<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 quarterly period ended July 1, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ______ to ______
Commission file number: 1-14557
---------
U.S. INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of 22-3568449
incorporation or organization) (I.R.S.Employer Identification No.)
101 WOOD AVENUE SOUTH
ISELIN, NJ 08830
(Address of principal executive offices)
(732) 767-0700
(Registrant's telephone number, including area code)
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
---
As of August 1, 2000, U.S. Industries, Inc. had one class of common stock, of
which 76,839,708 shares were outstanding.
<PAGE>
U.S. INDUSTRIES, INC.
INDEX
<TABLE>
<CAPTION>
Page
No.
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Statements of Operations
for the Three and Nine Months Ended June 30, 2000 and 1999..... 1
Consolidated Condensed Balance Sheets, June 30, 2000
and September 30, 1999......................................... 2
Consolidated Condensed Statements of Cash Flows
for the Nine Months Ended June 30, 2000 and 1999............... 3
Notes to Consolidated Condensed Financial Statements........... 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations .....................................19
Item 3. Quantitative and Qualitative Disclosures About
Market Risk ...................................................24
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K...............................25
SIGNATURES......................................................................26
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION.
ITEM 1. FINANCIAL STATEMENTS.
U.S. INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(IN MILLIONS EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
-------- --------
2000 1999 2000 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net Sales $ 729 $ 915 $ 2,433 $ 2,513
Operating costs and expenses:
Cost of products sold 489 642 1,674 1,762
Selling, general and administrative expenses 168 191 566 544
Non-recurring charges -- 1 13 1
------- ------- ------- -------
Operating income 72 81 180 206
Interest expense 20 20 65 57
Interest income (8) (1) (10) (3)
Gain on sale of Diversified businesses -- -- (24) --
Equity earnings in investee (1) -- (1) --
Other expense (income), net 2 (9) 3 (9)
------- ------- ------- -------
Income before income taxes and discontinued operations 59 71 147 161
Provision for income taxes 24 26 57 62
------- ------- ------- -------
Income from continuing operations 35 45 90 99
Loss from discontinued operations, net of tax -- -- -- (13)
------- ------- ------- -------
Net Income $ 35 $ 45 $ 90 $ 86
------- ------- ------- -------
------- ------- ------- -------
Earnings per basic share:
Income from continuing operations $ 0.44 $ 0.50 $ 1.08 $ 1.05
Loss from discontinued operations -- -- -- (0.13)
------- ------- ------- -------
Net income $ 0.44 $ 0.50 $ 1.08 $ 0.92
------- ------- ------- -------
------- ------- ------- -------
Earnings per diluted share:
Income from continuing operations $ 0.44 $ 0.49 $ 1.06 $ 1.03
Loss from discontinued operations -- -- -- (0.13)
------- ------- ------- -------
Net income $ 0.44 $ 0.49 $ 1.06 $ 0.90
------- ------- ------- -------
------- ------- ------- -------
Cash dividend declared per share $ 0.05 $ 0.05 $ 0.15 $ 0.15
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
1
<PAGE>
U.S. INDUSTRIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN MILLIONS)
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
2000 1999
------ ------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 35 $ 58
Trade receivables, net 549 667
Inventories 513 631
Deferred income taxes 63 68
Other current assets 57 67
------ ------
Total current assets 1,217 1,491
Property, plant and equipment, net 437 597
Deferred income taxes -- 6
Other assets 394 185
Goodwill, net 654 749
------ ------
$2,702 $3,028
------ ------
------ ------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 32 $ 33
Current maturities of long-term debt 223 15
Trade accounts payable 214 278
Accrued expenses and other liabilities 223 302
Income taxes payable 25 29
------ ------
Total current liabilities 717 657
Long-term debt 885 1,219
Deferred income taxes 10 --
Other liabilities 271 232
------ ------
Total liabilities 1,883 2,108
Commitments and contingencies
Stockholders' equity 819 920
------ ------
$2,702 $3,028
------ ------
------ ------
</TABLE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
2
<PAGE>
U.S. INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(IN MILLIONS-UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JUNE 30,
2000 1999
------- -------
<S> <C> <C>
OPERATING ACTIVITIES:
Income from continuing operations $ 90 $ 99
Adjustments to reconcile income from continuing operations to net cash
(used in) provided by operating activities of continuing operations:
Depreciation and amortization 75 72
Provision for doubtful accounts 4 3
Provision for deferred income taxes 2 --
Non-recurring charges 2 --
Gain on sale of excess real estate (3) (9)
Gain on sale of businesses (24) --
Equity earnings in investee (1) --
Changes in operating assets and liabilities,
excluding the effects of acquisitions and dispositions (194) (73)
------- -------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES OF
CONTINUING OPERATIONS (49) 92
------- -------
Loss from discontinued operations -- (13)
Decrease in net assets held for disposition -- 36
------- -------
NET CASH PROVIDED BY DISCONTINUED OPERATIONS -- 23
------- -------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (49) 115
------- -------
INVESTING ACTIVITIES:
Proceeds from sale of businesses 404 118
Acquisition of companies, net of cash acquired (78) (212)
Purchases of property, plant and equipment (59) (75)
Proceeds from sale of excess real estate 6 16
Proceeds from sales of property, plant and equipment 1 2
Collection of note -- 1
Other investing activities, net (2) (1)
------- -------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 272 (151)
------- -------
FINANCING ACTIVITIES:
Proceeds from long-term debt 2,480 1,745
Repayment of long-term debt (2,565) (1,437)
Proceeds from (repayment of) notes payable, net 1 (1)
Proceeds from exercise of stock options 2 3
Purchase of treasury stock (143) (128)
Payment of dividends (12) (14)
Payment to settle interest rate lock agreements -- (22)
------- -------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (237) 146
Effect of exchange rate changes on cash and cash equivalents (9) (8)
------- -------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (23) 102
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 58 44
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 35 $ 146
------- -------
------- -------
</TABLE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
3
<PAGE>
U.S. INDUSTRIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2000
NOTE 1-BASIS OF PRESENTATION
U.S. Industries, Inc. ("USI" and, together with its subsidiaries, the
"Company") manufactures and distributes a broad range of building and home
products and consumer products through three operating divisions: USI Bath and
Plumbing Products, Lighting Corporation of America and USI Hardware and Tools.
The Company completed the disposition of a majority equity interest in its
Diversified segment, by means of two separate transactions, on March 24, 2000
(see Note 9). Subsequent to March 24, 2000, the Company accounts for its
retained interest in its Diversified segment under the equity method of
accounting. The accompanying financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information, Article 10 of Regulation S-X and with the instructions to Form
10-Q. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. The interim financial data for the three and nine months ended June
30, 2000 and 1999 are unaudited and, in the opinion of management, reflect all
necessary adjustments for a fair presentation of the financial position and
results of operations for the interim periods on a consistent basis. Such
adjustments were of a normal and recurring nature. The results of operations for
the three and nine month periods ended June 30, 2000 are not necessarily
indicative of those for the full fiscal year ending September 30, 2000. For
further information, refer to the Consolidated Financial Statements and
footnotes thereto included in the Company's Annual Report on Form 10-K for the
year ended September 30, 1999.
The Company's fiscal year ends on the Saturday nearest to September 30.
All three and nine month data contained in this report reflect results of
operations for the 13-week periods and 39-week periods ended on the Saturday
closest to June 30, 2000 and 1999, respectively, but are presented as of June 30
for convenience.
NOTE 2-INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
(IN MILLIONS)
JUNE 30, SEPTEMBER 30,
2000 1999
----- -----
(UNAUDITED)
<S> <C> <C>
Finished products $ 267 $ 301
Work-in process 74 115
Raw materials 172 215
----- -----
$ 513 $ 631
----- -----
----- -----
</TABLE>
4
<PAGE>
U.S. INDUSTRIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2000
NOTE 3-LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
(IN MILLIONS)
JUNE 30, SEPTEMBER 30,
-------- -------------
2000 1999
------- -------
(UNAUDITED)
<S> <C> <C>
7.125% Senior Notes, net $ 249 $ 248
7.25% Senior Notes, net 123 123
Revolving credit facility, US dollar 200 300
Revolving credit facility, foreign currencies 247 279
Commercial paper 259 167
Other short-term borrowings 11 55
Other long-term debt 19 62
------- -------
1,108 1,234
Less current maturities (223) (15)
------- -------
Long-term debt $ 885 $ 1,219
======= =======
</TABLE>
The 7.25% Notes and the 7.125% Notes (collectively, the "Notes"), along
with the Credit Agreement and Credit Facility described below, are joint and
several obligations of USI, USI Global Corp. ("USI Global") and USI American
Holdings, Inc. ("USIAH"), and are guaranteed by USI Atlantic Corp. ("USI
Atlantic") (see Note 10). USI Global and USI Atlantic are wholly-owned
subsidiaries of USI. USIAH is a wholly-owned subsidiary of USI Atlantic. The
Notes are unsecured but the indentures place restrictions on liens and
subsidiary indebtedness.
