SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 - For the quarter ended June 28, 1997.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
Commission file number 333-07429
Remington Products Company, L.L.C.
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(Exact name of registrant as specified in its charter)
Delaware 06-1451076
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
60 Main Street, Bridgeport, Connecticut 06604
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 367-4400
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Securities registered pursuant to Section 12(b) of the Act:
Title of Each class Name of each exchange on which registered
None None
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Securities registered pursuant to Section 12(g) of the Act:
11% Series B Senior Subordinated Notes due 2006
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(Title of Class)
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 _____
<PAGE>
REMINGTON PRODUCTS COMPANY, L.L.C.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 28, 1997
INDEX
<TABLE>
<CAPTION>
<S> <C> <C>
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited):
Consolidated Balance Sheets -
June 28, 1997 and December 31, 1996 3
Consolidated Statements of Operations -
For the three and six months ended June 28, 1997 and
June 29, 1996 4
Consolidated Statements of Cash Flows -
For the six months ended June 28, 1997 and
June 29, 1996 5
Notes to Unaudited Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 10
Signature 11
</TABLE>
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<PAGE>
Remington Products Company, L.L.C.
Consolidated Balance Sheets
(unaudited in thousands)
<TABLE>
<CAPTION>
June 28, December 31,
1997 1996
------------ -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,487 $ 7,199
Accounts receivable, less allowance for doubtful accounts
of $895 in 1997 and $1,340 in 1996 27,155 54,262
Inventories 67,957 63,785
Prepaid and other current assets 2,702 4,212
-------- ---------
Total current assets 100,301 129,458
Property, plant and equipment, net 15,687 13,982
Intangibles, net 61,536 62,520
Other assets 8,568 8,863
-------- ---------
Total assets $186,092 $ 214,823
======== =========
LIABILITIES AND MEMBERS' DEFICIT
Current Liabilities: Accounts payable $ 9,189 $ 16,414 Short-term
borrowings 746 1,153 Current portion of long-term debt 1,051 1,067 Accrued
liabilities 21,057 32,964 --------- --------- Total current liabilities 32,043
51,598
Long-term debt 169,074 169,411
Other liabilities 1,630 1,521
Commitments and contingencies
Members' deficit:
Members' deficit (15,734) (7,351)
Cumulative translation adjustment (921) (356)
----------- -----------
Total members' deficit (16,655) (7,707)
--------- ----------
Total liabilities and members' deficit $186,092 $214,823
======== ========
</TABLE>
See notes to unaudited consolidated financial statements.
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<PAGE>
Remington Products Company, L.L.C.
Consolidated Statements of Operations
(unaudited in thousands)
<TABLE>
<CAPTION>
Three Months Three Months Ended June 29, 1996 Six Months Six Months Ended June 29, 1996
-------------------------------- -------------------------------
Ended 5 Weeks Ended 8 Weeks Ended Ended 5 Weeks Ended 21 Weeks Ended
June 28, June 29, May 23, June 28, June 29, May 23,
1997 1996 1996 1997 1996 1996
---------- ------------ -------------- ----------- ------------- -------------
(Successor) (Successor) (Predecessor) (Successor) (Successor) (Predecessor)
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 44,862 $ 23,155 $ 24,016 $ 81,299 $ 23,155 $ 56,713
Cost of sales 25,797 14,030 16,439 47,077 14,030 35,102
---------- ---------- ------------ ---------- --------- -----------
Gross profit 19,065 9,125 7,577 34,222 9,125 21,611
Selling, general and
administrative 17,486 7,225 23,472 32,448 7,225 37,912
Amortization of Intangibles 483 150 244 967 150 650
---------- ---------- ----------- ---------- --------- -----------
Operating income
(loss) 1,096 1,750 (16,139) 807 1,750 (16,951)
Interest expense 4,528 1,931 847 9,193 1,931 2,228
Other expense (income) 379 (243) (21) (276) (243) (115)
---------- ---------- ----------- ---------- --------- ----------
Income /(loss)before
income taxes (3,811) 62 (16,965) (8,110) 62 (19,064)
Provision (benefit) for
income taxes (58) 325 (802) (347) 325 (873)
---------- ---------- ----------- ---------- --------- -----------
Net loss $(3,753) $ (263) $ (16,163) $ (7,763) $ (263) $ (18,191)
========== ========== =========== ========== ========= ===========
Net loss applicable to
common units $(5,810) $(1,017) $ - $ (11,818) $ (1,017) $ -
========== ========== =========== ========== ========= ===========
</TABLE>
See notes to unaudited consolidated financial statements.
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<PAGE>
Remington Products Company, L.L.C.
Consolidated Statements of Cash Flows
(unaudited in thousands)
<TABLE>
<CAPTION>
Six Months Six Months Ended June 29, 1996
--------------------------------
Ended 5 Weeks Ended 21 Weeks Ended
June 28, June 29, May 23,
1997 1996 1996
------------- ---------------- --------------
(Successor) (Successor) (Predecessor)
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (7,763) $ (263) $ (18,191)
Adjustment to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation 989 193 1,355
Amortization of intangibles 967 150 650
Amortization of deferred financing fees 536 100 262
Deferred income taxes (413) 245 (561)
Foreign currency forward gain (705) - -
Changes in assets and liabilities:
Accounts receivable 27,107 (3,698) 41,043
Inventories (4,172) (446) (8,339)
Accounts payable (7,225) 495 1,187
Accrued liabilities (11,907) (3,699) (933)
Other, net (730) - (372)
---------- ----------- ------------
Cash provided by (used in) operating activities (3,316) (6,923) 16,101
---------- ----------- ------------
Cash flows from investing activities:
Capital expenditures (2,562) (141) (1,310)
Proceeds from working capital adjustment 2,500 - -
Payment for purchase of Company, net - (139,750) -
----------- ----------- ------------
Cash used in investing activities (62) (139,891) (1,310)
----------- ----------- ------------
Cash flows from financing activities:
Proceeds from sale of Senior Subordinated Notes - 129,026 -
Net repayments under term loan facilities (314) (2,650) (3,600)
Net repayments under credit facilities (149) (9,583) (12,353)
Equity investments (repurchases) (620) 34,302 -
Debt issuance costs - (7,721) -
Other, net (251) 200 -
----------- ----------- ------------
Cash provided by (used in) financing activities (1,334) 143,574 (15,953)
Decrease in cash and cash equivalents (4,712) (3,240) (1,162)
Cash and cash equivalents, beginning of period 7,199 5,642 6,804
----------- ----------- ------------
Cash and cash equivalents, end of period $ 2,487 $ 2,402 $ 5,642
=========== =========== ============
Supplemental cash flow information:
Interest paid $ 8,650 $ 253 $ 1,874
Income taxes paid $ 682 $ 752 $ 440
</TABLE>
See notes to unaudited consolidated financial statements.
