<PAGE>
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, 1999
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 333-43195
Commission File Number 333-43195-01
SCOVILL FASTENERS INC.
SCOVILL HOLDINGS INC.
(Exact name of registrants as specified in their respective charters)
<TABLE>
<S> <C> <C>
Delaware 3965 95-3959561
Delaware 6719 58-2365743
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
Scovill Fasteners Inc.
Scovill Holdings Inc.
Post Office Box 44
1802 Scovill Drive
Clarkesville, Georgia 30523
706-754-4181
(Name, address, including zip code, and telephone number, including area code,
of registrants' principal executive offices)
___________________
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 [ ] No [X]
Number of shares of Common Stock outstanding as of October 15, 1999 was
4,655,500.
<PAGE>
SCOVILL FASTENERS INC.
SCOVILL HOLDINGS INC.
Quarterly Report on Form 10-Q
For the Quarter Ended September 30, 1999
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION Page No.
---------
<S> <C>
Item 1. Financial Statements -
Consolidated Balance Sheets at September 30, 1999 and December 31, 1998........................... 3
Consolidated Statements of Operations for the three and nine month periods ended
September 30, 1999 and 1998............................................................... 4
Consolidated Statements of Cash Flows for the nine months ended September 30,
1999 and 1998............................................................................. 5
Notes to Consolidated Financial Statements......................................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations...................................................................................... 7
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.................................................................................. 14
Item 2. Changes in Securities and Use of Proceeds.......................................................... 14
Item 3. Defaults Upon Senior Securities.................................................................... 14
Item 4. Submission of Matters to a Vote of Security Holders............................................... 14
Item 5. Other Information.................................................................................. 14
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES......................................................................................... 15
</TABLE>
-2-
<PAGE>
Scovill Fasteners Inc.
Scovill Holdings Inc.
Consolidated Balance Sheets
(in thousands, except share data)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
(Unaudited)
--------------------------------
ASSETS
<S> <C> <C>
Current Assets
Cash and cash equivalents......................................................... $ 2,228 $ 293
Accounts receivable, net of allowances of $1,246 and $1,132, respectively......... 14,565 12,319
Inventories....................................................................... 23,514 24,573
Other............................................................................. 462 572
-------------- -------------
Total Current Assets........................................................... 40,769 37,757
-------------- -------------
Property, Plant and Equipment, Net.................................................. 65,952 69,421
Intangible Assets................................................................... 106,724 110,089
-------------- -------------
$ 213,445 $ 217,267
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current maturities of long-term debt.............................................. $ 366 $ 3,530
Accounts payable.................................................................. 9,230 8,379
Accrued liabilities............................................................... 5,499 6,202
Accrued interest.................................................................. 3,815 957
-------------- -------------
Total Current Liabilities...................................................... 18,910 19,068
-------------- -------------
Long-Term Liabilities
Revolving line of credit.......................................................... 18,100 12,900
Long-term debt.................................................................... 126,635 124,893
Employee benefits................................................................. 22,899 24,032
Deferred income taxes............................................................. -- 319
Other............................................................................. 2,945 3,520
-------------- -------------
Total Long-Term Liabilities.................................................... 170,579 165,664
-------------- -------------
Series A Cumulative Redeemable Exchangeable Preferred Stock, $.001 par value,
200,000 shares authorized, none issued and outstanding at September 30,
1999 and December 31, 1998 (liquidation preference of $100 per share)....... -- --
-------------- -------------
Stockholders' Equity
Series B Preferred Stock, $.0001 par value, 16,200,000 shares authorized,
4,655,500 shares issued and outstanding at September 30, 1999 and December
31, 1998..................................................................... -- --
Common stock, $.0001 par value, 6,000,000 shares authorized,
4,655,500 shares issued and outstanding at September 30, 1999 and December
31, 1998..................................................................... -- --
Additional paid-in capital--preferred.............................................. 49,942 49,942
Additional paid-in capital--common................................................. 503 503
Predecessor basis adjustment....................................................... (7,831) (7,831)
Retained earnings (deficit)........................................................ (19,113) (10,548)
Accumulated other comprehensive income............................................. 455 469
-------------- -------------
Total Stockholders' Equity..................................................... 23,956 32,535
-------------- -------------
$ 213,445 $ 217,267
============== =============
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
-3-
<PAGE>
Scovill Fasteners Inc.
Scovill Holdings Inc.
Consolidated Statements of Operations
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30, Three Months Ended September 30,
1999 1998 1999 1998
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales................................ $ 69,010 $ 70,939 $ 21,827 $ 21,945
Cost of sales............................ 51,746 52,628 16,981 16,635
--------------- -------------- --------------- ---------------
Gross profit............................ 17,264 18,311 4,846 5,310
Selling, general and administrative
expenses............................. 11,564 11,735 3,918 3,650
Restructuring and asset impairment
charge............................... -- 2,968 -- 1,000
Amortization expense..................... 2,505 2,924 826 972
--------------- -------------- --------------- ---------------
Operating income (loss).................. 3,195 684 102 (312)
Other expense............................ 352 62 248 10
Interest expense......................... 12,460 11,470 4,216 3,973
--------------- -------------- --------------- ---------------
Income (loss) before income
tax provision (benefit).............. (9,617) (10,848) (4,362) (4,295)
Income tax provision
(benefit)............................... (1,052) (3,607) 110 (1,432)
--------------- -------------- --------------- ---------------
Net income (loss)........................ $ (8,565) $ (7,241) $ (4,472) $ (2,863)
--------------- -------------- --------------- ---------------
Dividends on redeemable
preferred stock........................ -- 230 -- --
--------------- -------------- --------------- ---------------
Net income (loss) available
to common stockholders................. $ (8,565) $ (7,471) $ (4,472) $ (2,863)
=============== ============== =============== ===============
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
-4-
<PAGE>
Scovill Fasteners Inc.
Scovill Holdings Inc.
