<PAGE> 1
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 ...JUNE 30, 1996...............................
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.........0-28040.........................................
...............................BACOU USA, INC................................
(Exact name of registrant as specified in its charter)
............DELAWARE............................ .........05-0470688.......
(State or other jurisdiction of incorporation or (I.R.S. Employer
organization) Identification No.)
..........10 THURBER BOULEVARD, SMITHFIELD, RHODE ISLAND 02917-1896..........
(Address of principal executive offices)
(Zip Code)
........... ....................(401) 233-0333................................
(Registrant's telephone number, including area code)
..............................................................................
(Former name, former address and former fiscal year if changed since last
report)
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......
The number of shares outstanding of the issuer's common stock, $.001 par
value, as of August 13, 1996 was 17,310,000.
1
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BACOU USA, INC.
INDEX
Page No.
-------
Part I. Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheets
December 31, 1995 and June 30, 1996 3
Consolidated Condensed Statements of Income
Three Months ended June 30, 1995 and 1996 4
Consolidated Condensed Statements of Income
Six Months Ended June 30, 1995 and 1996 5
Consolidated Condensed Statements of Cash Flows
Six Months Ended June 30, 1995 and 1996 6
Notes to Consolidated Condensed Financial Statements 7-8
Item 2. Management's Discussion and Analysis of financial
Condition and Results of Operations 9-13
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 14
2
<PAGE> 3
BACOU USA, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, 1995 June 30, 1996
----------------- -------------
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,210,247 $ 9,866,575
Trade accounts receivable, net 10,803,126 14,284,491
Inventories 18,205,258 17,121,311
Prepaid expenses 1,383,206 784,462
Recoverable income taxes 442,873 --
Deferred income taxes 762,193 304,000
---------- ------------
Total current assets 32,806,903 42,360,839
---------- ------------
Property and equipment, net 20,792,562 21,937,737
Intangible assets, net 50,869,949 49,436,125
---------- ------------
Total assets $104,469,414 $113,734,701
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $ 20,000,000 $ --
Accounts payable 2,936,939 1,984,819
Accrued compensation and benefits 1,934,794 1,865,095
Other accrued expenses 3,528,986 3,890,016
Income taxes payable -- 2,048,828
------------ ------------
Total current liabilities 28,400,719 9,788,758
------------ ------------
Long-term debt, excluding current installments 29,000,000 --
Deferred income taxes 1,370,494 1,195,000
------------ ------------
Total liabilities 58,771,213 10,983,758
------------ ------------
Stockholders' equity:
Preferred stock, $.001 par value, 5,000,000 shares
authorized, no shares issued and outstanding -- --
Common stock, $.001 par value, 25,000,000 shares
authorized, 13,860,000 shares in 1995 and 17,310,000
shares in 1996 issued and outstanding 13,860 17,310
Additional paid-in capital 19,186,140 66,480,623
Retained earnings 26,498,201 36,253,010
------------ ------------
Total stockholders' equity 45,698,201 102,750,943
------------ ------------
Total liabilities and stockholders' equity $104,469,414 $113,734,701
============ ============
</TABLE>
See accompanying notes to consolidated condensed financial statements.
3
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BACOU USA, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
(Unaudited)
Three months ended
June 30,
1995 1996
----------- -----------
<S> <C> <C>
Net sales $20,812,456 $28,806,454
Cost of sales 8,500,682 12,225,383
----------- -----------
Gross profit 12,311,774 16,581,071
Operating expenses:
Selling 2,770,658 4,443,682
General and administrative 1,138,755 2,033,789
Amortization of intangible assets 751,764 1,041,039
----------- -----------
Total operating expenses 4,661,177 7,518,510
----------- -----------
Operating income 7,650,597 9,062,561
----------- -----------
Other expenses (income):
Interest expense:
Bacou, S.A. 299,218 --
Other 246,491 4,961
----------- -----------
545,709 4,961
Interest income (45,175) (74,533)
Other (15,943) (81,762)
----------- -----------
Total other expenses (income) 484,591 (151,334)
----------- -----------
Income before income taxes 7,166,006 9,213,895
Income taxes 2,794,074 3,565,313
----------- -----------
Net income $ 4,371,932 $ 5,648,582
=========== ===========
Net income per share of common stock $ 0.32 $ 0.33
=========== ===========
Weighted average shares of common stock 13,860,000 17,189,363
=========== ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements
4
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BACOU USA, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
(Unaudited)
Six months ended
June 30,
1995 1996
----------- -----------
<S> <C> <C>
Net sales $38,218,265 $55,094,294
Cost of sales 15,829,781 23,950,122
----------- -----------
Gross profit 22,388,484 31,144,172
Operating expenses:
Selling 5,008,417 8,559,408
General and administrative 2,090,882 3,990,215
Amortization of intangible assets 1,442,028 2,102,210
----------- -----------
Total operating expenses 8,541,327 14,651,833
----------- -----------
Operating income 13,847,157 16,492,339
----------- -----------
Other expenses (income):
Interest expense:
Bacou, S.A. 534,589 --
Other 522,716 811,596
----------- -----------
1,057,305 811,596
Interest income (87,704) (102,257)
Other (34,430) (162,209)
