SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
Form 10Q
QUARTER REPORT UNDER SECTION 13 or 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 1994 Commission File 1-8919
CONAIR CORPORATION
(Exact name of registrant as specified on its charter)
Delaware 11-1950030
(State or other jurisdiction of (I.R.S. Identification Number)
Incorporation or organization)
150 Milford Road, East Windsor, NJ 08520
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number including area code (609) 426-1300
Not Applicable
Former name, former address and former fiscal year, if changed
since last year
Indicate by check mark whether this 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
Common Stock $100.00 par value
Authorized Shares 5,000
Issued and Outstanding Shares
as of April 29, 1994 2,814
CONAIR CORPORATION AND SUBSIDIARIES
I N D E X
PAGE NO.
PART I FINANCIAL INFORMATION
Item 1: Financial Statements
Consolidated Balance Sheets
March 31, 1994 (Unaudited),
December 31, 1993 and March 31,
1993 (Unaudited) -1-
Consolidated Statements of Operations
Three months ended March 31, 1994
and 1993 (Unaudited) -2-
Consolidated Statements of Cash Flows
Three months ended March 31, 1994
and 1993 (Unaudited) -3-
Notes to Consolidated Financial
Statements (Unaudited) -4-
Item 2: Management's Discussion and Analysis
of Financial Condition and Results
of Operations -5-
PART II OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K -7-
CONAIR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except number of shares)
ASSETS
3/31/94 12/31/93 3/31/93
CURRENT ASSETS (Unaudited) Note (Unaudited)
Cash, including cash equivalents
of $3,687, $4,096 and $3,045,
respectively........................ $ 4,546 $ 15,856 $ 4,805
Accounts receivable, net of allowance
for doubtful accounts of $1,416,
$1,337 and $1,375, respectively..... 62,845 70,244 59,192
Inventories (Note 2)................. 105,788 85,416 94,184
Prepaid expenses..................... 1,298 1,753 2,475
Deferred income taxes................ 2,885 2,885 3,213
177,362 176,154 163,869
PROPERTY, PLANT AND EQUIPMENT - AT COST
Net of accum. depreciation & amort... 64,669 44,685 43,933
INVESTMENTS AND OTHER ASSETS
Investments in affiliated companies.. 1,026 1,141 995
Excess of cost over net assets of
acquired companies.................. 73,196 73,829 75,728
Deferred expenses and other assets... 13,693 14,309 14,043
87,915 89,279 90,766
$329,946 $310,118 $298,568
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and other current
liabilities......................... $ 48,107 $ 41,014 $ 39,558
Income taxes......................... 4,079 6,756 3,557
Current portion of long-term debt.... 3,625 3,625 1,407
Notes payable........................ - - 11,000
55,811 51,395 55,522
OTHER LIABILITIES
Long-term debt....................... 101,115 87,575 80,018
Deferred income taxes................ 19,860 19,511 17,172
120,975 107,086 97,190
STOCKHOLDERS' EQUITY
Convertible preferred stock,
$1.00 par value: 5 5 5
Authorized 10,000 shares
Issued and outstanding - 5,000 shares
Common stock, $100 par value:
Authorized - 3,000 shares
Issued and outstanding - 2,814 shares 281 281 281
Reduction for ESOP loan guarantee... (5,000) (5,000) -
Additional paid-in capital........... 7,633 7,633 7,633
Cumulative translation adjustments... 130 129 214
Retained earnings.................... 150,111 148,589 137,723
153,160 151,637 145,856
$329,946 $310,118 $298,568
NOTE: The balance sheet at December 31, 1993, has been taken from the audited
financial statements at that date.
CONAIR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended March 31, 1994 and 1993
(in thousands)
1994 1993
NET SALES............................... $95,575 $83,987
COSTS AND EXPENSES:
Cost of goods sold.................... 63,761 55,293
Selling, general and
administrative....................... 27,401 25,021
91,162 80,314
INCOME FROM OPERATIONS ................. 4,413 3,673
INTEREST:
Interest expense...................... 1,598 1,846
Interest income....................... (51) (25)
1,547 1,821
INCOME BEFORE INCOME TAXES 2,866 1,852
Income tax provision.................. 1,263 945
NET INCOME ............................. $ 1,603 $ 907
CONAIR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three months ended March 31,
1994 1993
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ................................. $ 1,603 $ 907
Adjustments to reconcile net income
to net cash used in operating
activities:
Depreciation............................... 1,655 1,551
Amortization of goodwill................... 633 633
Amortization of deferred expenses and other
assets.................................... 616 548
Deferred income taxes...................... 349 409
Tax benefit on dividends paid to ESOP...... 44 -
Other, net................................. 116 70
Changes in operating assets and liabilities:
Accounts receivable....................... 7,399 (1,130)
Inventories............................... (20,372) (15,640)
Prepaid expenses.......................... 455 112
Accounts payable and other
current liabilities...................... 7,093 4,946
Income taxes.............................. (2,677) (451)
Net cash used in operating activities........ (3,086) (8,045)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment. (21,639) (1,946)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in short-term debt................ - 11,000
Increase in long-term debt................. 20,000 2,500
Reduction of long-term debt................ (6,460) (18,133)
Dividends ................................. (125) (125)
13,415 (4,758)
DECREASE IN CASH AND CASH EQUIVALENTS........ (11,310) (14,749)
CASH AND CASH EQUIVALENTS,
January 1,................................. 15,856 19,554
CASH AND CASH EQUIVALENTS,
March 31,.................................. $ 4,546 $ 4,805
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the quarter for:
Interest.................................. $ 1,417 $ 1,482
Income taxes.............................. $ 3,547 $ 987
CONAIR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. FINANCIAL STATEMENTS
The accompanying financial information is submitted in response to the
requirements of Form 10Q and does not purport to be financial statements
prepared in accordance with generally accepted accounting principles.
