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 September 30, 1998.
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.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 06-1451076
- ------------------------------ ---------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
60 Main Street, Bridgeport, Connecticut 06604
- --------------------------------------- --------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 367-4400
----------------
Securities registered pursuant to Section 12(b) of the Act:
Title of Each class Name of each exchange on which registered
- --------------------- ------------------------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
11% Series B Senior Subordinated Notes due 2006
-----------------------------------------------
(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 SEPTEMBER 30, 1998
INDEX
<TABLE>
<CAPTION>
<S> <C> <C>
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited):
Consolidated Balance Sheets -
September 30, 1998 and December 31, 1997 3
Consolidated Statements of Operations -
For the three and nine months ended September 30, 1998 and 1997 4
Consolidated Statements of Cash Flows -
For the nine months ended September 30, 1998 and 1997 5
Notes to Unaudited Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
Signature 14
</TABLE>
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<PAGE>
Remington Products Company, L.L.C.
Consolidated Balance Sheets
(unaudited in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,400 $ 5,408
Accounts receivable, less allowance for doubtful accounts
of $642 in 1998 and $734 in 1997 41,035 53,052
Inventories 69,138 60,507
Prepaid and other current assets 4,141 1,525
--------- ---------
Total current assets 117,714 120,492
Property, plant and equipment, net 13,083 16,033
Intangibles, net 59,072 60,538
Other assets 8,006 8,182
-------- --------
Total assets $197,875 $205,245
======== ========
LIABILITIES AND MEMBERS' DEFICIT
Current Liabilities:
Accounts payable $ 14,112 $ 13,359
Short-term borrowings 4,919 1,300
Current portion of long-term debt 1,680 1,417
Accrued liabilities 21,822 28,055
--------- ---------
Total current liabilities 42,533 44,131
Long-term debt 190,621 178,114
Other liabilities 2,401 1,278
Members' deficit:
Members' deficit (33,756) (15,894)
Accumulated other comprehensive income (3,924) (2,384)
--------- ---------
Total members' deficit (37,680) (18,278)
--------- ---------
Total liabilities and members' deficit $ 197,875 $ 205,245
========= =========
</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>
<S> <C> <C>
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- --------------------------------
1998 1997 1998 1997
---------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $ 60,614 $ 59,577 $ 152,499 $ 140,876
Cost of sales 35,948 34,179 90,257 81,256
--------- -------- --------- ---------
Gross profit 24,666 25,398 62,242 59,620
Selling, general and administrative 19,300 19,294 56,987 51,742
Amortization of intangibles 496 485 1,459 1,452
Restructuring and reorganization charge - - 6,531 -
--------- -------- --------- ----------
Operating income (loss) 4,870 5,619 (2,735) 6,426
Interest expense 5,198 4,813 15,077 14,006
Other expense (income) 474 (133) 597 (409)
--------- -------- --------- ---------
Income (loss) before income taxes (802) 939 (18,409) (7,171)
Income tax expense (benefit) (139) 681 (789) 334
--------- -------- --------- ---------
Net income (loss) $ (663) $ 258 $(17,620) $ (7,505)
========= ======== ========= =========
Net loss applicable to common units $(3,048) $(1,861) $(24,568) $(13,679)
======== ======== ========= =========
</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>
Nine Months Ended September 30,
---------------------------------
1998 1997
-------------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (17,620) $(7,505)
Adjustment to reconcile net loss to net cash provided by operating activities:
Depreciation 2,348 1,812
Amortization of intangibles 1,459 1,452
Amortization of deferred financing fees 829 805
Restructuring and reorganization charge 6,531 -
Inventory markdown 1,456 -
Deferred income taxes (669) (37)
Foreign currency forward (gain) loss (59) (940)
Changes in assets and liabilities:
Accounts receivable 12,017 11,216
Inventories (10,087) (14,550)
Accounts payable 753 2,940
Accrued liabilities (8,532) (9,230)
Other, net (3,005) (2,671)
---------- ----------
Cash used in operating activities (14,579) (16,708)
---------- ----------
Cash flows from investing activities:
Capital expenditures (2,990) (3,725)
Proceeds from working capital adjustment - 2,500
---------- ---------
Cash used in investing activities (2,990) (1,225)
---------- ---------
Cash flows from financing activities:
Repayments under term loan facilities (1,032) (757)
Net borrowings under credit facilities 16,706 13,355
Equity repurchases (242) (620)
Other, net 19 (251)
---------- -----------
Cash provided by financing activities 15,451 11,727
Effect of exchange rate changes on cash 110 300
Decrease in cash and cash equivalents (2,008) (5,906)
Cash and cash equivalents, beginning of period 5,408 7,199
---------- ----------
Cash and cash equivalents, end of period $ 3,400 $ 1,293
========== ==========
Supplemental cash flow information:
Interest paid $ 10,580 $ 10,092
Income taxes paid $ 2,028 $ 1,715
</TABLE>
See notes to unaudited consolidated financial statements.
