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 October 1, 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 October 1, 1995, the close of the period covered by this report, registrant
had outstanding 23,559,244 common shares, $1.00 par value per share.
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<PAGE>
PART 1. FINANCIAL INFORMATION
BIC CORPORATION AND SUBSIDIARIES
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
October 1, January 1,
1995 1995
---------- ----------
(Thousands)
ASSETS
- ------
CURRENT ASSETS:
Cash and cash equivalents $ 90,330 $ 48,091
Accounts and notes receivable:
Trade - net of allowance for doubtful
accounts of $5,208,000 at October 1 and
$4,530,000 at January 1 75,006 54,648
Affiliates 4,577 4,358
Other 4,364 3,861
Inventories:
Finished goods 21,292 25,804
Work in process 18,303 18,335
Raw materials 8,400 7,860
Packaging materials 2,720 2,364
Other current assets 34,050 29,124
--------- ---------
Total current assets 259,042 194,445
--------- ---------
PROPERTY, PLANT AND EQUIPMENT - at cost less
accumulated depreciation of $163,684,000 at
October 1 and $151,365,000 at January 1 127,158 132,553
OTHER ASSETS 34,825 31,689
--------- ---------
TOTAL $421,025 $358,687
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Bank borrowings $ 1,010 $ 0
Accounts payable:
Trade 15,957 11,835
Affiliates 6,704 7,080
Accrued expenses 82,904 63,214
Other current liabilities 16,451 4,500
--------- ---------
Total current liabilities 123,026 86,629
--------- ---------
NONCURRENT LIABILITIES 26,493 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 266,251 238,076
Foreign currency translation adjustment (18,304) (13,718)
--------- ---------
Total shareholders' equity 271,506 247,917
--------- ---------
TOTAL $421,025 $358,687
========= =========
See Notes to Unaudited Condensed Consolidated Financial Statements.
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<PAGE>
BIC CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE NINE MONTHS ENDED OCTOBER 1, 1995 AND OCTOBER 2, 1994
1995 1994
---- ----
(Thousands Except Share Data)
NET SALES $387,688 $369,336
COST OF GOODS SOLD 202,880 186,844
--------- ---------
GROSS PROFIT 184,808 182,492
ADVERTISING, SELLING, GENERAL AND ADMINISTRATIVE,
MARKETING AND RESEARCH & DEVELOPMENT EXPENSES 111,918 112,236
--------- ---------
INCOME FROM OPERATIONS 72,890 70,256
OTHER INCOME (EXPENSE) - NET 2,105 (1,352)
--------- ---------
INCOME BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 74,995 68,904
PROVISION FOR INCOME TAXES 30,564 28,130
--------- ---------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE 44,431 40,774
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
FOR POSTEMPLOYMENT BENEFITS, NET OF
TAXES OF $410,000 0 (623)
--------- ---------
NET INCOME 44,431 40,151
RETAINED EARNINGS - BEGINNING OF YEAR 238,076 205,902
DIVIDENDS PAID (PER COMMON SHARE: 1995 - $0.69,
1994 - $0.60) (16,256) (14,136)
--------- ---------
RETAINED EARNINGS - END OF PERIOD $266,251 $231,917
========= =========
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 $ 1.89 $ 1.73
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE 0 (0.02)
--------- ---------
NET INCOME $ 1.89 $ 1.71
========= =========
See Notes to Unaudited Condensed Consolidated Financial Statements.
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<PAGE>
BIC CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE FISCAL QUARTERS ENDED OCTOBER 1, 1995 AND OCTOBER 2, 1994
1995 1994
---- ----
(Thousands Except Share Data)
NET SALES $130,275 $127,720
COST OF GOODS SOLD 67,658 63,425
--------- ---------
GROSS PROFIT 62,617 64,295
ADVERTISING, SELLING, GENERAL AND ADMINISTRATIVE,
MARKETING AND RESEARCH & DEVELOPMENT EXPENSES 36,929 38,773
--------- ---------
INCOME FROM OPERATIONS 25,688 25,522
OTHER INCOME (EXPENSE) - NET 1,073 (104)
--------- ---------
INCOME BEFORE INCOME TAXES 26,761 25,418
PROVISION FOR INCOME TAXES 10,952 10,624
--------- ---------
NET INCOME (PER COMMON SHARE: 1995 - $0.68,
1994 - $0.63) $ 15,809 $ 14,794
========= =========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 23,559,244 23,559,244
See Notes to Unaudited Condensed Consolidated Financial Statements.
