SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 K
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended Commission File Number
December 31, 1994 1 8919
CONAIR CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 11 1950030
(State or other (I.R.S. Employer
jurisdiction of incorporation Identification No.)
or organization)
150 Milford Road
East Windsor, N.J. 08520
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 426 1300
Securities registered pursuant to Section 12 (b) of the Act:
Name of each exchange
Title of each class on which registered
Serial Zero Coupon Senior Notes American Stock Exchange
Due 1995
Securities registered pursuant to Section 12 (g) of the Act:
NONE
(Title of Class)
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 twelve 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 February 28, 1995, 2,814 shares of common stock were outstanding.
Such shares were held by one person and are not publicly traded.
Documents Incorporated by Reference
NONE
PART I
Conair Corporation and Subsidiaries
Item 1: Business
(a) General
Conair Corporation ("the Company") operates in one industry segment and is
engaged in the development, manufacturing and marketing of personal care
and beauty aid products and consumer electronic and kitchen appliances.
The Company is a leading manufacturer and distributor of nationally
branded personal care small appliances and manufactures and markets
various liquid hair care products to both the consumer and beauty
professional.
On June 20, 1985, the shareholders of Conair Corporation ("Conair")
approved an Agreement and Plan of Merger which provided for the
acquisition of Conair by Conair Acquisition Corporation ("Acquisition"), a
company wholly owned by Leandro P. Rizzuto, and the merger of Acquisition
into Conair, whereby Conair remained the surviving legal entity. In
connection with such merger, Conair's outstanding common stock was retired
and each stockholder became entitled to receive $24.70 in cash for each
share of common stock held. A public offering by Acquisition of debt
securities of approximately $190,000,000, which was primarily used to
finance such merger, was also consummated on June 20, 1985. At
December 31, 1994, all of this publicly traded debt was either redeemed,
repurchased or defeased.
On September 2, 1988, the Company completed the sale, effective August 31,
1988, of its wholly-owned subsidiary, Zotos International, Inc. ("Zotos"),
for an aggregate cash consideration of $329,000,000 plus the adjusted pre-
tax earnings of Zotos for the eight months ended August 31, 1988.
On December 27, 1989, the Company, through its wholly owned subsidiary
Cair Acquisition, Inc., acquired certain net assets of Cuisinarts, Inc., a
leading marketer of food processors and professional quality cookware for
$17,119,000 in cash plus certain closing adjustments and expenses.
On March 16, 1993, the Company signed a Licensing and Distribution
Agreement with Southwestern Bell Telecommunications, Inc. This agreement,
subject to the achievement of certain minimum sales levels, covers a
twenty-five year period during which Conair has the right to market one
and two-line residential telephones in the U.S. under the BELL logo, the
Southwestern Bell name and the FREEDOM PHONE trademark.
On February 18, 1995, the Company acquired 100% of the common stock of
Babyliss, S.A. ("Babyliss") for cash. Babyliss is a manufacturer and
marketer of personal care appliance products principally in France, the
United Kingdom, Germany, Belgium, the Netherlands and Spain. Through its
distributors Babyliss products are also marketed in Scandinavia and
several non-European markets including North America, Africa and East
Asia.
(b) Financial Information about Industry Segment
Financial information relating to international operations is set forth in
Note 12 (International Operations) of the Notes to the Consolidated
Financial Statements on page 28 herein.
In 1994, sales to two customers each accounted for in excess of 10% of
consolidated revenues.
(c) Description of Business
Products
The following is a brief description of the principal products sold by the
Company's product groups:
Personal Care Appliances. The Company is a leading marketer of personal
care appliances. The principal product is hair dryers, of which the
Company has been the number one seller in the United States for many
years. Other products include curling irons, curling brushes, hair-
setters, body massagers, lighted make-up mirrors, heating pads, men's
grooming appliances and hair trimmers. Products are principally marketed
under the CONAIR brand name; however, the Company also produces private
label appliances for major retail chains. In 1993, the Company acquired,
pursuant to a long-term license agreement, exclusive rights to market and
distribute products in Western Europe, Scandinavia and Mexico under the
REVLON brand name. In 1994, the Company acquired, pursuant to a long-term
license agreement, exclusive rights to market and distribute products in
the Asia Pacific region under the VIDAL SASSOON brand name. In 1995, the
Company acquired 100% of the common stock of Babyliss. Babyliss
manufactures and markets personal care appliances principally in Europe.
