<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For quarterly period ended JULY 2, 1995
------------
Commission File Number 1-7484
------
EKCO GROUP, INC.
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 11-2167167
-------------------------------- -------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
98 SPIT BROOK ROAD, NASHUA, NEW HAMPSHIRE 03062
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
(603) 888-1212
----------------------------------------------------
(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 7, 1995, there were issued and outstanding 18,394,577
shares of common stock of the registrant.
<PAGE> 2
<TABLE>
EKCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<CAPTION>
JULY 2, JANUARY 1,
1995 1995
----------- ---------
(UNAUDITED)
<S> <C> <C>
Current assets
Cash and cash equivalents $ 222 $ 129
Accounts receivable, net 38,849 46,030
Inventories 63,060 48,242
Prepaid expenses and other current assets 6,321 6,296
Deferred income taxes 7,320 7,330
Investment pledged as collateral - 3,600
-------- --------
Total current assets 115,772 111,627
Property and equipment, net 55,512 52,361
Property held for sale or lease, net 6,904 7,373
Other assets 4,800 5,440
Excess of cost over fair value of net assets
acquired, net 138,801 140,982
-------- --------
Total assets $321,789 $317,783
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Note payable $ - $ 3,643
Current portion of long-term obligations 82 36
Accounts payable 18,041 15,652
Accrued expenses 24,468 27,843
Income taxes 2,318 3,944
-------- --------
Total current liabilities 44,909 51,118
-------- --------
Long-term obligations, less current portion 111,715 102,580
-------- --------
Other long-term liabilities 9,449 9,375
-------- --------
7% Convertible Subordinated Note 22,000 22,000
-------- --------
Series B ESOP Convertible Preferred Stock, net;
outstanding July 2, 1995, 1,533 shares;
outstanding January 1, 1995, 1,568 shares,
redeemable at $3.61 per share 3,305 3,096
-------- --------
Commitments and contingencies - -
Minority interest 498 498
-------- --------
Stockholders' equity
Common stock, $.01 par value; outstanding
July 2, 1995, 18,395 shares; outstanding
January 1, 1995, 18,069 shares 184 181
Capital in excess of par value 107,246 105,448
Cumulative translation adjustment 877 771
Retained earnings 27,317 27,172
Unearned compensation (4,223) (2,968)
Pension liability adjustment (1,488) (1,488)
-------- --------
129,913 129,116
-------- --------
Total liabilities and stockholders' equity $321,789 $317,783
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE> 3
<TABLE>
EKCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JULY 2, 1995 AND JULY 3, 1994
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ----------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net revenues $61,691 $59,199 $120,423 $113,553
------- ------- -------- --------
Costs and expenses
Cost of sales 43,229 39,657 83,954 76,265
Selling, general and administrative 12,398 13,482 25,683 25,168
Amortization of excess cost over
fair value 1,108 1,109 2,217 2,219
------- ------- -------- --------
56,735 54,248 111,854 103,652
------- ------- -------- --------
Income before interest and
income taxes 4,956 4,951 8,569 9,901
------- ------- -------- --------
Net interest expense
Interest expense 3,410 3,095 6,843 6,289
Investment income - (133) (75) (226)
------- ------- -------- --------
3,410 2,962 6,768 6,063
------- ------- -------- --------
Income before income taxes 1,546 1,989 1,801 3,838
Income taxes 735 956 856 1,826
------- ------- -------- --------
Net income $ 811 $ 1,033 $ 945 $ 2,012
======= ======= ======== ========
Net income per share $ .04 $ .05 $ .05 $ .10
======= ======= ======== ========
Weighted average number of shares used
in computation of per share data 20,308 20,114 20,266 20,091
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 4
<TABLE>
EKCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JULY 2, 1995 AND JULY 3, 1994
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities
Net income $ 945 $ 2,012
Adjustments to reconcile net income to net cash
provided by (used in) operations
Depreciation 4,901 4,757
Amortization 5,226 3,985
Other (1) 940
Change in certain assets and liabilities, affecting
cash provided by (used in) operations:
Accounts receivable 7,603 (302)
Inventories (14,789) (6,833)
Other assets (2,484) 4,276
