<PAGE>
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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 Quarter Ended March 30, 1996
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 - 33-97056
CALMAR INC.
(exact name of registrant as specified in its charter)
Delaware 95-3833709
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
333 South Turnbull Canyon Road
City of Industry, California 91745
(Address of principal executive offices)
Registrant's telephone number, including area code: (818) 330-3161
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 a 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 [_]
---------------
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
3,097,031 shares of Common Stock, par value $.01 per share, as of May 14, 1996.
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Page 1 of 12 Pages
Exhibit Index Appears on Page 13
<PAGE>
CALMAR INC. AND SUBSIDIARIES
Index to Form 10-Q
For the Quarterly Period Ended March 30, 1996
PART I - FINANCIAL INFORMATION:
- - --------------------------------
<TABLE>
<CAPTION>
Item 1 - Financial Statements Pages
-------------------- -----
<S> <C>
Condensed Consolidated Balance Sheets at
March 30, 1996 (Unaudited) and December 31, 1995...................... 3
Condensed Consolidated Statements of Operations
for the Three-Month Periods Ended
March 30, 1996 and April 1, 1995 (Unaudited).......................... 4
Condensed Consolidated Statements of Cash Flows
for the Three-Month Periods Ended
March 30, 1996 and April 1, 1995 (Unaudited).......................... 5
Notes to Condensed Consolidated Financial Statements.................. 6
Item 2 - Management's Discussion and Analysis of
--------------------------------------
Financial Condition and Results of Operations............... 7-10
---------------------------------------------
</TABLE>
PART II - OTHER INFORMATION:
- - ----------------------------
Item 6 - Exhibits and Reports on Form 8-K 11
Page 2 of 12
<PAGE>
CALMAR INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Dollars in Thousands)
<TABLE>
<CAPTION>
March 30,
1996 December 31,
(Unaudited) 1995
----------- ------------
<S> <C> <C>
Assets
------
Current assets:
Cash and cash equivalents $ 6,493 $ 9,037
Accounts receivable, less allowance for doubtful
accounts of $1,393 in 1996 and $1,401 in 1995 36,068 34,694
Inventories 18,568 17,421
Income taxes receivable 577 486
Prepaid expenses 2,170 2,460
--------- --------
Total current assets 63,876 64,098
Property and equipment, net 107,593 111,076
Cost in excess of net assets acquired, less accumulated
amortization of $23,846 in 1996 and $23,007 in 1995 96,163 97,002
Other intangible assets, less accumulated amortization of
$13,631 in 1996 and $13,231 in 1995 7,353 7,752
Other assets, net 9,763 9,857
--------- --------
$ 284,748 $289,785
========= ========
Liabilities and Stockholders' Deficiency
----------------------------------------
Current Liabilities:
Short-term borrowings $ - $ 390
Current installments of long-term debt 6,947 7,278
Accounts payable 16,767 17,887
Accrued liabilities 19,916 19,675
--------- --------
Total current liabilities 43,630 45,230
Long-term debt 234,339 235,785
Deferred income taxes 13,077 13,430
Other liabilities 19,077 18,959
--------- --------
Total liabilities 310,123 313,404
--------- --------
Stockholders' deficiency:
Preferred stock, par value $.01 per share; liquidation
preference aggregating $54,250 for all outstanding
preferred stock:
Series A Preferred Stock, liquidation preference $100
per share; authorized 450,000 shares; issued and
outstanding 442,500 shares 4 4
Series B Preferred Stock, liquidation preference $10
per share; authorized 1,000,000 shares; issued and
outstanding 1,000,000 shares 10 10
Common stock, par value $.01 per share. Authorized
8,500,000 shares; issued and outstanding 3,097,031
shares 31 31
Additional paid-in capital 77,986 77,986
Accumulated deficit (100,494) (99,386)
Accumulated translation adjustment (2,369) (1,725)
Notes receivable from officers for purchase of common stock (543) (539)
--------- --------
Total stockholders' deficiency (25,375) (23,619)
--------- --------
$ 284,748 $289,785
========= ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
Page 3 of 12
<PAGE>
CALMAR INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
(Dollars in Thousands)
(Except Per Share Data)
<TABLE>
<CAPTION>
THREE-MONTH
PERIODS ENDED
------------------------------
March 30 April 1
1996 1995
-------- -------
<S> <C> <C>
Net sales $55,338 $61,306
Cost of sales 41,410 45,021
------- -------
Gross profit 13,928 16,285
Selling, general and administrative expenses 9,156 9,229
------- -------
Operating income 4,772 7,056
Other income (expense) 370 (7)
Interest expense (6,228) (6,974)
------- -------
Income (loss) before income tax provision (1,086) 75