Consumer Electronics. In 1983, the Company commenced selling a line of
consumer telephones under the CONAIRPHONE brand name. The principal
products are standard or basic telephones. Other products include
telephone answering devices and cordless telephones. As a result of a
Licensing and Distribution Agreement signed on March 16, 1993 between the
Company and Southwestern Bell Telecommunications, Inc., the Company
expanded its consumer telephone business. The agreement provides Conair
with an exclusive license to market one and two-line residential
telephones - including cordless telephones, answering machines and caller
ID devices - to be sold to U.S. retailers. The Company markets telephones
under the CONAIRPHONE name as well as the BELL logo, the Southwestern Bell
name and the FREEDOM PHONE trademark.
Cuisinart Appliances. In 1989, the Company acquired certain assets of
Cuisinart, Inc., including the CUISINART brand name. Cuisinart is sold
mainly in department stores and specialty stores and its product line
consists of food processors, stainless steel cookware, accessories and
other kitchen appliances such as pasta makers, hand mixers,
chopper/grinders, toasters, blenders and coffee makers.
Consumer Toiletries and Professional Salon Products. The Company
manufactures and markets consumer toiletries, principally under the JHERI
REDDING and CONAIR brand names, including shampoos, conditioners and hair
treatments, and styling aids such as gels and mousses. The Company also
markets hair brushes under the CONAIR brand name and produces private
label toiletries products.
The Company is a leading innovator and manufacturer of high quality
products designed to meet the needs of beauty professionals. Hair dryers,
curling irons, brushes, shampoos, conditioners, hair sprays, tipping caps,
permanent waves, perm rods and shears are some of the products marketed
principally under the CONAIR and JHERI REDDING brand names. Conair's
professional products are designed and manufactured specifically for the
beauty professional and are distributed exclusively to the professional
hairstyling industry.
Product Distribution
Consumer products are primarily distributed directly to major retail
chains, department, drug and food stores, discount and variety stores,
catalog houses and showrooms, warehouse clubs and also through whole-
salers. The Company's products in the retail field are sold through
independent sales representative organizations which employ more than
400 salesmen who are paid commissions based upon sales in their respective
territories. The Company also employs a number of in-house salesmen and
regional sales managers, compensated on a salary and bonus basis.
The Company's professional salon products are principally distributed
through beauty and barber supply dealers. These sales are conducted for
the Company by independent sales organizations with representatives
throughout the country and by the Company's own sales personnel.
Manufacturing
The Company requires sources for the products it markets that are capable
of producing sufficient quantities of superior quality products at
competitive costs and on acceptable delivery schedules. During 1989, the
Company purchased a manufacturing facility in Rantoul, Illinois to produce
toiletry products. In addition, the Company's wholly owned subsidiary in
Costa Rica started production of appliances in April, 1989. In November,
1993, the Company started production of toiletry and household maintenance
products at a leased manufacturing facility in Highland Park, Illinois.
The Company also owns an assembly plant in Belgium which manufactures
approximately 30% of Babyliss' products. A substantial portion of the
Company's electrical products, including telephones and kitchen
appliances, are purchased from independent firms, principally located in
East Asia. Substantially all tooling and molds utilized in the
manufacturing of the products marketed by the Company are owned by the
Company.
The Company believes that all component parts of its products and raw
materials are widely available and the Company has not experienced any
material shortage of parts or materials during the recent years.
Quality assurance is particularly important to the Company. The Company
maintains rigid quality controls and extensively tests its products. The
Company's personnel perform source inspections of the Company's suppliers,
and laboratory approval is required before any products are released for
distribution. The Company maintains a permanent quality control staff in
East Asia to assure the quality of products produced by the Company's
independent suppliers and raw materials suppliers. The in-house research
and development and testing of the Company's liquid products is
supplemented by independent research and development laboratories and
testing salons.