Accounts payable and accrued expenses (1,000) (4,468)
Income taxes payable (1,621) (2,146)
-------- --------
Net cash provided by (used in) operations (1,220) 2,221
-------- --------
Cash flows from investing activities
Proceeds from sale of property, equipment and product line 236 4,412
Capital expenditures (6,926) (4,481)
-------- --------
Net cash used in investing activities (6,690) (69)
-------- --------
Cash flows from financing activities
Proceeds from issuance of long-term obligations 31,183 24,355
Proceeds from sale of investment held as collateral 3,600 -
Payment of dividends (800) -
Issuance of stock under stock option and purchase plans 238 363
Payment of note and long-term obligations (25,645) (26,349)
Other (574) (400)
-------- --------
Net cash provided by (used in) financing activities 8,002 (2,031)
-------- --------
Effect of exchange rate changes on cash 1 52
-------- --------
Net increase in cash and cash equivalents 93 173
Cash and cash equivalents at beginning of year 129 327
-------- --------
Cash and cash equivalents at end of period $ 222 $ 500
======== ========
Cash paid during the period for
Interest $ 5,940 $ 5,928
Income taxes 2,379 3,762
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 5
EKCO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
(1) BASIS OF PRESENTATION AND OTHER MATTERS
The consolidated condensed financial statements included herein have
been prepared by Ekco Group, Inc. (the "Company"), without audit, pursuant to
the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. It is believed,
however, that the disclosures are adequate to make the information presented
not misleading. It is suggested that these condensed financial statements be
read in conjunction with the financial statements and the notes thereto
included in the Company's latest annual report on Form 10-K. The consolidated
condensed financial statements include the accounts of the Company and its
subsidiaries. All significant intercompany accounts and transactions have been
eliminated. The condensed financial statements, in the opinion of management,
reflect all adjustments necessary to fairly state the Company's financial
position and the results of its operations. Such adjustments are of a normal
recurring nature.
A large part of the Company's business is seasonal. Historically,
revenues in the last half of the calendar year have been greater than revenues
in the first half of the year. Accordingly, the results for the entire year
may not necessarily be the product of annualizing results for any interim
period.
(2) ACCOUNTS RECEIVABLE, NET
<TABLE>
Accounts receivable consisted of the following:
<CAPTION>
JULY 2, 1995 JANUARY 1, 1995
------------ ---------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Accounts receivable $39,875 $47,769
Allowance for doubtful accounts (1,026) (1,739)
------- -------
$38,849 $46,030
======= =======
</TABLE>
(3) INVENTORIES
<TABLE>
The components of inventory were as follows:
<CAPTION>
JULY 2, 1995 JANUARY 1, 1995
------------ ---------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Raw materials $15,204 $15,229
Work in process 4,963 4,047
Finished goods 42,893 28,966
------- -------
$63,060 $48,242
======= =======
</TABLE>
5
<PAGE> 6
EKCO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
(4) PROPERTY AND EQUIPMENT, NET
<TABLE>
Property and equipment consisted of the following:
<CAPTION>
JULY 2, 1995 JANUARY 1, 1995
------------ ---------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Property and equipment at cost
Land, buildings and improvements $22,443 $22,261
Equipment, factory and other 66,859 59,839
------- -------
89,302 82,100
Less accumulated depreciation 33,790 29,739
------- -------
$55,512 $52,361
======= =======
</TABLE>
(5) EXCESS OF COST OVER FAIR VALUE OF NET ASSETS ACQUIRED, NET
Excess of cost over fair value of net assets acquired is net of
accumulated amortization of $25,507 as of July 2, 1995 and $23,290 as of
January 1, 1995.
(6) INCOME TAXES
The Company's effective tax rate as reported in its latest annual
report on Form 10-K was 46% for the year ended January 1, 1995 ("Fiscal 1994").
The difference between the Company's effective tax rate of 48% for the three
and six months ended July 2, 1995 and the Fiscal 1994 rate results primarily
from amortization of excess of cost over fair value of net assets acquired
becoming a higher percentage of earnings before income taxes.
