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 June 30, 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 July 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
June 30, 1994 (Unaudited),
December 31, 1993 and June 30,
1993 (Unaudited) -1-
Consolidated Statements of Operations
Three months ended June 30, 1994
and 1993 (Unaudited) -2-
Consolidated Statements of Operations
Six months ended June 30, 1994
and 1993 (Unaudited) -3-
Consolidated Statements of Cash Flows
Six months ended June 30, 1994
and 1993 (Unaudited) -4-
Notes to Consolidated Financial
Statements (Unaudited) -5-
Item 2: Management's Discussion and Analysis
of Financial Condition and Results
of Operations -6-
PART II OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K -8-
CONAIR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except number of shares)
ASSETS
6/30/94 12/31/93 6/30/93
CURRENT ASSETS (Unaudited) Note (Unaudited)
Cash, including cash equivalents
of $1,750, $4,096 and $2,882,
respectively........................ $ 8,671 $ 15,856 $ 4,583
Accounts receivable, net of allowance
for doubtful accounts of $1,449,
$1,337 and $1,328, respectively..... 75,153 70,244 59,880
Inventories (Note 2)................. 111,005 85,416 101,344
Prepaid expenses..................... 1,148 1,753 2,096
Deferred income taxes................ 2,850 2,885 3,213
198,827 176,154 171,116
PROPERTY, PLANT AND EQUIPMENT - AT COST
Net of accum. depreciation & amort... 64,528 44,685 44,289
INVESTMENTS AND OTHER ASSETS
Investments in affiliated companies.. 1,068 1,141 1,016
Excess of cost over net assets of
acquired companies.................. 72,563 73,829 75,095
Deferred expenses and other assets... 13,207 14,309 13,593
86,838 89,279 89,704
$350,193 $310,118 $305,109
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and other current
liabilities......................... $ 49,753 $ 41,014 $ 40,275
Income taxes......................... 5,714 6,756 4,231
Current portion of long-term debt.... 3,625 3,625 2,063
Notes payable........................ 14,000 - 15,000
73,092 51,395 61,569
OTHER LIABILITIES
Long-term debt....................... 99,999 87,575 79,099
Deferred income taxes................ 20,423 19,511 17,601
120,422 107,086 96,700
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 - 5,000 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... 96 129 110
Retained earnings.................... 153,664 148,589 138,811
156,679 151,637 146,840
$350,193 $310,118 $305,109
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 June 30, 1994 and 1993
(in thousands)
1994 1993
NET SALES............................... $117,060 $93,472
COSTS AND EXPENSES:
Cost of goods sold.................... 79,506 62,977
Selling, general and
administrative....................... 29,500 26,448
109,006 89,425
INCOME FROM OPERATIONS ................. 8,054 4,047
INTEREST:
Interest expense...................... 2,017 1,748
Interest income....................... (15) (18)
2,002 1,730
INCOME BEFORE INCOME TAXES 6,052 2,317
Income tax provision.................. 2,418 1,104
NET INCOME ............................. $ 3,634 $ 1,213
CONAIR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Six months ended June 30, 1994 and 1993
(in thousands)
1994 1993
NET SALES............................... $212,635 $177,459
COSTS AND EXPENSES:
Cost of goods sold.................... 143,267 118,270
Selling, general and
administrative....................... 56,901 51,469
200,168 169,739
INCOME FROM OPERATIONS ................. 12,467 7,720
INTEREST:
Interest expense...................... 3,615 3,594
Interest income....................... (66) (43)
3,549 3,551
INCOME BEFORE INCOME TAXES 8,918 4,169
Income tax provision.................. 3,681 2,049
NET INCOME ............................. $ 5,237 $ 2,120
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six months ended June 30,
1994 1993
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ................................. $ 5,237 $ 2,120
Adjustments to reconcile net income
to net cash used in operating
activities:
Depreciation............................... 3,475 3,200
Amortization of goodwill................... 1,266 1,266
Amortization of deferred expenses and other
assets.................................... 1,102 998
Deferred income taxes...................... 912 887
Tax benefit on dividends paid to ESOP...... 88 -
Other, net................................. 40 (55)
Changes in operating assets and liabilities:
Accounts receivable....................... (4,909) (1,818)
Inventories............................... (25,589) (22,800)
Prepaid expenses.......................... 605 491
Accounts payable and other
current liabilities...................... 8,739 5,663
Income taxes.............................. (1,007) 174
Net cash used in operating activities........ (10,041) (9,874)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment. (23,318) (3,951)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in short-term debt................ 14,000 15,000
Increase in long-term debt................. 20,000 2,500
Reduction of long-term debt................ (7,576) (18,396)
Dividends ................................. (250) (250)
26,174 (1,146)
DECREASE IN CASH AND CASH EQUIVALENTS........ ( 7,185) (14,971)
CASH AND CASH EQUIVALENTS,
January 1,................................. 15,856 19,554
CASH AND CASH EQUIVALENTS,
June 30.................................... $ 8,671 $ 4,583
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the six months for:
Interest.................................. $ 3,678 $ 3,717
Income taxes.............................. $ 3,688 $ 988
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. June 30, 1993
financial statements have been reclassified to conform to current presentation.
2. INVENTORIES
Inventories are summarized as follows:
June 30, Dec. 31, June 30,
1994 1993 1993
Components and raw materials $ 14,948 $11,441 $ 13,994
Finished goods 96,057 73,975 87,350
$111,005 $85,416 $101,344
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 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 second quarter and first half of 1994 increased 25.2% and
19.8%, respectively over the comparable periods in 1993. The increases in the
second quarter and the first half of 1994 were primarily due to increases in
most product categories as well as the sales of Southwestern Bell Freedom Phone
Products which were not sold during the first quarter of 1993.
GROSS MARGINS
Gross margins in the second quarter and first half of 1994 were 32.1% and 32.6%
of net sales, respectively. Gross margins for the second quarter and first
half of 1993 were 32.6% and 33.4% of net sales, respectively. The variances in
gross margins are primarily due to product mix.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses in the second quarter and first
half of 1994 were 25.2% and 26.8% of net sales, respectively. Selling general
and administrative expenses in the second quarter and first half of 1993 were
28.3% and 29.0% of net sales, respectively. The declines resulted from the
fixed and semi-variable nature of certain costs in this category.
INTEREST
Interest expense has increased in the second quarter of 1994 as compared to the
same period last year due to an increase in the Company's long-term debt.
INCOME TAXES
The effective income tax rate varied in the second quarter and first half 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 $125,735,000 at June 30, 1994 and the current
ratio was 2.7 to 1. The Company's cash balance was $8,671,000, short-term
borrowings were $14,000,000 and long term debt was $99,999,000 at June 30,
1994.
The Company believes its capital resources are adequate to finance normal
growth and service the Company's debt obligations. At June 30, 1994, the
Company had short term lines of credit with banks in the United States and
abroad aggregating $89,400,000, which includes $25,000,000 available for the
period June 1 to November 30 to finance its seasonal business needs.
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 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 June 30, 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