Income tax provision 22 627
------- -------
Net Loss $(1,108) $ (552)
======= =======
Net loss per share $ (1.56) $ (1.21)
======= =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
Page 4 of 12
<PAGE>
CALMAR INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
THREE-MONTH
PERIODS ENDED
---------------------------
March 30 April 1
1996 1995
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(1,108) $ (552)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization 6,032 6,235
Amortization of discount on notes payable 32 103
Additions to notes receivable from officers (4) (4)
Gain on sale of property and equipment (2) (8)
Deferred income tax benefit (297) (159)
Changes in assets and liabilities:
Accounts receivable (1,707) (7,736)
Inventories (1,349) (1,770)
Income taxes receivable (105) (15)
Prepaid expenses 258 1,233
Accounts payable (874) 425
Accrued liabilities 396 945
Other long-term liabilities 287 982
------- -------
Net cash provided by (used in) operating activities 1,559 (321)
------- -------
Cash flows from investing activities:
Purchases of property and equipment (1,886) (1,647)
Proceeds from sales of equipment 5 23
Increase in other assets (103) (174)
------- -------
Net cash used in investing activities (1,984) (1,798)
------- -------
Cash flows from financing activities:
Short-term repayments (383) (695)
Net change in revolver - 5,650
Proceeds from issuance of long-term debt - 1,132
Payments on long-term debt (1,588) (4,541)
Proceeds from issuance of common stock - 1
------- -------
Net cash provided by (used in) financing activities (1,971) 1,547
------- -------
Effect of exchange rate changes on cash and cash
equivalents (148) 131
------- -------
Net decrease in cash and cash equivalents (2,544) (441)
Cash and cash equivalents, beginning of period 9,037 2,639
------- -------
Cash and cash equivalents, end of period $ 6,493 $ 2,198
======= =======
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Income taxes $ 429 $ 354
======= =======
Interest $ 9,479 $ 7,641
======= =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
Page 5 of 12
<PAGE>
CALMAR INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
Three-Month Periods Ended March 30, 1996 and April 1, 1995
(1) Consolidated Financial Statements
- - --------------------------------------
The accompanying unaudited consolidated financial statements do not include
all information and footnotes necessary for a fair presentation of
consolidated financial position, results of operations, and cash flows, in
conformity with generally accepted accounting principles, and should be
read in conjunction with the Calmar Inc. and Subsidiaries (the "Company")
Consolidated Financial Statements for the year ended December 31, 1995.
However, the information furnished does reflect all adjustments (consisting
only of a normal and recurring nature) which are, in the opinion of
management, necessary for a fair presentation of the results for the
interim periods presented.
(2) Loss per Share of Common Stock
- - -----------------------------------
The calculations of loss per share of common stock are as follows (dollars
in thousands, except per share data):
<TABLE>
<CAPTION>
THREE-MONTH
PERIODS ENDED
--------------------------
MARCH 30, APRIL 1,
1996 1995
---------- ----------
<S> <C> <C>
Net Loss before extraordinary item $ (1,108) $ (552)
Accrual of dividends on preferred stock (3,708) (3,200)
---------- ----------
Loss attributable to common shareholders $ (4,816) $ (3,752)
========== ==========
Weighted average common shares outstanding 3,097,031 3,099,531
========== ==========
Net Loss per share $ (1.56) $ (1.21)
========== ==========
</TABLE>
Loss per share of common stock does not include the effect of common share
equivalents (stock options and warrants) because their inclusion would be
anti-dilutive.
(3) Inventories
- - ----------------
Inventories are stated at the lower of cost or market using the first-in,
first-out (FIFO) method and consist of the following (dollars in
thousands):
<TABLE>
<CAPTION>
MARCH 30, DECEMBER 31,
1996 1995
---------- ------------
<S> <C> <C>
Raw material $ 5,004 $ 4,817
Work in process 8,529 8,843
Finished goods 5,035 3,761
---------- ------------
$18,568 $17,421
========== ============
</TABLE>
Page 6 of 12
<PAGE>
CALMAR INC. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Three-Month Periods ended March 30, 1996 and April 1, 1995
GENERAL
The following discussion and analysis provides information which management
believes is relevant to an assessment and understanding of the Company's
consolidated results of operations and financial condition. The discussion
should be read in conjunction with the consolidated financial statements and
notes thereto which were included in the December 31, 1995 Form 10-K.