(7) LONG-TERM OBLIGATIONS AND OTHER LONG-TERM LIABILITIES
<TABLE>
Long-term obligations consisted of the following:
<CAPTION>
JULY 2, 1995 JANUARY 1, 1995
------------ ---------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Group Credit Facility $ 51,664 $ 42,424 (a)
12.70% Notes, due 1998 60,000 60,000
Other 133 192
-------- --------
111,797 102,616
Less current portion 82 36
-------- --------
$111,715 $102,580
======== ========
7% Convertible Subordinated Note,
due 2002 $ 22,000 $ 22,000
======== ========
</TABLE>
6
<PAGE> 7
EKCO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(7) LONG-TERM OBLIGATIONS AND OTHER LONG-TERM LIABILITIES (CONTINUED)
<TABLE>
Other long-term liabilities consisted of the following:
<CAPTION>
JULY 2, 1995 JANUARY 1, 1995
------------ ---------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Accrued pension cost $1,484 $1,408
Deferred income taxes 1,034 948
Other long-term liabilities 6,931 7,019
------ ------
$9,449 $9,375
====== ======
</TABLE>
<TABLE>
(a) Borrowings which were refinanced under the Group Credit Facility:
<CAPTION>
JANUARY 1, 1995
---------------
(AMOUNTS IN THOUSANDS)
<S> <C>
Frem Credit Agreement $ 5,896
Housewares Credit Agreement 14,305
Group Credit Line 22,223
--------
$ 42,424
========
</TABLE>
On April 11, 1995, the Company entered into a bank credit agreement
(the "Group Credit Facility") which provides lines of credit aggregating
$75 million for each of the Company ($30 million), Ekco Housewares, Inc.
("Housewares") ($35 million) and Frem Corporation ("Frem") ($10 million). The
proceeds from the Group Credit Facility were used to retire loans under the
Housewares and Frem Credit Agreements and the Group Credit Line and,
consequently, all amounts due under these agreements were classified as
long-term. The facility matures on December 1, 1998.
Loans under the Group Credit Facility bear interest ranging from the
bank's prime rate to the prime rate plus 0.25% or the LIBOR rate plus 1.25% to
1.75%, depending on the Company's borrowing strategy and the ratio of total
debt to cash flow (as defined). The Group Credit Facility provides for a
commitment fee of three-eighths of one percent on the unused portion of the
commitment amount and a $60,000 annual agency fee.
Borrowings under the Group Credit Facility are collateralized by
substantially all of the tangible assets of the Company. The Group Credit
Facility contains certain financial and operating covenants. The most
restrictive covenant requires the Company to maintain a minimum level of
cash flow.
(8) SERIES B ESOP CONVERTIBLE PREFERRED STOCK
<TABLE>
Series B ESOP Convertible Preferred Stock, net, consisted of the following:
<CAPTION>
JULY 2, 1995 JANUARY 1, 1995
------------ --------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Series B ESOP Convertible Preferred
Stock, par value $.01, redeemable at
$3.61 per share $ 5,535 $ 5,662
Unearned compensation (2,230) (2,566)
------- -------
$ 3,305 $ 3,096
======= =======
</TABLE>
7
<PAGE> 8
EKCO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(9) COMMON STOCK, $.01 PAR VALUE
<TABLE>
Share information regarding common stock consisted of the following:
<CAPTION>
JULY 2, 1995 JANUARY 1, 1995
------------ ---------------
<S> <C> <C>
Authorized shares 60,000,000 60,000,000
========== ==========
Shares issued 27,632,372 27,292,641
Shares held in treasury 9,237,795 9,223,600
---------- ----------
18,394,577 18,069,041
========== ==========
</TABLE>
(10) NET INCOME PER COMMON SHARE
<TABLE>
Primary earnings per common share are based upon the weighted
average of common stock and dilutive common stock equivalent shares outstanding
during each period. Fully diluted earnings per share have been omitted since
they are either the same as primary earnings per share or anti-dilutive. The
weighted average number of shares used in computation of earnings per share
consisted of the following for the periods presented:
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ----------------
JULY 2, JULY 3, JULY 2, JULY 3,
------- ------- ------- -------
1995 1994 1995 1994
---- ---- ---- ----
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C>
Weighted average shares of common
stock outstanding during the
period 18,343 17,927 18,273 17,887
Series B ESOP Convertible
Preferred Stock 1,533 1,640 1,551 1,640
Weighted average common equivalent
shares due to stock options 432 547 442 564
------ ------ ------ ------
20,308 20,114 20,266 20,091
====== ====== ====== ======
</TABLE>
(11) ENVIRONMENTAL MATTERS
From time to time, the Company has had claims asserted against it by
regulatory agencies or private parties for environmental matters relating to
the generation or handling of hazardous substances by the Company or its
predecessors and has incurred obligations for investigations or remedial
actions with respect to certain of such matters. While the Company does not
believe that any such claims asserted or obligations incurred to date will
result in a material adverse effect upon the Company's financial position,
results of operations or liquidity, the Company is aware that at its facilities
in Massillon and Hamilton, Ohio; Chicago, Illinois; Easthampton, Massachusetts;
Hudson, New Hampshire and Lititz, Pennsylvania; hazardous substances and oil
have been detected and that additional investigation will be, and remedial
action will or may be, required. Operations at these and other facilities
currently or previously owned or leased by the Company utilize, or in the past
have utilized, hazardous substances. There can be no assurance that activities
at these or any other facilities owned or operated by the Company or future
facilities may not result in additional environmental claims being asserted
against the Company or additional investigations or remedial actions being
required.