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months ended September 30,
1999 1998
-------------------------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income (loss) available to common stockholders....................... $ (8,565) $ (7,471)
Adjustments to reconcile net income (loss)
available to common stockholders to net
cash provided by (used in) operating activities:
Depreciation......................................................... 7,551 8,279
Amortization......................................................... 3,261 3,497
Deferred income taxes................................................ (1,300) (1,918)
Asset impairment charge.............................................. -- 940
Non-operating preferred.stock dividends.............................. -- 345
Changes in operating assets and liabilities:
Accounts receivable, net............................................ (2,246) (4,094)
Inventories......................................................... 1,059 (928)
Other current assets................................................ 110 250
Accounts payable.................................................... 851 (4,112)
Accrued liabilities................................................. 2,154 812
Other assets and liabilities........................................ (818) (1,370)
----------- -----------
Net cash provided by (used in) operating activities.................... 2,057 (5,770)
----------- -----------
Cash Flows from Investing Activities:
Additions to property, plant and equipment............................... (3,900) (6,044)
----------- -----------
Net cash used in investing activities.................................... (3,900) (6,044)
----------- -----------
Cash Flows from Financing Activities:
Net borrowings on line of credit......................................... 5,200 9,950
Repayments of long-term debt............................................. (1,422) (410)
Redemption of preferred stock and payments of dividends................. -- (10,345)
Issuance of common and preferred stock................................... -- 10,345
----------- -----------
Net cash provided by financing activities................................ 3,778 9,540
----------- -----------
Net Increase (Decrease) in Cash.......................................... 1,935 (2,274)
Cash at Beginning of Period.............................................. 293 2,821
----------- -----------
Cash at End of Period.................................................... $ 2,228 $ 547
=========== ===========
Supplemental Disclosure of Cash Flow Information
Interest paid....................................................... $ 8,738 $ 8,051
=========== ===========
Income taxes paid................................................... $ 268 $ 70
=========== ===========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
-5-
<PAGE>
SCOVILL FASTENERS INC.
SCOVILL HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(All amounts expressed in thousands, or as otherwise noted)
Note 1. Basis of Presentation and Business
The interim financial statements presented herein include the accounts of
Scovill Holdings Inc. ("Holdings") and its wholly owned subsidiaries, including
Scovill Fasteners Inc. ("Fasteners"), (together with Holdings, the "Company")
as of September 30, 1999 and December 31, 1998 and for the three and nine month
periods ended September 30, 1999 and 1998.
The accompanying unaudited consolidated financial statements include all
adjustments, consisting only of normal recurring adjustments which are in the
opinion of the Company necessary for a fair statement of the results of the
interim periods. The operating results for the three and nine month periods
ended September 30, 1999 and 1998 are not necessarily indicative of the results
that would be obtained for the entire fiscal year or any other interim period.
Certain information and footnote disclosures normally included in annual
financial statements prepared in accordance with generally accepted accounting
principles have been omitted from these consolidated financial statements
pursuant to the applicable rules and regulations of the SEC. These financial
statements should be read in conjunction with the audited consolidated financial
statements and notes thereto included in the annual report on Form 10-K for the
year ended December 31, 1998.
Note 2. New Accounting Standards
In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133, "Accounting for Derivative Instruments and Hedging Activities," ("SFAS
133"). This Statement requires companies to record derivatives on the balance
sheet as assets or liabilities, measured at fair value. Gains or losses
resulting from changes in the values of those derivatives would be accounted for
depending on the use of the derivative and whether it qualifies for hedge
accounting. SFAS 133, as amended by Statement of Financial Accounting Standards
No. 137, will be effective for the Company's fiscal year 2001. Management
believes that this Statement will not have a significant impact on the Company's
financial condition or results of operations.
Note 3. Comprehensive Income
The Company adopted Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income" ("SFAS 130") in the first quarter of fiscal
1998. SFAS 130 requires the reporting of a measure of all changes in equity of
an entity that result from recognized transactions and other economic events
other than transactions with owners in their capacity as owners. Other
comprehensive income (loss) for the nine months ended September 30, 1999 and
1998 includes only foreign currency translation. The calculation of
comprehensive income is as follows:
<TABLE>
<CAPTION>
September 30, 1999 September 30, 1998
-------------------------------------------------
<S> <C> <C>
Net Income (Loss) $(8,565) $(7,471)
Foreign Currency Translation Adjustments (14) 316
------- -------
Comprehensive Income (Loss) $(8,579) $(7,155)
======= =======
</TABLE>
6
<PAGE>
Note 4. Inventories
<TABLE>
<CAPTION>
Inventories consisted of the following at:
September 30, 1999 December 31, 1998
-----------------------------------------------------------------
<S> <C> <C>
Raw materials $ 1,358 $ 1,901
Work in process 5,209 4,797
Attaching machines spare parts 7,793 8,219
Finished goods 9,154 9,656
-----------------------------------------------------------------
$ 23,514 $ 24,573
=================================================================
</TABLE>
Note 5. Credit Facility
During November 1999, the Company entered into an amendment to the Credit
Facility (the "Facility Amendment") which adjusted the Credit Facility's
financial covenants and provided an additional term loan of $10 million (the
"Tranche Loan B"). The Facility Amendment adjusted the Credit Facility's fixed
charge coverage ratio, funded indebtedness to EBITDA ratio and adjusted the
amortization schedule of both the Term Loan and the Revolving Credit Facility.
The new $10 million Tranche Loan B was funded through lenders including owners
of the Company. The new Tranche Loan B bears interest at the rate specified in
the Credit Facility plus an additional margin of 0.25% for a certain period,
will mature in November 2004, and is subject to the requirements and conditions
set forth in the Facility Amendment and Credit Facility. The Tranche Loan B does
not require cash interest or principal payments until final maturity. The
Company will use the proceeds from the new Tranche Loan B to fund an interest
payment on its Notes and for other working capital purposes, and after taking
the Facility Amendment into account, the Company is in full compliance with the
financial and other covenants in the Credit Facility as of September 30, 1999.