----------- -----------
Total other expenses 935,171 547,130
----------- -----------
Income before income taxes 12,911,986 15,945,209
Income taxes 5,035,006 6,190,400
----------- -----------
Net income $ 7,876,980 $ 9,754,809
=========== ===========
Net income per share of common stock $ 0.57 $ 0.63
=========== ===========
Weighted average shares of common stock 13,860,000 15,524,797
=========== ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
5
<PAGE> 6
BACOU USA, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(Unaudited)
-----------
Six months ended June 30,
1995 1996
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 7,876,980 $ 9,754,809
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 2,424,680 3,940,619
Deferred income taxes 151,696 282,699
Change in assets and liabilities:
Trade accounts receivable (1,152,751) (3,481,365)
Inventories (151,742) 1,083,947
Prepaid expenses 666,869 598,744
Accounts payable 407,067 (952,120)
Accrued expenses 31,784 291,331
Income taxes 966,909 2,491,701
----------- -----------
Net cash provided by operating activities 11,221,492 14,010,365
----------- -----------
Cash flows from investing activities:
Capital expenditures (1,369,510) (3,519,199)
Acquisition of businesses, including direct costs
of acquisition, net of cash acquired (6,320,621) (132,771)
----------- -----------
Net cash used in investing activities (7,690,131) (3,651,970)
----------- -----------
Cash flows from financing activities:
Repayment of long-term debt (4,000,000) (49,000,000)
Proceeds from long-term debt 4,000,000 --
Proceeds from issuance of common stock,
net of expenses -- 47,297,933
----------- -----------
Net cash used in financing activities -- (1,702,067)
----------- -----------
Net increase in cash and cash equivalents 3,531,361 8,656,328
Cash and cash equivalents at beginning of period 453,138 1,210,247
----------- -----------
Cash and cash equivalents at end of period $ 3,984,499 $ 9,866,575
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $ 1,172,781 $ 832,905
=========== ===========
Cash paid during the period for income taxes $ 3,824,000 $ 3,416,000
=========== ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements
6
<PAGE> 7
BACOU USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying consolidated condensed financial statements ("financial
statements") include the accounts of Bacou USA, Inc. and its wholly-owned
subsidiaries (the "Company"). The Company designs, manufactures and sells
personal protective equipment, including non-prescription protective eyewear,
frames for prescription protective eyewear, respirators, vision screening
equipment and laser protective eyewear.
The financial statements have been prepared pursuant to rules and regulations of
the Securities and Exchange Commission for interim financial information,
including the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, certain information and footnote disclosures normally required in
complete financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. Effective August 1, 1995,
the Company elected to change its fiscal year end from July 31 to December 31.
Operating results for 1995 have been presented for interim periods that
coincide with the new fiscal year. In the opinion of management these financial
statements include all adjustments necessary for a fair presentation of the
results of operations for the interim periods presented. The results of
operations for interim periods, however, may not be indicative of the results
that may be expected for a full year.
Certain 1995 balances have been reclassified to conform to the 1996
presentation.
2. SALE OF COMMON STOCK
In April 1996 the Company completed a public offering of its common stock.
Proceeds from the sale of 3,450,000 shares, net of underwriters discount and
expenses of issuance, totaled $47.3 million. Proceeds were used to repay all
outstanding bank indebtedness ($45.0 million at March 31, 1996). Following is a
summary of changes in stockholders' equity for the six months ended June 30,
1996.
<TABLE>
<CAPTION>
Additional Total
Common Paid-In Retained Stockholders'
Stock Capital Earnings Equity
----- ------- -------- ------
<S> <C> <C> <C> <C>
Balances at December 31, 1995 $13,860 $19,186,140 $26,498,201 $ 45,698,201
Issuance of 3,450,000
shares of common stock at $15/share 3,450 51,746,550 - - - 51,750,000
Expenses of issuance - - - (4,452,067) - - - (4,452,067)
Net income for six months
ended June 30, 1996 - - - - - - 9,754,809 9,754,809
------- ----------- ----------- ------------
Balances at June 30, 1996 $17,310 $66,480,623 $36,253,010 $102,750,943
======= =========== =========== ============
</TABLE>
7
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3. TRADE ACCOUNTS RECEIVABLE
An allowance for doubtful accounts is deducted from trade accounts receivable in
the accompanying Financial Statements. The allowance for doubtful accounts was
$656,745 at December 31, 1995 and $763,385 at June 30, 1996.
4. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1995 1996
---- ----
<S> <C> <C>
Raw material and supplies ....... $ 7,655,184 $ 7,142,885
Work-in-process ................. 2,824,696 2,349,930
Finished goods .................. 7,725,378 7,628,496
----------- -----------
$18,205,258 $17,121,311
=========== ===========
</TABLE>
5. STOCK OPTIONS
Effective February 26, 1996 the Company adopted the Bacou USA, Inc. 1996 Stock
Incentive Plan (the "Plan"). The Plan provides for stock-based incentive awards
to be granted to key employees, including incentive stock options, non-qualified
stock options, restricted stock, stock appreciation rights and stock unit
awards. An aggregate of 900,000 shares of Common Stock have been reserved for
issuance under the Plan.