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<PAGE>
Remington Products Company, L.L.C. and Subsidiaries
Notes to (Unaudited) Consolidated Financial Statements
1. BASIS OF PRESENTATION
Remington Products Company, L.L.C., a Delaware limited liability company,
(the "Company") was formed to acquire the operations of Remington Products
Company and its subsidiaries ("RPC"). The acquisition, which was effective on
May 23, 1996 (the "Closing Date"), was accounted for as a purchase transaction
in accordance with Accounting Principles Board Opinion No. 16, Business
Combinations, and EITF Issue No. 88-16, Basis in Leveraged Buyout Transactions.
The consolidated balance sheets as of June 28, 1997 and December 31, 1996 and
the consolidated results of operations and cash flows for the six months ended
June 28, 1997 include the accounts of Remington Products Company, L.L.C., the
"Successor" company, and its wholly-owned subsidiaries following the Closing
Date. The statements also include results of operations and cash flows of RPC,
the "Predecessor" company, prior to the Closing Date.
The statements have been prepared by the Company without audit, pursuant
to the rules and regulations of the Securities and Exchange Commission and
according to generally accepted accounting principles, and reflect all
adjustments consisting of normal recurring accruals which, in the opinion of
management, are necessary for a fair statement of the results of the interim
periods presented. These financial statements do not include all disclosures
associated with annual financial statements and, accordingly, should be read in
conjunction with the notes contained in the Company's audited consolidated
financial statements for the year ended December 31, 1996.
2. INVENTORIES
Inventories were comprised of the following (in thousands):
<TABLE>
<CAPTION>
June 28, December 31,
1997 1996
-------- ------------
<S> <C> <C>
Finished goods $63,259 $59,205
Work in process 4,673 4,556
Raw materials 25 24
-------- ----------
$67,957 $63,785
======== ==========
</TABLE>
3. INCOME TAXES
Federal income taxes on net earnings of the Company are payable directly
by the members pursuant to the Internal Revenue Code. Accordingly, no provision
has been made for Federal income taxes for the Company. However, certain state
and local jurisdictions do not recognize L.L.C. status for taxing purposes and
require taxes to be paid on net earnings. Furthermore, earnings of certain
foreign operations are taxable under local statutes. In jurisdictions where
L.L.C. status is not recognized or foreign corporate subsidiaries exist,
deferred taxes on income are provided for as temporary differences between the
financial and tax basis of assets and liabilities.
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<PAGE>
4. COMMITMENTS AND CONTINGENCIES
The Company is involved in legal and administrative proceedings and claims
of various types. While any litigation contains an element of uncertainty,
management believes that the outcome of each such proceeding or claim which is
pending or known to be threatened, or all of them combined, will not have a
material adverse effect on the Company's consolidated financial position or
results of operations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
The Company manufactures and markets men's and women's electrical personal
care appliances. The Company distributes on a worldwide basis men's and women's
electric shavers and accessories, women's personal care appliances including
hair setters, curling irons and hair dryers, men's electric grooming products,
travel products and other small electric consumer appliances. In addition to its
U.S. merchandising and manufacturing operations, the Company has merchandising
subsidiaries in the United Kingdom, Canada, Germany, Australia and New Zealand
and branch offices in France and South Africa. The Company markets products
throughout Europe, the Middle East, Africa, Asia and a portion of South America
through its subsidiary in the United Kingdom and distributes products to Japan,
Central America and the remainder of South America from its U.S. headquarters.