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<PAGE>
Remington Products Company, L.L.C.
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. The acquisition, which was effective on May 23,
1996, 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 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, 1997.
2. Inventories
Inventories were comprised of the following (in thousands):
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
---------- -----------
<S> <C> <C>
Finished goods $ 62,954 $ 55,099
Work in process 6,166 5,392
Raw materials 18 16
--------- --------
$ 69,138 $ 60,507
========= ========
</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. Comprehensive Income
The Company adopted Statement of Financial Accounting Standards No. 130,
(SFAS 130), "Reporting Comprehensive Income" during the first quarter of 1998,
as required. Comprehensive income is defined as the change in equity of a
business enterprise during a period from transactions and other events and
circumstances from non-owner sources.
Comprehensive income consists of the following (in thousands):
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
----------------------------- -----------------------------
1998 1997 1998 1997
---------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
Net income (loss) per financial statements $ (663) $ 258 $(17,620) $(7,505)
Other comprehensive income (loss):
Foreign currency translation adjustments (810) (282) (1,090) (847)
Cumulative effect of adoption of SFAS 133 (105) - (105) -
Unrealized hedging loss (345) - (345) -
---------- --------- ----------- ---------
Comprehensive income (loss) $(1,923) $ (24) $(19,160) $(8,352)
========== ========= =========== =========
</TABLE>
5. 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.
6. Accounting for Derivative Instruments and Hedging Activities
Effective July 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 133, (SFAS 133), "Accounting for Derivative Instruments
and Hedging Activities". The Statement requires the Company to recognize all
derivatives on the balance sheet at fair value. Derivatives that are not hedges
must be recorded at fair value through earnings. If the derivative qualifies as
a hedge, depending on the nature of the exposure being hedged, changes in the
fair value of derivatives are either offset against the change in fair value of
assets, liabilities, or firm commitments through earnings or recognized in other
comprehensive income until the hedged item is recognized in earnings. The
ineffective portion of a derivative's change in fair value is recognized in
earnings. The adoption of this standard as of July 1, 1998 did not have a
material effect on the Company's financial statements.
7. Restructuring and Reorganization Charge
In the second quarter of 1998 the Company announced its plan for
restructuring its Connecticut assembly and warehousing operations. The assembly
operations will be moved to an existing Remington partner- vendor located in
Asia and the warehousing function to a third party provider in Southern
California. In connection with the restructuring and reorganization, the Company
recorded a total non-recurring charge to earnings of $8.0 million in the second
quarter of 1998, of which $6.5 million was recorded as a restructuring and
reorganization charge and includes cash items such as severance and other
employee costs and lease obligations as well as non-cash items such as the
write-down of certain equipment and tooling. An additional $1.5 million was
recorded to cost of sales related to inventory markdowns associated with the
restructuring. At September 30, 1998, the remaining unexpended reserve balance
was approximately $2.5 million and related primarily to future severance and
lease obligations. It is expected that the restructuring initiatives will be
completed by the end of the first quarter of 1999.
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<PAGE>
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
hairsetters, 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, New Zealand,
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.