8
<PAGE> 9
EKCO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(11) ENVIRONMENTAL MATTERS (CONTINUED)
In connection with the acquisition of Kellogg Brush Manufacturing Co.
and subsidiaries ("Kellogg") by the Company in fiscal year 1993, the Company
engaged environmental engineering consultants ("Consultants") to review
potential environmental liabilities at all of Kellogg's properties. Such
additional investigation and testing resulted in the identification of likely
environmental remedial actions, operation, maintenance and ground water
monitoring and the estimated costs thereof. Based upon the cost estimates
provided by the Consultants, the Company believes remediation costs will be
approximately $1.6 million and the expense for the ongoing operation,
maintenance and ground water monitoring will be $181,000 for the first ten
years and $116,000 for 20 years thereafter. Management believes that the total
amount of these liabilities is approximately $6 million, including the effects
of inflation. Accordingly, the Company has recorded a liability of
approximately $3.6 million. This amount represents the undiscounted costs of
remediation and the net present value of future operation, maintenance and
ground water monitoring costs discounted at 6%. The Company expects to pay
approximately $1.3 million of the remediation costs in the current year
("Fiscal 1995") with the balance being paid out in fiscal years 1996 and 1997.
During the first six months of Fiscal 1995, the Company paid approximately
$124,000 of such costs. These estimates may subsequently change if additional
sites are identified or further remediation measures are required or undertaken
or the interpretation of current laws or regulations are modified. The Company
has not anticipated any insurance proceeds or third-party payments in arriving
at the above estimates.
9
<PAGE> 10
EKCO GROUP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
The following discussion and analysis of the consolidated results of
operations for the thirteen week periods ended July 2, 1995 (the "Second
Quarter of 1995") and July 3, 1994 (the "Second Quarter of 1994") and for the
twenty six week periods ended July 2, 1995 (the "First Half of 1995") and July
3, 1994 (the "First Half of 1994") and the financial condition at July 2, 1995
should be read in conjunction with the Company's Consolidated Condensed
Financial Statements and Notes thereto. Because of the seasonality of the
Company's revenues, which have historically been concentrated in the second
half of its fiscal year, the results of operations for any interim period and
the balance sheet as of the end of any interim period are not indicative of
either a full year's operations or the financial condition of the Company at
the end of any fiscal year.
NET REVENUES
Net revenues for the Second Quarter and First Half of 1995 increased
approximately $2.5 million (4.2%) and $6.9 million (6.1%), respectively, from
the comparable prior year periods. The increase in net revenues for the Second
Quarter and First Half of 1995 was primarily the result of price increases
($2.6 million and $3.6 million, respectively), the introduction of new products
($1.2 million and $2.8 million, respectively, principally plastic products),
increased sales from the Company's J-Hook program ($300,000 and $1.0 million,
respectively) and increased sales of kitchenware products ($900,000 and $2.4
million, respectively). While in the Second Quarter of 1995 the Company
experienced a slight decline in net revenues from its bakeware products
($900,000) this was more than offset by strong first quarter sales, resulting
in increased net revenues from the Company's bakeware products for the First
Half of 1995 of $500,000. The above increases were partially offset by the
decline in net revenues from the Company's plastic products, reflecting
retailer and consumer resistance to price increases.