The following table sets forth selected results of operations as percentages of
net sales for the periods indicated:
<TABLE>
<CAPTION>
THREE-MONTH
PERIODS ENDED
--------------
MAR 30, APR 1,
1996 1995
----------- --------------
<S> <C> <C>
Sprayers 59.0% 57.0%
Dispensers 31.0% 31.0%
Other Products 10.0% 12.0%
----- -----
Net sales 100.0% 100.0%
Gross profit 25.2% 26.6%
Selling, general and
administrative expenses 16.5% 15.1%
Operating income 8.7% 11.5%
</TABLE>
RESULTS OF OPERATIONS
Net sales for the three-month period ended March 30, 1996, were $55.3 million,
a decrease of $6.0 million or 9.7% over the comparable 1995 period. Sprayer
sales decreased $2.7 million or 7.8% from the comparable period in 1995. Fine
mist sprayer sales decreased in both North America and Europe due to a new
product introduction in the U.S. in 1995 which did not repeat in 1996 and a
weakened demand from fragrance applications in Europe. Sales of regular sprayers
declined primarily as a result of one customer building excess inventories at
the end of 1995 and another customer generating incremental sales from new
product promotions during 1995. Dispenser sales decreased $1.6 million or 8.3%
due primarily to lower sales of high viscosity dispensers in North America as
the major customer built excess inventories during 1995. Other products sales
decreased $1.7 million or 23% due primarily to lower component sales to
licensees. Net sales were not materially impacted by changes in foreign exchange
rates.
Page 7 of 12
<PAGE>
Gross profit for the three-month period ended March 30, 1996, decreased $2.4
million or 14.5% from the comparable 1995 period. As a percentage of sales,
gross profit decreased from 26.6% to 25.2%. The decrease is primarily
attributable to lower sales volume and the resulting under absorption of fixed
costs. Other contributing factors include lower selling prices and increased
European cost of outside molding.
Selling, general and administrative expenses were $9.2 million or 16.5% of net
sales for the three-month period ended March 30, 1996 as compared to $9.2
million or 15.1% of net sales for the comparable 1995 period. The slight
decrease in selling, general and administrative expenses for the three-month
period ended in 1996 resulted primarily from lower depreciation expense,
increased capitalized engineering costs and lower selling expenses, offset by
higher research and development expenses. The increase in selling, general and
administrative expenses as a percentage of sales for the three-month period
ended in 1996 was due primarily to lower sales volume.
Operating income for the three-month period ended March 30, 1996, decreased to
$4.8 million, or 8.7% of net sales, as compared to $7.1 million or 11.5% of net
sales, from the comparable 1995 period. The decrease resulted from a reduction
in gross profit offset, in part, by a decrease in selling, general and
administrative expenses.
Interest expense for the three-month period ended March 30, 1996, decreased to
$6.2 million as compared to $7.0 million for the comparable 1995 period. The
decrease was due primarily to lower interest rates resulting from the
refinancing of the majority of long-term debt in 1995. As no income tax benefit
was recorded against the U.S. losses due to uncertainty of its ultimate
realization, the income tax provisions for the three-month periods ended in 1996
and 1995 were primarily related to income from the Company's European
operations. The decrease in the tax provision in 1996 reflects lower earnings of
each European subsidiary.
The net loss for the three-month period ended March 30, 1996 increased to $1.1
million as compared to $.6 million for the comparable 1995 period. The increase
in net loss is due primarily to lower operating income offset partially by lower
interest expense and a lower income tax provision.
LIQUIDITY AND CAPITAL RESOURCES
The Company funds its cash needs through cash flow from operations, existing
cash balances, equipment financing and the Revolver under the Senior Secured
Credit Facility. The Company's primary source of cash continues to be its cash
flow from operations. The net cash provided by operating activities increased
for the three-month period ended March 30, 1996, from the comparable 1995
period. Decrease in change of accounts receivable was offset by decreases in
changes of accounts payable, accrued liabilities and other long-term
liabilities. Working capital, at March 30, 1996, was $20.2 million compared to
$18.9 million at December 31, 1995. The increase in working capital resulted
primarily from a reduction of accounts payable. The Company has entered into
certain interest rate cap agreements to reduce the risk of significant
fluctuations in interest rates.
Page 8 of 12
<PAGE>
The net cash used in investing activities increased slightly for the three-
month period ended March 30, 1996, as compared to the corresponding 1995 period
due to higher cash purchases of property and equipment. For the three-month
period ended March 30, 1996, capital expenditures were $1.9 million. The Company
plans to fund new equipment purchases through equipment financing and
leasing, as well as from cash flow from operations. The Company did not have any
material commitments for capital expenditures as of March 30, 1996.
The net cash used in financing activities increased by $3.5 million for the
three-month period ended March 30, 1996, from the comparable period of 1995
because no new debt was incurred to fund operating activities and to make
capital expenditures.
The Revolver permits borrowing of up to the lesser of $20.0 million or the
maximum amount permitted under an eligible borrowing base test and contains a
$5.0 million sublimit for letters of credit. At March 30, 1996, the borrowing
base test permitted the Company to borrow up to $17.0 million. At such date, the
Company had no borrowings outstanding and letters of credit of $0.8 million,
leaving $16.2 million available for borrowing.