Note 6. Restructuring and Asset Impairment Charge
In June 1998, the Company announced a corporate restructuring plan. The
plan, which was completed in the second quarter of 1998, included outsourcing
the production of plastic components, which was previously performed in the
Company's existing manufacturing facilities. As a result, in June 1998, the
Company recorded a restructuring charge of approximately $1.0 million related to
severance payments to be paid to approximately 30 terminated employees and a
$1.0 million asset impairment charge related to plastics component part
production fixed assets to be disposed of under the plan. In July 1998, under
the restructuring plan discussed above, an additional severance benefit was paid
under the terms of an employment agreement.
Note 7. Selling, General and Administrative Expenses
Selling, General and Administrative expenses for the three and nine months
ended September 30, 1999 includes $638 of non-recurring expenses related to the
implementation of certain components of a profit improvement plan. The Company
has implemented certain components, and is in the process of implementing
additional components of a profit improvement plan which includes cost
reductions in manufacturing, selling and administrative functions. The plan is
expected to result in increased operating cash flow and operating profit. The
plan will be fully implemented in the near future.
7
<PAGE>
Note 8. Business Segments
The Company's businesses are organized and internally reported as three
segments: Apparel, Industrial, and European operations. The European operations
include some of the same products as both apparel and industrial. However, the
European operations are managed separately and thus reported as a separate
segment. Sales are reported and classified based on the customers' location.
<TABLE>
<CAPTION>
Business Segment Nine Months European Total
Information ended September 30, Apparel Industrial (1) Operations (2) Company
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales 1999 $ 40,197 $ 21,014 $ 7,799 $ 69,010
1998 40,917 21,840 8,182 70,939
Operating Income (3) 1999 $ 10,467 $ 3,445 $ 427 $ 14,339
1998 10,635 4,059 611 15,305
</TABLE>
(1) Includes all Canadian operations.
(2) Represents Scovill-Europe operations.
(3) Operating Income (i) includes allocations of general and
administrative expenses based on sales and (ii) excludes depreciation,
amortization and unallocated corporate charges.
The following is a reconciliation of operating income from reportable segments
above to operating income on the financial statements:
<TABLE>
<CAPTION>
Nine Months Ended September 30,
1999 1998
-------------------------------------------------------------------------------------
<S> <C> <C>
Operating income from reportable segments $14,339 $15,305
Less:
Depreciation 7,551 8,279
Amortization 2,505 2,924
Restructuring charge -- 2,968
Non-recurring charges in SG&A 638 --
Unallocated corporate charges 450 450
-----------------------------------------
Total operating income $ 3,195 $ 684
=========================================
</TABLE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following ''Safe Harbor Statement'' is made pursuant to the Private
Securities Litigation Reform Act of 1995. Certain statements contained in the
body of this Report are forward-looking statements (rather than historical
facts) that are subject to risks and uncertainties that could cause actual
results to differ materially from those described in the forward-looking
statements. Such forward-looking statements are based on management's current
plans and expectations and are subject to a number of uncertainties that could
cause actual results to differ materially from those described in such
statements. Such uncertainties and risks include, but are not limited to: the
leveraged nature of the Company, its debt service requirements and the
restrictions on the Company under the terms of the Credit Facility, as amended,
the Indenture, and the other agreements governing the Company's indebtedness;
the risks and uncertainties inherent in doing business abroad, the volatility of
the price of raw materials; increasing domestic and foreign competition;
increasingly complex and stringent environmental laws and regulations; delays or
difficulties associated with systems conversion and Year 2000 compliance; and
general economic
8
<PAGE>
conditions. The preceding list of uncertainties, however, is not intended to be
exhaustive, and should be read in conjunction with other cautionary statements
in the Company's publicly-filed reports and its final Form S-1 Registration
Statement, dated December 24, 1997 (Commission File No. 333-43195).
Nine Months Ended September 30, 1999 Compared with Nine Months Ended September
30, 1998
Net Sales Net sales decreased $1.9 million, or 2.7%, from $70.9 million to
$69.0 million. Such decrease is partly attributable to lower Industrial group
revenues, which declined $0.8 million, or 3.8%, from $21.8 million to $21.0
million. In addition, Apparel group revenues decreased $0.7 million, or 1.8%,
from $40.9 million to $40.2 million. The Company's European revenues decreased
$0.4 million, or 4.7%, from $8.2 million to $7.8 million.
Gross Profit Gross profit decreased $1.0 million, or 5.7%, from $18.3 million
to $17.3 million, which is primarily attributable to the decline in sales
discussed above. The gross margin decreased from 25.8 % to 25.0% primarily due
to unfavorable sales mix.
Selling, General and Administrative Expenses ("SG&A") SG&A decreased $0.2
million, or 1.5%, from $11.7 million to $11.5 million and was 16.8% and 16.6% of
sales for each of the nine months ended September 30, 1999 and 1998,
respectively. SG&A for the nine months ended September 30, 1999 includes $638 of
non-recurring expenses related to the implementation of a profit improvement
plan. The decrease in SG&A is a result of the restructuring plan which the
Company initiated in June 1998, in which it reduced its headcount by
approximately 30 people. The Company has recently implemented a profit
improvement plan which includes cost reductions in SG&A. The plan is expected to
result in increased operating cash flow and operating profit.
Restructuring and Asset Impairment Charge In June 1998, the Company
announced a corporate restructuring plan and recorded a restructuring charge of
$3.0 million ($2.0 million and $1.0 million recorded in the second and third
quarters of 1998, respectively). The plan included outsourcing the production
of plastic components, which was previously performed in the Company's existing
manufacturing facilities.
Operating Income Operating income increased $2.5 million as a result of the
lack of a restructuring and asset impairment charge, which was recorded in 1998,
of $3.0 million, a decrease in SG&A of $0.2 million in addition to a decrease in
amortization expense as a result of the full amortization of a non-compete
agreement, offset by a decrease in gross profit of $1.0 million.
Interest Expense Interest expense increased by $1.0 million as a result of
additional borrowings outstanding under the Revolving Credit Facility at
September 30, 1999, compared to September 30, 1998.