The Company maintains a five year revolving line of credit providing
for borrowings in both US dollars and foreign currency of up to an aggregate
amount of $650 million (the "Credit Agreement"). The revolving credit commitment
will be permanently reduced by $150 million in December 2000 and terminates in
December 2001. As of June 30, 2000, the Company had $203 million available under
this revolving line of credit.
During fiscal 1999, the Company commenced a $300 million commercial
paper program, of which $259 million was outstanding at June 30, 2000. The
commercial paper is supported by a $300 million 364-day credit facility (the
"Credit Facility") which expires on October 27, 2000.
At June 30, 2000, the Company had unused availability of approximately
$468 million, including approximately $244 million of committed availability
under its Credit Agreement and Credit Facility and $224 million under
uncommitted lines of credit. The Credit Agreement and the Credit Facility
contain certain covenant restrictions that limit the amount of indebtedness the
Company may incur. At June 30, 2000, the Company could have incurred an
additional $130 million in indebtedness under the specified restrictions on the
Company's permitted ratio of debt to total capital.
NOTE 4-COMMITMENTS AND CONTINGENCIES
The Company is subject to a wide range of environmental protection
laws. The Company has remedial and investigatory activities underway at
approximately 26 sites. In addition, the Company has been named as a Potentially
Responsible Party ("PRP") at 11 "Superfund" sites pursuant to the Comprehensive
Environmental Response Compensation and Liability Act of 1980 or comparable
statutes.
It is often difficult to estimate the future impact of environmental
matters, including potential liabilities. The Company accrues for losses
associated with environmental remediation obligations when such losses are
probable and reasonably estimable. This practice is followed whether the claims
are asserted or unasserted. Reserves for estimated losses from environmental
remediation are, depending on the site, based primarily upon internal or third
party environmental studies, and estimates as to the number, participation level
and financial viability of any other PRP, to the extent of contamination and the
nature of required remedial actions. Such reserves are adjusted as further
information
5
<PAGE>
U.S. INDUSTRIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2000
NOTE 4-COMMITMENTS AND CONTINGENCIES (CONTINUED)
develops or circumstances change. Costs of future expenditures for environmental
remediation obligations are not discounted to their present fair value.
Recoveries of environmental remediation costs from other parties are recognized
as assets when their receipt is deemed probable. Management expects that the
amount accrued will be paid out over the periods of remediation for the
applicable sites which range up to 30 years and that all such reserves are
adequate based on all current data. Each of the sites in question is at various
stages of investigation or remediation; however, no information currently
available reasonably suggests that projected expenditures associated with
remedial action or compliance with environmental laws, for any single site or
for all sites in the aggregate, will have a material adverse effect on the
Company's financial condition, results of operations or cash flows.
At June 30, 2000, the Company had accrued $11 million for known
environmental related matters. The Company believes that the range of liability
for such matters is between $3 million and $15 million.
Also, certain of the Company's subsidiaries are defendants or
plaintiffs in lawsuits that have arisen in the normal course of business. While
certain of these matters involve substantial amounts, it is management's
opinion, based on the advice of counsel, that the ultimate resolution of such
litigation will not have a material adverse effect on the Company's financial
condition, results of operations or cash flows.
During October 1999, the Company entered into equity instrument
contracts that were utilized to purchase approximately $40 million of its
common stock. At the discretion of the Company, such contracts can be settled
in cash, shares or a combination of both, at anytime prior to October 20,
2000.
In June 2000, upon expiration of the contingency period related to the
December 1997 acquisition of Spear & Jackson plc ("S&J"), the Company made an
additional cash payment of (pound sterling) 47 million ($71 million), to the
former owners of S&J. A portion of the contingent cash payment ($36 million)
was recorded as an adjustment to stockholders' equity as it was based upon
the market value of the Company's common stock price at the end of the
contingency period, and the remainder of the cash payment ($35 million) was
recorded as additional goodwill as it related to the settlement of additional
contingent consideration. Further, the Company repurchased all of its common
stock held by the former owners of S&J for $44 million. The Company is
reviewing the recoverability of the S&J goodwill and expects such analysis to
be completed during the fourth quarter of fiscal 2000.
6
<PAGE>
U.S. INDUSTRIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2000
NOTE 5-SEGMENT DATA
The results of the Diversified segment are included until the March 24,
2000 disposal date, after which the Company's proportionate share of earnings
from the Diversified segment is recorded as equity earnings under the equity
method of accounting.
The following table presents information about the Company by segment.
<TABLE>
<CAPTION>
(IN MILLIONS) (IN MILLIONS)
FOR THE THREE MONTHS ENDED JUNE 30, FOR THE NINE MONTHS ENDED JUNE 30,
----------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
------ ------ ------ ------ ------ ------ ------ ------
NET SALES OPERATING INCOME NET SALES OPERATING INCOME
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Business Segments:
Bath and Plumbing Products (1) $ 389 $ 353 $ 52 $ 47 $1,033 $ 911 $ 96 $ 104
Lighting Corporation of America (2) 204 204 9 12 602 591 26 32
Hardware and Tools 136 155 15 15 384 360 36 28
Diversified (3) -- 203 -- 13 414 651 35 59
------ ------ ------ ------ ------ ------ ------ ------
Totals $ 729 $ 915 76 87 $2,433 $2,513 193 223
------ ------ ------ ------
------ ------ ------ ------
Corporate expenses (4) (6) (13) (17)
------- ------ ------ ------
Total Operating Income 72 81 180 206
Interest expense 20 20 65 57
Interest income (8) (1) (10) (3)
Gain on sale of Diversified businesses -- -- (24) --
Equity earnings in investee (1) -- (1) --
Other expense (income), net 2 (9) 3 (9)
----- ----- ----- -----
Income before income taxes 59 71 147 161
Provision for income taxes 24 26 57 62
----- ----- ----- -----
Income from continuing operations $ 35 $ 45 $ 90 $ 99
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
(1) Operating income for the nine months ended June 30, 2000 includes a $13
million restructuring charge.
(2) Operating income for the three and nine months ended June 30, 2000 includes
$3 million and $4 million, respectively, of losses and exit costs associated
with the discontinuance of an unprofitable residential product line.
Operating income for the three and nine months ended June 30, 1999 includes
$1 million of severance related charges.
(3) Operating income for the three and nine months ended June 30, 1999 includes
$12 million and $14 million, respectively, of restructuring and other
unusual costs.
On May 4, 2000, the Company announced that it engaged Compass Partners
International, LLC as its financial advisor to assist in reviewing strategic
alternatives for Lighting Corporation of America ("LCA"), including a possible
sale. LCA, which constitutes the Company's entire lighting segment,
manufacturers and distributes a complete line of indoor and outdoor lighting for
the commercial, institutional and residential markets. Its major brand names
include Architectural Area Lighting, Columbia, Dual-Lite, Prescolite, Moldcast,
Spaulding, Kim, Progress and SiTeco.