Competitive Conditions
The Company operates in a highly competitive business environment. The
basis for competition in the Company's markets is price and quality; how-
ever, servicing of the stores and wholesalers who purchase from the
Company is also very important. The Company believes that its trade
names, particularly CONAIR, JHERI REDDING and CUISINART and its licensed
trademarks SOUTHWESTERN BELL FREEDOM PHONE and BELL logo, REVLON, VIDAL
SASSOON and BABYLISS are important to the Company's ability to compete
effectively. Although the Company holds many patents, the Company does
not believe that any particular patent or license is materially important
to its business.
Research and Development
Research and development costs are not a major expense to the Company.
Employees
As of December 31, 1994, the Company employed 3,010 persons including 28
executive officers.
Environment
Federal, state and local regulations concerning the environment have had
no significant impact on the Company.
(d) Foreign Operations
A substantial portion of the Company's production is overseas, in
particular in East Asia and Costa Rica. As a result, the Company is
subject to a certain degree of risk associated with the possibility of
currency fluctuation and political unrest; however, the Company has not
been significantly affected by such factors to date.
Financial information relating to foreign and domestic operations and
export sales is set forth in Notes 1 and 12 of Notes to the Consolidated
Financial Statements on pages 20 and 28 herein.
Item 2: Properties
A summary of the Company's properties follows:
Owned or
Location Building Area Leased Description
(sq. ft.)
East Windsor, NJ 431,000 Owned Executive offices,
warehouse/distribution
and repair facility
Rantoul, IL 273,000 Owned Manufacturing and
distribution facility
Zona Industrial De 233,000 Owned Costa Rica manufacturing
Cartago, Costa Rica facility and warehouse
Stamford, CT 165,000 Owned Executive offices
Phoenix, AZ 124,000 Owned Warehouse/distribution
facility and offices
Wandre, Belgium 46,000 Owned Assembly facility,
warehouse and offices
Valenciennes, France 37,000 Owned Warehouse/distribution
facility
Highland Park, IL 67,000 Leased Manufacturing facility
Item 2: Properties (cont'd)
A summary of the Company's properties follows:
Owned or
Location Building Area Leased Description
(sq. ft.)
Toronto, Ontario, 34,000 Leased Warehouse/distribution
Canada facility and offices
Breda, Netherlands 19,300 Leased Warehouse and offices
Hong Kong 16,500 Leased Continental Conair Ltd
offices
Dusseldorf, Germany 13,500 Leased Warehouse and offices
Montrouge, France 8,600 Leased Babyliss, S.A. offices
The Belgian plant owned by the Company is located on land in which the
Company has a leasehold interest which expires January 31, 2006. The
Company has the option to renew this leasehold interest for successive
five-year periods.
Also, during 1992, 1993 and 1994, temporary facilities in independent
warehouses were utilized to service the Company during peak inventory
periods.
The Company's facilities are generally modern and efficient and in
satisfactory working condition. The Company also owns 100 acres of land
in Glendale, Arizona, on which it has commenced construction of a 350,000
square foot state-of-the-art warehouse and distribution facility.
Construction of this facility is scheduled to be completed by the end of
1995.
Item 3: Legal Proceedings
The Company is not involved in any material pending legal proceedings.
Item 4: Submission of Matters to a Vote of Security Holders
See Note 8 of the Notes to the Consolidated Financial Statements on
page 25 herein.
PART II
Conair Corporation and Subsidiaries
Item 5: Market for the Registrant's Common Stock and Related Stockholder
Matters
(a) Principal Market
All of the Company's outstanding shares of common stock are privately
held.
(b) Approximate Number of Holders of Common Stock
See Note (a) above.