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<PAGE>
BIC CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED OCTOBER 1, 1995 AND OCTOBER 2, 1994
1995 1994
---- ----
(Thousands)
NET CASH PROVIDED BY OPERATING ACTIVITIES* $ 61,666 $ 41,391
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (13,493) (16,271)
Proceeds from sale of property, plant and
equipment 319 1,020
Deferred charges, deposits and other (2,421) (163)
Purchases of trademarks and patents (684) (900)
--------- ---------
Net cash used in investing activities (16,279) (16,314)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in short term borrowings 13,090 1,440
Dividends paid (16,256) (14,136)
--------- ---------
Net cash used in financing activities (3,166) (12,696)
--------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 18 36
--------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS 42,239 12,417
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 48,091 24,094
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 90,330 $ 36,511
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest $ 1,024 $ 818
========= =========
Income taxes $ 30,617 $ 27,409
========= =========
*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.
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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 nine-month period ended October 1, 1995 are not
necessarily indicative of the results that may be expected for the fiscal
year ending December 31, 1995.
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, now merged with United
Steel 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 has been reflected in the Corporation's
condensed consolidated statement of income for the nine months ended
October 2, 1994.
3. Short Term Borrowings
---------------------
Bank borrowings totaled $1.0 million at October 1, 1995, which represents
borrowings by the Corporation's Mexican subsidiary, with a weighted average
interest rate of 6.14%. These borrowings were repaid during October 1995.
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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 third fiscal quarter of 1995 reflect normal operations.
Accounts and notes receivable were higher at October 1, 1995 as compared to
January 1, 1995 due to higher sales levels. The Corporation's current ratio
was 2.11 at October 1, 1995 and 2.24 at January 1, 1995.
Cash and cash equivalents were $90.3 million at October 1, 1995 and $48.1
million at January 1, 1995. The increase was due to cash generated from
operating activities and the Corporation's loan from Societe BIC S.A., which
is discussed below.
Accrued expenses were $82.9 million at October 1, 1995 as compared to $63.2
million at January 1, 1995. The increase was due to an increase in accrued
advertising and promotion costs; an increase in accrued income taxes; an
increase in accrued insurance associated with general liability and workers'
compensation; and an increase in payroll liability attributable to the timing
of payments for bonuses and vacation time.
Other current liabilities were $16.5 million at October 1, 1995 and $4.5
million at January 1, 1995. Other current liabilities at October 1, 1995
included a $12.0 million loan from the Corporation's 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 September 30,
1995 the PIBOR was 7.55%.
The foreign currency translation adjustment included in shareholders' equity
was $(18.3) million at October 1, 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.
Results of Operations
- ---------------------
Net sales for the fiscal quarter ended October 1, 1995 were $130.3 million, an
increase of 2% from $127.7 million for the same period in 1994. Gross profit
as a percentage of net sales was 48% in 1995 compared to 50% for the same
period last year. Net income was $15.8 million, or $0.68 per share, compared
with $14.8 million, or $0.63 per share, for the same period last year.
Net sales for the nine months ended October 1, 1995 were $387.7 million
compared with $369.3 million in 1994, for an increase of 5%. Gross profit as a
percentage of net sales was 48% in 1995 compared to 49% in 1994. Income before
cumulative effect of a change in accounting principle was $44.4 million, or
$1.89 per share, compared with $40.8 million, or $1.73 per share for the same
period last year.
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<PAGE>
BIC CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations (Continued)
- ---------------------------------
The net sales increase for the fiscal quarter ended October 1, 1995 as compared
to the same period last year was primarily due to an increase in units sold and
higher average selling prices, in stationery products in the United States.
These improvements were partially offset by a decline in lighter and shaver
sales resulting from a decrease in units sold in the United States. The
Corporation's Mexican operations continued to show a decrease in unit sales due
to the adverse impact the decline in value of the peso had on the Mexican
economy.
The lower gross profit percentage for the third fiscal 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, and unfavorable foreign exchange rates
associated with imports.