GROSS PROFIT
The Company's gross profit margin declined from approximately 33% in
the 1994 periods to approximately 30% for the 1995 periods. The principal
contributing factors to this decline were the significant rise in the prices of
resin, corrugated and wood, increases in manufacturing and distribution costs
and a shift in product mix, partially offset by the effect of price increases
initiated in the beginning of the year.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses for the Second Quarter of
1995 decreased approximately $1.1 million (8.1%) from the comparable prior year
period, but increased $500,000 for the First Half of 1995 as compared with the
First Half of 1994. The decline in second quarter expenses was the direct
result of management's efforts to reorganize and better control expenditures.
The increase in selling, general and administrative expenses in the First Half
of 1995 from the First Half of 1994 was due primarily to planned increases in
advertisement and product placement costs in the first quarter of 1995, and
costs associated with B. Via International Housewares, Inc., a start-up
subsidiary, that is developing products for the upscale and specialty market
place.
NET INTEREST EXPENSE
Net interest expense increased $448,000 from the Second Quarter of 1994
level of $3.0 million and $705,000 from the First Half of 1994 level of $6.1
million. The increases were due to both an increase in interest rates and
higher average borrowings.
10
<PAGE> 11
EKCO GROUP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONTINUED)
RESTRUCTURING/REORGANIZATION AND EXCESS FACILITIES CHARGE
During the Fourth Quarter of Fiscal 1993, the Company recorded an $11
million restructuring/reorganization and excess facilities charge ($6.6 million
after income taxes) resulting from management's analysis of the Company's
operations and future strategy. Of this charge approximately $2.7 million was
non-cash. At January 1, 1995, the accrual relating to
restructuring/reorganization and excess facilities costs was $3.3 million.
In February 1995, the Company announced the second phase of its
restructuring which is expected to utilize the balance of the reserve. During
this phase, the Company has combined its principal housewares business units
into a single operating division. The new division consolidates the management
and operations of Housewares, Frem and Kellogg. This new division also
provides certain administrative and distribution services to the Company's
other business units.
During the First Half of 1995, the Company charged approximately $1.9
million against the reserve for costs incurred in the implementation of the
second phase of the restructuring plan. At July 2, 1995 the remaining accrual
was $1.4 million.
LIQUIDITY AND CAPITAL RESOURCES
During the First Half of 1995, the Company utilized approximately $1.2
million to fund operating activities, primarily to increase working capital and
pay interest expense. Also, during the First Half of 1995, the Company used
approximately $5.5 million of increased borrowings along with proceeds of $3.6
million from investments previously pledged as collateral for capital
expenditures of approximately $6.7 million and dividend payments of
approximately $800,000.
The decline in the Company's accounts receivable balance relates to the
seasonality of the Company's revenues, which have historically been
concentrated in the second half of its fiscal year. The increase in inventory
reflects a planned increase in plastic products and bakeware products to better
balance manufacturing in anticipation of the "back-to-school" and holiday
baking seasons and a softening of demand experienced towards the end of the
quarter.
On April 11, 1995, the Company entered into a bank credit agreement (the
"Group Credit Facility") which provides lines of credit aggregating $75 million
for each of the Company ($30 million), Housewares ($35 million) and Frem ($10
million). Loans under the Group Credit Facility bear interest ranging from the
bank's prime rate to the bank's prime rate plus 0.25% or the LIBOR rate plus
1.25% to 1.75%, depending on the Company's borrowing strategy and the ratio of
total debt to cash flow (as defined). The Group Credit Facility provides for a
commitment fee of three-eighths of one percent on the unused portion of the
commitment amount and a $60,000 annual agency fee. The facility matures on
December 1, 1998.
At July 2, 1995, the Company and its operating subsidiaries had unused
credit facilities of $16.2 million (net of approximately $7.1 million in
outstanding letters of credit). The Company believes it has sufficient
borrowing capacity to finance its ongoing operations through the end of Fiscal
1995. The Company may require additional funds to finance any additional
acquisitions.
The Company has land and buildings in Hudson, New Hampshire; Chicago,
Illinois; and a portion of its facilities in Lititz, Pennsylvania; held for
sale. The Company is actively pursuing the sale or lease of these properties,
and has partially leased the Hudson and Lititz facilities. The aggregate
carrying values of such properties are periodically reviewed and are stated at
the lower of cost or market.