7
<PAGE>
U.S. INDUSTRIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2000
NOTE 6-COMPREHENSIVE INCOME
The components of the Company's comprehensive income were as follows:
<TABLE>
<CAPTION>
(IN MILLIONS - UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income $ 35 $ 45 $ 90 $ 86
---- ---- ---- ----
Foreign currency translation:
Foreign currency translation adjustment
arising during period (7) (2) (15) (18)
Plus: reclassification adjustment for
translation realized in net income -- -- 3 --
---- ---- ---- ----
Net currency translation adjustment (7) (2) (12) (18)
---- ---- ---- ----
Comprehensive income $ 28 $ 43 $ 78 $ 68
---- ---- ---- ----
---- ---- ---- ----
</TABLE>
NOTE 7-EARNINGS PER SHARE
The following is a reconciliation of the numerators and denominators of
the basic and diluted earnings per share calculation:
<TABLE>
<CAPTION>
(IN MILLIONS EXCEPT PER SHARE DATA)
(UNAUDITED)
INCOME FROM INCOME FROM
CONTINUING PER SHARE CONTINUING PER SHARE
OPERATIONS SHARES AMOUNT OPERATIONS SHARES AMOUNT
---------- ---------- --------- ----------- --------- ---------
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
JUNE 30, 2000 JUNE 30, 2000
----------------------------------- ---------------------------------
<S> <C> <C> <C> <C> <C> <C>
Earnings per basic share $ 35 80.4 $ 0.44 $ 90 83.3 $ 1.08
Effect of dilutive securities
Stock options 0.4 0.4
Nonvested restricted stock 0.4 0.8
Equity instrument contract 0.3 0.4
---------- ---------- --------- ----------- --------- ---------
Earnings per diluted share $ 35 81.5 $ 0.44 $ 90 84.9 $ 1.06
---------- ---------- --------- ----------- --------- ---------
---------- ---------- --------- ----------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
JUNE 30, 1999 JUNE 30, 1999
-------------------------------- ------------------------------
<S> <C> <C> <C> <C> <C> <C>
Earnings per basic share $ 45 90.2 $ 0.50 $ 99 93.9 $ 1.05
Effect of dilutive securities
Stock options 0.8 0.7
Nonvested restricted stock 1.1 1.1
------ ---- -------- ----- ---- --------
Earnings per diluted share $ 45 92.1 $ 0.49 $ 99 95.7 $ 1.03
------ ---- -------- ----- ---- --------
------ ---- -------- ----- ---- --------
</TABLE>
8
<PAGE>
U.S. INDUSTRIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2000
NOTE 7-EARNINGS PER SHARE (CONTINUED)
Diluted common shares include shares that would be outstanding assuming
the fulfillment of conditions that would remove the restriction on nonvested
shares and the exercise of stock options. Options to purchase approximately 2.5
million shares in the three and nine months ended June 30, 2000, and options to
purchase approximately 1.2 million and 1.3 million shares in the three and nine
months ended June 30, 1999, respectively, were not included in the computation
of earnings per share because the options' exercise prices exceeded the average
market price of the common shares for those periods.
NOTE 8- RESTRUCTURING CHARGES
In January 2000, a decision was made to close the USI Bath and Plumbing
corporate office in Dallas, Texas and relocate it to the USI Corporate office in
New Jersey. The closing of the USI Bath and Plumbing corporate office resulted
in the termination of 30 employees and vacating the Dallas corporate office. The
Company recorded a pre-tax charge of $13 million relating to this decision,
which included severance costs of $2 million, lease costs of $9 million for a
lease expiring November 2007, and a write-off of $2 million relating to
leasehold improvements and other fixed assets.
The accrued liabilities relating to the cash restructuring charge is detailed as
follows:
<TABLE>
<CAPTION>
(IN MILLIONS - UNAUDITED)
LEASE AND
CONTRACT SEVERANCE
RELATED AND RELATED TOTAL
COSTS COSTS COSTS
---------- ---------- ---------
<S> <C> <C> <C>
Balance at September 30, 1999 $ 3 $ 5 $ 8
Cash payments (2) (4) (6)
Reserves of Diversified companies sold -- (1) (1)
Fiscal 2000 charge 9 2 11
---------- ---------- ---------
Balance at June 30, 2000 $ 10 $ 2 $ 12
---------- ---------- ---------
---------- ---------- ---------
</TABLE>
Approximately $5 million of the reserve is included in the balance
sheet caption "accrued expenses and other liabilities", while the remaining $7
million is recorded in the balance sheet caption "other liabilities".
The Company expects the remaining cash charges of $12 million to be
paid by the respective lease termination dates and over the periods provided by
severance agreements.
NOTE 9- DISPOSITION OF BUSINESSES AND DISCONTINUED OPERATIONS
On March 24, 2000, in two separate transactions (the "Diversified
Transactions"), the Company completed the previously announced disposition of a
majority equity interest in its Diversified group to Automotive Interior
Products LLC ("AIP"), a Citicorp Venture Capital portfolio company. The
consideration for the Diversified Transactions included a combination of cash
and notes.
In one of the transactions, the Company disposed of the following
subsidiaries to AIP, which are now held by Strategic Industries, LLC ("SILLC"):
Atech Turbine Components, Inc.; Bearing Inspection, Inc.; BiltBest Products,
Inc.; EJ Footwear Corp., including Georgia Boot Inc. and Lehigh Safety Shoe Co.;
Garden State Tanning Inc.; Huron Inc.; Jade Holdings Pte Ltd, including Jade
Technologies Singapore Ltd and FSM Europe B.V.; Leon Plastics Inc.; Native
Textiles Inc.; and SCF Industries, Inc.
9
<PAGE>
U.S. INDUSTRIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2000
NOTE 9- DISPOSITION OF BUSINESSES AND DISCONTINUED OPERATIONS (CONTINUED)
The Company received gross cash proceeds of $198 million and
approximately $205 million aggregate principal amount of 12% increasing rate
senior notes due 2007 issued by SILLC (the "Senior Notes"), and, in addition,
SILLC assumed approximately $8 million of existing bank debt. The Company also
retained a preferred equity interest having a stated value of approximately
$19.5 million and a 17.7% common equity interest in SILLC. The purchase price is
subject to a post-closing working capital adjustment. As a result of this
transaction, for the quarter ended March 31, 2000, the Company recorded a
pre-tax gain of $24 million ($15 million after-tax).
In the other transaction, Rexair, Inc. ("Rexair"), which manufactures
"Rainbow" brand vacuum cleaners, sold newly issued shares to SILLC representing,
after issuance, 75% of the equity interest in Rexair. The Company received
approximately $195 million in cash and retained a 25% direct equity interest in
Rexair.
As part of the Rexair transaction, the Company guaranteed Rexair's new
$200 million credit facility (the "Rexair Facility"), which is scheduled to
mature on the fifth anniversary of the closing. However, Rexair is primarily
responsible for the repayment of indebtedness under the Rexair Facility. The
Rexair Facility provides that all Rexair free cash flow, as defined, must be
used to repay the outstanding balance of the Rexair Facility. At June 30, 2000,
the outstanding balance on the Rexair Facility was approximately $186 million.
As a result of the Rexair transaction, the Company recorded a deferred gain of
approximately $45 million, which will be deferred until the release of the
guarantee of the Rexair Facility. The Company's 25% share of the net liabilities
of Rexair amounting to $38 million and the deferred gain of $45 million are
included in the balance sheet caption "other liabilities".
The Company's retained interest in SILLC and Rexair is accounted for
under the equity method of accounting subsequent to the March 24, 2000 disposal
date. For the quarter ended June 30, 2000, the Company recorded equity earnings
in investee of approximately $1 million.
In the second quarter of fiscal 2000, the Company sold its fire
protection businesses. The cash consideration paid for these businesses totaled
approximately $23 million, which approximated its carrying value.
During the first quarter of fiscal 2000, the Company disposed of assets
relating to its ladder operations and the infant and children footwear
operation. The total proceeds of these separate transactions were $17 million,
which approximated its carrying value. The Company has retained certain
liabilities of the ladder and footwear operations.
In the second quarter of fiscal 1999, the Company adopted a formal plan
to dispose of The Ertl Company, Inc. ("Ertl"), which was sold in April 1999 for
gross proceeds of approximately $95 million, which resulted in a net-of-tax loss
of $13 million. In addition, for the nine months ended June 30, 1999, the
Company recorded a loss from the operations of Ertl of $1 million. The results
of Ertl have been reclassified as discontinued operations for all periods
presented.
During April 1999, the Company completed the sale of its investment in
Teardrop Golf. The Company realized a $1 million net-of-tax gain from the sale.
10
<PAGE>
U.S. INDUSTRIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2000
NOTE 10-SUPPLEMENTAL JOINT ISSUER AND GUARANTOR FINANCIAL INFORMATION
The following represents the supplemental consolidating condensed
financial statements of USI, USI Global and USIAH which are the jointly
obligated issuers of the Notes, and USI Atlantic, which is the guarantor of the
Notes, and their non-guarantor subsidiaries, as of June 30, 2000 and September
30, 1999 and for the three and nine months ended June 30, 2000 and 1999.