The indenture which governs the terms of the Senior Subordinated Notes (the
"Indenture") and the Senior Secured Credit Facility contain significant
financial and operating covenants. The Indenture and the Senior Secured Credit
Facility contain certain covenants that, among other things, limit the ability
of the Company and its subsidiaries to incur debt, create liens securing
subordinated debt, sell or transfer assets, make restricted payments (dividends,
redemption's, investments, and payments on subordinated debt) and engage in
certain transactions with affiliates and certain mergers. The Senior Secured
Credit Facility contains certain financial and other negative covenants,
including, but not limited to, covenants related to a minimum interest coverage
ratio, minimum consolidated EBITDA, a maximum leverage ratio, a current asset
ratio and limitations on capital expenditures. The Senior Secured Credit
Facility and Indenture also contains customary events of default, including
certain changes of control of the Company. As of March 30, 1996, the Company was
in compliance with all covenants contained in such debt instruments.
The terms of the Indenture allow for the additional indebtedness, including
Senior Debt (as defined in the Indenture) and secured indebtedness. The
incurrence of additional indebtedness is limited by certain conditions,
including compliance with a Consolidated Cash Flow Ratio (as defined in the
Indenture), calculated on a pro forma basis to reflect such additional
indebtedness, of 2.0 to 1.0. At March 30, 1996, the Consolidated Cash Flow Ratio
before any issuance of the prescribed indebtedness was 1.7 to 1.0. In addition
and notwithstanding the foregoing, the Indenture permits the Company, and in
certain cases its subsidiaries, to incur certain specified additional
indebtedness without regard the compliance with the Consolidated Cash Flow Ratio
referred to above. The terms of the Senior Secured Credit Facility permits the
Company, and in certain cases its subsidiaries, to incur additional indebtedness
only under certain circumstances.
Page 9 of 12
<PAGE>
The Company has a substantial amount of indebtedness. The degree to which the
Company is leveraged could have important consequences to investors, including
the following: (i) the Company's ability to obtain additional financing in the
future for refinancing indebtedness, working capital, capital expenditures,
acquisitions or general corporate purposes may be impaired, (ii) a substantial
portion of the Company's consolidated cash flow from operations must be used for
the payment of interest and principal on its indebtedness, (iii) the Company may
be more highly leveraged than its competitors, which may place it at a
competitive disadvantage, (iv) the Indenture and the Senior Secured Credit
Facility contain restrictive financial and operating covenants, (v) the
borrowings under the Senior Secured Credit Facility have floating rates of
interest, which cause the Company to be vulnerable to increases in interest
rates, and (vi) the Company's substantial degree of leverage could make it more
vulnerable to a downturn in general economic conditions.
The Company had unused credit facilities available to its European
subsidiaries of $8.1 million at March 30, 1996.
The Company believes that cash flow from operations, existing cash balances
and the financial resources available to it, including the Revolver under the
Senior Secured Credit Facility and equipment financing and leasing, will be
sufficient to meet its debt service, working capital and capital investment
needs through the term of the Revolver.
Page 10 of 12
<PAGE>
PART II - OTHER INFORMATION
---------------------------
Item 6 - Exhibits and Reports on Form 8-K.
--------------------------------
27.1 Financial Data Schedule
Page 11 of 12
<PAGE>
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 on this 14th day of May, 1996.
CALMAR INC.
By: /s/C. Richard Huebner
---------------------------
C. Richard Huebner, in his
dual capacity as a duly
authorized Officer of the
Registrant, Executive Vice
President, and as Registrant's
Principal Financial Officer.
Page 12 of 12
<PAGE>
CALMAR INC. AND SUBSIDIARIES
Exhibit Index
Exhibit Page
Number Description Number
------- ----------- ------
27.1 Financial Data Schedule 14
Page 13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-30-1996
<CASH> 6,493
<SECURITIES> 0
<RECEIVABLES> 37,461
<ALLOWANCES> 1,393
<INVENTORY> 18,568
<CURRENT-ASSETS> 63,876
<PP&E> 228,432
<DEPRECIATION> 120,839
<TOTAL-ASSETS> 284,748
<CURRENT-LIABILITIES> 43,630
<BONDS> 120,000
0
14
<COMMON> 31
<OTHER-SE> (25,420)
<TOTAL-LIABILITY-AND-EQUITY> 284,748
<SALES> 55,338
<TOTAL-REVENUES> 55,338
<CGS> 41,410
<TOTAL-COSTS> 50,566
<OTHER-EXPENSES> (370)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,228
<INCOME-PRETAX> 1,086
<INCOME-TAX> 22
<INCOME-CONTINUING> (1,108)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,108)
<EPS-PRIMARY> (1.56)
<EPS-DILUTED> (1.56)
</TABLE>