Therefore, they do not include all disclosures which might be associated with
such financial statements. In the opinion of management, this includes all
adjustments, consisting only of normal recurring accruals, necessary for a fair
statement of the results for the interim periods presented. March 31, 1993
financial statements have been reclassified to conform to current presentation.
2. INVENTORIES
Inventories are summarized as follows:
March 31, Dec. 31, March 31,
1994 1993 1993
Components and raw materials $ 12,676 $11,441 $14,768
Finished goods 93,112 73,975 79,416
$105,788 $85,416 $94,184
3. PURCHASE OF BUILDING
On March 15, 1994, the Company acquired its Stamford, Connecticut executive
office facility from Leandro P. Rizzuto, President and sole common stockholder
of the Company. The purchase price of $20,000,000 was determined based on an
independent appraisal. A ten-year unsecured loan in the amount of $20,000,000
was obtained by the Company on the above date to finance this transaction. The
interest rate on this new loan is 7%. Principal repayments on this loan begin
on June 1, 1996 with the payment of $625,000 and variable sums are due semi-
annually on June 1 and December 1 until a final payment of $4,000,000 at
maturity on February 28, 2004. The Company leased back to Leandro P. Rizzuto a
portion of the facility for a period of 99 years subject to the Company's
option, for a period of 10 years, to buy back the lease rights. The option
price for the Company to repurchase the lease rights is $4,000,000 for the
first five years, escalating to $6,400,000 million over the remaining five
years. The initial option price was determined based on an independent
appraisal.
CONAIR CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
SALES
Net sales for the quarter ended March 31, 1994 increased 13.8% over the
comparable period in 1993. The increase resulted primarily from an increase in
sales of Consumer Electronics, due to sales of Southwestern Bell and Freedom
Phone products which were not sold in the first quarter of 1993. Increases in
the sales of Consumer Toiletries and Cuisinarts products were offset by a
decline in the sales of Consumer Appliances.
GROSS MARGINS
Gross margins in the first quarter of 1994 were 33.3% of net sales as compared
to 34.2% for the comparable period in 1993. The variance in gross margins
is primarily due to product mix.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses in the first quarter of 1994 were
28.7% of net sales as compared to 29.8% for the comparable period in 1993. The
decline resulted from the fixed and semi-variable nature of certain costs in
this category.
INTEREST
Interest expense has decreased from the same period last year due to a
reduction of average borrowings.
INCOME TAXES
The effective income tax rate varied for the first quarter of 1994 as compared
to the same period in 1993. This was primarily due to the amortization of the
excess cost of investments over net assets acquired, not deductible for tax
purposes.
CONAIR CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital was $121,551,000 at March 31, 1994 and the
current ratio was 3.2 to 1. The Company's cash balance was $4,546,000, long-
term debt was $101,115,000 and there were no short-term borrowings at March 31,
1994.
The Company believes its capital resources are adequate to finance normal
growth and service the Company's debt obligations. At March 31, 1994, the
Company had lines of credit with banks in the United States and abroad
aggregating $64,400,000.
On March 15, 1994, the Company acquired its Stamford, Connecticut executive
office facility from Leandro P. Rizzuto, President and sole common stockholder
of the Company. The purchase price of $20,000,000 was determined based on an
independent appraisal. A ten-year unsecured loan in the amount of $20,000,000
was obtained by the Company on the above date to finance this transaction. The
interest rate on this new loan is 7%. Principal repayments on this loan begin
on June 1, 1996 with the payment of $625,000 and variable sums are due semi-
annually on June 1 and December 1 until a final payment of $4,000,000 at
maturity on February 28, 2004. The Company leased back to Leandro P. Rizzuto a
portion of the facility for a period of 99 years subject to the Company's
option, for a period of 10 years, to buy back the lease rights. The option
price for the Company to repurchase the lease rights is $4,000,000 for the
first five years, escalating to $6,400,000 million over the remaining five
years. The initial option price was determined based on an independent
appraisal.
CONAIR CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K
(b) The company was not required to file reports on Form 8-K during the
quarter ended March 31, 1994.
CONAIR CORPORATION AND SUBSIDIARIES
SIGNATURE
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.
CONAIR CORPORATION
(Registrant)
/s/ Leandro P. Rizzuto
(Date) By: Leandro P. Rizzuto
Chairman of the Board
and President
/s/ Patrick P. Yannotta
(Date) By: Patrick P. Yannotta
Senior Vice President - Finance
/s/ James A. Porcelli
(Date) By: James A. Porcelli
Corporate Controller
