UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended July 2, 1995.
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: 1-6832
BIC CORPORATION
(Exact name of registrant as specified in its charter)
Incorporated in State of New York I.R.S. Employer Number: 06-0735597
Principal Executive Offices: 500 BIC Drive, Milford, Connecticut 06460
Telephone number, including area code: (203) 783-2000
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 report(s), and (2) has been subject to
such filing requirements for the past 90 days.
Yes _____X_____ No __________
At July 2, 1995, the close of the period covered by this report, registrant had
outstanding 23,559,244 common shares, $1.00 par value per share.
<PAGE>
PART 1. FINANCIAL INFORMATION
BIC CORPORATION AND SUBSIDIARIES
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
July 2, January 1,
1995 1995
------- ----------
ASSETS (Thousands)
CURRENT ASSETS:
Cash and cash equivalents $ 65,923 $ 48,091
Accounts and notes receivable:
Trade - net of allowance for doubtful
accounts of $5,131,000 at July 2 and
$4,530,000 at January 1 91,260 54,648
Affiliates 5,961 4,358
Other 4,547 3,861
Inventories:
Finished goods 25,075 25,804
Work in process 18,472 18,335
Raw materials 10,663 7,860
Packaging materials 2,595 2,364
Other current assets 52,052 29,124
--------- ---------
Total current assets 276,548 194,445
--------- ---------
PROPERTY, PLANT AND EQUIPMENT - at cost less
accumulated depreciation of $158,668,000 at
July 2 and $151,365,000 at January 1 129,888 132,553
OTHER ASSETS 34,137 31,689
--------- ---------
TOTAL $440,573 $358,687
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Bank borrowings $ 242 $ 0
Accounts payable:
Trade 17,480 11,835
Affiliates 11,540 7,080
Accrued expenses 76,286 63,214
Other current liabilities 47,884 4,500
--------- ---------
Total current liabilities 153,432 86,629
--------- ---------
NONCURRENT LIABILITIES 25,694 24,141
--------- ---------
SHAREHOLDERS' EQUITY:
Preferred shares ($1 par value; authorized -
1,000,000; no shares issued or outstanding) 0 0
Common shares ($1 par value; authorized -
50,000,000; outstanding 23,559,244) 23,559 23,559
Retained earnings 255,861 238,076
Foreign currency translation adjustment (17,973) (13,718)
--------- ---------
Total shareholders' equity 261,447 247,917
--------- ---------
TOTAL $440,573 $358,687
========= =========
See Notes to Unaudited Condensed Consolidated Financial Statements.
-2-
<PAGE>
BIC CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE SIX MONTHS ENDED JULY 2, 1995 AND JULY 3, 1994
1995 1994
---- ----
(Thousands Except Share Data)
NET SALES $257,413 $241,616
COST OF GOODS SOLD 135,222 123,419
--------- ---------
GROSS PROFIT 122,191 118,197
ADVERTISING, SELLING, GENERAL AND ADMINISTRATIVE,
MARKETING AND RESEARCH & DEVELOPMENT EXPENSES 74,989 73,463
--------- ---------
INCOME FROM OPERATIONS 47,202 44,734
OTHER INCOME (EXPENSE) - NET 1,032 (1,248)
--------- ---------
INCOME BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 48,234 43,486
PROVISION FOR INCOME TAXES 19,612 17,506
--------- ---------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE 28,622 25,980
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
FOR POSTEMPLOYMENT BENEFITS,
NET OF TAXES OF $410,000 0 (623)
--------- ---------
NET INCOME 28,622 25,357
RETAINED EARNINGS - BEGINNING OF YEAR 238,076 205,902
DIVIDENDS PAID (PER COMMON SHARE: 1995 - $0.46,
1994 - $0.40) (10,837) (9,424)
--------- ---------
RETAINED EARNINGS - END OF PERIOD $255,861 $221,835
========= =========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 23,559,244 23,559,244
EARNINGS (LOSS) PER COMMON SHARE:
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE $ 1.21 $ 1.10
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE 0 (0.02)
--------- ---------
NET INCOME $ 1.21 $ 1.08
========= =========
See Notes to Unaudited Condensed Consolidated Financial Statements.