Sales of the Company's products are highly seasonal, with a large percentage
of net sales occurring during the Christmas selling season. The Company
typically derives more than 40% of its annual net sales in the fourth quarter of
each year while incurring losses in the first quarter of each year. As a result
of this seasonality, the Company's inventory and working capital needs fluctuate
substantially during the year. To facilitate comparison of the operating results
of the periods set forth below, results of operations for the three and six
months ended June 29, 1996 were obtained by combining, without adjustment, the
results of operations of the predecessor company for the eight and twenty-one
weeks ended May 23, 1996 with those of the Company for the five weeks ended June
29, 1996. <TABLE> <CAPTION>
Three Months Ended Six Months Ended
------------------------------------------- --------------------------------
June 28, 1997 June 29, 1996 June 28, 1997 June 29, 1996
-------------------- ---------------------- ------------------- ----------------------------
Successor Predecessor and Successor Successor Predecessor and Successor
$ % $ % $ % $ %
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales:
U.S. $18.9 42.0 $23.6 50.0 $34.9 42.9 $38.1 47.7
U.S. service stores 7.7 17.3 6.8 14.4 14.1 17.4 12.4 15.5
International 18.3 40.7 16.8 35.6 32.3 39.7 29.4 36.8
------ ------ ------- ------ ------- ------- --------- ------
44.9 100.0 47.2 100.0 81.3 100.0 79.9 100.0
Cost of sales 25.8 57.5 30.5 64.6 47.1 57.9 49.2 61.5
------ ------ ------- ------ ------- ------- --------- ------
Gross profit 19.1 42.5 16.7 35.4 34.2 42.1 30.7 38.5
Selling, general and
administrative 17.5 39.0 30.7 65.1 32.4 39.9 45.1 56.5
Amortization of
intangibles 0.5 1.1 0.4 0.8 1.0 1.2 0.8 1.0
------ ------ ------- ------- ------- ------- ---------- ------
Operating income
(loss) 1.1 2.4 (14.4) (30.5) 0.8 1.0 (15.2) (19.0)
Interest expense 4.5 10.1 2.8 5.9 9.2 11.3 4.2 5.2
Other expense
(income) 0.4 0.8 (0.3) (0.6) (0.3) (0.3) (0.4) (0.4)
------ ------ ------- ------- ------- ------- --------- ------
Loss before income
taxes (3.8) (8.5) (16.9) (35.8) (8.1) (10.0) (19.0) (23.8)
Provision (benefit)
for income taxes (0.1) (0.1) (0.5) (1.0) (0.3) (0.4) (0.5) (0.7)
------ ------ ------- ------- ------- ------- --------- ------
Net loss $(3.7) (8.4) $(16.4) (34.8) $(7.8) (9.6) $(18.5) (23.1)
====== ====== ======= ======= ======= ======= ======= ======
</TABLE>
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<PAGE>
RESULTS OF OPERATIONS
Second Quarter Ended June 1997 Versus June 1996
NET SALES. Net sales for the quarter ended June 28, 1997 were $44.9 million
compared to $47.2 million for the quarter ended June 29, 1996, a decrease of
4.9%. The sales decline occurred in the domestic business, while international
net sales were up across all major international regions due to investments in
additional sales and distribution programs. Domestic Service Stores also
experienced a sales increase.
Net sales in the United States decreased to $18.9 million in the second
quarter of 1997 from $23.6 million in the second quarter of 1996. This decrease
was due primarily to the anticipated lower sales of certain men's shavers. Men's
shaver sales were impacted by the decision to not repeat certain promotional
programs which had been offered during last year's second quarter, as well as by
the transition from the current to the updated line of dual MicroScreen(R)
shavers to be introduced in the third quarter of 1997. Domestic sales of
personal care products were also down, due primarily to competitive actions in
hairsetters.
Net sales through the Company's U.S. service stores increased to $7.7
million in the second quarter of 1997 from $6.8 million in the second quarter of
1996. The increase is due to a 3.0% increase in same store sales and incremental
sales from new store openings as compared to the second quarter of 1996.
International net sales increased to $18.3 million in the second quarter of
1997 from $16.8 million in the second quarter of 1996, primarily on the strength
of the U. K. and Australian operations. Net sales in the United Kingdom
increased 7.1% in the second quarter of 1997 as a result of strong personal care
product sales, while net sales in Australia increased 16.7% due to sales of new
products and incremental sales from the acquisition of a small chain of stores
in July 1996. An increase in Canadian net sales for the quarter were offset by
lower German net sales due to a continuing weak economy.
GROSS PROFIT. Gross profit increased to $19.1 million, or 42.5% of net
sales in the second quarter of 1997, from $16.7 million, or 35.4% of net sales
in the second quarter of 1996. The significant increase in the gross margin
percentage is primarily attributable to the effect of certain non-cash or
non-recurring charges related to the Company's recapitalization in May 1996.
After restatement for the non-cash or non-recurring charges, margins were
approximately one percentage point higher in the 1997 quarter than in the
comparable quarter in 1996.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses decreased to $17.5 million, or 39.0% of net sales in the second quarter
of 1997, as compared to $30.7 million or 65.1% of net sales in 1996. The
decrease was primarily due to various non-cash or non-recurring charges in the
1996 quarter, the most significant of which were $10.9 million of costs and
obligations paid out in conjunction with the Company's recapitalization in May
1996, and a charge of $1.3 million related to the bankruptcy of the Company's
largest customer in Canada. In addition, the decline as a percentage of sales
was impacted by reduced promotional allowances and continued general and
administrative expense controls
OPERATING INCOME. Operating income in the second quarter of 1997 was $1.1
million compared to an operating loss of $14.4 million in the second quarter of
1996, primarily due to the non-cash or non-recurring charges in the prior year.
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<PAGE>
INTEREST EXPENSE. Interest expense increased to $4.5 million in the second
quarter of 1997 from $2.8 million in the second quarter of 1996. The increase
was due to $2.2 million in additional interest on the Senior Subordinated Notes
issued in May 1996 which was partially offset by lower rates on the refinanced
term and revolving credit borrowings.
PROVISION FOR INCOME TAXES The benefit for income taxes was $0.1 million
for the second quarter of 1997 compared to a benefit of $0.5 million for the
second quarter of 1996, and is generated primarily by the Company's U.K.
operations.
Six Months Ended June 1997 Versus June 1996
NET SALES. Net sales for the six months ended June 28, 1997 were $81.3
million compared to $79.9 million for the six months ended March 30, 1996. The
slight increase was a result of strong international and service store sales and
lower domestic results.
Net sales in the United States decreased to $34.9 million in the first six
months of 1997 from $38.1 million in the first six months of 1996. This decrease
was principally due to anticipated lower sales of certain men's shavers and
lower sales of personal care products.
Net sales through the Company's U.S. service stores increased to $14.1
million in the first six months of 1997 from $12.4 million in the first six
months of 1996. The increase is due to a 5% increase in same store sales and
incremental sales from the addition of 13 new stores as compared to the second
quarter of 1996.