(c) Stock Price and Dividend Information
No dividends were paid for the period from January 1, 1992 to December 31,
1993. Dividends of $1,199,000 were paid in 1994. See Note (a) above.
Item 6: Selected Financial Data
For Years Ended
December 31,
1990 1991 1992 1993 1994
(in thousands)
Net Sales $298,502 $330,125 $361,838 $442,562 $524,398
Income before
extraordinary item $ 1,025 $ 2,916 $ 5,085 $ 12,061 $ 20,487
Extraordinary item $ 279 $ 14 $ (3,866) $ $
Net income $ 1,304 $ 2,930 $ 1,219 $ 12,061 $ 20,487
At year-end:
Total assets $291,745 $298,879 $297,471 $310,118 $362,704
Long-term debt $100,109 $100,332 $ 96,151 $ 87,575 $100,405
Working capital $106,052 $115,080 $122,332 $124,759 $146,653
Stockholders' equity $136,061 $138,971 $145,030 $151,637 $175,454
Item 7: Management's Discussion and Analysis of Financial Condition
and Results of Operations
Introduction
The Company operates in one industry segment, with revenues primarily
derived from the sale of personal care appliances, mainly hair dryers and
hairstyling devices, consumer electronics, mainly telephones and
telephone-related devices, CUISINART products, such as small kitchen
appliances and cookware and consumer toiletries and professional salon
products. In recent years, the Company has substantially expanded the
range of product categories that it offers through internal growth, as
well as licensing arrangements and acquisitions. Most significantly, in
1993, the Company entered into a long-term licensing arrangement with
Southwestern Bell to market telephone and telephone-related products in
the United States under the Southwestern Bell FREEDOM PHONE name. This
arrangement has enabled the Company to diversify and broaden the price
point coverage of its consumer electronics products line. In addition, in
February 1995, the Company acquired the stock of Babyliss, S.A., a leading
designer, manufacturer and marketer of personal care appliances in France,
the United Kingdom and other parts of Western Europe for approximately
$38,000,000 in cash subject to a maximum downward adjustment of
$4,000,000. Because the acquisition was consummated in February, 1995, it
is not reflected in the historical figures discussed below.
The following table summarizes the net sales of each of the Company's
product groups for the three years ended December 31, 1992, 1993 and 1994.
Years Ended December 31,
1992 1993 1994
(in thousands)
Personal Care Appliances $184,244 $208,063 $227,222
Consumer Electronics 56,648 112,400 149,601
CUISINART Products 47,311 49,316 56,839
Toiletries and Professional
Salon Products 73,635 72,783 90,736
Total $361,838 $442,562 $524,398
Results of Operations
The following table sets forth for the periods indicated certain
consolidated statements of operations data expressed as a percentage of
net sales:
Years Ended December 31,
1992 1993 1994
Net sales 100.0% 100.0% 100.0%
Cost of goods sold 66.1 67.4 68.3
Gross profit 33.9 32.6 31.7
Selling, general and administrative 27.9 26.2 23.7
Operating income 6.0 6.4 8.0
Interest expense 3.6 1.7 1.6
Interest income (.2) (.1)
Income before extraordinary items
and income taxes 2.6 4.8 6.4
Income tax provision 1.2 2.1 2.5
Net income before extraordinary
items 1.4 2.7 3.9
Overview
The Company's growth is primarily driven by new and enhanced products,
augmented by brand licensing and acquisitions. The Company has achieved a
compound annual growth rate of 20.4% in sales from 1992 through 1994.
Approximately half of the sales growth during that period was as a result
of the inclusion of Southwestern Bell FREEDOM PHONE sales in the Company's
consolidated sales after April 1993 and the Company's success in rapidly
increasing sales of Southwestern Bell FREEDOM PHONE products since the
commencement of the licensing arrangement. Excluding sales of these
products, the Company's compound annual growth rate during this period
would have been 10.3%.
The Company's gross margins have declined slightly from 1992 to 1994
because a higher portion of the Company's sales consisted of consumer
electronics products which generate lower gross margins than most of the
Company's other product categories. Excluding sales of consumer
electronics products, the Company's gross margins would have remained
essentially unchanged during this period.