-3-
<PAGE>
BIC CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE FISCAL QUARTERS ENDED JULY 2, 1995 AND JULY 3, 1994
1995 1994
---- ----
(Thousands Except Share Data)
NET SALES $143,935 $138,839
COST OF GOODS SOLD 75,817 70,307
--------- ---------
GROSS PROFIT 68,118 68,532
ADVERTISING, SELLING, GENERAL AND ADMINISTRATIVE,
MARKETING AND RESEARCH & DEVELOPMENT EXPENSES 40,093 39,702
--------- ---------
INCOME FROM OPERATIONS 28,025 28,830
OTHER INCOME (EXPENSE) - NET 1,404 (1,275)
--------- ---------
INCOME BEFORE INCOME TAXES 29,429 27,555
PROVISION FOR INCOME TAXES 11,982 11,289
--------- ---------
NET INCOME (PER COMMON SHARE: 1995 - $0.74,
1994 - $0.69) $ 17,447 $ 16,266
========= =========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 23,559,244 23,559,244
See Notes to Unaudited Condensed Consolidated Financial Statements.
-4-
<PAGE>
BIC CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JULY 2, 1995 AND JULY 3, 1994
1995 1994
---- ----
(Thousands)
NET CASH PROVIDED BY OPERATING ACTIVITIES* $ 18,957 $ 10,688
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (10,643) (13,859)
Proceeds from sale of property, plant and
equipment 265 697
Deferred charges, deposits and other (2,418) (174)
Purchases of trademarks and patents (536) (523)
--------- ---------
Net cash used in investing activities (13,332) (13,859)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in short term borrowings 22,995 2,746
Dividends paid (10,837) (9,424)
--------- ---------
Net cash provided by (used in)
financing activities 12,158 (6,678)
--------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 49 (82)
--------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 17,832 (9,931)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 48,091 24,094
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 65,923 $ 14,163
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest $ 493 $ 637
========= =========
Income taxes $ 19,076 $ 17,184
========= =========
*The 1994 Change in Employers' Accounting for Postemployment Benefits had no
effect on cash and cash equivalents.
See Notes to Unaudited Condensed Consolidated Financial Statements.
-5-
<PAGE>
BIC CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
---------------------
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with the instructions to Form 10-Q and do
not include all of the information and disclosures required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the six-month period ended July 2, 1995 are not
necessarily indicative of the results that may be expected for the fiscal
year ending December 31, 1995. Certain items in the 1994 unaudited
condensed consolidated financial statements have been reclassified to
conform to the 1995 presentation.
2. New Accounting Standards
------------------------
As of January 3, 1994, the Corporation adopted Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits." This new standard requires that the cost of benefits provided
to former or inactive employees be recognized on the accrual basis of
accounting. Previously, the Corporation recognized postemployment
benefits on a cash basis or at the date the event gave rise to the payment
of these benefits. In accordance with the provisions of the Collective
Bargaining Agreement between BIC Corporation and Local 134 United Rubber,
Cork, Linoleum and Plastic Workers of America, the Corporation provides
severance benefits to its unionized employees. The Corporation also
provides medical and life insurance benefits to salaried employees
receiving long-term disability benefits. The cumulative effect of this
change, net of deferred income tax benefit of $0.4 million, reduced net
income by $0.6 million or $0.02 per share, which was reflected in the
Corporation's condensed consolidated statement of income for the six
months ended July 3, 1994.
Also effective January 3, 1994, the Corporation adopted FASB
Interpretation No. 39, "Offsetting of Amounts Related to Certain
Contracts." This Interpretation defines the right of setoff and specifies
what conditions must be met to have that right. The Corporation enters
into forward exchange contracts denominated in foreign currencies
providing protection from foreign currency fluctuations. At July 2, 1995,
the Corporation had outstanding $20.6 million of forward exchange
contracts, under which the Corporation is required to purchase French
francs at an average contract rate of approximately 4.9 French francs to
the dollar during 1995. These contracts do not meet the conditions for
setoff as set forth in FASB Interpretation No. 39 and accordingly, at July
2, 1995, the Corporation has recorded a current asset and a current
liability for the $20.6 million.
3. Bank Borrowings
---------------
Bank borrowings totaled $0.2 million at July 2, 1995, which represents
borrowings by the Corporation's Mexican subsidiary. These borrowings were
repaid during July 1995, with a weighted average interest rate of 47%.
-6-
<PAGE>
BIC CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
-------------------------------
The changes in the financial condition of the Corporation between January 1,
1995 and the end of the second fiscal quarter of 1995 reflect normal
operations. Accounts and notes receivable were higher at July 2, 1995 as
compared to January 1, 1995 due to higher sales levels. The Corporation's
current ratio was 1.80 at July 2, 1995 and 2.24 at January 1, 1995.