On March 28, 1996 (subject to the initial closing on April 2, 1996 of the public
offering of common stock) incentive and non-qualified stock options were granted
to certain employees for the purchase of up to 377,000 shares of common stock at
an exercise price of $15.00 per share. Options vest 20% on July 31, 1996, and
20% on each of the first, second, third and fourth anniversary dates from the
date of grant.
On May 23, 1996 the Board of Directors approved an annual grant of stock
options, to each non-employee director, to purchase 2,000 shares of common
stock. Effective July 31, 1996 options to purchase a total of 8,000 shares of
common stock were granted. An aggregate of 100,000 shares of common stock have
been reserved for issuance upon exercise of options by non-employee directors.
The Company is required to adopt statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation (Statement 123)," effective
December 31, 1996. Statement 123 requires financial statement disclosure about
stock-based employee compensation arrangements. As allowed by Statement 123, the
Company intends to account for employee stock-based compensation using the
"Intrinsic Value Based Method." The Company does not believe the adoption of
Statement 123 will have a material impact on its operating results.
6. NET INCOME PER SHARE OF COMMON STOCK
Net income per share of common stock is calculated using the weighted average
number of common shares outstanding during the period, and the net additional
number of shares which would be issuable upon the exercise of stock options,
assuming the Company used the proceeds received upon exercise of the options to
purchase shares at market value (treasury stock method). Stock options are
assumed to be exercised at the beginning of the period or, if later, the date of
grant. Accounting Principles Board Opinion No. 15 requires presentation of
supplementary net income per share of common stock in the event shares of common
stock are sold for cash and a portion or all of the proceeds are used to retire
debt. Assuming the sale of common stock and repayment of debt, as described in
note 2, occurred effective January 1, 1996 supplementary per share data for the
six months ended June 30, 1996 would have been as follows:
Supplementary net income per share of common stock $0.60
=====
Supplementary weighted average shares of common stock 17,334,297
==========
No dividends were declared or paid during the six months ended June 30, 1995 and
1996.
8
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
BACKGROUND AND OTHER INFORMATION
The Company acquired the business of Pro-Tech Respirators, Inc. ("Pro-Tech")
effective March 31, 1995 for approximately $6.8 million, and the Company
acquired all of the outstanding capital stock of Titmus Optical, Inc. ("Titmus")
effective September 29, 1995 for approximately $27.3 million (collectively, the
"Acquisitions"). Operating results of Pro-Tech and Titmus have been included in
the consolidated condensed financial statements of the Company for periods
subsequent to their respective acquisition dates.
Statements contained in this Form 10-Q that are not historical facts are
forward-looking statements that are made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. The Company cautions
that a number of important factors could cause the Company's actual results for
1996 and beyond to differ materially from those expressed in any forward-
looking statements made by, or on behalf of, the Company. Forward-looking
statements involve a number of risks and uncertainties including, but not
limited to, continued demand for current product lines, the success of new
product introductions, the success of the Company's acquisition strategy,
competitive pressures, general economic conditions, and regulatory matters.
The Company cannot assure that it will be able to anticipate or respond timely
to changes in any of the factors listed above, which could adversely affect the
operating results in one or more fiscal quarters. Results of operations in any
past period should not be considered indicative of the results to be expected
for future periods. Fluctuations in operating results may also result in
fluctuations in the price of the Company's common stock.
QUARTER ENDED JUNE 30, 1995 COMPARED TO QUARTER ENDED JUNE 30, 1996
The following table presents certain items from the Company's consolidated
condensed statements of income, and such amounts as percentages of net sales,
for the periods indicated (in thousands, except percentages).
<TABLE>
<CAPTION>
Three Months Ended June 30
--------------------------
1995 1996
---- ----
<S> <C> <C> <C> <C>
Net sales $20,812 100.0% $28,806 100.0%
Cost of sales 8,500 40.8% 12,225 42.4%
------- ----- ------- -----
Gross profit 12,312 59.2% 16,581 57.6%
------- ----- ------- -----
Operating expenses:
Selling 2,771 13.3% 4,444 15.4%
General and administrative 1,139 5.5% 2,034 7.1%
Amortization of intangibles 751 3.6% 1,041 3.6%
------- ----- ------- -----
Total operating expenses 4,661 22.4% 7,519 26.1%
------- ----- ------- -----
Operating income 7,651 36.8% 9,062 31.5%
Other expense (income), net 485 2.4% (152) (0.5%)
------- ----- ------- -----
Income before income taxes 7,166 34.4% 9,214 32.0%
Income taxes 2,794 13.4% 3,565 12.4%
------- ----- ------- -----
Net income $ 4,372 21.0% $ 5,649 19.6%
======= ===== ======= =====
</TABLE>
Net Sales. Net sales increased 38.4% from $20.8 million for the three months
ended June 30, 1995 to $28.8 million for the three months ended June 30, 1996.
This increase was primarily the result of inclusion of the operations of Titmus,
reduced by the effect of the discontinuation of sales of certain respirator
product lines.
