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EXHIBIT 99.1
NEWS RELEASE
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707 Crossroads Court Daryle A. Lovett
Vandalia, OH 45377 Executive Vice President and
Chief Financial Officer
EVENFLO COMPANY, INC.
Evenflo Reports 3rd Quarter 2000 results.
VANDALIA, OHIO, NOVEMBER 14, 2000 - Evenflo Company, Inc. (the "Company") today
released its financial results for the third quarter and nine months ended
September 30, 2000.
Third quarter EBITDA and Net Sales were below year ago. This follows EBITDA
gains for the previous six quarters.
Richard W. Frank, Evenflo's, Chairman and CEO, commenting on the third quarter
said, "We are clearly disappointed in these results. They reflect a shift in
order patterns from the third quarter to the fourth as retailers pared back
inventories to make way for Evenflo's fourth quarter shipments of new products.
While we continue to experience strong competitive pressure in car seats,
feeding, and bed and bath products, we look forward to the positive impact of
our product development efforts with increased sales volume in the fourth
quarter and throughout 2001."
EBITDA (earnings before interest expense, income taxes, depreciation,
amortization, and extraordinary items,) for the third quarter ending September
30, 2000 were $5.4 million, compared to $9.2 million recorded in the third
quarter of 1999. For the nine months ending September 30, 2000 EBITDA was $18.9
million versus $22.6 million for the same period in 1999.
Net sales for the third quarter ending September 30, 2000 were $83.1 million, a
$10.5 million or 11.2% decrease from the $93.6 million for the prior year
quarter ending September 30, 1999. The Company's 2000 nine months sales of
$258.5 million are approximately equal to $258.6 million in the 1999 nine
months. U.S. net sales of $72.2 million for the third quarter decreased $9.9
million or 12.1% from the prior year third quarter of $82.1 million. U.S. net
sales of $224.8 million for the 2000 nine months, decreased $1.8 million or 0.8%
from 1999 nine months of $226.6 million. U.S. sales decreased due primarily to
reduction in sales of feeding products and juvenile car seats due to strong
competitive pressure. International net sales decreased 5.2% to $10.9 million in
the third quarter 2000 from $11.5 million for the 1999 third quarter. In the
2000 nine months, international sales increased by $1.7 million, or 5.3% to
$33.7 million from $32.0 million for the 1999 nine months. For the 2000 nine
months, international net sales increased principally due to increased sales in
Canada and Mexico, partially offset by lower sales in Asia and Europe.
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The Company's gross profit for the latest three months was $18.1 million
compared to 1999's gross profit for the comparable period of $23.4 million. As a
percentage of net sales, gross profit decreased to 21.8% in the third quarter
2000 from 25.0% in the third quarter of 1999. For the 2000 nine months, gross
profit decreased to $59.3 million from $62.4 million for the 1999 nine months.
As a percentage of net sales, gross profit decreased to 22.9% in the 2000 nine
months from 24.1% in the 1999 nine months. The margin decrease was due to
unfavorable manufacturing variances, and a lower gross profit mix due to
reductions in feeding products. The unfavorable manufacturing variance is
primarily the result of the Company's incurring increased freight charges to
meet unforecasted customer demand for certain products.
Evenflo's selling, general and administrative (SG&A) expenses decreased to $16.9
million for the three months ending September 30, 2000 versus $18.0 million in
the three months ending September 30, 1999. During the 2000 three months ending
September 30, 2000 the Company reduced SG&A expenses over the same period in
1999 in the following key areas (i) outside services, (ii) customer marketing
promotional costs, (iii) recruitment expenses and (iv) product liability. The
Company increased product-engineering expenses in the three months ending
September 30, 2000. For the 2000 nine months SG&A expenses were $52.8 million
compared to $52.6 million in the 1999 nine months. In the 2000 nine months,
increased product development and engineering expenses resulted in total SG&A
expenses being approximately the same as the 1999 nine months.
Interest expense in the third quarter 2000 increased to $4.7 million from $4.4
million recorded in the third quarter 1999. For the nine months ended September
30, 2000 interest expense was $13.7 million versus $12.4 million in the nine
months ended September 30, 1999.
During the third quarter ending September 30, 2000, the company generated $1.1
million in cash before financing activities. Operating activities generated $4.5
million and the Company invested $3.4 million in capital expenditures. For the
same period in 1999 the Company generated $4.0 million in cash before financing
activities. Operating activities generated $12.8 million and the Company
invested $8.8 million in capital expenditures.
The Company and the syndicate of financial institutions under the revolving
credit facility agreed to amend certain financial covenants included in the
revolving credit facility for the period commencing with the third fiscal
quarter of this fiscal year. The amendment modified financial covenants relating
to an interest coverage ratio and a leverage ratio, increased bankers'
acceptance limit and increased the additional margin on the "eurodollar rate"
and the "base rate" interest calculation. Borrowings under Evenflo's $100
million long-term revolving credit facility, increased by $2.5 million during
the third quarter 2000. At September 30, 2000, the company had $41.0 million of
available borrowing capacity under this $100 million revolving credit facility.
Certain matters discussed in this press release contain forward-looking
statements based on the Company's current expectations and estimates as to
prospective events about
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which the Company can give no firm assurance. These forward-looking statements
are based on management's expectations as of the date hereof, and the Company
does not undertake any responsibility to update any of these statements in the
future. Actual future performance and results could differ from that contained
in or suggested by these forward-looking statements as a result of the factors
set forth in filings with the Securities and Exchange Commission. See Evenflo's
cautionary statement relating to forward looking statements filed on our Current
Report on Form 8-K dated November 13, 2000.