Cash and cash equivalents were $65.9 million at July 2, 1995 as compared to
$48.1 million at January 1, 1995. The increase was largely due to the
Corporation's French franc loan described below.
Other current assets were $52.0 million at July 2, 1995 and $29.1 million at
January 1, 1995. The increase was due to the $20.6 million of forward
contracts the Corporation had outstanding at July 2, 1995. See Note 2, New
Accounting Standards for further discussion.
Accounts payable were $29.0 million at July 2, 1995 and $18.9 million at
January 1, 1995. The increase was primarily due to the timing of inventory
purchases.
Accrued expenses were $76.3 million at July 2, 1995 as compared to $63.2
million at January 1, 1995. The increase was due to an increase in accrued
insurance associated with general liability and workers' compensation, the
timing of payments for advertising campaigns and marketing promotions, and an
increase in payroll liability attributable to the timing of payments for
bonuses and vacation time.
Other current liabilities were $47.9 million at July 2, 1995 and $4.5 million
at January 1, 1995. The increase in other current liabilities was partially
due to the $20.6 million of forward contracts the Corporation had outstanding.
See Note 2, New Accounting Standards for further discussion. The increase was
also due to the Corporation borrowing 110 million French francs, or $22.7
million U.S. dollars at July 2, 1995, from its majority shareholder, Societe
BIC S.A., in accordance with a certain loan agreement. Under the agreement,
Societe BIC S.A. will advance BIC Corporation French francs during 1995. The
principal portion of the loan is due in December 1995. Interest on the loan is
payable monthly at a rate equal to the Paris Interbank Offered Rate ("PIBOR")
in effect at the loan origination date plus 0.15%. At June 30, 1995 the PIBOR
was 7.80.
The foreign currency translation adjustment included in shareholders' equity
was $(18.0) million at July 2, 1995 and $(13.7) million at January 1, 1995.
The fluctuation was primarily due to the translation effect associated with the
decline in value of the Mexican peso.
-7-
<PAGE>
BIC CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
---------------------
Net sales for the fiscal quarter ended July 2, 1995 were $143.9 million, an
increase of 4% from $138.8 million for the same period in 1994. Gross profit
as a percentage of net sales was 47% in 1995 as compared to 49% for the same
period last year. Net income was $17.4 million, or $0.74 per share, compared
with $16.3 million, or $0.69 per share, for the same period last year.
Net sales for the six months ended July 2, 1995 were $257.4 million compared
with $241.6 million in 1994, for an increase of 7%. Gross profit as a
percentage of net sales was 47% in 1995 compared to 49% in 1994. Income before
cumulative effect of a change in accounting principle was $28.6 million, or
$1.21 per share, compared with $26.0 million, or $1.10 per share for the same
period last year.
The net sales increase for the fiscal quarter ended July 2, 1995 as compared to
the same period last year was primarily due to higher average selling prices in
stationery products and lighters in the United States. These improvements were
partially offset by a decline in shaver sales resulting from a decrease in
units sold. The Corporation's Mexican operations continued to show a decrease
in unit sales due to the adverse impact the decline in the value of the peso
had on the Mexican economy.
The lower gross profit percentage for the second quarter of 1995, as compared
to the same period last year was primarily due to continuing production
disruptions and other costs associated with the Corporation's changeover to
child-resistant lighters.
Other income/(expense) for the second fiscal quarter of 1995 was $1.4 million
as compared to $(1.3) million in 1994. The fluctuation was due to a write-down
of certain obsolete manufacturing machinery in 1994 and higher foreign exchange
gains reported in 1995.
For the six-month period ended July 3, 1994, net income included a $0.6 million
charge, representing the cumulative effect of a change in accounting for
postemployment benefits.
-8-
<PAGE>
PART II. OTHER INFORMATION
BIC CORPORATION AND SUBSIDIARIES
Item 1. Legal Proceedings
-----------------
In connection with the proposal made by Societe BIC S.A. (the
"Purchaser") to acquire all the equity interest in BIC Corporation
not currently owned by the Purchaser and members of the Bich family
(see Item 6), beginning on May 19, 1995, four actions were filed in
the Supreme Court of the State of New York, County of New York, by
shareholders of the Corporation. These actions, purportedly brought
as class actions on behalf of all shareholders of the Corporation,
named the Corporation, its directors, certain of its officers and
Purchaser as defendants, alleging that they breached their fiduciary
duties to plaintiffs and the Corporation's other shareholders in
connection with Purchaser's proposal to acquire the Public Shares for
$36.50 per share. The parties have entered into a stipulation
consolidating these four actions under the caption In re BIC Corp.