Cost of Sales. Cost of sales increased 43.8% from $8.5 million for the three
months ended June 30, 1995 to $12.2 million for the three months ended June 30,
1996. The increase was primarily attributable to increased sales volume
resulting from the acquisition of Titmus.
Gross Profit. Gross profit increased 34.7% from $12.3 million for the three
months ended June 30, 1995 to $16.6 million for the three months ended June 30,
1996. As a percentage of net sales, gross profit was 59.2% and 57.6% for the
1995 and 1996 periods, respectively. The Company's consolidated gross margin
declined from the 1995 period to the 1996 period as a result of including the
operations of Titmus, which have lower gross margins than the combined gross
margin of the Company's other subsidiaries. The decrease in consolidated gross
margin resulting from the acquisition of Titmus was offset in part by labor
reductions at other subsidiaries.
Selling Expenses. Selling expenses increased 60.4% from $2.8 million for the
three months ended June 30, 1995 to $4.4 million for the three months ended June
30, 1996. The increase resulted primarily from the acquisition of Titmus.
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General and Administrative Expenses. General and administrative expenses
increased 78.6% from $1.1 million for the three months ended June 30, 1995 to
$2.0 million for the three months ended June 30, 1996. The increase resulted
primarily from the acquisition of Titmus and to a lesser extent from the
addition of administration at Bacou USA, Inc. In connection with the relocation
of Titmus to a new facility, the Company expects to incur one-time expenses
associated with the move totaling approximately $0.3 to $0.4 million. These
costs will increase general and administrative expenses during the third and
fourth quarters of 1996.
Amortization of Intangibles. Amortization of intangibles increased 38.6% from
$0.7 million for the three months ended June 30, 1995 to $1.0 million for the
three months ended June 30, 1996. This increase was due to intangible assets
recorded in connection with the acquisition of Titmus.
Operating Income. As a result of the foregoing, the Company's operating
income increased 18.4% from $7.7 million for the three months ended June 30,
1995 to $9.1 million for the three months ended June 30, 1996.
Other Expense (Income), Net. Other expense (income), net was $0.5 million and
($0.2) million for the three months ended June 30, 1995 and 1996, respectively.
The 1995 period included interest expense which totaled $0.5 million.
Indebtedness of the Company was repaid in full during April 1996 and therefore
interest expense during the 1996 period was not significant.
Income Taxes. The Company's effective income tax rate was 39.0% during both
the 1995 and 1996 periods. The effective rate was higher than the federal
statutory rate due primarily to state and local taxes.
Net Income. As a result of the foregoing, the Company's net income increased
by 29.2% from $4.4 million for the three months ended June 30, 1995 to $5.6
million for the three months ended June 30, 1996.
10
<PAGE> 11
SIX MONTHS ENDED JUNE 30, 1995 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996
The following table presents certain items from the Company's consolidated
condensed statements of income, and such amounts as percentages of net sales,
for the periods indicated (in thousands, except percentages).
<TABLE>
<CAPTION>
Six Months Ended June 30
---------------------------
1995 1996
---- ----
<S> <C> <C> <C> <C>
Net sales $38,218 100.0% $55,094 100.0%
Cost of sales 15,830 41.4% 23,950 43.5%
------- ----- ------- -----
Gross profit 22,388 58.6% 31,144 56.5%
------- ----- ------- -----
Operating expenses:
Selling 5,008 13.1% 8,560 15.5%
General and administrative 2,091 5.5% 3,990 7.3%
Amortization of intangibles 1,442 3.8% 2,102 3.8%
------- ----- ------- -----
Total operating expenses 8,541 22.4% 14,652 26.6%
------- ----- ------- -----
Operating income 13,847 36.2% 16,492 29.9%
Other expense, net 935 2.4% 547 1.0%
------- ----- ------- -----
Income before income taxes 12,912 33.8% 15,945 28.9%
Income taxes 5,035 13.2% 6,190 11.2%
------- ----- ------- -----
Net income $ 7,877 20.6% $ 9,755 17.7%
======= ===== ======= =====
</TABLE>
Net Sales. Net sales increased 44.2% from $38.2 million for the six months
ended June 30, 1995 to $55.1 million for the six months ended June 30, 1996.
This increase was primarily the result of inclusion of the operations of
Pro-Tech and Titmus, reduced by the effect of the discontinuation of sales of
sports product lines and certain respirator product lines.
Export sales of all products represented 6.5% and 7.3% of net sales in the
1995 and 1996 periods, respectively. Export sales (including export sales of
Titmus and Pro-Tech) for the six months ended June 30, 1996 and for the quarter
ended June 30, 1996 increased by 60.7% and 31.9% over the comparable 1995
periods.
Cost of Sales. Cost of sales increased 51.3% from $15.8 million for the six
months ended June 30, 1995 to $24.0 million for the six months ended June 30,
1996. The increase was primarily attributable to increased sales volume
resulting from the Acquisitions.
Gross Profit. Gross profit increased 39.1% from $22.4 million for the six
months ended June 30, 1995 to $31.1 million for the six months ended June 30,
1996. As a percentage of net sales, gross profit was 58.6% and 56.5% for the
1995 and 1996 periods, respectively. The Company's consolidated gross margin
declined from the 1995 period to the 1996 period as a result of lower gross
margins at the acquired companies. Decreases in consolidated gross margin
resulting from the Acquisitions were offset in part by labor reductions at
another subsidiary and a non-recurring purchase accounting adjustment recorded
in the first quarter of 1995.