For the nine-month period ended October 2, 1994, net income included a $0.6
million charge, representing the cumulative effect of change in accounting for
postemployment benefits.
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<PAGE>
PART II. OTHER INFORMATION
BIC CORPORATION AND SUBSIDIARIES
Item 1. Legal Proceedings
-----------------
On May 19, 1995 and May 22, 1995, various litigation was commenced
against the Corporation by shareholders of the Corporation in New
York and Connecticut state courts. These actions, purportedly named
as class actions on behalf of all public shareholders, varyingly
named the Corporation, its directors, certain of its officers and its
French parent, Societe BIC S.A., as defendants. In these actions,
plaintiffs alleged that the defendants breached their fiduciary
duties to plaintiffs and the Corporation's other public shareholders
in connection with Societe BIC, S.A.'s original proposal to acquire
the public shares for $36.50 per share.
The parties to these actions have entered into a Memorandum of
Understanding, dated September 7, 1995, outlining the general terms
of a proposed settlement providing for the dismissal with prejudice
of such actions. The settlement is subject to execution of a
stipulation of settlement and approval by the court following notice
to the public shareholders. In connection with the proposed
settlement, the plaintiffs intend to apply for an award of attorneys'
fees and litigation expenses in the amount of $487,500. The
defendants have agreed not to oppose this application.
The defendants have denied, and continue to deny, that they have
committed or have threatened to commit any violation of law or
breaches of duty to the plaintiffs or the purported class. The
defendants have agreed to the proposed settlement because, among
other reasons, such settlement would eliminate the burden and expense
of further litigation and would facilitate the consummation of a
transaction that they believe to be in the best interests of the
Corporation and the public shareholders.
On August 16, 1995, BIC Corporation and Societe BIC S.A. jointly
announced that they had executed a definitive merger agreement
pertaining to Societe BIC S.A.'s previously announced proposal to
acquire from public shareholders the approximately 22% of BIC
Corporation's Common Shares not currently owned by Societe BIC S.A.
and the Bich family. Under the agreement, Societe BIC S.A. will
acquire in the merger the publicly held shares of BIC Corporation for
a price of $40.50 per share in cash, or an aggregate of approximately
$219 million.
The merger agreement was approved by the Board of Directors of BIC
Corporation following the unanimous recommendation of the merger by a
special committee of independent directors. Goldman, Sachs & Co. has
served as financial advisor to the special committee.
The transaction, which will be financed out of Societe BIC's cash
position, is subject to certain customary conditions including
approval of a majority of the publicly held shares actually voted at
a special meeting of shareholders which will be called to consider
the merger.
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<PAGE>
PART II. OTHER INFORMATION
BIC CORPORATION AND SUBSIDIARIES
Item 1. Legal Proceedings (Continued)
-----------------------------
Although there can be no assurance as to whether the proposed
transaction will be effected, it is currently anticipated that the
merger will be completed in late November of 1995.
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
27) Financial Data Schedule
b) Reports on Form 8-K
A report on Form 8-K, dated August 21, 1995 was filed by the
Registrant with respect to the Registrant and Registrant's
parent company, Societe BIC S.A., having executed a definitive
Agreement and Plan of Merger pertaining to Societe BIC S.A.'s
previously announced proposal to acquire from public
shareholders the approximately 22% of the Corporation's common
shares not currently owned by Societe BIC S.A. and 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: October 24, 1995 Robert L. Macdonald
----------------------------------------
(Signature)
Robert L. Macdonald, Vice President - Finance
(Principal Accounting Officer)
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<ARTICLE> 5
<CIK> 0000011975
<NAME> BIC CORPORATION
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> OCT-01-1995
<CASH> 90,330
<SECURITIES> 0
<RECEIVABLES> 80,214
<ALLOWANCES> 5,208
<INVENTORY> 50,715
<CURRENT-ASSETS> 259,042
<PP&E> 290,842
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<CURRENT-LIABILITIES> 123,026
<BONDS> 0
<COMMON> 23,559
0
0
<OTHER-SE> 247,947
<TOTAL-LIABILITY-AND-EQUITY> 421,025
<SALES> 387,688
<TOTAL-REVENUES> 387,688
<CGS> 202,880
<TOTAL-COSTS> 202,880
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 74,995
<INCOME-TAX> 30,564
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
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</TABLE>