Separate consolidated financial statements of USI, USI Global, USI Atlantic and
USIAH are not presented, as management has determined that they would not be
material to investors.
<TABLE>
<CAPTION>
(IN MILLIONS - UNAUDITED)
FOR THE THREE MONTHS ENDED JUNE 30, 2000
-----------------------------------------------------------------------------
USI USI NONGUARANTOR
USI GLOBAL ATLANTIC USIAH SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------ ------ -------- ------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Sales $ -- $ -- $ -- $ -- $ 729 $ -- $ 729
Operating costs and expenses:
Cost of products sold -- -- -- -- 489 -- 489
Selling, general and administrative expenses 6 (1) -- -- 163 -- 168
----- ------ ----- ----- ----- ------ -----
Operating income (loss) (6) 1 -- -- 77 -- 72
Interest expense 10 9 -- -- 1 -- 20
Interest income (7) -- -- -- (1) -- (8)
Intercompany interest (income) expense, net (4) (10) -- -- 14 -- --
Other (income) expense, net -- -- -- -- 2 -- 2
Other intercompany (income) expense -- 15 -- (15) -- -- --
Equity in earnings of investees, net (38) (24) (9) -- -- 70 (1)
----- ------ ----- ----- ----- ------ -----
Income before income taxes 33 11 9 15 61 (70) 59
Provision (benefit) for income taxes (2) (6) -- 6 26 -- 24
----- ------ ----- ----- ----- ------ -----
Net income (loss) $ 35 $ 17 $ 9 $ 9 $ 35 $ (70) $ 35
----- ------ ----- ----- ----- ------ -----
----- ------ ----- ----- ----- ------ -----
</TABLE>
11
<PAGE>
U.S. INDUSTRIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2000
NOTE 10-SUPPLEMENTAL JOINT ISSUER AND GUARANTOR FINANCIAL INFORMATION
(CONTINUED)
<TABLE>
<CAPTION>
(IN MILLIONS - UNAUDITED)
FOR THE NINE MONTHS ENDED JUNE 30, 2000
-----------------------------------------------------------------------------
USI USI NONGUARANTOR
USI GLOBAL ATLANTIC USIAH SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------ ------ -------- ------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Sales $ -- $ -- $ -- $ -- $ 2,433 $ -- $ 2,433
Operating costs and expenses:
Cost of products sold -- -- -- -- 1,674 -- 1,674
Selling, general and administrative expenses 15 (1) -- -- 552 -- 566
Non-recurring charges -- -- -- -- 13 -- 13
------- ------ ------ ------ ------- ------- -------
Operating income (loss) (15) 1 -- -- 194 -- 180
Interest expense 30 31 -- -- 4 -- 65
Interest income (7) -- -- -- (3) -- (10)
Intercompany interest (income) expense, net (10) (42) -- -- 52 -- --
Gain on sale of Diversified businesses -- -- -- -- (24) -- (24)
Other (income) expense, net -- -- -- -- 3 -- 3
Management fee (income) expense (15) -- -- -- 15 -- --
Other intercompany (income) expense -- 46 -- (46) -- -- --
Equity in earnings of investees, net (98) (76) (28) -- -- 201 (1)
------- ------ ------ ------ ------- ------- -------
Income before income taxes 85 42 28 46 147 (201) 147
Provision (benefit) for income taxes (5) (14) -- 18 58 -- 57
------- ------ ------ ------ ------- ------- -------
Net income (loss) $ 90 $ 56 $ 28 $ 28 $ 89 $(201) $ 90
------- ------ ------ ------ ------- ------- -------
------- ------ ------ ------ ------- ------- -------
</TABLE>
12
<PAGE>
U.S. INDUSTRIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2000
NOTE 10-SUPPLEMENTAL JOINT ISSUER AND GUARANTOR FINANCIAL INFORMATION
(CONTINUED)
<TABLE>
<CAPTION>
(IN MILLIONS - UNAUDITED)
FOR THE THREE MONTHS ENDED JUNE 30, 1999
-----------------------------------------------------------------------------
USI USI NONGUARANTOR
USI GLOBAL ATLANTIC USIAH SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------ ------ -------- ------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Sales $ -- $ -- $ -- $ -- $ 915 $ -- $ 915
Operating costs and expenses:
Cost of products sold -- -- -- -- 642 -- 642
Selling, general and administrative expenses 6 -- -- -- 185 -- 191
Non-recurring charges -- -- -- -- 1 -- 1
------- ------ ------ ------ ------- ------- -------
Operating income (loss) (6) -- -- -- 87 -- 81
Interest expense 9 6 -- 3 2 -- 20
Interest income -- -- -- -- (1) -- (1)
Intercompany interest (income) expense, net (3) (10) -- (5) 18 -- --
Other (income) expense, net -- -- -- -- (9) -- (9)
Other intercompany (income) expense -- -- -- -- -- -- --
Equity in earnings of investees, net (53) (22) (8) (7) -- 90 --
------- ------ ------ ------ ------- ------- -------
Income before income taxes and
discounted operations 41 26 8 9 77 (90) 71
Provision (benefit) for income taxes (4) 2 -- 1 27 -- 26
------- ------ ------ ------ ------- ------- -------
Income from continuing operations 45 24 8 8 50 (90) 45
Discounted operations, net of tax -- -- -- -- -- -- --
------- ------ ------ ------ ------- ------- -------
Net income (loss) $ 45 $ 24 $ 8 $ 8 $ 50 $ (90) $ 45
------- ------ ------ ------ ------- ------- -------
------- ------ ------ ------ ------- ------- -------
</TABLE>
13
<PAGE>
U.S. INDUSTRIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2000
NOTE 10-SUPPLEMENTAL JOINT ISSUER AND GUARANTOR FINANCIAL INFORMATION
(CONTINUED)
<TABLE>
<CAPTION>
(IN MILLIONS - UNAUDITED)
FOR THE NINE MONTHS ENDED JUNE 30, 1999
-----------------------------------------------------------------------------
USI USI NONGUARANTOR
USI GLOBAL ATLANTIC USIAH SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------ ------ -------- ------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Sales $ -- $ -- $ -- $ -- $ 2,513 $ -- $ 2,513
Operating costs and expenses:
Cost of products sold -- -- -- -- 1,762 -- 1,762
Selling, general and administrative expenses 18 -- -- -- 526 -- 544
Non-recurring charges -- -- -- -- 1 -- 1
------- ------ ------ ------ ------- ------- -------
Operating income (loss) (18) -- -- -- 224 -- 206
Interest expense 22 6 -- 21 8 -- 57
Interest income -- -- -- -- (3) -- (3)
Intercompany interest (income) expense, net (9) (10) -- (33) 52 -- --
Other (income) expense, net -- -- -- -- (9) -- (9)
Other intercompany (income) expense -- -- -- -- -- -- --
Equity in earnings of investees, net (105) (22) (37) (30) -- 194 --
------- ------ ------ ------ ------- ------- -------
Income before income taxes and
discounted operations 74 26 37 42 176 (194) 161
Provision (benefit) for income taxes (12) 2 -- 5 67 -- 62
------- ------ ------ ------ ------- ------- -------
Income from continuing operations 86 24 37 37 109 (194) 99
Discounted operations, net of tax -- -- -- -- (13) -- (13)
------- ------ ------ ------ ------- ------- -------
Net income (loss) $ 86 $ 24 $ 37 $ 37 $ 96 $ (194) $ 86
------- ------ ------ ------ ------- ------- -------
------- ------ ------ ------ ------- ------- -------
</TABLE>
14
<PAGE>
U.S. INDUSTRIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2000
NOTE 10-SUPPLEMENTAL JOINT ISSUER AND GUARANTOR FINANCIAL INFORMATION
(CONTINUED)
<TABLE>
<CAPTION>
(IN MILLIONS - UNAUDITED)
AT JUNE 30, 2000
-----------------------------------------------------------------------------
USI USI NONGUARANTOR
USI GLOBAL ATLANTIC USIAH SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------ ------ -------- ------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ -- $ -- $ -- $ -- $ 35 $ -- $ 35
Trade receivables, net -- -- -- -- 549 -- 549
Inventories -- -- -- -- 513 -- 513
Deferred income taxes 63 -- -- -- -- -- 63
Other current assets 15 -- -- -- 42 -- 57
------ ------ ------ ------ ------ ------- --------
Total current assets 78 -- -- -- 1,139 -- 1,217
Property, plant and equipment, net -- 1 -- -- 436 -- 437
Other assets 7 7 -- 908 380 (908) 394
Goodwill, net -- -- -- -- 654 -- 654
Investments in subsidiaries 1,524 1,596 951 -- -- (4,071) --
Intercompany receivable (payable), net (196) 155 33 43 (35) -- --
------ ------ ------ ------ ------ ------- --------
Total assets $1,413 $1,759 $ 984 $ 951 $2,574 $(4,979) $ 2,702
------ ------ ------ ------ ------ ------- --------
------ ------ ------ ------ ------ ------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ -- $ -- $ -- $ -- $ 32 $ -- $ 32
Current maturities of long-term debt 223 -- -- -- -- -- 223
Trade accounts payable -- -- -- -- 214 -- 214
Accrued expenses and other liabilities 10 47 -- -- 166 -- 223