Selling Expenses. Selling expenses increased 70.9% from $5.0 million for the
six months ended June 30, 1995 to $8.6 million for the six months ended June 30,
1996. The increase resulted primarily from the Acquisitions.
General and Administrative Expenses. General and administrative expenses
increased 90.8% from $2.1 million for the six months ended June 30, 1995 to $4.0
million for the six months ended June 30, 1996. The increase resulted primarily
from the Acquisitions and to a lesser extent from the addition of administration
at Bacou USA, Inc.
Amortization of Intangibles. Amortization of intangibles increased 45.8%
from $1.4 million for the six months ended June 30, 1995 to $2.1 million for the
six months ended June 30, 1996. This increase was due to intangible assets
recorded in connection with the Acquisitions.
Operating Income. As a result of the foregoing, the Company's operating
income increased 19.1% from $13.8 million for the six months ended June 30, 1995
to $16.5 million for the six months ended June 30, 1996.
11
<PAGE> 12
Other Expense. Other expense was $0.9 million and $0.5 million for the six
months ended June 30, 1995 and 1996, respectively. These amounts included
interest expense which totaled $1.1 million and $0.8 million, respectively.
Interest expense declined in the 1996 period due to the repayment of all
outstanding indebtedness in April 1996.
Income Taxes. The Company's effective income tax rate was 39.0% during both
the 1995 and 1996 periods. The effective rate was higher than the federal
statutory rate due primarily to state and local taxes.
Net Income. As a result of the foregoing, the Company's net income increased
by 23.8% from $7.9 million for the six months ended June 30, 1995 to $9.8
million for the six months ended June 30, 1996.
LIQUIDITY AND CAPITAL RESOURCES
Gross cash flow (net income plus non-cash items) increased $3.5 million from
$10.5 million during the six months ended June 30, 1995 to $14.0 million during
the six months ended June 30, 1996.
Trade accounts receivable increased from $10.8 million at December 31, 1995
to $14.3 million at June 30, 1996. This increase resulted primarily from higher
sales volume during the second quarter of 1996. Inventories declined from $18.2
million at December 31, 1995 to $17.1 million at June 30, 1996 due to higher
sales volume as well as a planned reduction in certain raw materials.
Cash used in investing activities decreased from $7.7 million for the six
months ended June 30, 1995 to $3.7 million for the six months ended June 30,
1996. The 1995 period includes payments for the acquisition of Pro-Tech totaling
approximately $6.3 million. Capital expenditures totaled $1.4 million in the
1995 period and $3.5 million in the 1996 period. As discussed below, increased
capital spending in the 1996 period is a result of the construction of a new
manufacturing facility for Titmus.
The Company is constructing a new manufacturing facility and will relocate
the operations of Titmus. The Company estimates that the cost to construct this
facility will be approximately $6.0 million, with additional capital
requirements of approximately $2.5 million to $3.0 million for machinery,
equipment, furnishings, fixtures and relocation expenses. At June 30, 1996 there
were firm commitments outstanding related to the construction of the Titmus
facility equal to $3.9 million. In addition to the Titmus facility, the
Company's planned on-going investment in machinery and equipment during 1996 is
between $3.0 million and $4.8 million.
The Company pursues a business strategy which includes acquisitions as an
important element. The Company is engaged in discussions on one possible
transaction which could be consummated during 1996. This transaction and any
other transactions to be considered by the Company would require additional
capital to fund the purchase price paid for each acquired company.
The Company had aggregate indebtedness of $49.0 million at December 31, 1995,
of which $45.0 million was indebtedness to a foreign commercial bank and $4.0
million was indebtedness to a domestic commercial bank. During the first quarter
of 1996, indebtedness to the domestic commercial bank was repaid from cash
provided by operations. During April 1996 the Company completed a public
offering of its common stock. Proceeds from the sale of 3,450,000 shares, net of
underwriters discount and expenses of issuance, totaled $47.3 million and were
used to repay total indebtedness to the foreign commercial bank. As of June 30,
1996, the Company had approximately $11.0 million invested in overnight
repurchase agreements and high grade municipal securities.
To supplement cash flow provided by operating activities, the Company
maintains a $3.0 million revolving credit facility which is available for use by
a wholly-owned subsidiary for its general working capital purposes. The
revolving credit facility is subject to annual renewal and presently expires
December 31, 1996. No amounts were outstanding under this facility as of June
30, 1996. The Company also has $8.0 million available under a term credit
facility with a domestic commercial bank which can be used for general corporate
and other working capital requirements of a wholly-owned subsidiary. Both credit
facilities require the Company to maintain a ratio of tangible net worth to
total liabilities of not less than 1.0 to 1.0. The Company believes that its
cash flow provided by operating activities and unused borrowing capacity will be
sufficient to fund capital expenditures, including those to be incurred in
connection with the construction of the new Titmus facility, and to fund the
Company's operating needs during 1996. However, the Company may be required to
negotiate additional borrowing facilities and additional indebtedness may be
incurred in order to fund new investments, if any, resulting from the Company's
acquisition strategy.