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
----------------------------------------------- ----------------------------------------------
1998 1997 1998 1997
------------------- --------------------- ---------------------- -----------------
$ % $ % $ % $ %
----- ---- ----- ------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales:
U.S. $24.9 41.1 24.0 40.3 $ 66.8 43.8 $ 58.9 41.8
U.S. Service Stores 8.9 14.7 8.4 14.1 24.8 16.3 22.5 16.0
International 26.8 44.2 27.2 45.6 60.9 39.9 59.5 42.2
------- ------ ------ ------- -------- ------ ------- ------
60.6 100.0 59.6 100.0 152.5 100.0 140.9 100.0
Cost of sales 35.9 59.2 34.2 57.4 90.3 59.2 81.3 57.7
----- ------ ------ ------- -------- ------ ------- -----
Gross profit 24.7 40.8 25.4 42.6 62.2 40.8 59.6 42.3
Selling, general and
administrative 19.3 31.8 19.3 32.4 57.0 37.4 51.7 36.7
Amortization of
intangibles 0.5 0.8 0.5 0.8 1.4 0.9 1.5 1.0
Restructuring and
reorganization - - - - 6.5 4.3 - -
------- ------- ------- -------- --------- ------- -------- ------
charge
Operating income 4.9 8.2 5.6 9.4 (2.7) (1.8) 6.4 4.6
(loss)
Interest expense 5.2 8.6 4.8 8.1 15.1 9.9 14.0 9.9
Other expense 0.5 0.8 (0.2) (0.3) 0.6 0.4 (0.4) (0.2)
------- ------- ------- -------- --------- ------- -------- ------
(income)
Income (Loss) before
income taxes (0.8) (1.2) 1.0 1.6 (18.4) (12.1) (7.2) (5.1)
Income tax expense
(benefit) (0.1) (0.2) 0.7 1.2 (0.8) (0.5) 0.3 0.2
------- ------- ------- -------- --------- ------- -------- ------
Net income (loss) $(0.7) (1.0) $ 0.3 0.4 $ (17.6) (11.6) $ (7.5) (5.3)
====== ======= ======= ======== ========= ======= ======== ======
</TABLE>
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<PAGE>
Results of Operations
Third Quarter Ended September 1998 Versus September 1997
Net Sales. Net sales for the quarter ended September 30, 1998 were $60.6
million, an increase of 1.7% compared to $59.6 million for the quarter ended
September 30, 1997. The increase in sales is primarily attributable to the
Company's United States businesses,including Service Stores, offset slightly by
a decrease in the international business.
Net sales in the United States were $24.9 million in the third quarter of
1998, an increase of 3.8% compared to $24.0 million in the third quarter of
1997. This increase was due primarily to demand for the Company's new shaver
products, which were partially offset by decreases in sales of personal care
products, primarily hairsetters, as a result of the highly competitive market.
Net sales through the Company's U.S. service stores increased 6.0% to $8.9
million in the third quarter of 1998 from $8.4 million in the third quarter of
1997. The increase is due to incremental sales from the net addition of 11
stores since the third quarter 1997, as same store sales increased by
approximately 1%.
International net sales were $26.8 million in the third quarter of 1998
compared to $27.2 million in the third quarter of 1997, or a decrease of 1.5%
due primarily to negative currency impacts. Excluding currency impacts,
international business sales increased by approximately 8% for the quarter. U.K.
sales decreased 9.5% for the quarter, as sales in the U.K. export markets were
impacted by weak local economies. Net sales in Australia increased by 18.9% in
local currency as a result of incremental sales from the opening of additional
service stores, as well as sales for new products. When converted to U.S.
dollars, Australia's net sales decreased by 7.8% for the quarter due to the
continued weakness of the Australian dollar compared to the U.S. dollar in 1998.
German net sales increased during the quarter, primarily the result of a
one-time shipment to a certain customer.
Gross Profit. Gross profit was $24.7 million, or 40.8% of net sales in the
third quarter of 1998, compared to $25.4 million, or 42.6% of net sales in the
third quarter of 1997. The decrease in the gross profit percentage is primarily
attributable to decreased margins in Australia and U.K. export markets, due to
the negative currency impact on cost of sales as inventory purchases are made in
U.S. dollars.
Selling, General and Administrative. Selling, general and administrative
expenses were $19.3 million, or 31.8% of net sales in the third quarter of 1998,
as compared to $19.3 million or 32.4% of net sales in 1997, as higher expenses
in the U.S. were offset by lower expenses in the international businesses.
Operating Income. The operating income in the third quarter of 1998 was $4.9
million compared to $5.6 million in the third quarter of 1997, as the increase
in sales was more than offset by the lower international margins.
Interest Expense. Interest expense increased to $5.2 million for the third
quarter of 1998 compared to $4.8 million in the third quarter of 1997 due to
higher average outstanding borrowings under the Company's Senior Credit
Agreement.