Income Tax Provision (Benefit) The income tax benefit was $1.1 million in the
nine months ended September 30, 1999 compared to $3.6 million in the nine months
ended September 30, 1998. The decrease in the income tax benefit is a result of
the Company fully offsetting its deferred tax liabilities with its deferred tax
assets in April 1999; therefore, no income tax benefit was recognized subsequent
to April 1999.
Net Income (Loss) The net loss available to common stockholders was $8.6
million in the nine months ended September 30, 1999 compared to $7.5 million in
the nine months ended September 30, 1998 attributable to the factors discussed
above.
Three Months Ended September 30, 1999 Compared with Three Months Ended September
30, 1998
Net Sales Net sales decreased $0.1 million, or 0.5%, from $21.9 million to
$21.8 million. Sales in each of the Apparel and Industrial groups decreased by
$0.1 million, while the Company's European revenues increased by $0.1 million.
9
<PAGE>
Gross Profit Gross profit decreased $0.5 million, or 8.7% from $5.3 million to
$4.8 million, which is primarily a result of a decline in gross margin. The
gross margin decreased from 24.2% to 22.2% primarily as a result of unfavorable
sales mix and volume variances.
Selling, General and Administrative Expenses ("SG&A") SG&A increased $0.2
million, or 7.3%, from $3.7 million to $3.9 million for the three months ended
September 30, 1999 and 1998, respectively and equaled approximately 18.0% and
16.6% of sales for the three months ended September 30, 1999 and 1998,
respectively. SG&A for the three months ended September 30, 1999 includes $638
of non-recurring expenses related to the implementation of a profit improvement
plan.
Restructuring and Asset Impairment Charge See discussion above.
Operating Income (Loss) Operating income increased $0.4 million as a result of
the lack of a restructuring charge, which was recorded in 1998, of $1.0 million,
in addition to a decrease in amortization expense, offset by a decrease in gross
profit of $0.5 million and an increase in SG&A of $0.2 million.
Interest Expense Interest expense increased by $0.2 million as a result of
additional borrowings outstanding under the Revolving Credit Facility at
September 30, 1999 compared to September 30, 1998.
Income Tax Provision (Benefit) The income tax expense was $0.1 million in the
three months ended September 30, 1999 compared to an income tax benefit of $1.4
million in the three months ended September 30, 1998. The decrease in the
income tax benefit is a result of the Company fully offsetting its deferred tax
liabilities with its deferred tax assets in April 1999; therefore, no income tax
benefit was recognized subsequent to April 1999.
Net Income (Loss) The net loss was $4.5 million in the three months ended
September 30, 1999 compared to $2.9 million in the three months ended September
30, 1998 attributable to the factors discussed above.
Liquidity and Capital Resources
The Company has outstanding $100 million of 11.25% Senior Notes due 2007
(the "Notes") and a senior secured bank credit facility with Credit Agricole
Indosuez as administrative agent (the "Credit Facility"), consisting of a $28.0
million term loan (the "Term Loan") and a $25.0 million revolving credit
facility (the "Revolving Credit Facility").
Historically, the Company derived its cash from funds generated by
operations and from third-party financings. As of September 30, 1999 and
December 31, 1998, $18.1 million and $12.9 million of borrowings were
outstanding under the Revolving Credit Facility, with limited additional
availability at September 30, 1999. As of September 30, 1999 and December 31,
1998, $25.5 million and $27.0 million was outstanding on the Term Loan,
respectively.
The Company's liquidity requirements consist primarily of scheduled
payments of principal and interest on the Notes, the Term Loan and the Revolving
Credit Facility, working capital needs and capital expenditures. The Company
believes that its operating cash flow, together with borrowings under the Term
Loan B (as defined below) and the revised debt service requirements provided by
the Facility Amendment (as defined below) will be sufficient to meet its
operating expenses, debt service, and capital requirements over the next twelve
months and for the near term thereafter.
The Company has implemented certain components, and is in the process of
implementing additional components, of a profit improvement plan which includes
cost reductions in manufacturing, selling and administrative functions. The plan
is expected to result in increased operating cash flow and operating profit. The
plan will be fully implemented in the near future.
10
<PAGE>
In conjunction with this plan, in November 1999 the Company entered into an
amendment to the Credit Facility (the "Facility Amendment") which adjusted the
Credit Facility's financial covenants and provided an additional term loan of
$10 million (the "Tranche Loan B"). The Facility Amendment adjusted the Credit
Facility's fixed charge coverage ratio, funded indebtedness to EBITDA ratio and
adjusted the amortization schedule of both the Term Loan and the Revolving
Credit Facility. The new $10 million Tranche Loan B was funded through lenders
including owners of the Company. The new Tranche Loan B bears interest at the
rate specified in the Credit Facility plus an additional margin of .25% for a
certain period, will mature in November 2004, and is subject to the requirements
and conditions set forth in the Facility Amendment and Credit Facility. The
Tranche Loan B does not require cash interest or principal payments until final
maturity. The Company will use the proceeds from the new Tranche Loan B to fund
an interest payment on its Notes and for other working capital purposes, and
after taking the Facility Amendment into account, the Company is in full
compliance with the financial and other covenants in the Credit Facility as of
September 30, 1999.
EBITDA
EBITDA is defined for the purpose of this report as net income (loss)
before interest expense (including amortization of deferred financing costs),
provision (benefit) for income taxes, depreciation, amortization, restructuring
and asset impairment charge, non-recurring charges and management fees.
The Company has included information concerning EBITDA in this report
because it is used by certain investors as a measure of a company's ability to
service its debt. EBITDA is not required or recognized as a measure of financial
performance under generally accepted accounting principles in the U.S. ("GAAP"),
and should not be considered an alternative to net income determined in
accordance with GAAP as an indicator of operating performance or as an
alternative to cash flow from operating activities determined in accordance with
GAAP as a measure of liquidity. The Company's use of EBITDA may not be
comparable to similarly titled measures used by other companies due to their use
of different financial statement components in calculating EBITDA.