12
<PAGE> 13
BUSINESS DEVELOPMENTS
The Company has been actively pursuing opportunities for the sale of
protective eyewear to the United States Military. During the second quarter,
the Company received a request from the Government Procurement Office for a
best and final offer which was submitted on July 3, 1996. A final determination
concerning this bid to provide protective eyewear for the military is expected
by August 20, 1996. If successful, the Company believes this bid will result
in annual sales of approximately $8.0-$9.0 million during a three year period.
SEASONALITY
The Company's business has been subject to slight seasonal variations which
the Company has attributed to fluctuations in industrial activity associated
with annual weather patterns. Historically, net sales from October through
December have been somewhat lower than other periods due to anticipated lower
demand in the more inclement winter months, resulting in planned inventory
reductions by major distributors.
13
<PAGE> 14
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit Index
Exhibit Number Description of Exhibit
-------------- ----------------------
10(p)(1) Sales Agreement dated June 20, 1996
by and between Uvex Safety, Inc. and
General Electric Company
11 Statement Re: Computation of Per Share
Earnings
27 Financial Data Schedule
(b) The registrant filed no reports on Form 8-K during the
quarterly period ended June 30, 1996.
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.
Dated: August 13, 1996
BACOU USA, INC.
(Registrant)
/s/ Philip B. Barr, Jr. /s/ Jeffrey T. Brown
--------------------------------------- -------------------------
Philip B. Barr, Jr., Vice President and Jeffrey T. Brown
Chief Financial Officer Corporate Controller and
Chief Accounting Officer
14
<PAGE> 1
Exhibit 10(P)(1)
SALES AGREEMENT
Uvex Safety Inc. GE Plastics
10 Thurber Blvd. One Plastics Avenue
Smithfield, RI 02917 Pittsfield, MA 01201
General Electric Company (GE Plastics) agrees to sell to Uvex Safety
(Customer) and Customer agrees to purchase the products specified according to
the terms and conditions of this agreement.
Duration of Agreement:
Effective Date: January 1, 1996 Expiration Date: December 31, 1996
Product:
Attachment "A" LEXAN(R) Resin
Estimated Requirements: 1,700,000 lbs.
Customer Terms:
Payment: 1% discount 10 days, Net 30 from date of invoice.
Shipment: Delivery FOB destination point. Minimum freight prepaid to
destinations within the contiguous United States by carrier
of seller's choice.
Conditions of Sale: Standard Conditions of Sale applying to products sold
by GE Plastics as indicated on reverse side.
Approved: /s/ W. STEPAN Approved: /s/ THOMAS M. SCHLEICHER
--------------------- --------------------------
(Uvex Safety, Inc.) (General Electric Company)
Date: 6/14/96 Date: 6/20/96
--------------------- --------------------------
(R) Registered Trademark of General Electric Company
<PAGE> 2
CONDITIONS OF SALE APPLYING TO PRODUCTS SOLD BY
GE PLASTICS
FORCE MAJEURE
Neither the Customer nor GE Plastics shall be liable for its failure to
perform its obligations, either in whole or in part, under the terms of this
contract if such failure is a result of causes beyond its control, such as Acts
of God, Acts of the other Party or labor disruptions, strikes, fire, floods,
war, government regulation, the delay in or inability to obtain labor,
machinery, material or services through its usual and regular sources or any
other condition or cause beyond its reasonable control said causes being
hereafter referred to as Force Majeure and the quantities of material affected
by Force Majeure shall be deleted from the contract quantities. In the event
the Force Majeure condition is not alleviated on or before the expiration of
sixty (60) days, that party not incurring the Force Majeure condition may, at
its option, terminate this contract upon written notice to the other party,
such termination to be without further liability to either party.
WARRANTY
GE Plastics warrants that each product to be delivered hereunder will be of
the kind designated, NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR PURPOSE SHALL
APPLY. The conditions of any tests shall be mutually agreed upon and GE
Plastics shall be notified of, and may be represented at all tests that may be
made. If any failure of any product delivered hereunder to be of the kind
designated or specified appears prior to the date which is 60 days from the
date of shipment, or prior to date of use or resale of the product by the
Customer, whichever date sooner occurs, and if the Customer shall notify GE
Plastics thereof immediately, GE Plastics shall thereupon, at GE Plastics'
option either (1) furnish, F.O.B. its plant or such other points as may
designate a reprocessed or replacement product or (2) refund the purchase
price. It is understood that any defective product will not be returned until
authorized in advance by GE Plastics. Returned products should be intact in
form as shipped and must retain GE Plastics' identity.