International net sales increased to $32.3 million in the first six months
of 1997 from $29.4 million in the first six months of 1996, primarily on the
strength of the U. K. and Australian operations. Net sales in the United Kingdom
increased 9.6% in the first six months of 1997 as a result of strong personal
care product sales, while Australia increased 16.2% due to the acquisition of a
chain of three service stores in July 1996 and new product sales. German net
sales lagged behind the prior year six months due to a continued weak economy
and negative currency impacts, while Canadian net sales for the first six months
of 1997 were ahead of their 1996 level despite the loss of its largest customer
to bankruptcy in June 1996.
GROSS PROFIT. Gross profit increased to $34.2 million, or 42.1% of net
sales in the first six months of 1997, from $30.7 million, or 38.5% of net sales
in the first six months of 1996. The increase in the gross margin percentage is
primarily attributable to the effect of certain non-recurring charges related to
the Company's recapitalization in May 1996. After restatement for the non-cash
or non-recurring charges, margins were essentially flat between the 1997 and
1996 periods.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses decreased to $32.4 million, or 39.9% of sales, in 1997 as compared to
$45.1 million, or 56.5% of sales, in 1996. The decline is primarily due to the
non-cash or non-recurring charges in the prior year as well as the impact of
continued general and administrative expense controls.
OPERATING INCOME. Operating income in the first six months of 1997 was $0.8
million compared to an operating loss of $15.2 million in the first six months
of 1996, primarily due to the non-cash or non-recurring charges in the prior
year.
INTEREST EXPENSE. Interest expense increased to $9.2 million in the first
six months of 1997 from $4.2 million in the first six months of 1996. The
increase was due to $5.8 million in additional interest on the Senior
Subordinated Notes issued in May 1996 which was offset by lower rates on the
refinanced term and revolving credit borrowings.
PROVISION FOR INCOME TAXES. The benefit for income taxes was $0.3 million
for the first six months of 1997 compared to a benefit of $0.5 million for the
first six months of 1996, and is generated primarily by the Company's U.K.
operations which generally incurs losses in the first half of the year due to
the seasonality of its business.
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<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities for the first six months of 1997 was
$3.3 million versus a cash source of $9.2 million during the first six months of
1996. The primary reasons for the year-to-year difference were lower net
receivable collections during the period as a result of the lower year end 1996
net sales and resulting receivable balance versus year end 1995, as well as
decreases in accruals and payables.
The Company's operations are not capital intensive. During the first half of
1997 and 1996, the Company's capital expenditures totaled $2.6 million and $1.5
million, respectively, with the increase primarily due to spending on tooling
and other capital equipment for the new men's premier shaver line to be
introduced in 1998. In the first quarter of 1997, the Company also finalized the
working capital adjustment with certain owners of the Predecessor company which
resulted in cash proceeds of $2.5 million.
The Company made scheduled principal payments on term loans of $0.3 million
during the first half of 1997 and repaid $0.2 million in net borrowings under
the Company's Revolving Credit Agreement. The Company also repurchased $0.6
million in Common Units from former officers of the Company during the second
quarter of 1997. The higher interest payments arose because of the semi-annual
interest payments on the Senior Subordinated Notes issued in conjunction with
the reorganization of the Company in May 1996.
The Company's primary sources of liquidity are funds generated from
operations and borrowings available pursuant to the Senior Credit Agreement. The
Senior Credit Agreement provides for $70 million in Revolving Credit Facilities
and $10 million in Term Loans. The Term Loans are repayable quarterly over six
years. The Revolving Credit Facilities are subject to a borrowing base of 85% of
eligible accounts receivable and 60% of eligible inventory and expire on June
30, 2002. The Company believes that cash generated from operations and borrowing
resources will be adequate to permit the Company to meet both its debt service
requirements and capital requirements for the next twelve months, although no
assurance can be given in this regard.
PART II OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Third Amendment,dated as of May 16, 1997 to the Credit and Guarantee
Agreement dated as of May 23, 1996 among Remington, certain of its
subsidiaries, various lending institutions, Fleet National Bank and
Banque Nationale de Paris, as co-documentation agents, and Chemical
Bank, as administrative agent.
27 Financial Data Schedule
(b) Reports on Form 8-K
During the quarter ended June 28, 1997, the Registrant did not file any
reports on Form 8-K.
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<PAGE>
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.
REMINGTON PRODUCTS COMPANY, L.L.C.
By: /s/ Kris J. Kelley
-------------------------------
Kris J. Kelley, Vice President and Controller
Date: August 12, 1997
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<PAGE>
Exhibit 10.1
THIRD AMENDMENT
THIRD AMENDMENT, dated as of May 16, 1997 (this "Amendment"),
to the Credit and Guarantee Agreement, dated as of May 23, 1996 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among:
(a) REMINGTON PRODUCTS COMPANY, L.L.C., a Delaware limited liability
company (the "Company"); (b) REMINGTON CONSUMER PRODUCTS
LIMITED, a corporation organized and existing under the laws of the
United Kingdom (the "UK Borrower");
(c) each Acquisition Subsidiary from time to time party thereto
(together with the Company and the UK Borrower, the "Borrowers");
(d) the Lenders from time to time parties to the Agreement including the
Issuing Bank;
(e) FLEET NATIONAL BANK and BANQUE NATIONALE DE PARIS, as Co-Documentation
Agents (in such capacity, the "Co-Documentation Agents"); and
(f) THE CHASE MANHATTAN BANK (formerly known as CHEMICAL BANK), a New York
banking corporation, as administrative agent (in such capacity, the
"scent") for the Lenders hereunder.
W I TN E S S E T H:
WHEREAS, the Borrowers, the Lenders and the Agent are parties to the Credit
Agreement;
WHEREAS, the Borrowers have requested that the Agent and the Lenders agree
to amend certain provisions of the Credit Agreement in order to permit Letters
of Credit to be issued by Lenders other than The Chase Manhattan Bank;
WHEREAS, the Agent, the Lenders and The Chase Manhattan Bank (as Issuing
Lender) are willing to amend such provisions of the Credit Agreement, but only
upon the terms and subject to the conditions set forth herein;
NOW THEREFORE, in consideration of the premises contained herein, the
parties hereto agree as follows:
1. Defined Terms. Unless otherwise defined herein, capitalized terms which
are used herein shall have the meanings assigned thereto in the Credit
Agreement.