EBITDA decreased $1.0 million, or 6.3%, from $15.3 million to $14.3 million
primarily as a result of a decrease in gross profit, resulting from decreased
sales volume, offset by a decrease in SG&A for the nine months ended September
30, 1999 compared to the nine months ended September 30, 1998.
EBITDA decreased $0.3 million, or 6.7%, from $4.5 million to $4.2 million
primarily as a result of a decrease in gross profit, for the three months ended
September 30, 1999 compared to the three months ended September 30, 1998.
Cash Flows
Net cash provided by the Company's operating activities was $2.1 million
for the first nine months of 1999 compared to a use of cash of $5.8 million for
the first nine months of 1999. Principal working capital changes included an
increase of $2.2 million in accounts receivable and a decrease of $1.1 million
in inventories, and a net increase of accounts payable and accrued liabilities
of $3.0 million. The Company's cash used in investing activities during the
first nine months of 1999 was $3.9 million for capital expenditures. Net cash
provided by financing activities was $3.8 million, of which $5.2 million
represents borrowings under the Revolving Credit Facility.
The Indenture and the Credit Facility place significant restrictions on the
Company's ability to incur additional indebtedness, pay dividends or repurchase
stock or make other distributions, create liens, make certain investments, sell
assets, or enter into mergers or consolidations.
11
<PAGE>
Year 2000 Compliance
Many currently installed computer systems and software products are coded
to accept only two digit entries in the date code field. Beginning in the year
2000, these date code fields will need to accept four digit entries to
distinguish twenty-first century dates from twentieth century dates (the "Y2K
issue"). As a result computer systems and/or software used by many companies may
need to be upgraded to comply with such ''Year 2000'' requirements. Significant
uncertainty exists in the software industry concerning the potential effects
associated with such compliance.
In consideration of the potential impact of Y2K issue on its domestic
business, operations, and financial condition, the Company has addressed issues
which may arise from its systems as described below.
Effective July 1, 1998, the Company implemented an integrated software
package, BPCS, which is fully Y2K compliant. BPCS was implemented as a complete
Enterprise Resource Planning (ERP) package, which will control the Company's
main systems of: (a) shipping/distribution, (b) accounting and (c) customer
service/order entry systems. The Company's other principal system - the core
manufacturing process - is not dependent upon computer technology, and therefore
should not be affected by the Y2K issue. Finally, the Company outsources the
payroll portion of its accounting functions, such provider has represented to
the Company that it is Y2K compliant. Thus, all of the Company's computer-
dependent systems have been replaced by the Y2K compliant BPCS package.
The Company's foreign subsidiaries are in the process of either
implementing new computer systems or upgrading existing systems. The Company's
Canadian subsidiary implemented the BPCS software package, effective September
27, 1999. The BPCS software package is Y2K compliant, and will control all of
this subsidiary's main computer systems, including the shipping/distribution,
accounting and customer service/order entry systems. The Company's Mexican
subsidiary is nearing completion of installing new non-BPCS computer systems,
which are expected to be completed by November 30, 1999. These new systems will
be Y2K compliant, and will control all of this subsidiaries computer systems,
including the shipping/distribution, accounting and customer service/order entry
systems. The Company's European subsidiaries (located near Brussels, Paris and
Wuppertal, Germany) updated their respective computer systems with software
"patches" (software code added to the existing code) that upgraded the software
systems to Y2K compliance. This upgrade, which covers all their computer
systems, was applied in October 1999. In addition, simultaneous with the
software patches, the European subsidiaries are in the process of implementing a
more permanent Y2K solution by installing the Baan ERP computer system, which
will replace all of their existing systems. Portions of the Baan system, which
is Y2K compliant, will be on-line by December 31, 1999, with the balance of the
system to be on-line in 2000. The Brussels and Paris facilities utilize computer
systems for shipping/distribution, accounting and customer service/order entry
processes, while the German location only employs customer service/order entry
systems.
The Company is in the process of inquiring of its suppliers, vendors and
significant customers to determine whether their computer systems and operations
that impact the Company are Y2K compliant. The Company has sent Y2K compliance
surveys to approximately 350 such third parties, and have received responses
from approximately 50%. The Company is currently reviewing the responses, which
generally fall into two categories: current full Y2K compliance (approximately
57% of responses) and expected compliance prior to year end (approximately 43%
of responses). The Company is following up with survey responses that indicate
less than full Y2K compliance to determine the nature of their progress and
expected compliance date. However, the Company is not following up with third
parties that the Company deems insignificant and thus their Y2K failure would
not have a material impact on the Company's business, operations or financial
condition. The Company has not identified specific secondary suppliers or
vendors in the event any experience Y2K-related business interruptions, though
the Company intends to identify such sources for significant suppliers and
vendors prior to year end. However, in such event, the Company believes it can
locate and make such alternative arrangements, although the Company may be
required to pay more for such materials and services due to the loss of quantity
discounts or other
12
<PAGE>
favorable arrangements with our current relationships. Nevertheless, Y2K-related
failures by the Company's suppliers and vendors remain a possibility and could
have an adverse impact on the Company's business, results of operations or
financial condition.
The Company has not formally determined a most reasonably likely worst case
scenario regarding the impact of Y2K problems on our business. However, the
Company believes most likely and significant Y2K-related risks faced by the
Company are business interruptions by our customers. Such interruptions could
include manufacturing or assembly plant shutdowns and the related reduction or
elimination of demand for our products by such customers until their Y2K problem
is remedied. In the survey process, the Company is attempting to identify and
assess any such risks and follow up with any significant customers that indicate
less than full Y2K compliance. To date, 100% of the responding significant
customers have indicated full Y2K compliance.
Based on the Company's assessment and remediation efforts to date, it does
not believe that any problems resulting from the Y2K issue will have a material
adverse effect on its financial condition or results of operations.
The Company believes that its continuing assessment, planning and
implementation process will be effective to achieve a level of readiness that
will meet the challenges presented by Y2K issues in a timely manner. Although
the Company is evaluating the Y2K readiness of third-party software, computer
technology and other hardware and software, the Company cannot guarantee the Y2K
readiness of third-party products, services, or providers that may impact the
Company's operations.