Despite a decrease in gross margins, the Company's operating profit has
increased as a percentage of sales from 6.0% in 1992 to 8.0% in 1994,
primarily because of the fixed or semi-variable nature of certain of the
Company's expenses and the Company's ability to realize economies of
scale. As a result of improved efficiency, salaries and wages included in
selling, general and administrative expenses declined from 6.7% of sales
in 1992 as compared to 5.4% in 1994. In addition, depreciation and
amortization of goodwill and intangibles have declined as a percentage of
sales from 1.7% to 1.2% in the same period. The Company believes it can
continue to increase sales at a higher rate than the increase in general
and administrative expenses that is required to achieve such sales growth,
although the positive impact on improved operating profits may not be as
great as in recent years. The Company's improved operating results,
together with a substantial reduction in interest expense due to
refinancings, has led to significantly improved earnings.
Year Ended December 31, 1994 Compared to Year Ended December 31, 1993
Net sales increased by 18.5% to $524,398,000 in 1994 from $442,562,000 in
1993. Each of the Company's product groups contributed to this increase,
with approximately 41% of this increase attributable to increased sales of
Southwestern Bell FREEDOM PHONE products. The significant contribution of
sales of the Southwestern Bell FREEDOM PHONE products was due to sales of
new telephone and telephone-related products, expanded distribution, and
the inclusion of a full year of sales of Southwestern Bell FREEDOM PHONE
products in 1994 compared to only nine months commencing in April 1993,
when the Company started selling these products. For the comparable nine
month period in 1994, sales of the Company's Southwestern Bell FREEDOM
PHONE products increased by approximately 42%. This rate of increase is
not indicative of future growth because 1993 was the Company's first year
of sales of the Southwestern Bell FREEDOM PHONE products. Sales of other
consumer electronics products increased by approximately 5% in 1994,
principally due to increased sales of telephone answering machines. This
increase was partially offset by a decrease in sales of corded phones,
reflecting an industry reduction of basic corded phone sales.
Personal care appliance sales increased by approximately 9% during this
period. The Company's domestic personal care appliance sales increased by
5%. An 8% increase in sales of products sold under the CONAIR brand, such
as hair cutting kits and curling irons, was offset by a 3% reduction in
sales of private label products and higher unit sales of lower priced
CONAIR brand hair dryer models. Foreign sales increased by 50%
principally due to sales of REVLON brand products in Europe, which were
not sold in 1993 and increased sales in Canada. Sales of CUISINART
products increased by 15% due to new product introductions and increases
in unit sales of existing products. Sales of consumer toiletries and
professional salon products increased by approximately 25% due principally
to increased sales of private label toiletry products and the introduction
of the Company's Magical Mane hair shampoo and conditioner, which was
offset by a decrease in sales of professional salon products.
Gross margins decreased as a percentage of net sales to 31.7% in 1994 from
32.6% in 1993. The decrease was primarily due to changes in the mix of
products sold by the Company, as described more fully under "Overview".
Specifically, this decrease resulted from a disproportionate increase of
approximately 33% in sales of consumer electronics, primarily telephones,
which have relatively lower gross margins as a percentage of sales,
compared to a 14% increase in sales of all of the Company's other
products. Excluding sales of telephones in both periods, gross margins
have remained essentially unchanged as a percentage of sales during this
period.
Selling, general and administrative expenses decreased as a percentage of
net sales to 23.7% in 1994 from 26.2% in 1993, but increased by 7.7% to
$124,597,000 in 1994 from $115,672,000 in 1993. The increase of
$8,925,000 was principally due to increases in variable sales expenses to
support the increase in sales in the United States and, to a lesser
degree, to an increase in direct fixed expenses for the Company's new
subsidiary in the United Kingdom. The decline of 2.5% as a percentage of
net sales resulted primarily from the fixed and semi-variable nature of
certain costs in this category, including salaries and wages and, to a
lesser extent, depreciation of property, plant and equipment and
amortization of intangibles. In addition, the Company benefitted from a
reduction in its lease costs as a result of the purchase of its executive
office facility in Stamford, Connecticut in March 1994.