Income taxes payable 25 -- -- -- -- -- 25
------ ------ ------ ------ ------ ------- --------
Total current liabilities 258 47 -- -- 412 -- 717
Long-term debt 316 551 -- -- 18 -- 885
Deferred income taxes 10 -- -- -- -- -- 10
Other liabilities 10 42 -- -- 219 -- 271
------ ------ ------ ------ ------ ------- --------
Total liabilities 594 640 -- -- 649 -- 1,883
Commitments and contingencies
Stockholders' equity 819 1,119 984 951 1,925 (4,979) 819
------ ------ ------ ------ ------ ------- --------
Total liabilities and stockholders' equity $1,413 $1,759 $ 984 $ 951 $2,574 $(4,979) $ 2,702
------ ------ ------ ------ ------ ------- --------
------ ------ ------ ------ ------ ------- --------
</TABLE>
15
<PAGE>
U.S. INDUSTRIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2000
NOTE 10-SUPPLEMENTAL JOINT ISSUER AND GUARANTOR FINANCIAL INFORMATION
(CONTINUED)
<TABLE>
<CAPTION>
(IN MILLIONS)
AT SEPTEMBER 30, 1999
-----------------------------------------------------------------------------
USI USI NONGUARANTOR
USI GLOBAL ATLANTIC USIAH SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------ ------ -------- ------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ -- $ -- $ -- $ -- $ 58 $ -- $ 58
Trade receivables, net -- -- -- -- 667 -- 667
Inventories -- -- -- -- 631 -- 631
Deferred income taxes 31 -- -- -- 37 -- 68
Other current assets 6 -- -- -- 61 -- 67
------ ------ ------ ------ ------ ------- --------
Total current assets 37 -- -- -- 1,454 -- 1,491
Property, plant and equipment, net -- 1 -- -- 596 -- 597
Deferred income taxes (2) -- -- -- 8 -- 6
Other assets 7 6 -- 908 172 (908) 185
Goodwill, net -- -- -- -- 749 -- 749
Investments in subsidiaries 1,372 1,341 923 -- -- (3,636) --
Intercompany receivable (payable), net 24 444 33 15 (516) -- --
------ ------ ------ ------ ------ ------- --------
Total assets $1,438 $1,792 $ 956 $ 923 $2,463 $(4,544) $ 3,028
------ ------ ------ ------ ------ ------- --------
------ ------ ------ ------ ------ ------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ -- $ -- $ -- $ -- $ 33 $ -- $ 33
Current maturities of long-term debt -- -- -- -- 15 -- 15
Trade accounts payable 2 -- -- -- 276 -- 278
Accrued expenses and other liabilities 10 38 -- -- 254 -- 302
Income taxes payable 29 -- -- -- -- -- 29
------ ------ ------ ------ ------ ------- --------
Total current liabilities 41 38 -- -- 578 -- 657
Long-term debt 477 695 -- -- 47 -- 1,219
Other liabilities -- 51 -- -- 181 -- 232
------ ------ ------ ------ ------ ------- --------
Total liabilities 518 784 -- -- 806 -- 2,108
Commitments and contingencies
Stockholders' equity 920 1,008 956 923 1,657 (4,544) 920
------ ------ ------ ------ ------ ------- --------
Total liabilities and stockholders' equity $1,438 $1,792 $ 956 $ 923 $2,463 $(4,544) $ 3,028
------ ------ ------ ------ ------ ------- --------
------ ------ ------ ------ ------ ------- --------
</TABLE>
16
<PAGE>
U.S. INDUSTRIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2000
NOTE 10-SUPPLEMENTAL JOINT ISSUER AND GUARANTOR FINANCIAL INFORMATION
(CONTINUED)
<TABLE>
<CAPTION>
(IN MILLIONS - UNAUDITED)
FOR THE NINE MONTHS ENDED JUNE 30, 2000
-----------------------------------------------------------------------------
USI USI NONGUARANTOR
USI GLOBAL ATLANTIC USIAH SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------ ------ -------- ------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET CASH (USED IN) PROVIDED BY $ (7) $ (21) $ -- $ -- $ (21) $ -- $ (49)
OPERATING ACTIVITIES
INVESTING ACTIVITIES:
Proceeds from sale of businesses -- -- -- -- 404 -- 404
Acquisition of companies, net of cash acquired -- -- -- -- (78) -- (78)
Purchases of property, plant and equipment -- -- -- -- (59) -- (59)
Proceeds from sale of excess real estate -- -- -- -- 6 -- 6
Proceeds from sales of property, plant and equipment -- -- -- -- 1 -- 1
Net transfers with subsidiaries 98 234 -- -- -- (332) --
Other investing activities, net -- -- -- -- (2) -- (2)
------- ------- ----- ----- ------- ------ -------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES 98 234 -- -- 272 (332) 272
FINANCING ACTIVITIES:
Proceeds from long-term debt 2,474 -- -- -- 6 -- 2,480
Repayment of long-term debt (2,410) (120) -- -- (35) -- (2,565)
Proceeds from notes payable, net -- -- -- -- 1 -- 1
Payment of dividends (12) -- -- -- -- -- (12)
Proceeds from exercise of stock options 2 -- -- -- -- -- 2
Purchase of treasury stock (143) -- -- -- -- -- (143)
Net transfers with parent -- (92) -- -- (240) 332 --
------- ------- ----- ----- ------- ------ -------
NET CASH (USED IN) PROVIDED BY
FINANCING ACTIVITIES (89) (212) -- -- (268) 332 (237)
Effect of exchange rate changes on cash and cash
equivalents (2) (1) -- -- (6) -- (9)
------- ------- ----- ----- ------- ------ -------
DECREASE IN CASH AND CASH
EQUIVALENTS -- -- -- -- (23) -- (23)
Cash and cash equivalents at beginning of period -- -- -- -- 58 -- 58
------- ------- ----- ----- ------- ------ -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ -- $ -- $ -- $ -- $ 35 $ -- $ 35
------- ------- ----- ----- ------- ------ -------
------- ------- ----- ----- ------- ------ -------
</TABLE>
17
<PAGE>
U.S. INDUSTRIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2000
NOTE 10-SUPPLEMENTAL JOINT ISSUER AND GUARANTOR FINANCIAL INFORMATION
(CONTINUED)
<TABLE>
<CAPTION>
(IN MILLIONS - UNAUDITED)
FOR THE NINE MONTHS ENDED JUNE 30, 1999
-----------------------------------------------------------------------------
USI USI NONGUARANTOR
USI GLOBAL ATLANTIC USIAH SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------ ------ -------- ------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET CASH (USED IN) PROVIDED BY $ (3) $ (5) $ (8) $ 37 $ 94 $ -- $ 115
OPERATING ACTIVITIES
INVESTING ACTIVITIES:
Proceeds from sale of businesses -- -- -- -- 118 -- 118
Acquisition of companies, net of cash acquired (212) -- -- -- -- -- (212)
Purchases of property, plant and equipment -- -- -- -- (75) -- (75)
Proceeds from sale of excess real estate -- -- -- -- 16 -- 16
Proceeds from sales of property, plant and equipment -- -- -- -- 2 -- 2
Net transfers with subsidiaries (45) (163) 13 -- -- 195 --
Collection of notes -- -- -- -- 1 -- 1
Other investing activities, net -- -- -- -- (1) -- (1)
------- ------- ----- ----- ------- ------ -------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES (257) (163) 13 -- 61 195 (151)
FINANCING ACTIVITIES:
Proceeds from long-term debt 1,078 118 -- 264 285 -- 1,745
Repayment of long-term debt (678) -- -- (264) (495) -- (1,437)
Repayment from notes payable, net -- -- -- -- (1) -- (1)
Payment of dividends (14) -- -- -- -- -- (14)
Payment to settle interest rate lock arrangements -- -- -- (22) -- -- (22)
Proceeds from exercise of stock options 3 -- -- -- -- -- 3
Purchase of treasury stock (128) -- -- -- -- -- (128)
Net transfers with parent -- 50 (5) (13) 163 (195) --
------- ------- ----- ----- ------- ------ -------
NET CASH (USED IN) PROVIDED BY
FINANCING ACTIVITIES 261 168 (5) (35) (48) (195) 146
Effect of exchange rate changes on cash and cash
equivalents (1) -- -- (2) (5) -- (8)
------- ------- ----- ----- ------- ------ -------
INCREASE IN CASH AND CASH
EQUIVALENTS -- -- -- -- 102 -- 102
Cash and cash equivalents at beginning of period -- -- -- -- 44 -- 44
------- ------- ----- ----- ------- ------ -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ -- $ -- $ -- $ -- $ 146 $ -- $ 146
------- ------- ----- ----- ------- ------ -------
------- ------- ----- ----- ------- ------ -------
</TABLE>
18
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
As of June 30, 2000, the Company's operations are grouped into three
segments: USI Bath and Plumbing Products, Lighting Corporation of America, and
USI Hardware and Tools. The Company completed the disposition of a majority
interest in the USI Diversified segment on March 24, 2000. The results of all
operations classified as discontinued are excluded from the table below for all
periods presented and are discussed separately under Discontinued Operations.