------------------
Shareholders Litigation, Consolidated Index No. 112626/95. The
------------------------
stipulation provides that defendants need not respond to the other
four original complaints. The stipulation further provides that
plaintiffs shall file a Consolidated and Amended Complaint, which has
not yet been filed.
Another action asserting similar claims on behalf of the same
purported class, entitled Rosenzweig v. BIC Corp., et al., was filed
-------------------------------
in the Connecticut Superior Court, Judicial District of
Ansonia/Milford, on May 22, 1995. The time for defendants to respond
to the complaint in that action has been extended. In addition,
another similar purported class action, entitled Kahn v. Societe BIC,
--------------------
S.A., et al., Index No. 01785, which names only Purchaser and Bruno
-------------
Bich as defendants, was filed on May 19, 1995 in the Supreme Court of
the State of New York, County of Queens. The complaint in that
action has not been properly served.
In May 1994, BIC filed a petition with the United States Department
of Commerce ("DOC") and the United States International Trade
Commission ("ITC") for the imposition of antidumping duties against
disposable lighters from Thailand and China. The petition charged
that disposable lighters from Thailand and China are being "dumped"
or sold in the United Sates at less than fair value. During October
and December 1994, the DOC ruled favorably on BIC's petition in
preliminary decisions imposing antidumping duties on disposable
lighters imported from Thailand and China, respectively.
In April 1995, the DOC recommended antidumping duties of up to 197%
on disposable lighters imported from China. On June 2, 1995, the ITC
voted 4-2 that there is no material injury, or immediate threat of
injury, to the domestic lighter industry as a result of Chinese
lighters being dumped in the United States. A 3-3 vote would have
upheld the imposition of antidumping duties of up to 197% recommended
by the DOC following their six month investigation of lighters being
imported from China.
-9-
<PAGE>
PART II. OTHER INFORMATION
BIC CORPORATION AND SUBSIDIARIES
Item 1. Legal Proceedings (Continued)
-----------------------------
This decision by the ITC followed a similar decision announced on
April 13, 1995, regarding lighters imported from Thailand. In that
decision, the ITC also found that there was no injury, or immediate
threat of injury, as a result of lighters from Thailand being dumped
in the United States. Registrant has appealed the decision of the
ITC with respect to lighters imported from China and Thailand to the
United States Court of International Trade.
Item 2. Change in Securities - None.
Item 3. Defaults upon Senior Securities - Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders - None.
Item 5. Other Information - None.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits - None Required.
b) Reports on Form 8-K
A report on Form 8-K, dated May 23, 1995, was filed by the
Registrant with respect to the Registrant's parent company,
Societe BIC S.A.'s, proposal to acquire all the equity interest
in the Registrant not currently owned by Societe BIC S.A. and
members of the Bich family.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
BIC CORPORATION
-------------------------------------------------
(Registrant)
Date: August 10, 1995 Robert L. Macdonald
-------------------------------------------------
(Signature)
Robert L. Macdonald, Vice President - Finance
(Principal Accounting Officer)
[ARTICLE] 5
[CIK] 0000011975
[NAME] BIC CORPORATION
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] DEC-31-1995
[PERIOD-END] JUL-02-1995
[CASH] 65,923
[SECURITIES] 0
[RECEIVABLES] 96,391
[ALLOWANCES] 5,131
[INVENTORY] 56,805
[CURRENT-ASSETS] 276,548
[PP&E] 288,556
[DEPRECIATION] 158,668
[TOTAL-ASSETS] 440,573
[CURRENT-LIABILITIES] 153,432
[BONDS] 0
[COMMON] 23,559
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[OTHER-SE] 237,888
[TOTAL-LIABILITY-AND-EQUITY] 440,573
[SALES] 257,413
[TOTAL-REVENUES] 257,413
[CGS] 135,222
[TOTAL-COSTS] 135,222
[OTHER-EXPENSES] 0
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 0
[INCOME-PRETAX] 48,234
[INCOME-TAX] 19,612
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 28,622
[EPS-PRIMARY] 1.21
[EPS-DILUTED] 1.21
</TABLE>
