noted in Note 4 to the condensed consolidated statements.
Historically, approximately 60% of the Company's sales and 70% of its operating profit are achieved in the second half of the year. The Company relies on short-term bank debt to finance its seasonal operating needs which result in a build-up of receivables and inventory during the first nine months of each year with a substantial reduction in receivables, inventories and bank credit during the fourth quarter. As of March 31, 1995, the Company had short-term lines of credit aggregating $81,500,000, which do not include an additional $25,000,000 available for the period May 15 to November 30 to finance its seasonal business needs. In addition, the Company had a long-term revolving credit line of $58,500,000, of which $20,500,000 was unutilized at March 31, 1995. This revolving credit line includes an increase, in connection with the Babyliss acquisition, of $37,500,000. This additional debt has mandatory principal repayments of $5,000,000 on December 15, 1996, $7,500,000 on December 15, 1997, $10,000,000 on each of December 15, 1998 and December 15, 1999 and $5,000,000 on March 15, 2000. The interest rate on this facility is variable and is subject to change based on the leverage and operating performance of the Company.
As a result of the Company's acquisition of Babyliss, the Company has developed a hedging program designed to hedge firm purchase commitments of goods and services denominated in foreign currencies.
Effects of Inflation
The Company believes that the relatively moderate rate of inflation over the past few years has not had a significant impact on the Company's results of operation.
CONAIR CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K
(b) On March 6, 1995 the Company filed Form 8K in connection with its acquisition of Babyliss.
CONAIR CORPORATION AND SUBSIDIARIES
SIGNATURE
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.
CONAIR CORPORATION
(Registrant)
(Date) By: Leandro P. Rizzuto
Chairman of the Board
and President
|
(Date) By: Patrick P. Yannotta Sr. Vice President Finance
(Date) By: James A. Porcelli
Vice President
Corporate Controller
|
| ARTICLE 5 |
| PERIOD TYPE | 3 MOS | 3 MOS |
| FISCAL YEAR END | MAR 31 1995 | MAR 31 1994 |
| PERIOD END | MAR 31 1995 | MAR 31 1994 |
| CASH | 8,421,000 | 4,546,000 |
| SECURITIES | 845,000 | 340,000 |
| RECEIVABLES | 81,548,000 | 62,845,000 |
| ALLOWANCES | 1,708,000 | 1,416,000 |
| INVENTORY | 141,206,000 | 105,788,000 |
| CURRENT ASSETS | 236,152,000 | 177,362,000 |
| PP&E | 128,868,000 | 101,290,000 |
| DEPRECIATION | 52,645,000 | 36,621,000 |
| TOTAL ASSETS | 422,494,000 | 329,946,000 |
| CURRENT LIABILITIES | 89,888,000 | 55,811,000 |
| BONDS | 145,870,000 | 104,740,000 |
| COMMON | 281,000 | 281,000 |
| PREFERRED MANDATORY | 0 | 0 |
| PREFERRED | 5,000 | 5,000 |
| OTHER SE | 177,410,000 | 152,874,000 |
| TOTAL LIABILITY AND EQUITY | 422,494,000 | 329,946,000 |
| SALES | 113,826,000 | 95,575,000 |
| TOTAL REVENUES | 113,826,000 | 95,575,000 |
| CGS | 75,367,000 | 63,761,000 |
| TOTAL COSTS | 108,102,000 | 91,162,000 |
| OTHER EXPENSES | 0 | 0 |
| LOSS PROVISION | 112,000 | 112,000 |
| INTEREST EXPENSE | 2,323,000 | 1,598,000 |
| INCOME PRETAX | 3,525,000 | 2,866,000 |
| INCOME TAX | 1,579,000 | 1,263,000 |
| INCOME CONTINUING | 1,946,000 | 1,603,000 |
| DISCONTINUED | 0 | 0 |
| EXTRAORDINARY | 0 | 0 |
| CHANGES | 0 | 0 |
| NET INCOME | 1,946,000 | 1,603,000 |
| EPS PRIMARY | 0 | 0 |
| EPS DILUTED | 0 | 0 |