<PAGE>
2
2. Amendment to Subsection 1.1. Subsection 1.1 of the Credit Agreement
hereby is amended by deleting in their entireties the definitions of the terms
"Application," "Issuing Bank" and "L/C Participants" and by substituting
therefor the following:
"Application": with respect to any requested Letter of Credit, an
application, in such form as the relevant Issuing Bank may specify from
time to time, requesting the Issuing Bank to issue such Letter of Credit.
"Issuing Bank": with respect to each Letter of Credit, (a) Chemical,
(b) at the request of the Borrower (and with the consent of the Agent,
which consent will not be unreasonably withheld), any other Lender who
agrees to serve in such capacity or (c) any affiliate thereof.
"L/C Participants": with respect to any Letter of Credit, the
collective reference to all the Domestic Lenders other than the Issuing
Bank with respect thereto, if it is then a Domestic Lender.
3. Amendment to Section 4. Section 4 of the Credit Agreement hereby is
amended by deleting said Section 4 in its entirety and by substituting therefor
the new Section 4 which is set forth on Annex I hereto.
4. Amendment to Subsection 10.11. Subsection 10.11 of the Credit Agreement
hereby is amended by deleting said subsection 10.11 in its entirety and by
substituting therefor the new subsection 10.11 which is set forth on Annex II
hereto.
5. Amendment to Subsection 15.1. Subsection 15.1 of the Credit Agreement
hereby is amended by deleting therefrom each reference to the phrase "the
Issuing Bank" and by substituting therefor the phrase "the Issuing Banks."
6. Amendment to Subsection 17.1. Subsection 17.1 of the Credit Agreement
hereby is amended by deleting therefrom each reference to the phrase "the
Issuing Bank" and by substituting therefor the phrase "any Issuing Bank."
7. Amendment to Subsection 18.1. Subsection 18.1 of the Credit Agreement
hereby is amended by deleting in its entirety clause (v) of the proviso thereto
and by substituting therefor the following:
(v) amend, modify or waive any provision of Section 4 without
the written consent of each Issuing Bank directly affected thereby; or
8. Conditions to Effectiveness. This Amendment shall become effective on
the date upon which the Agent receives counterparts hereof, executed and
delivered by a duly authorized officer of each Borrower and the Required
Lenders.
9. Representations and Warranties. The Borrowers hereby confirm, reaffirm
and restate the representations and warranties set forth in Section 6 of the
Credit Agreement; provided that each reference to the Credit Agreement therein
<PAGE>
3
shall be deemed to be a reference to the Credit Agreement after giving effect to
this Amendment. The Borrowers represent and warrant that no Default or Event of
Default has occurred and is continuing.
10. Continuing Effect of Credit Agreement. This Amendment shall not
constitute a waiver or amendment of any other provision of the Credit Agreement
not expressly referred to herein and shall not be construed as a waiver or
consent to any further or future action on the part of a Borrower that would
require a waiver or consent of the Agent or the Lenders. Except as expressly
amended hereby, the provisions of the Credit Agreement are and shall remain in
full force and effect.
11. Counterparts. This Amendment may be executed by the parties hereto in
any number of counterparts, and all of such counterparts taken together shall be
deemed to constitute one and the same instrument.
12. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
and delivered by their respective duly authorized officers as of the date first
above written.
REMINGTON PRODUCTS COMPANY, L.L.C.
By: /s/ Alexander R.
Castaldi Title: Executive VP and Chief Financial Officer
REMINGTON CONSUMER PRODUCTS LIMITED
By: /s/ Robert Ward
Title: Finance and Operations Director
THE CHASE MANHATTAN BANK, as Administrative Agent, as a
Lender and as (or on behalf of) the Issuing Bank By: /s/
Peter C. Eckstein Title: Vice President
<PAGE>
4
BANQUE NATIONALE DE PARIS, as a Co- Documentation Agent
and as a Lender
By: /s/ Richard Cushing
Title: Vice President - Vice President
FLEET NATIONAL BANK, as a Co-Documentation Agent and as a
Lender
By: /s/
Title: Vice President
CORESTATES BANK, N.A.
By: /s/ Myron Landau
Title: Vice President
BANK BOSTON NA
By: /s/
Title:
FIRST UNION BANK OF CONNECTICUT
By: /s/ Richard R. Chalin
Title: Senior Vice President
HELLER FINANCIAL, INC.
By: /s/ Linda W. Wolf
Title: Senior Vice President
PEOPLE'S BANK
By: /s/
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION
By: /s/
Title: Vice President
THE PROVIDENT BANK
By:
Title:
<PAGE>
ANNEX I
SECTION 4 LETTER OF CREDIT SUB-FACILITY
4.1 L/C COMMITMENT. (a) Subject to the terms and conditions
hereof, each Issuing Bank agrees to issue letters of credit for the account of
the Company on any Business Day during the Commitment Period in such form as
shall be reasonably acceptable to such Issuing Bank; provided that no Letter of
Credit shall be issued if, after giving effect thereto (i) the aggregate amount
of the Domestic Revolving Credit Exposure of all the Domestic Lenders would
exceed the lesser of (A) the aggregate amount of the Domestic Revolving Credit
Commitments or (B) the Domestic Borrowing Base then in effect or (ii) the
aggregate amount of the L/C Obligations would exceed the L/C Commitment then in
effect.