13
<PAGE>
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable
Item 2. Changes in Securities and the Use of Proceeds
Not Applicable
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 4.01 - Amendment No. 6 to the Credit Agreement
(b) Exhibit 27.1 - Scovill Fasteners Inc. Financial Data Schedule
(c) Exhibit 27.2 - Scoville Holdings Inc. Financial Data Schedule
(d) Reports on Form 8-K
The Company filed a current report on Form 8-K on September
23, 1999.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Scovill Fasteners Inc.
Scovill Holdings Inc.
Date: December 1, 1999 /s/ John H. Champagne
---------------------
John H. Champagne
President
Date: December 1, 1999 /s/ Martin A. Moore
-------------------
Martin A. Moore
Executive Vice President,
Chief Financial Officer and
Principal Accounting Officer
15
<PAGE>
Exhibit 4.01
AMENDMENT NO. 6 TO THE CREDIT AGREEMENT
Dated as of September 30, 1999
AMENDMENT NO. 6 TO THE CREDIT AGREEMENT among Scovill
Holdings Inc., a Delaware corporation (the "Parent"), Scovill Fasteners Inc., a
------
Delaware corporation (the "Borrower"), PCI Group, Inc., a Delaware corporation
--------
("PCI"), Rau Fastener Company, LLC, a Delaware limited liability company
---
("Rau"), Scomex, Inc., a Delaware corporation ("Scomex"), the banks, financial
--- ------
institutions and other institutional lenders party to the Credit Agreement
referred to below (collectively, the "Banks") and Credit Agricole Indosuez, as
-----
administrative agent and collateral agent (the "Administrative Agent").
--------------------
PRELIMINARY STATEMENTS:
(1) The Parent, the Borrower, PCI, Rau, Scomex, the Banks,
the Administrative Agent, Swiss Bank Corporation, Stamford Branch, as
documentation agent and syndication agent, and SBC Warburg Dillon Read Inc., as
advisor and arranger, have entered into a Credit Agreement dated as of November
26, 1997, and amendments and waivers thereto dated as of January 17, 1998,
February 20, 1998, September 30, 1998, December 31, 1998 and June 30, 1999 (such
Credit Agreement, as so amended, being the "Credit Agreement"). Capitalized
----------------
terms not otherwise defined in this Amendment have the same meanings as
specified in the Credit Agreement.
(2) The Borrower has requested that Section 5.02(A)(c),
with respect to the September 30, 1999 Scheduled Term Loan Repayment date, be
amended so that such Scheduled Term Loan Repayment will be due on October 31,
1999.
(3) The Required Banks are, on the terms and conditions
stated below, willing to grant the request of the Borrower as hereinafter set
forth.
SECTION 1. Amendment to the Credit Agreement. Section
---------------------------------
5.02(A)(c) of the Credit Agreement is hereby amended in full to read as follows:
"(c) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 5.02(A), the Borrower shall be
required to repay on each date set forth below the principal amount of the Term
Loans, to the extent then outstanding, set forth below opposite such date (each
such repayment as the same may be reduced as provided in Sections 5.01 and
5.02(B), a "Scheduled Term Loan Repayment"):
-----------------------------
17
<PAGE>
Scheduled Repayment Date Amount
--------------------------------------------------
December 31, 1998 $1,000,000
March 31, 1999 $ 750,000
June 30, 1999 $ 750,000
October 31, 1999 $ 750,000
December 31, 1999 $ 750,000
March 31, 2000 $1,250,000
June 30, 2000 $1,250,000
September 30, 2000 $1,250,000
December 31, 2000 $1,250,000
March 31, 2001 $1,500,000
June 30, 2001 $1,500,000
September 30, 2001 $1,500,000
December 31, 2001 $1,500,000
March 31, 2002 $1,500,000
June 30, 2002 $1,500,000
September 30, 2002 $1,500,000
December 31, 2002 $1,500,000
March 31, 2003 $2,250,000
June 30, 2003 $2,250,000
September 30, 2003 $2,250,000
November 26, 2003 $ 250,000"
SECTION 2. Conditions of Effectiveness. This Amendment shall become
---------------------------
effective as of the date first above written when, and only when (i) the
Administrative Agent shall have received counterparts of this Amendment
executed by the Borrower, the other Credit Parties and the Required Banks or, as
to any of the Banks, advice satisfactory to the Administrative Agent that such
Bank has executed this Amendment and (ii) the Administrative Agent shall have
additionally received a certificate, dated the date hereof, in form and
substance satisfactory to the Administrative Agent, signed by a duly authorized
officer of the Borrower stating that:
(i) The representations and warranties contained in Section 3 are
correct on and as of the date of such certificate as though made on and as
of such date other than any such representations or warranties that, by
their terms, refer to a date other than the date of such certificate; and
(ii) No event has occurred and is continuing that constitutes a
Default.
This Amendment is subject to the provisions of Section 15.10 of the Credit
Agreement.
SECTION 3. Representations and Warranties of the Credit Parties.
----------------------------------------------------
Each Credit Party represents and warrants as follows:
(a) Corporate Status. Each of the Parent and its Subsidiaries (i) is
----------------
a duly organized and validly existing corporation or limited liability
company in good standing under the laws of the jurisdiction of its
incorporation or organization, (ii) has the corporate or other power and
authority to own its property and assets and to transact the
18
<PAGE>
business in which it is engaged and presently proposes to engage and (iii)
is duly qualified and is authorized to do business and is in good standing
in each jurisdiction where the ownership, leasing or operation of property
or the conduct of its business requires such qualifications, except for
failures to be so qualified which, in the aggregate, would not be
reasonably likely to have a material adverse effect on the performance,
business, assets, nature of assets, liabilities, operations, properties,
condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole.