Income Tax (Benefit) Expense. The benefit for income taxes was $0.1 million
for the third quarter of 1998 compared to expense of $0.7 million for the third
quarter of 1997, and is generated primarily by the Company's U.K. operations.
-9-
<PAGE>
Nine Months Ended September 1998 Versus September 1997
Net Sales. Net sales for the nine months ended September 30, 1998 increased
8.3% to $152.5 million compared to $140.9 million for the nine months ended
September 30, 1997. The increase is largely due to strong sales in the United
States, although all major businesses experienced increases over the prior year.
Net sales in the United States increased 13.4% to $66.8 million for the nine
months ended September 1998, compared to $58.9 million for the nine months ended
September 1997. The sales increase resulted primarily from the updated lines of
MicroScreen(R) shavers and the new Intercept(TM) shaver line which are the
result of investments made in sales and new product development over the past
year.
Net sales through the Company's U.S. Service Stores increased 10.2% to $24.8
million in the first nine months of 1998. The increase is due primarily to
incremental sales as a result of the opening of additional stores as well as the
impact of a 3.5% increase in same store sales in 1998 over 1997. At September
30, 1998 there were 100 retail stores operating throughout the U.S.
International net sales were $60.9 million in the first nine months of 1998
compared to $59.5 million in the first nine months of 1997. Excluding currency
impacts, international business sales increased by approximately 10% for the
nine months. The U.K. operations increased 2.5% as strong sales in the U.K.
domestic business were mostly offset by lower export sales due to weak local
economies. Australia's net sales in local currency have increased 16.7% in the
first nine months of 1998 compared to the same period in 1997 as a result of
additional retail service stores opened since third quarter 1997 and new product
sales. In U.S. dollars, Australia's net sales have decreased over the prior year
due to the continued weakness of the Australian dollar compared to the U.S.
dollar. German operations experienced an increase due to the one-time annual
sale discussed in the quarter. Canadian sales have increased slightly over the
prior year as a result of sales growth and increased demand, particularly for
new products, despite negative currency impacts.
Gross Profit. Gross Profit was $62.2 million, or 40.8% of net sales in the
first nine months of 1998 compared to $59.6 million or 42.3% of net sales in the
first nine months of 1997. The decrease in gross margin percentage is primarily
attributable to a $1.5 million charge to cost of sales for inventory markdowns
in connection with the restructuring of the Company's Connecticut operations.
Additionally, Australia gross profit percentages continue to decline due to the
negative currency impact as previously discussed in the third quarter analysis.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased to $57.0 million or 37.4% of net sales
compared to $51.7 million or 36.7% of net sales in the prior year. The increase
occurred in the U.S. as a result of increased advertising, primarily for
Father's Day, incremental operating costs related to retail stores and continued
investment in sales and product development. On a percentage of sales basis,
this increase resulted in a less than 1% increase over the prior year.
Restructuring and Reorganization Charge. The Company recorded an $8.0
million charge in the third quarter of 1998 in connection with restructuring its
Connecticut operations, of which $1.5 million was charged to cost of sales and
$6.5 million was charged to restructure and reorganization. The restructuring
will result in the shutdown of the assembly operations at its Bridgeport,
Connecticut facility. Additionally, the Company will close its Milford,
Connecticut warehouse and relocate this function to Southern California.
Included in the restructuring charge are items such as severance and other
employee costs, lease obligations and write-offs of certain equipment and
tooling.
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<PAGE>
Operating Income. For the nine months ended September 1998, the Company
recorded operating income of $5.3 million before restructuring charges of $8.0
million, compared to operating income of $6.4 million for the nine months ended
September 1997. Incremental gross profit was more than offset by the increased
investment in advertising and other operating costs. Including the restructuring
charges, the operating loss was $2.7 million.
Interest Expense. Interest expense for the first nine months of 1998 was
$15.1 million compared to $14.0 million in the first nine months of 1997 as a
result of higher outstanding borrowings in 1998.
Income Tax (Benefit) Expense. For the nine months ended September 1998, the
benefit for income taxes was $0.8 million compared to $0.3 million of expense in
the nine months ended September 1997. Income tax benefits were generated by the
U.K.'s foreign operations.