(b) Each Letter of Credit shall:
(i) be denominated in Dollars and shall be either (A)
a standby letter of credit issued to support obligations of
the Company or any of its Subsidiaries, contingent or
otherwise, to provide credit support for workers'
compensation, other insurance programs and other lawful
corporate purposes (a "Standby Letter of Credit") or (B) a
commercial letter of credit issued in respect of the purchase
of goods and services in the ordinary course of business of
the Company and its Subsidiaries (a "Commercial Letter of
Credit"; together with the Standby Letters of Credit, the
"Letters of Credit"); and
(ii) expire no later than the earlier of 365 days
after its date of issuance and 5 Business Days prior to the
Termination Date; provided that unless the relevant Issuing
Bank notifies the Company not less than 30 days prior to the
expiry of such Letter of Credit that such Issuing Bank is not
willing to extend it, any such Letter of Credit may by its
terms be automatically extended for periods of one year from
the current or any future expiration date thereof (but not to
any date which is later than 5 Business Days prior to the
Termination Date).
(c) Each Letter of Credit shall be subject to the Uniform Customs and, to
the extent not inconsistent therewith, the laws of the State of New York.
(d) No Issuing Bank shall at any time be obligated to issue a Letter of
Credit hereunder if such issuance would conflict with, or cause such Issuing
Bank or any Domestic Lender to exceed any limits imposed by, any applicable
Requirement of Law.
4.2 Procedure for Issuance of Letters of Credit under this Agreement. The
Company may from time to time request that an Issuing Bank issue a Letter of
Credit by delivering to such Issuing Bank at its office listed on Schedule II or
otherwise notified to the Company an Application therefor (with a copy to the
Agent), completed to the satisfaction of such Issuing Bank, and such other
certificates, documents and other papers and information as such Issuing Bank
may reasonably request. Upon receipt by such Issuing Bank of any Application,
and subject to the terms and conditions hereof, such Issuing Bank will process
such Application and the certificates, documents and other papers and
information delivered to it in connection therewith in accordance with its
<PAGE>
2
customary procedures and shall promptly issue the Letter of Credit requested
thereby (but in no event shall such Issuing Bank be required to issue the
requested Letter of Credit earlier than five Business Days after its receipt of
the Application therefor and all such other certificates, documents and other
papers and information relating thereto) by issuing the original of such Letter
of Credit to the beneficiary thereof or as otherwise may be agreed by such
Issuing Bank and the Company. Such Issuing Bank shall advise the Agent of the
terms of the Letter of Credit on the date of issuance thereof and shall promptly
thereafter furnish copies thereof and each amendment thereto to the Company and
the Agent. The Agent shall, with the cooperation of the Issuing Banks and the
Company, prepare and distribute to the Domestic Lenders a quarterly summary
setting forth issuances, cancellations, extensions and changes in face amounts
of Letters of Credit.
4.3 Fees. Commissions and Other Charges. (a) The Company shall pay to the
Agent, for the account of the Domestic Lenders (including the relevant Issuing
Bank) pro rata according to their respective Commitment Percentages of the
Domestic Revolving Credit Commitments, a letter of credit commission with
respect to each Letter of Credit, computed at a rate per annum equal to the then
Applicable Margin for Eurodollar Loans on the daily average undrawn face amount
of such Letter of Credit. Such commission shall be payable in arrears on the
last day of each March, June, September and December to occur after the date of
issuance of such Letter of Credit and on the expiration date of such Letter of
Credit and shall be nonrefundable. On each date upon which the Company pays to
the Agent letter of credit commissions pursuant to this subsection 4.3(a), the
Company shall also pay to the relevant Issuing Bank a fronting fee with respect
to each Letter of Credit, computed at a rate per annum equal to 1/8 of 1% on the
daily average undrawn face amount of such Letter of Credit.
(b) In addition to the foregoing fees and commissions, the Company shall
(i) pay or reimburse the relevant Issuing Bank for such normal and customary
costs and expenses as are incurred or charged by such Issuing Bank in issuing,
effecting payment under, amending or otherwise administering such Letter of
Credit and (ii) pay such Issuing Bank such other fees as shall be agreed by such
Issuing Bank and the Company.
(c) The Agent shall, promptly following its receipt thereof, distribute to
the relevant Issuing Bank and the Domestic Lenders all fees and commissions
received by the Agent for their respective accounts pursuant to this subsection.
4.4 L/C Participations. (a) Each Issuing Bank irrevocably agrees to grant
and hereby grants to each L/C Participant, and, to induce such Issuing Bank to
issue Letters of Credit hereunder, each L/C Participant irrevocably agrees to
accept and purchase and hereby accepts and purchases from such Issuing Bank, on
the terms and conditions hereinafter stated, for such L/C Participant's own
account and risk, an undivided interest equal to such L/C Participant's
Commitment Percentage of the Domestic Revolving Credit Commitments in such
Issuing Bank's obligations and rights under each Letter of Credit issued by such
Issuing Bank hereunder and the amount of each draft paid by such Issuing Bank
thereunder. Each L/C Participant unconditionally and irrevocably agrees with
each Issuing Bank that, if a draft is paid under any Letter of Credit issued by
such Issuing Bank for which the Company has not reimbursed such Issuing Bank to
the full extent required by the terms of this Agreement, such L/C Participant
shall pay to such Issuing Bank upon demand at such Issuing Bank's office listed
<PAGE>
3
in Schedule II or otherwise notified to such L/C Participant an amount equal to
such L/C Participant's Commitment Percentage of the Domestic Revolving Credit
Commitments times the amount of such draft, or any part thereof, which is not so
reimbursed.
(b) If any amount required to be paid by any L/C Participant to an Issuing
Bank pursuant to subsection 4.4(a) in respect of any unreimbursed portion of any
payment made by such Issuing Bank under any Letter of Credit is not paid to such
Issuing Bank on the date such payment is due from such L/C Participant, such L/C
Participant shall pay to such Issuing Bank on demand an amount equal to the
product of (i) such amount, times (ii) the daily average Federal funds rate, as
quoted by such Issuing Bank, during the period from and including the date such
payment is required to the date on which such payment is immediately available
to such Issuing Bank, times (iii) a fraction the numerator of which is the
number of days that elapse during such period and the denominator of which is
360. A certificate of such Issuing Bank submitted to any L/C Participant with
respect to any amounts owing under this subsection shall be conclusive in the
absence of manifest error.