Evenflo will have its quarterly conference call on Wednesday, November 29, 2000
starting at 3 p.m. Eastern Time. The teleconference dial-in number is
(800)-553-0351. The call will also be available for replay beginning at 7:30
p.m. Eastern Time until Monday, December 4, 2000 at 7:30 p.m. Replay numbers is:
USA (800)-475-6701, Access Code: 551024.
Evenflo is one of the world's most recognized innovators and marketers of
infant and juvenile products. Headquartered in Vandalia, Ohio, its lines
include car seats, strollers, baby bottles, infant soft and frame carriers,
pacifiers, gates, high chairs, activity centers, and cribs.
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"World's Best Baby Care"
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EVENFLO COMPANY, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
December 31, 1999 and Sept. 30, 2000 (Dollar amounts in thousands, except
per share amounts)
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<TABLE>
<CAPTION>
(Unaudited)
DECEMBER 31, SEPTEMBER 30,
ASSETS 1999 2000
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<S> <C> <C>
CURRENT ASSETS:
Cash $ 3,110 $ 6,716
Receivables, less allowance of $ 1,050 and $996 70,772 65,526
Inventories 63,896 70,312
Deferred income taxes 8,066 12,403
Prepaid expenses 654 1,577
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TOTAL CURRENT ASSETS 146,498 156,534
Property, plant and equipment 126,246 129,468
Accumulated depreciation (61,823) (72,980)
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Property, plant and equipment, net 64,423 56,488
Intangible assets, net 44,779 43,618
Deferred income taxes 14,429 14,227
Other 6,494 6,056
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TOTAL ASSETS $ 276,623 $ 276,923
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 29,706 $ 35,743
Bankers acceptances and letters of credit 18,431 23,715
Accrued expenses 32,068 22,942
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TOTAL CURRENT LIABILITIES 80,205 82,400
Senior notes 110,000 110,000
Revolving credit loans 20,500 23,000
Pension and post-retirement benefits 5,742 5,667
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TOTAL LIABILITIES 216,447 221,067
Commitments and contingencies
SHAREHOLDERS' EQUITY:
Preferred stock $.01 par value, 10,000,000 shares authorized,
400,000 shares outstanding (liquidation value, $40,000,000) 40,000 40,000
Common Stock:
Class A, $1 par value, 20,000,000 shares authorized;
10,000,000 shares outstanding 10,000 10,000
Class B, $1 par value, 5,000,000 shares authorized;
none outstanding 0 0
Paid-in capital 61,387 61,387
Retained earnings (deficit) (47,161) (51,437)
Accumulated other comprehensive earnings (loss)-currency
translation adjustments (4,050) (4,094)
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TOTAL SHAREHOLDERS' EQUITY 60,176 55,856
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 276,623 $ 276,923
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</TABLE>
See Form 10-Q filing for Notes to Condensed Consolidated Financial Statements.
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EVENFLO COMPANY, INC. AND SUBSIDIARIES
Condensed Statements of Consolidated Earnings (Loss)
For the three and nine months ended September 30, 1999 and 2000
(Dollar amounts in thousands) (Unaudited)
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<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
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1999 2000 1999 2000
------ ------ ------ ------
<S> <C> <C> <C> <C>
NET SALES $ 93,550 $ 83,077 $ 258,595 $ 258,474
Cost of sales 70,178 64,931 196,155 199,197
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GROSS PROFIT 23,372 18,146 62,440 59,277
Selling, general & administrative expenses 18,049 16,935 52,618 52,832
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INCOME FROM OPERATIONS 5,323 1,211 9,822 6,445
Interest expense, net 4,448 4,708 12,417 13,665
Currency (gain) loss, net 156 183 (541) 606
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EARNINGS (LOSS) BEFORE INCOME TAXES 719 (3,680) (2,054) (7,826)
Income tax benefit (605) (1,820) (1,471) (3,550)
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NET EARNINGS (LOSS) $ 1,324 $ (1,860) $ (583) $ (4,276)
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</TABLE>
See Form 10-Q filing for Notes to Condensed Consolidated Financial Statements.
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EVENFLO COMPANY, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
For the nine months ended September 30, 1999 and 2000
(Dollar amounts in thousands)
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<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
SEPTEMBER 30, SEPTEMBER 30,
1999 2000
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<S> <C> <C>
INCREASE (DECREASE) IN CASH
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (583) $ (4,276)
Adjustments to reconcile net loss to net cash provided (used)
by operating activities:
Depreciation 10,370 11,286
Intangibles amortization 1,163 1,161
Deferred income taxes (2,012) (4,135)
Deferred financing cost amortization 561 370
Other 46 (75)
Change in working capital components:
Receivables 7,968 5,246
Inventories (7,855) (6,416)
Current liabilities 2,366 2,195
Other, including currency translation adjustment 760 (826)
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NET CASH PROVIDED (USED) IN OPERATING ACTIVITIES 12,784 4,530
NET CASH USED IN INVESTING ACTIVITIES - CAPITAL EXPENDITURES (8,794) (3,424)
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NET CASH PROVIDED BY FINANCING ACTIVITIES - BORROWINGS FROM
REVOLVING CREDIT FACILITY 2,200 2,500
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CASH - net change 6,190 3,606
beginning of period 4,197 3,110
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end of period $ 10,387 $ 6,716
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SUPPLEMENTAL CASH FLOW DATA
Interest paid 15,104 16,791
Income taxes paid 541 585
</TABLE>
See Form 10-Q filing for Notes to Condensed Consolidated Financial Statements.
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