LIMITATION OF LIABILITY
The liability of GE Plastics (except as to title) arising out of the
supplying of said product, or its use, whether on warranties, contract,
negligence or otherwise, shall not in any case exceed the cost of correcting
defects in the product as herein provided, and upon the expiration of the
applicable warranty period specified herein, all such liability shall
terminate. The foregoing shall constitute the sole and exclusive remedy of the
Customer and the exclusive liability of GE Plastics. THE WARRANTIES STATED
HEREIN ARE IN LIEU OF ALL OTHER WARRANTIES (EXCEPT TITLE), WRITTEN OR ORAL,
STATUTORY, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OF
FITNESS FOR PURPOSE. IN NO EVENT SHALL GE PLASTICS BE LIABLE FOR CONSEQUENTIAL
OR SPECIAL DAMAGE.
TECHNICAL ADVICE
Any technical advice furnished or recommendation made by GE Plastics or any
representative of GE Plastics concerning any use or application of any product
furnished under this contract is believed to be reliable but GE Plastics makes
no warranty, express or implied, as to its accuracy or completeness or of the
results to be obtained. With regard to any reprocessing or conversion of the
products delivered hereunder, the Customer assumes full responsibility for
quality control, testing and determination of suitability of such reprocessed
or converted products for their intended application or use.
PATENTS
Customer shall hold GE Plastics harmless against any expense or loss
resulting from infringement of patents or trademarks arising from compliance
with the Customer's designs or specifications or instructions. Except as
otherwise provided in the preceding sentence, GE Plastics shall defend any suit
or proceeding brought against the Customer so far as based on a claim that any
product, or any part thereof furnished under this contract constitutes an
infringement of any patent of the United States, if notified promptly in
writing and given authority, information and assistance (at GE Plastics'
expense) for the defense of the same, and GE Plastics shall pay all damages and
costs awarded therein against the Customer. In case said product, or any part
thereof, is in such suit held to constitute infringement and the use of said
product or part is enjoined, GE Plastics shall at its own expense either
procure for the Customer the right to continue using said product, or part, or
replace same with a non-infringing product, or modify it so it becomes
non-infringing, or remove said product and refund the purchase price and the
transportation cost thereof. GE Plastics shall, however, in no event be liable
for any use made by the Customer of the product supplied hereunder which is
covered by any adversely held patents. The foregoing states the entire
liability of GE Plastics for patent infringement by said product or any part
thereof.
PRODUCT WARNINGS AND INSTRUCTIONS
The Customer acknowledges that the products delivered hereunder may be, or
become, considered as hazardous materials under various laws and regulations.
The Customer agrees to familiarize itself (without reliance on GE Plastics
except to the accuracy of specific safety information actually furnished by GE
Plastics) with any hazards of such goods and their applications and the
containers in which such goods are shipped. The Customer agrees to inform and
train its employees and properly warn and instruct its customers as to such
hazards.
SECURITY TITLE
Security Title and right of possession of the products sold hereunder shall
remain with GE Plastics and such products shall remain personal property until
all payments hereunder (including deferred payments, whether evidenced by notes
or otherwise) shall have been made in full in cash and the Customer agrees to
do all acts necessary to perfect and maintain such security right and title in
GE Plastics.
GOVERNMENT CONTRACTS
Under its standard accounting procedures, GE Plastics is unable to supply
the Federal Acquisition Regulation (FAR) required cost and pricing data. The
Customer shall make no claims against GE Plastics regarding the failure to
provide such data. GE Plastics will accept no obligation to supply goods
which, under the current FARs would: (i) prevent qualification for an
exemption; (ii) require submission of cost and pricing data; or (iii) require
compliance with Cost Accounting Standards thereunder.
SALES AND SIMILAR TAXES
GE Plastics prices do not include sales, use, excise or similar taxes.
Consequently, in addition to the price specified herein, the amount of any
present or future sales, use, excise or other similar tax applicable to the
sale of the products hereunder or the use thereof by GE Plastics or by the
Customer, or in lieu thereof, the Customer shall provide GE Plastics with a
tax-exemption certificate acceptable to the taxing authorities.
CANCELLATION
The Customer may cancel his order, provided he gives written notice to GE
Plastics and pays to GE Plastics the latter's cancellation charges, if any.
VARIATIONS
Unless otherwise specified in writing, any variation over or under in
quantities shipped not exceeding 10% of the quantities ordered shall constitute
compliance with the order and the unit price will continue to apply.
GENERAL
GE Plastics will comply with all applicable Federal, State, and local laws.
The Customer's assignment of his order, or of any interest therein or of any
rights hereunder, without the written consent of GE Plastics, shall be void.
This document contains the entire agreement between GE Plastics and the
Customer respecting the subject matter hereof and any representation, promise,
condition or understanding not contained herein shall not be binding upon
either party. Any provisions or conditions to the Customer's order which are
in any way inconsistent with or in addition to these Conditions of Sale (except
additional shipping instructions specifying quantity and character of the items
ordered) shall not be binding on GE Plastics and shall not be considered
applicable to this sale. No waiver, alteration, or modification of the
foregoing conditions shall be valid unless made in writing and signed by an
authorized representative of GE Plastics.
<PAGE> 3
AGREEMENT #: 26949
CUSTOMER #: 90099
SUPERCEDES: 24742
ATTACHMENT "A"
PRODUCT LINE: LEXAN
GRADE/COLOR:
<TABLE>
<CAPTION>
PRICE PER LB. MINIMUM ITEM SHIPMENT QTY.