(c) Whenever, at any time after an Issuing Bank has made payment under any
Letter of Credit and has received from any L/C Participant its pro rata share of
such payment in accordance with subsection 4.4(a), such Issuing Bank receives
any payment related to such Letter of Credit (whether directly from the account
party or otherwise, including by way of set-off or proceeds of collateral
applied thereto by such Issuing Bank), or any payment of interest on account
thereof, such Issuing Bank will distribute to such L/C Participant its pro rata
share thereof; provided, however, that in the event that any such payment
received by such Issuing Bank shall be required to be returned by such Issuing
Bank, such L/C Participant shall return to such Issuing Bank the portion thereof
previously distributed by such Issuing Bank to it.
(d) Notwithstanding the foregoing, no Domestic Lender shall be required to
purchase a participating interest in an Issuing Bank's obligations and rights
under a Letter of Credit if, prior to the issuance by such Issuing Bank of such
Letter of Credit or increase by such Issuing Bank of the face amount of, or
extension by such Issuing Bank of the expiration date of, such Letter of Credit,
such Issuing Bank has received written notice from such Domestic Lender
specifying that such Domestic Lender believes in good faith that an Event of
Default has occurred and is continuing, describing the nature of such Event of
Default and stating that, as a result thereof, such Domestic Lender shall cease
to purchase such participating interests, except that (x) in the case of an
increase in face amount, such Domestic Lender shall be required to purchase such
participating interest to the extent of the face amount of such Letter of Credit
prior to such Domestic Lender's written notice and (y) in the case of an
extension of expiration date, such Domestic Lender shall be required to purchase
such participating interest to the extent that such Letter of Credit is drawn
prior to prior expiration date (without giving effect to such extension);
provided that the obligation of such Domestic Lender to purchase such
participating interests shall be reinstated upon the earlier to occur of (i) the
date upon which such Domestic Lender notifies such Issuing Bank that its prior
notice has been withdrawn and (ii) the date upon which the Event of Default
specified in such notice no longer is continuing (it being understood that, in
the event that such Event of Default was not continuing at the time that such
<PAGE>
4
Issuing Bank received such notice, such Domestic Lender shall be obligated to
purchase such participating interest promptly upon discovery that its good faith
belief was erroneous).
4.5 Reimbursement Obligation. (a) The Company agrees to reimburse the
relevant Issuing Bank in respect of each Letter of Credit issued by such Issuing
Bank on each date on which such Issuing Bank notifies the Company (with a copy
to the Agent at its address listed in subsection 18.2) of the date and amount of
a draft presented under such Letter of Credit and paid by such Issuing Bank for
the amount of (i) such draft so paid and (ii) any taxes, fees, charges or other
costs or expenses incurred by such Issuing Bank in connection with such payment;
Provided that, if such Issuing Bank shall notify the Company of a drawing after
2:00 p.m., New York City time, on the date of any drawing under a Letter of
Credit, the Company will not be required to reimburse such Issuing Bank until
the next succeeding Business Day and, until such reimbursement is so required,
the amount of such drawing shall be deemed to be a Domestic Revolving Credit
Loan which is an ABR Loan hereunder in accordance with the provisions of
paragraph (c) below. Each such payment shall be made to such Issuing Bank at its
address for notices specified herein in lawful money of the United States of
America and in immediately available funds.
(b) Interest shall be payable on any and all amounts remaining unpaid by
the Company under this subsection from the date such amounts become payable
(whether at stated maturity, by acceleration or otherwise) until payment in full
at the rate which is 2% above the rate payable with respect to ABR Loans from
time to time.
(c) Each notice of a drawing under any Letter of Credit shall constitute a
request by the Company for a borrowing pursuant to subsection 3.2 of Domestic
Revolving Credit Loans which are ABR Loans in the amount of such drawing plus
any amounts payable pursuant to subsection 4.5(a)(ii) in respect of such
drawing. The borrowing date with respect to such borrowing shall be the date of
such drawing.
4.6 Obligations Absolute. (a) The obligations of the Company under this
Section 4 shall be absolute and unconditional under any and all circ~n~stances
and irrespective of any set-off, counterclaim or defense to payment which the
Company may have or have had against any Issuing Bank or any beneficiary of a
Letter of Credit.
(b) The Company hereby agrees with each Issuing Bank that such Issuing Bank
shall not be responsible for, and the Company's Reimbursement Obligations under
subsection 4.5(a) shall not be affected by, among other things, (i) the validity
or genuineness of documents or of any endorsements thereon, even though such
documents shall in fact prove to be invalid, fraudulent or forged; provided.
that reliance upon such documents by such Issuing Bank shall not have
constituted gross negligence or wilful misconduct of such Issuing Bank or (ii)
any dispute between or among the Company and any beneficiary of any Letter of
Credit or any other party to which such Letter of Credit may be transferred or
(iii) any claims whatsoever of the Company or any Subsidiary against any
beneficiary of such Letter of Credit or any such transferee.
<PAGE>
5
(c) No Issuing Bank shall be liable for any error, omission, interruption
or delay in transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit issued by it, except for
errors or omissions caused by such Issuing Bank's gross negligence or willful
misconduct.
(d) The Company agrees that any action taken or omitted by an Issuing Bank
under or in connection with any Letter of Credit issued by such Issuing Bank or
the related drafts or documents, if done in the absence of gross negligence or
willful misconduct and in accordance with the standards of care specified in the
Uniform Customs, shall be binding on the Company and shall not result in any
liability of such Issuing Bank to the Company or any Subsidiary.