(b) Corporate Power and Authority. Each of the Parent and its
-----------------------------
Subsidiaries has the power to execute, deliver and perform the terms and
provisions of this Amendment and the Credit Agreement as amended by this
Amendment (collectively, the "Documents") and has taken all necessary
---------
corporate or other action to authorize the execution, delivery and
performance by it of each of such Documents. Each of the Parent and its
Subsidiaries has duly executed and delivered each of the Documents to which
it is party, and each of such Documents constitutes the legal, valid and
binding obligation of such party enforceable in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or
limiting creditors' rights generally or by general equitable principles
(regardless of whether the issue of enforceability is considered in a
proceeding in equity or at law).
(c) No Violation. Neither the execution, delivery or performance by
------------
the Parent or any of its Subsidiaries of the Documents to which it is a
party, nor compliance by it with the terms and provisions hereof or
thereof, (i) will contravene any provision of any applicable law, statute,
rule or regulation or any order, writ, judgment, injunction or decree of
any court or governmental instrumentality, (ii) will conflict with or
result in any breach of any of the terms, covenants, conditions or
provisions of, or constitute a default or event of default under, or result
in the creation or imposition of (or the obligation to create or impose),
any Lien (except pursuant to the Security Documents) upon any of the
property or assets of the Parent or any of its Subsidiaries pursuant to the
terms of any indenture, mortgage, deed of trust, credit agreement or loan
agreement, or any other agreement, contract or instrument to which the
Parent or any of its Subsidiaries is a party or by which it or any of its
property or assets is bound, or to which it may be subject or (iii) will
violate any provision of the Certificate of Incorporation or By-Laws (or
similar organizational documents) of the Parent or any of its Subsidiaries.
(d) Governmental Approvals. No order, consent, approval, license,
----------------------
authorization or validation of, or filing, recording or registration with
(except as has been obtained or made on or prior to the Initial Borrowing
Date and as is in full force and effect), or exemption by, any governmental
or public body or authority, or any subdivision thereof, is required to
authorize, or is required in connection with, (i) the execution, delivery
and performance of any Document or (ii) the legality, validity, binding
effect or enforceability of any such Document.
(e) Litigation. Other than with respect to matters set forth on
----------
Schedule VIII to the Credit Agreement, there are no actions, suits or
proceedings pending or, to the best knowledge of the Borrower or any of its
Subsidiaries, threatened that (a) would have a material adverse effect on
the operations or financial condition of the Parent and the
19
<PAGE>
Borrower together with their respective Subsidiaries, taken as a whole, or
(b) involves a reasonable possibility of (i) a material adverse effect on
(x) the ability of any of the Credit Parties to perform their respective
obligations hereunder or under any of the Credit Documents or (y) the
rights, remedies and benefits available to the Agents, the Issuing Bank and
the Banks hereunder or under any of the Credit Documents, or (c) would be
materially inconsistent with the assumptions underlying the forecasts
previously provided to the Agents, the Issuing Bank and the Banks.
(f) The Security Documents. (i) The provisions of the Security
----------------------
Agreement are effective to create in favor of the Collateral Agent for the
benefit of the Secured Creditors a legal, valid and enforceable security
interest in all right, title and interest of the respective Credit Parties
in the Collateral described therein, and the Collateral Agent, for the
benefit of the Secured Creditors, in the case of the Credit Parties, has, a
fully perfected first Lien on, and security interest in, all right, title
and interest of the respective Credit Parties, in all of the Collateral
described therein, subject to no other Liens other than Permitted Liens.
(ii) The recordation of the Security Agreement in the United States
Patent and Trademark Office, together with filings on Form UCC-1 in all
applicable jurisdictions made pursuant to the Security Agreement, is
effective, under federal and state law, to perfect the security interest
granted to the Collateral Agent in the Trademarks and Patents covered by
the Security Agreement and the filing of the Security Agreement with the
United States Copyright Office, together with filings on Form UCC-1 made
pursuant to the Security Agreement is effective under federal and state law
to perfect the security interest granted to the Collateral Agent in the
Copyrights covered by the Security Agreement. Each of the Credit Parties
party to the Security Agreement has good and merchantable title to all
Collateral described therein, free and clear of all Liens except those
described above in subsection (i) of this Section 3(f) and in this
subsection (ii).
(iii) From and after the Initial Borrowing Date, the Mortgages create,
as security for the obligations purported to be secured thereby, a valid,
enforceable and perfected security interest in and Lien on all of the
Mortgaged Properties in favor of the Collateral Agent (or such other
trustee as may be required or desirable under local law) for the benefit of
the Secured Creditors, superior to and prior to the rights of all third
persons (except that the security interest created in the Mortgaged
Properties may be subject to the Permitted Encumbrances related thereto)
and subject to no other Liens (other than Permitted Liens). Each of the
Borrower and its Subsidiaries has good and marketable title at the time of
the grant thereof and at all times thereafter to all Mortgaged Properties,
free and clear of all Liens except those described in the first sentence of
this subsection (iii).
SECTION 4. Conditions Subsequent to the Effectiveness of Amendment.
-------------------------------------------------------
(a) The Borrower hereby agrees (x) to deliver to the Administrative Agent in
form and substance satisfactory to the Administrative Agent:
(i) a weekly receipts and disbursements analysis with
weekly comparisons of actual performance to projected performance
until the Administrative Agent shall notify the Borrower that
such analysis is no longer required;
20
<PAGE>
(ii) a Borrowing Base Certificate each week (in addition to
the requirements of Section 9.01(k) of the Credit Agreement)
until the Administrative Agent shall notify the Borrower that
such weekly Borrowing Base Certificate is no longer required;
(iii) a weekly accounts payable and accounts receivable
aging schedule, until the Administrative Agent shall notify the
Borrower that such aging schedule is no longer required; and
(iv) within 30 days of the date first above written,
certified copies of (i) the resolutions of the Board of Directors
of each Credit Party approving this Amendment and (ii) all
documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to this Amendment.