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
(IN MILLIONS) (IN MILLIONS)
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
2000 1999 2000 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
NET SALES
Bath and Plumbing Products $ 389 $ 353 $ 1,033 $ 911
Lighting Corporation of America 204 204 602 591
Hardware and Tools 136 155 384 360
Diversified -- 203 414 651
------- ------- ------- -------
TOTAL NET SALES $ 729 $ 915 $ 2,433 $ 2,513
------- ------- ------- -------
------- ------- ------- -------
OPERATING INCOME
Bath and Plumbing Products (1) $ 52 $ 47 $ 96 $ 104
Lighting Corporation of America (2) 9 12 26 32
Hardware and Tools 15 15 36 28
Diversified (3) -- 13 35 59
------- ------- ------- -------
76 87 193 223
Corporate expenses (4) (6) (13) (17)
------- ------- ------- -------
TOTAL OPERATING INCOME $ 72 $ 81 $ 180 $ 206
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
(1) Operating income for the nine months ended June 30, 2000 includes a $13
million restructuring charge.
(2) Operating income for the three and nine months ended June 30, 2000 includes
$3 million and $4 million, respectively, of losses and exit costs associated
with the discontinuance of an unprofitable residential product line.
Operating income for the three and nine months ended June 30, 1999 includes
$1 million of severance related charges.
(3) Operating income for the three and nine months ended June 30, 1999 includes
$12 million and $14 million, respectively, of restructuring and other usual
costs.
DISCLOSURE CONCERNING FORWARD-LOOKING STATEMENTS
All statements, other than statements of historical fact, included in
the following Management's Discussion or elsewhere in this Quarterly Report are,
or may be deemed to be, forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. Such forward-looking statements include, without limitation, the
statements set forth in Outlook, herein. Various economic and competitive
factors could cause actual results to differ materially from the expectations
reflected in such forward-looking statements, including factors which are
outside the control of the Company, such as interest rates, foreign currency
exchange rates, instability in domestic and foreign financial markets, consumer
spending patterns, availability of consumer and commercial credit, levels of
residential and commercial construction, and changes in raw material costs,
along with the other factors noted in this Report and in other documents filed
by the Company with the Securities and Exchange Commission. In addition, the
Company's future results are subject to uncertainties relating to the Company's
ability to consummate its business strategy, including realizing market
synergies and cost savings from the integration of its acquired businesses. All
subsequent written and oral forward-looking statements attributable to the
Company are expressly qualified in their entirety by the foregoing factors.
19
<PAGE>
THREE MONTHS ENDED JUNE 30, 2000
COMPARED TO THREE MONTHS ENDED JUNE 30, 1999
INTRODUCTION
The Company had sales of $729 million and operating income of $72
million for the quarter ended June 30, 2000, compared to sales of $915 million
and an operating income of $81 million for the same period in the prior year.
Sales decreased $186 million (20.3%) and operating income decreased $9 million
(11.1%) compared to the third quarter of fiscal 1999. Sales and operating income
for the quarter ended June 30, 1999 included $203 million and $13 million,
respectively, related to the Diversified businesses disposed of in March 2000.
Excluding the Diversified results, sales and operating income for the quarter
ended June 30, 2000 increased $17 million (2.4%) and $4 million (5.9%),
respectively, compared to the third quarter of fiscal 1999. Also, included in
operating income for the quarter ended June 30, 1999 are unusual charges in the
lighting business and restructuring and other unusual charges in the recently
disposed Diversified businesses amounting to $13 million.
The Bath and Plumbing Products Operations had sales of $389 million and
operating income of $52 million for the quarter ended June 30, 2000, increases
of $36 million (10.2%) and $5 million (10.6%), respectively, from the third
quarter of fiscal 1999. The increases in sales and operating income are
primarily attributable to the inclusion of Spring Ram acquired in July 1999 and
Gatsby Spas acquired in June 1999, combined with continued strength in the U.S.
bath and spa businesses. These increases were partially offset by lost
contribution from the disposal of the water resource and fire protection
businesses, lower profitability in the HVAC and chinaware businesses and
unfavorable currency translation.
The Lighting Products Operations had sales of $204 million and
operating income of $9 million for the quarter ended June 30, 2000,
representing flat sales and a decrease of $3 million (25.0%) in operating
income from the third quarter of fiscal 1999. Included in the fiscal 1999
operating income were severance related charges amounting to $1 million.
Increases in sales in the European and architectural outdoor lighting
businesses were offset by lost sales from discontinuing an unprofitable
residential product line. Operating income was lower due to losses and exit
costs of $3 million associated with the discontinued residential product line
and lower profitability in the commercial indoor businesses.
The Hardware and Tools Operations had sales of $136 million and
operating income of $15 million for the quarter ended June 30, 2000, a
decrease of $19 million (12.3%) and flat operating income compared to the
third quarter of fiscal 1999. The decrease in sales in mainly attributable to
the lost sales associated with the ladder business, which was divested in
October 1999. Operating income increases at Ames/True Temper were offset by
continued weakness in the U.K. operations resulting from cheaper imports and
a downward trend in the industrial sector.
A majority interest in the Diversified Operations was disposed of on
March 24, 2000. The Company, for the quarter ended June 30, 2000, recorded
equity earnings of $1 million with respect to its retained interest in the
Diversified operations.
DISCONTINUED OPERATIONS
During April 1999, the Company completed the sale of its investment in
Teardrop Golf. The Company realized a $1 million net-of-tax gain from the sale.
During June 1999 the Company recorded an additional net-of-tax loss of $1
million with respect to the April 1999 sale of The Ertl Company Inc. ("Ertl").
OTHER EXPENSE (INCOME), NET
Other expense (income), net was an expense of $2 million for the three
months ended June 30, 2000, compared to income of $9 million in the comparable
period of fiscal 1999. The prior year included real estate gains of $9 million.
INTEREST AND TAXES
Interest expense was $20 million for both quarters ended June 30, 2000,
and June 30, 1999. For the quarter ended June 30, 2000, the Company's lower
average debt level was offset by higher average interest rates compared to the
same period of the prior year. Interest income was $8 million for the quarter
ended June 30, 2000, a $7 million increase from the comparable period of fiscal
1999. The increase in interest income is primarily due to interest earned on the
12% senior notes received on the disposition of a majority equity interest in
the Diversified businesses.
20
<PAGE>
The provision for income taxes on continuing operations was $24 million
for the quarter ended June 30, 2000, on pre-tax income of $59 million (an
effective tax rate of approximately 39.6%) compared to a $26 million provision
on pre-tax income of $71 million (an effective tax rate of approximately 38.1%)
in the comparable period of fiscal 1999.