4.7 Letter of Credit Payments. If any draft shall be presented for payment
to an Issuing Bank under any Letter of Credit issued by it, such Issuing Bank
shall promptly notify the Company of the date and amount thereof. The
responsibility of such Issuing Bank to the Company in connection with any draft
presented for payment under any Letter of Credit issued by such Issuing Bank
shall, in addition to any payment obligation expressly provided for in such
Letter of Credit, be limited to determining that the documents (including each
draft) delivered under such Letter of Credit in connection with such presentment
are in substantial conformity with such Letter of Credit.
4.8 Application. To the extent that any provision of any Application
related to any Letter of Credit is inconsistent with the provisions of this
Section 4, the provisions of this Section 4 shall apply.
<PAGE>
ANNEX II
10.11 Requirements of Law. (a) If the adoption of or any
change in any Requirement of Law or in the interpretation or application thereof
or compliance by any Lender or any Issuing Bank with any request or directive
(whether or not having the force of law) from any central bank or other
Governmental Authority made subsequent to the date hereof:
(i) shall subject any Lender or any Issuing Bank or any
corporation controlling such Lender or such Issuing Bank or from which
such Lender or such Issuing Bank obtains funding or credit to any tax
of any kind whatsoever with respect to this Agreement, any Letter of
Credit, any Application or any Eurodollar Loan or Domestic Sterling
Loan made by it, or change the basis of taxation of payments to such
Lender or such Issuing Bank or such corporation in respect thereof
(except for Non-Excluded Taxes covered by subsection 10.12 and changes
in the rate of tax on the overall net income of such Lender or such
Issuing Bank or such corporation);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender or such Issuing Bank
or any corporation controlling such Lender or such Issuing Bank or from
which such Lender or such Issuing Bank obtains funding or credit which
in the case of Eurodollar Loans or Domestic Sterling Loans, as the case
may be, is not otherwise included in the determination of the Adjusted
LIBO Rate or Domestic Sterling Rate, as the case may be, hereunder or
(iii) shall impose on such Lender or such Issuing Bank or any
corporation controlling such Lender or such Issuing Bank or from which
such Lender or such Issuing Bank obtains funding or credit any other
condition; and the result of any of the foregoing is to increase the
cost to such Lender or such Issuing Bank or such corporation, by an
amount which such Lender or such Issuing Bank or such corporation deems
to be material, of making, converting into, continuing or maintaining
Eurodollar Loans or Domestic Sterling Loans or issuing or participating
in Letters of Credit or to reduce any amount receivable hereunder in
respect thereof, then, in any such case, the Company shall pay such
Lender or such Issuing Bank any additional amounts necessary to
compensate such Lender or such Issuing Bank for such increased cost or
reduced amount receivable.
(b) If any Lender or any Issuing Bank shall have determined
that the adoption of or any change in any Requirement of Law regarding capital
adequacy or in the interpretation or application thereof or compliance by such
Lender or such Issuing Bank or any corporation controlling such Lender or such
Issuing Bank or from which such Lender or such Issuing Bank obtains funding or
credit with any request or directive regarding capital adequacy (whether or not
having the force of law) from any Governmental Authority made subsequent to the
date hereof does or shall have the effect of reducing the rate of return on such
<PAGE>
2
Lender's or such Issuing Bank's or such corporation's capital as a consequence
of its obligations hereunder or under any Letter of Credit to a level below that
which such Lender or such Issuing Bank or such corporation could have achieved
but for such change or compliance (taking into consideration such Lender's or
such Issuing Bank's or such corporation's policies with respect to capital
adequacy) by an amount deemed by such Lender or such Issuing Bank to be
material, then, from time to time, the Company shall pay to such Lender or such
Issuing Bank such additional amount or amounts as will compensate such Lender or
such Issuing Bank for such reduction.
(c) In addition to, and without duplication of, amounts which
may become payable from time to time pursuant to paragraphs (a) and (b) of this
subsection 10.11, the Company agrees to pay to each Lender which requests
compensation under this paragraph (c) by notice to the Company, on the last day
of each Interest Period with respect to any Eurodollar Loan or Domestic Sterling
Loan made by such Lender to the Company, at any time when such Lender shall be
required to maintain reserves against "Eurocurrency Liabilities" under
Regulation D of the Board (or, at any time when such Lender may be required by
the Board or by any other Governmental Authority, whether within the United
States, the United Kingdom or in another relevant jurisdiction, to maintain
reserves against any other category of liabilities which includes deposits by
reference to which the Adjusted LIBO Rate or the Domestic Sterling Rate is
determined as provided in this Agreement or against any category of extensions
of credit or other assets of such Lender which includes any such Eurodollar
Loans or Domestic Sterling Loans), an additional amount (determined by such
Lender's calculation or, if an accurate calculation is impracticable, estimate
using such means of allocation as such Lender shall determine) equal to the
actual costs, if any, incurred by such Lender during such Interest Period as a
result of the applicability of the foregoing reserves to such Eurodollar Loans
or Domestic Sterling Loans, as the case may be.
(d) A certificate of each Lender or any Issuing Bank setting
forth (x) such amount or amounts as shall be necessary to compensate such Lender
or such Issuing Bank for amounts claimed by it in good faith pursuant to
paragraph (a), (b) or (c) above, as the case may be, and (y) setting forth in
reasonable detail an explanation of the basis for requesting such compensation
and the calculation thereof, shall be delivered to the Company and shall be
conclusive absent manifest error. The Company shall pay each Lender or such
Issuing Bank the amount shown as due on any such certificate delivered to it
within 20 days after its receipt of the same.
(e) The agreements in this subsection shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
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<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-28-1997
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<ALLOWANCES> 895
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<CURRENT-ASSETS> 100,301
<PP&E> 15,687
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0
0
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<SALES> 81,299
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