11
<PAGE> 12
EKCO GROUP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
The Company has provided a reserve of approximately $3.6 million for
environmental remediation and ongoing operation, maintenance and ground water
monitoring costs associated with Kellogg-owned or occupied facilities. The
Company believes the provision is adequate but will continue to monitor and
adjust the provision, as appropriate, should additional sites be identified or
further remediation measures be required or undertaken or if interpretation of
current laws or regulations are modified.
12
<PAGE> 13
EKCO GROUP, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS:
From time to time, the Company has had claims asserted
against it by regulatory agencies or private parties for
environmental matters relating to the generation or
handling of hazardous substances by the Company or its
predecessors and has incurred obligations for
investigations or remedial actions with respect to
certain of such matters. While the Company does not
believe that any such asserted claims or obligations
incurred to date will result in a material adverse effect
upon the Company's financial position, results of
operations or liquidity, the Company is aware that with
respect to its operating facilities at Massillon and
Hamilton, Ohio; Chicago, Illinois; Easthampton,
Massachusetts; Hudson, New Hampshire and Lititz,
Pennsylvania; hazardous substances or oil have been
detected and that additional investigation will be, and
remedial action will or may be, required. Operations at
these and other facilities currently or previously owned
or leased by the Company utilize, or in the past have
utilized, hazardous substances. There can be no
assurance that activities at these or any other
facilities owned or operated by the Company or any future
facilities may not result in additional environmental
claims being asserted against the Company or additional
investigations or remedial actions being required.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
At the Annual Meeting of Stockholders held on May 25,
1995 in Boston, Massachusetts, each of the persons
nominated for election as a director of the Company were
elected by the votes shown below. Directors will hold
office until the next annual meeting of stockholders and
until their successors are duly chosen and qualified or
until their earlier resignation or removal.
<TABLE>
<CAPTION>
No. of No. of
Shares Voted Shares
FOR WITHHELD
----------------------------------------------------------------------------------------------------
<S> <C> <C>
T. Michael Long 15,487,004 399,047
Stuart B. Ross 15,487,004 399,047
Malcolm L. Sherman 15,462,348 423,703
Bill W. Sorenson 15,487,169 398,882
Herbert M. Stein 15,480,419 405,632
Robert Stein 15,449,434 436,617
Jeffrey A. Weinstein 15,487,404 418,647
</TABLE>
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K:
a) Exhibits: None.
b) Reports on Form 8-K: On April 14, 1995, the registrant
filed a report on Form 8-K as of April 13, 1995 to report
under "Item 5. Other Events" that it had issued a press
release in which it announced that it had entered into a
$75 million bank credit agreement.
13
<PAGE> 14
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.
EKCO GROUP, INC.
--------------------------------------
(Registrant)
Date: August 15, 1995 By: /s/ Robert Stein
------------------------ -----------------------------------
Robert Stein
President and
Chief Executive Officer
By: /s/ Donato A. DeNovellis
-----------------------------------
Donato A. DeNovellis
Executive Vice President,
Finance and Administration, and
Chief Financial Officer
14
<PAGE> 15
<TABLE>
INDEX TO EXHIBIT FILED WITH FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JULY 2, 1995
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF EKCO GROUP, INC FOR THE SIX
MONTHS ENDED JULY 2, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUL-02-1995
<EXCHANGE-RATE> 1
<CASH> 222
<SECURITIES> 0
<RECEIVABLES> 39,875
<ALLOWANCES> 1,026
<INVENTORY> 63,060
<CURRENT-ASSETS> 115,772
<PP&E> 89,302
<DEPRECIATION> 33,790
<TOTAL-ASSETS> 321,789
<CURRENT-LIABILITIES> 44,909
<BONDS> 133,797
<COMMON> 3,305
0
184
<OTHER-SE> 129,729
<TOTAL-LIABILITY-AND-EQUITY> 321,789
<SALES> 120,423
<TOTAL-REVENUES> 120,423
<CGS> 83,954
<TOTAL-COSTS> 109,637
<OTHER-EXPENSES> 2,217
<LOSS-PROVISION> (404)
<INTEREST-EXPENSE> 6,843
<INCOME-PRETAX> 1,801
<INCOME-TAX> 856
<INCOME-CONTINUING> 945
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 945
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