NINE MONTHS ENDED JUNE 30, 2000
COMPARED TO NINE MONTHS ENDED JUNE 30, 1999
The Company had sales of $2,433 million and operating income of $180
million for the nine months ended June 30, 2000, compared to sales of $2,513
million and an operating income of $206 million for the same period in the prior
year. Sales decreased $80 million (3.2%) and operating income decreased $26
million (12.6%) compared to the same period of fiscal 1999. The current year
results include approximately six months of operations from the recently
disposed Diversified segment compared to nine months of operations in the same
period of the prior year. Included in the fiscal 2000 operating income is a
restructuring charge of $13 million to close the USI Bath and Plumbing corporate
office, while fiscal 1999 operating income includes restructuring and unusual
charges amounting to $15 million. Excluding such charges, operating income for
the nine months ended June 30, 2000 was $193 million, a decrease of $28 million
(12.7%) compared to the same period of fiscal 1999.
The Bath and Plumbing Products Operations had sales of $1,033 million
and operating income of $96 million for the nine months ended June 30, 2000, an
increase of $122 million (13.4%) and a decrease of $8 million (7.7%),
respectively, from the same period of fiscal 1999. Included in operating income
for the nine months ended June 30, 2000 is a $13 million restructuring charge to
close the USI Bath and Plumbing corporate office. Excluding the restructuring
charge, operating income for the nine months ended June 30, 2000 would have been
$109 million, an increase of $5 million (4.8%) compared to the same period of
fiscal 1999. The increase in sales is mainly due to the contributions of Spring
Ram acquired in July 1999 and Gatsby Spas acquired in June 1999, combined with
continued strength in the U.S. bath and spa businesses. This increase was
partially offset by the lost sales of the water resource business, sold in
September 1999, and the fire protection business, sold in January 2000.
Operating income, excluding the restructuring charge, increased from the
acquisitions of Spring Ram and Gatsby Spas, and continued strength in the U.S.
bath and spa businesses. This increase was partially offset by weakness at the
North American and European HVAC, chinaware and U.S. Brass businesses.
The Lighting Products Operations had sales of $602 million and
operating income of $26 million for the nine months ended June 30, 2000, an
increase of $11 million (1.9%) and a decrease of $6 million (18.8%),
respectively, from the same period of fiscal 1999. Included in the fiscal
1999 operating income were severance related charges amounting to $1 million.
The increase in sales is primarily due to the Dual-Lite acquisition in March
1999 and strength at the architectural outdoor lighting business. This sales
increase was partially offset by lost sales from discontinuing an
unprofitable residential product line and lower sales at the European
business due to unfavorable currency translation. Operating income was lower
due to losses and exit costs of $4 million associated with the discontinued
product line and weakness at the commercial indoor lighting businesses.
The Hardware and Tools Operations had sales of $384 million and
operating income of $36 million for the nine months ended June 30, 2000,
increases of $24 million (6.7%) and $8 million (28.6%), respectively, from the
same period of fiscal 1999. The increase in sales is primarily due to the
acquisition of True Temper Hardware in March 1999, partially offset by lost
sales of the ladder business which was sold in October 1999, and lower sales at
Ames. Operating income increased due to the True Temper acquisition combined
with the synergies of integrating True Temper and Ames.
The Diversified Operations results for the nine months ended June 30,
2000 was comprised of approximately six months of operations through the
disposal date of March 24, 2000, as compared to the prior year results which
included a full nine months of operations. The Diversified Operations had sales
of $414 million and operating income of $35 million for the nine months ended
June 30, 2000, decreases of $237 million (36.4%) and $24 million (40.7%),
respectively, from the prior year. The fiscal 1999 operating income includes
restructuring and other related charges of $2 million, comprised of a $2 million
severance and impairment charge to close a manufacturing facility and $1 million
of obsolescence, partially offset by a $1 million adjustment of the 1998
restructuring reserves. In addition, the fiscal 1999 operating income includes
unusual charges of $12 million, of which $6 million related to the closure of an
unprofitable window operation and $6 million related to a write-down of a Hong
Kong-based equity investment. Excluding such charges, operating income for the
nine months ended June 30, 2000 decreased $38 million (52.1%) compared to the
prior year. The Company, for the nine months ended June 30, 2000, recorded
equity earnings of $1 million with respect to its retained interest in the
Diversified operations.
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RESTRUCTURING CHARGE
In January 2000, a decision was made to close the USI Bath and Plumbing
corporate office in Dallas, Texas and relocate it to the USI Corporate office in
New Jersey. The closing of the USI Bath and Plumbing corporate office resulted
in the termination of 30 employees and vacating the Dallas corporate office. The
Company recorded a pre-tax charge of $13 million relating to this decision,
which included severance costs of $2 million, lease costs of $9 million for a
lease expiring November 2007, and a write-off of $2 million relating to
leasehold improvements and other fixed assets.
DISCONTINUED OPERATIONS
For the nine months ended June 30, 1999, the Company had a loss from
discontinued operations of $13 million, net-of-tax, consisting of a loss on
disposal of Ertl of $13 million and a loss from the operations of Ertl of $1
million, partially offset by a $1 million gain on the sale of Teardrop Golf.
OTHER EXPENSE (INCOME), NET
Other expense (income), net was an expense of $3 million for the nine
months ended June 30, 2000, compared to income of $9 million in the comparable
period of fiscal 1999. The current year includes a $3 million gain on real
estate sales, while the prior year includes $9 million of real estate gains.
INTEREST AND TAXES
Interest expense was $65 million for the nine months ended June 30,
2000, a $8 million (14.0%) increase from the comparable period of fiscal 1999.
The increase is due to higher average levels of outstanding debt coupled with
higher average interest rates. The increase in debt level is primarily
attributable to the Company's share repurchase program. Interest income was $10
million for the nine months ended June 30, 2000, a $7 million increase from the
comparable period of fiscal 1999. The increase in interest income is primarily
due to interest earned on the 12% senior notes received on the disposition of a
majority equity interest in the Diversified businesses .
The provision for income taxes on continuing operations was $57 million
for the nine months ended June 30, 2000, on pre-tax income of $147 million (an
effective tax rate of 38.8%) as compared to a $62 million provision on pre-tax
income of $161 million (an effective tax rate of 38.5%) in the comparable period
of fiscal 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of liquidity and capital resources are
cash and cash equivalents, cash provided from operations and available
borrowings under the Company's revolving credit facility, commercial paper
program, and uncommitted short-term lines of credit.
Net cash used in operating activities was $49 million for the nine
months ended June 30, 2000 compared to net cash provided of $115 million for the
comparable period of prior year. In the current period, continuing operations
used $49 million compared to providing $92 million in the comparable period of
the prior year. This change relates primarily to working capital investments due
to seasonal cash requirements at the Hardware and Tools and Bath and Plumbing
divisions, additional cash requirements at the Diversified operations prior to
divestiture and timing of tax payments.
Cash provided by discontinued operations of $23 million for the nine
months ended June 30, 1999 resulted from reduced working capital requirements at
Ertl.
Net cash provided by investing activities of $272 million for the nine
months ended June 30, 2000, was primarily comprised of cash proceeds of $404
million received from the sale of a majority interest in the Diversified
businesses and the sale of the fire protection, children footwear and ladder
operations and $6 million from the sale of excess real estate. This was
partially offset by net cash of $59 million for capital expenditures, $71
million for the Spear & Jackson plc ("S&J") payment and $7 million for
acquisitions. In the nine months ended June 30, 1999, the Company used net cash
of $151 million, which primarily consisted of $212 million for acquisitions and
$75 million for capital expenditures, partially offset by the net proceeds of
$118 million from the sales of the remaining interest in the Power Systems
Segment and Ertl and $16 million from the sale of excess real estate.
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Net cash used in financing activities was $237 million for the nine
months ended June 30, 2000. This included net repayments of long-term debt and
notes of $84 million, dividend payments of $12 million, and the purchase of $143
million of the Company's common stock for treasury. In the corresponding period
of the prior year, financing activities provided net cash of $146 million, which
included net proceeds of long-term debt and notes of $307 million, partially
offset by net cash used to purchase $128 million of the Company's common stock
for treasury, dividend payments of $14 million, and a $22 million payment to
settle interest rate protection agreements.
The Company maintains a five year revolving line of credit providing
for borrowings in both U.S. dollars and foreign currency of up to an aggregate
amount of $650 million (the "Credit Agreement"). The revolving credit commitment
will be permanently reduced by $150 million in December 2000 and terminates in
December 2001. As of June 30, 2000, the Company had $203 million available under
this revolving line of credit.