(y) that at any time and from time to time to the extent that
the Required Banks or any of the Agents request in order to fulfill the
requirements of any applicable statute, regulation or order of any
governmental body, to preserve, protect, enforce or realize upon the
security interests granted to the Secured Creditors pursuant to the
Security Documents, each Credit Party shall, and shall cause each of its
Subsidiaries to, cooperate with and promptly take all actions necessary to
assist the Banks, the Issuing Bank and the Agents, including, without
limitation, to make, execute, acknowledge, file and/or deliver to the
Banks, the Issuing Bank or the Agents, as the case may be, such
information, documents, certificates, reports and other assurances or
instruments, which the Banks, the Issuing Bank or the Agents, as the case
may be, deems appropriate or advisable to comply with such statutes,
regulations or orders so as to preserve, protect, enforce or realize upon
such security interests granted to the Secured Creditors.
(b) The Borrower will use its best efforts to cooperate with counsel
to the Administrative Agent to complete a satisfactory review of security and
related loan documentation, not later than October 31, 1999.
(c) Upon the Administrative Agent's request, the Borrower shall
cooperate with a field audit of the Borrower's accounts receivable and
inventory.
SECTION 5. Reference to and Effect on the Credit Documents. (a) On
-----------------------------------------------
and after the effectiveness of this Amendment, each reference in the Credit
Agreement to "this Agreement", "hereunder", "hereof" or words of like import
referring to the Credit Agreement, and each reference in the Notes and each of
the other Credit Documents to "the Credit Agreement", "thereunder", "thereof" or
words of like import referring to the Credit Agreement, shall mean and be a
reference to the Credit Agreement, as amended by this Amendment.
(b) The Credit Agreement, as specifically amended by this Amendment,
is and shall continue to be in full force and effect and is hereby in all
respects ratified and confirmed. Without limiting the generality of the
foregoing, the Security Documents and all of the Collateral described therein do
and shall continue to secure the payment of all Obligations of the Credit
Parties under the Credit Documents, in each case as amended by this Amendment.
(c) The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a Amendment of any right,
power or remedy of
21
<PAGE>
any Bank or any Agent under any of the Loan Documents, nor constitute a
Amendment of any provision of any of the Loan Documents.
SECTION 6. Costs and Expenses. Each of the Parent and the Borrower
------------------
jointly and severally agree to pay on demand all costs and expenses of the
Agents in connection with the preparation, execution, delivery and
administration, modification and amendment of this Amendment and the other
instruments and documents to be delivered hereunder (including, without
limitation, the reasonable fees and expenses of counsel for the Agents) in
accordance with the terms of Section 15.01 of the Credit Agreement.
SECTION 7. Execution in Counterparts. This Amendment may be executed
-------------------------
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute but one and the same agreement.
Delivery of an executed counterpart of a signature page to this Amendment by
telecopier shall be effective as delivery of an original executed counterpart of
this Amendment.
SECTION 8. Governing Law. This Amendment shall be governed by, and
-------------
construed in accordance with, the laws of the State of New York.
22
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
SCOVILL HOLDINGS INC.
By
Name:
Title:
SCOVILL FASTENERS INC.
By
Name:
Title:
PCI GROUP, INC.
By
Name:
Title:
RAU FASTENER COMPANY, LLC
By
Name:
Title:
SCOMEX, INC.
By
Name:
Title:
23
<PAGE>
CREDIT AGRICOLE INDOSUEZ
as Administrative Agent and as a Bank
By
Name:
Title:
By
Name:
Title:
INDOSUEZ CAPITAL FUNDING IV, L.P.
By: INDOSUEZ CAPITAL, as Portfolio Advisor
By
Name:
Title:
UBS AG, Stamford Branch
By
Name:
Title:
By
Name:
Title:
PILGRIM PRIME RATE TRUST
By: PILGRIM INVESTMENTS, INC., as its investment
manager
By
Name:
Title:
24
<PAGE>
IBJ WHITEHALL BANK & TRUST
COMPANY (Formerly known as
IBJ Schroder Bank & Trust
Company)
By
Name:
Title:
SUMMIT BANK
By
Name:
Title:
FLEET BUSINESS CREDIT CORPORATION
By
Name:
Title:
25
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0001051885
<NAME> Scovill Fasteners
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 2,228
<SECURITIES> 0
<RECEIVABLES> 15,811
<ALLOWANCES> 1,246
<INVENTORY> 23,514
<CURRENT-ASSETS> 40,769
<PP&E> 65,952
<DEPRECIATION> 15,237
<TOTAL-ASSETS> 213,445
<CURRENT-LIABILITIES> 18,910
<BONDS> 144,735
0
0
<COMMON> 0
<OTHER-SE> 23,956
<TOTAL-LIABILITY-AND-EQUITY> 213,445
<SALES> 69,010
<TOTAL-REVENUES> 69,010
<CGS> 51,746
<TOTAL-COSTS> 62,860
<OTHER-EXPENSES> 2,857
<LOSS-PROVISION> 330
<INTEREST-EXPENSE> 12,460
<INCOME-PRETAX> (9,167)
<INCOME-TAX> (1,052)
<INCOME-CONTINUING> (8,115)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,115)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0001051860
<NAME> Scoville Holdings
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 2,228
<SECURITIES> 0
<RECEIVABLES> 15,811
<ALLOWANCES> 1,246
<INVENTORY> 23,514
<CURRENT-ASSETS> 40,769
<PP&E> 65,952
<DEPRECIATION> 15,237
<TOTAL-ASSETS> 213,445
<CURRENT-LIABILITIES> 18,910
<BONDS> 144,735
0
0
<COMMON> 0
<OTHER-SE> 23,956
<TOTAL-LIABILITY-AND-EQUITY> 213,445
<SALES> 69,010
<TOTAL-REVENUES> 69,010
<CGS> 51,746
<TOTAL-COSTS> 63,310
<OTHER-EXPENSES> 2,857
<LOSS-PROVISION> 330
<INTEREST-EXPENSE> 12,460
<INCOME-PRETAX> (9,617)
<INCOME-TAX> (1,052)
<INCOME-CONTINUING> (8,565)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,565)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