------------- --------------------------
<S> <C> <C>
OQ4120R GP (Natural) $2.00 5,500 lbs and up
OQ4120R ST (Tints) $2.10 2,200 lbs and up
OQ4220R GP (Natural) $2.00 5,500 lbs and up
OQ422OR ST (Tints) $2.10 2,200 lbs and up
OQ432OR GP (Natural) $2.00 5,500 lbs and up
OQ432OR ST (Tints) $2.10 2,200 lbs and up
OQ462OR GP (Natural) $2.00 5,500 lbs and up
OQ4620R ST (Tints) $2.10 2,200 lbs and up
OQ462O ST (Tints) $2.10 2,200 lbs and up
103R GP (Natural) $2.00 5,500 lbs and up
103R ST (Tints) $2.10 2,200 lbs and up
ML4284 GP (Natural) $2.00 5,500 lbs and up
ML4284 ST (Tints) $2.10 2,200 lbs and up
</TABLE>
NOTE: The prices listed above are effective March 6, 1996.
Additional grade/color combinations may be added to this agreement as mutually
agreed upon by Uvex Safety, Inc. and GE Plastics.
PRICE PROTECTION:
GE Plastics will not increase these prices during the term of this agreement.
GUARANTEE OF SUPPLY:
GE Plastics guarantees that we will make available to Uvex Safety 2MM pounds of
polycarbonate during the term of the agreement.
PRODUCTIVITY:
See Addendum "A"
<PAGE> 4
ADDENDUM "A"
PRODUCTIVITY PROGRAM:
GE Plastics and UVEX Safety agree to mutually participate in a
Productivity Program which will attempt to improve productivity at
UVEX Safety's site. Each party agrees to provide sufficient
personnel and time to develope projects sufficient to meet the
Productivity Goal. The goal of this program shall be to achieve
quantifiable cost savings of $64,000 by 12/31/96. Savings credit
shall be measured and tracked by UVEX Safety and approved by GE
Plastics. Savings credit for an approved project shall be equal to
any GE Plastics' investment plus any estimated savings that will
generate over a 12 month period. UVEX Safety agrees to promptly
implement any approved projects and if it fails to do so, UVEX safety
shall still provide GEP productivity credit in the amount of the
estimated annual savings.
In the event that the Productivity Goal is not achieved by 12/31/96,
GEP agrees to compensate UVEX Safety for the difference between the
Productivity Goal and the Savings Credit in the form of a credit memo
by January 31, 1997.
This productivity guarantee is void in the event the Productivity Goal
is not achieved due to lack of commitment by UVEX Safety as
determined in GEP's reasonable discretion.
<PAGE> 1
EXHIBIT 11
----------
Bacou USA, Inc.
Statement Re: Computation of Per Share Earnings
-----------------------------------------------
(Unaudited)
-----------
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
---------------- ------------------
June 30 June 30
------- -------
1995 1996 1995 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Primary:
Weighted average shares outstanding 13,860,000 15,500,500 13,860,000 17,141,000
Net effect of dilutive stock
options based on the treasury
stock method using the average
market price -- 24,297 -- 48,363
----------- ----------- ----------- -----------
Total 13,860,000 15,524,797 13,860,000 17,189,363
=========== =========== =========== ===========
Net income $ 7,876,980 $ 9,754,809 $ 4,371,932 $ 5,648,582
=========== =========== =========== ===========
Per share amount $ 0.57 $ 0.63 $ 0.32 $ 0.33
=========== =========== =========== ===========
Fully Diluted:
Weighted average shares outstanding 13,860,000 15,500,500 13,860,000 17,141,000
Net effect of dilutive stock
options based on the treasury
stock method using the period
end market price -- 30,027 -- 58,361
----------- ----------- ----------- -----------
Total 13,860,000 15,530,527 13,860,000 17,199,361
=========== =========== =========== ===========
Net income $ 7,876,980 $ 9,754,809 $ 4,371,932 $ 5,648,582
=========== =========== =========== ===========
Per share amount $ 0.57 $ 0.63 $ 0.32 $ 0.33
=========== =========== =========== ===========
</TABLE>
15
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001006027
<NAME> BACOU USA, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 9,866,575
<SECURITIES> 0
<RECEIVABLES> 14,284,491
<ALLOWANCES> 0
<INVENTORY> 17,121,311
<CURRENT-ASSETS> 42,360,839
<PP&E> 21,937,737
<DEPRECIATION> 0
<TOTAL-ASSETS> 113,734,701
<CURRENT-LIABILITIES> 9,788,758
<BONDS> 0
<COMMON> 17,310
0
0
<OTHER-SE> 102,733,633
<TOTAL-LIABILITY-AND-EQUITY> 113,734,701
<SALES> 55,094,294
<TOTAL-REVENUES> 55,094,294
<CGS> 23,950,122
<TOTAL-COSTS> 23,950,122
<OTHER-EXPENSES> 14,651,833
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 811,596
<INCOME-PRETAX> 15,945,209
<INCOME-TAX> 6,190,400
<INCOME-CONTINUING> 9,754,809
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,754,809
<EPS-PRIMARY> .63
<EPS-DILUTED> .63
</TABLE>