During fiscal 1999, the Company commenced a $300 million commercial
paper program, of which $259 million was outstanding at June 30, 2000. The
commercial paper is supported by a $300 million 364-day credit facility (the
"Credit Facility") which expires on October 27, 2000.
At June 30, 2000, the Company had unused availability of approximately
$468 million, including approximately $244 million of committed availability
under its Credit Agreement and Credit Facility and $224 million under
uncommitted lines of credit. The Credit Agreement and Credit Facility contain
certain covenant restrictions that limit the amount of indebtedness the Company
may incur. At June 30, 2000, the Company could have incurred an additional $130
million in indebtedness under the specified restrictions on the Company's
permitted ratio of debt to total capital.
The Company believes that cash provided by operations and availability
under unused credit facilities and commercial paper program will adequately
support cash needs for working capital, capital expenditures for existing
businesses and future principal payments on outstanding borrowings.
Total stockholders' equity decreased $101 million from September 30,
1999, principally due to $143 million in purchases of the Company's common stock
for treasury, $36 million for the portion of the S&J payment relating to the
market value of the Company's common stock price, and dividends declared of $12
million, partially offset by the Company's nine months net income of $90
million.
During the nine months ended June 30, 2000, the Company paid
approximately $6 million related to its restructuring plans announced in fiscal
1998 and 1999, and expects an additional $5 million to be paid in the next 12
months. There have been no material changes in the nature or costs of the
restructuring.
During fiscal 1999, the Board of Directors authorized share repurchase
programs aggregating $300 million. In April 2000, the Board of Directors
authorized an additional $50 million of share repurchases. As of June 30,
2000, the Company had purchased $288 million of its common stock for treasury
under the program, of which $99 million was purchased in fiscal 2000. During
June 2000, in a separate transaction authorized and undertaken outside the
existing share repurchase program, the Company repurchased all of its common
stock held by the former owners of S&J for $44 million. During October 1999,
the Company entered into equity instrument contracts that were utilized to
purchase approximately $40 million of its common stock. At the discretion of
the Company, such contracts can be settled in cash, shares or a combination
of both, at anytime prior to October 20, 2000. The repurchase program has
been and will continue to be, funded from cash provided from operations,
proceeds received from the sale of a majority interest in the Diversified
businesses and available borrowings under the Company's existing credit
facilities. Share repurchases are made at prices deemed acceptable to
management.
In June 2000, upon expiration of the contingency period related to the
December 1997 acquisition of S&J, the Company made an additional cash payment
of (pound sterling) 47 million ($71 million), to the former owners of S&J. A
portion of the contingent cash payment ($36 million) was recorded as an
adjustment to stockholders' equity as it was based upon the market value of the
Company's common stock price at the end of the contingency period, and the
remainder of the cash payment ($35 million) was recorded as additional goodwill
as it related to the settlement of additional contingent consideration. The
Company is reviewing the recoverability of the S&J goodwill and expects such
analysis to be completed during the fourth quarter of fiscal 2000.
In August 1999, the Company's shelf registration statement on Form S-3
filed with the Commission in order to register $600 million in debt securities
became effective. The Company expects to issue debt securities covered by this
registration statement in the future, subject to market conditions.
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On March 24, 2000, in two separate transactions (the "Diversified
Transactions"), the Company completed the previously announced disposition of a
majority equity interest in its Diversified group to Automotive Interior
Products LLC ("AIP"), a Citicorp Venture Capital portfolio company.
In one of the transactions, the Company disposed of the following
subsidiaries to AIP, which are now held by Strategic Industries, LLC ("SILLC"):
Atech Turbine Components, Inc.; Bearing Inspection, Inc.; BiltBest Products,
Inc.; EJ Footwear Corp., including Georgia Boot Inc. and Lehigh Safety Shoe Co.;
Garden State Tanning Inc.; Huron Inc.; Jade Holdings Pte Ltd, including Jade
Technologies Singapore Ltd and FSM Europe B.V.; Leon Plastics Inc.; Native
Textiles Inc.; and SCF Industries, Inc. The Company received gross cash proceeds
of $198 million and approximately $205 million aggregate principal amount of 12%
increasing rate senior notes due 2007 issued by SILLC (the "Senior Notes"), and,
in addition, SILLC assumed approximately $8 million of existing bank debt. The
Company also retained a preferred equity interest having a stated value of
approximately $19.5 million and a 17.7% common equity interest in SILLC. The
purchase price is subject to a post-closing working capital adjustment.
In the other transaction, Rexair, Inc. ("Rexair"), which manufactures
"Rainbow" brand vacuum cleaners, sold newly issued shares to SILLC representing,
after issuance, 75% of the equity interest in Rexair. The Company received
approximately $195 million in cash and retained a 25% direct equity interest in
Rexair. As part of the Rexair transaction, the Company guaranteed Rexair's new
$200 million credit facility (the "Rexair Facility"), which is scheduled to
mature on the fifth anniversary of the closing. However, Rexair is primarily
responsible for the repayment of indebtedness under the Rexair Facility. The
Rexair Facility provides that all Rexair free cash flow, as defined, must be
used to repay the outstanding balance of the Rexair Facility. At June 30, 2000,
the outstanding balance on the Rexair Facility was approximately $186 million.
As a result of the Rexair transaction, the Company recorded a deferred gain of
approximately $45 million, which will be deferred until the release of the
guarantee of the Rexair Facility. The Company's 25% share of the net liabilities
of Rexair amounting to $38 million and the deferred gain of $45 million are
included in the balance sheet caption "other liabilities".
On May 4, 2000, the Company announced that it engaged Compass Partners
International, LLC as its financial advisor to assist in reviewing strategic
alternatives for Lighting Corporation of America ("LCA"), including a possible
sale. LCA, which constitutes the Company's entire lighting segment,
manufacturers and distributes a complete line of indoor and outdoor lighting for
the commercial, institutional and residential markets.
OUTLOOK
Some of the business units are currently experiencing a mild softness,
and assuming this trend continues, the Company expects that fiscal 2000 earnings
will be at the low end of the previously estimated range of $1.40 to $1.50 per
diluted share from continuing operations, excluding unusual items.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company, in the normal course of doing business, is exposed to the
risks associated with changes in interest rates and currency exchange rates. To
limit the risks from such fluctuations, the Company enters into various hedging
transactions that have been authorized pursuant to the Company's policies and
procedures and does not engage in such transactions for trading purposes.
To manage exposure to interest rate movements, the Company uses
interest rate protection agreements. Based on the Company's overall exposure to
interest rate changes, a hypothetical change of 100 basis points across all
maturities of the Company's floating rate debt obligations, after considering
interest rate protection agreements, would decrease the Company's pre-tax
earnings in fiscal 2000 by approximately $6 million.
The Company utilized foreign currency-denominated borrowings to
selectively hedge its net investments in subsidiaries in foreign countries.
These borrowings at June 30, 2000 are denominated in German marks, British
pounds and Dutch guilders. The Company estimates that a 10% change in the
relevant currency exchange rates is estimated to have an impact of $27 million
on the fair value of such borrowings. This quantification of the Company's
exposure to the market risk of foreign exchange sensitive financial instruments
is necessarily limited, as it does not take into account the offsetting impact
of the Company's underlying investment exposures.
The Company is also exposed to foreign currency exchange risk related
to its international operations as well as its U.S. businesses, which import or
export goods. The Company has made limited use of financial instruments to
manage this risk.
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PART II. OTHER INFORMATION.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.1 Financial Data Schedule*
(b) Reports on Form 8-K
The Company filed a current report on Form 8-K on April 10, 2000,
responsive to Items 2 and 7 of such form relating to the disposition of
a majority equity interest in the Company's Diversified businesses.
The following financial statements were filed: consolidated condensed
unaudited pro-forma balance sheet and statement of operations as of
December 31, 1999, and for the three months then ended, and the
unaudited pro-forma condensed statement of operations for the year
ended September 30, 1999.
* Filed herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
U.S. INDUSTRIES, INC.
Date: August 10, 2000
By: /s/ John W. Dean III
-------------------------------------
John W. Dean III
Vice President,
Chief Financial Officer and Treasurer
(Principal Financial Officer)
/s/ Nicola Rossi
--------------------------------------
Nicola Rossi
Corporate Controller
(Principal Accounting Officer)
26