Liquidity and Capital Resources
Net cash used in operating activities for the first nine months of 1998 was
$14.6 million versus $16.7 million during the first nine months of 1997. The
decrease was primarily attributable to lower inventory levels for the period,
somewhat offset by higher accounts payable disbursements.
The Company's operations are not capital intensive. During the first nine
months of 1998 and 1997, the Company's capital expenditures totaled $3.0 million
and $3.7 million, respectively. Capital expenditures for 1998 are anticipated to
be approximately $4.0 million.
The Company borrowed an additional $16.7 million on various revolving
credit agreements and repaid$1.0 million under term loans during the first nine
months of 1998. The Company repurchased $0.2 million in Common Units from the
remaining Management Investors of the Company in January 1998.
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 that expire on June 30, 2002. The Revolving Credit
Facilities are subject to a borrowing base of 85% of eligible accounts
receivable and 60% of eligible inventory. In March 1998, the Company amended the
Senior Credit Agreement. As a result of this amendment, the Revolving Credit
Facilities' borrowing base can be increased as needed by $10 million over the
applicable percentage of eligible receivables and inventories (still limited to
the $70 million total facilities), and financial covenants were amended through
December 31, 1998. In addition, the interest rate on borrowings under the
Revolving Credit Facilities will be increased by one quarter percent during any
period that any of the additional $10 million in borrowing base is utilized. As
of September 30, 1998, the Company was in compliance with all covenants under
the Senior Credit Agreement and availability under the Revolving Credit
Facilities, including the additional $10 million, was approximately $10.8
million. 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.
-11-
<PAGE>
Year 2000 Compliance
The Company continues to assess its exposure related to the impact of the
Year 2000 date issue. The Year 2000 date issue arises from the fact that many
computer programs use only two digits to identify a year in a date field. The
Company's key financial and operational systems have been reviewed, and the
majority of the systems did not require modifications. All required
modifications have been completed, with the exception of one minor communication
program, which will be completed by the end of the first quarter of 1999. Costs
incurred to date are not material and Management does not expect that any
remaining costs to be incurred will have a material adverse impact on the
Company's financial position, results of operations or cash flows. However, the
Company could be adversely impacted by the Year 2000 date issue if suppliers,
customers and other businesses do not address this issue successfully. The
Company has a formalized comprehensive supplier compliance program in place, and
responses from suppliers are currently being reviewed. To date, the Company has
contacted its major customers and financial institutions and has received
assurances of Year 2000 compliance from a number of those contaced. Management
continues to assess these risks in order to reduce the impact on the Company.
EURO Conversion
On January 1, 1999, eleven of fifteen member countries of the European
Union are scheduled to establish fixed conversion rates between their existing
local currencies and one common legal currency (the "euro"). The euro will then
trade on currency exchanges and may be used in business transactions. The
conversion to the euro will eliminate currency exchange rate risk between the
member countries. Beginning in January 2002, new euro-denominated bills and
coins will be issued, and local currencies will be removed from circulation.
Although the Company's international businesses affected by the euro conversion
are not material, the Company is establishing plans to address the issues raised
by the euro currency conversion. These issues include, among others, the need to
adapt computer and financial systems and business processes to accommodate
euro-denominated transactions and the impact of one common currency on pricing.
Although the Company does not expect any system conversion costs to be material,
due to the existence of many unknown variables at this early stage, it is not at
this time possible for the Company to predict the precise implications of the
euro conversion on its operations.
Forward Looking Statements
This Management's Discussion and Analysis may contain forward-looking
statements which include assumptions about future market conditions, operations
and results. These statements are based on current expectations and are subject
to risks and uncertainties. They are made pursuant to safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Among the many factors
that could cause actual results to differ materially from any forward-looking
statements are the success of new product introductions and promotions, changes
in the competitive environment for the Company's product, changes in economic
conditions, foreign exchange risk and other factors discussed in prior
Securities and Exchange Commission filings by the Company. The Company assumes
no obligation to update these forward-looking statements or advise of changes in
the assumptions on which they were based.
-12-
<PAGE>
PART II OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule.
(b) Reports on Form 8-K
During the quarter ended September 30, 1998, the Registrant did not file
any reports on Form 8-K.
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: November 13, 1998
-13-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 3,400
<SECURITIES> 0
<RECEIVABLES> 41,035
<ALLOWANCES> 642
<INVENTORY> 69,138
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0
0
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</TABLE>