The Company's interest expense of $8,511,000 in 1994 increased from
$7,524,000 in 1993. This was as a result of an increase in the Company's
long-term debt, primarily to finance the purchase of its executive office
facility.
The Company's effective income t ax rate decreased to 38.8% in 1994 from
42.7% in 1993, primarily due to an increase, as compared to the prior
period, in taxable income relative to the amount of amortized goodwill,
which is not deductible for tax purposes.
Year Ended December 31, 1993 Compared to Year Ended December 31, 1992
Net sales increased by 22.3% to $442,562,000 in 1993 from $361,838,000 in
1992. More than approximately 60% of this increase was due to the
introduction of Southwestern Bell FREEDOM PHONE products, which were not
sold prior to 1993. Sales of other consumer electronics products
increased approximately 10% due to significant increases in sales of
telephone answering machines and cordless phones. These increases
resulted from a combination of new product introductions and expanded
distribution, which were partially offset by a decrease in sales of corded
phones, reflecting reductions in the overall corded phone market. Sales
of personal care appliances increased by approximately 13% in 1993. Sales
in the United States of personal care appliances marketed under the CONAIR
name increased by 13% due principally to increases in unit sales of hair
dryers. An increase of 49% in foreign sales of personal care appliances
was offset by lower growth in the Company's domestic sales of private
label personal care appliances. CUISINART products sales increased in
1993 by approximately 4% principally due to the successful introduction of
a line of high-end blenders and coffee makers. Sales of consumer
toiletries and professional salon products decreased by approximately 1%
in 1993 due primarily to a reduction in sales of toiletries to one
customer.
Gross margins decreased as a percentage of net sales to 32.6% in 1993 from
33.9% in 1992. This decrease resulted primarily from changes in the mix
of products sold by the Company during such periods, and in particular due
to the impact of lower gross margins on sales of Southwestern Bell FREEDOM
PHONE products, which were not sold prior to 1993. Excluding sales of
telephones in both periods, gross margins have remained essentially
unchanged as a percentage of sales during this period.
Selling, general and administrative expenses decreased as a percentage of
net sales to 26.2% in 1993 from 27.9% in 1992, but increased by 14.5% to
$115,672,000 in 1993 from $101,007,000 in 1992. The increase of
$14,665,000 was principally due to increases in variable selling expenses
to support the higher level of sales, increases in direct consumer
advertising, general increases in salaries and wages, and increases in
rent and related expenses due to additional office space leased at the
Company's Stamford, Connecticut executive offices. The reduction in
selling, general and administrative expenses of 1.7% as a percentage of
sales was primarily due to the fixed and semi-variable nature of certain
of these costs, including salaries and wages and, to a lesser extent,
depreciation of property, plant and equipment and amortization of
intangibles.
Interest expense decreased by approximately 42% to $7,524,000 in 1993 from
$12,966,000 in 1992 due to a reduction in long-term debt and a refinancing
of the Company's long-term debt in 1992. Interest income decreased by
approximately 85% to $89,000 in 1993 from $592,000 in 1992, primarily due
to a reduction in funds available for short-term investment and lower
interest rates.
The Company's effective income tax rate decreased to 42.7% in 1993 from
46.2% in 1992, primarily due to an increase, as compared to the prior
period, in taxable income relative to the amount of amortized goodwill,
which is not deductible for tax purposes and partially offset by a 1%
increase in Federal income tax rates in 1993.
Liquidity and Capital Resources
At December 31, 1994, the Company's working capital was $146,653,000 and
its current ratio was 3.2 to 1. The Company's cash balance was
$23,702,000 and long-term debt was $100,405,000 at December 31, 1994.
As of December 31, 1993, the Company had working capital of $124,759,000
and a cash balance of $15,856,000.
Capital expenditures during 1994 and anticipated capital expenditures
during 1995 are higher than previous years because of certain real estate
acquisitions and improvements. Capital expenditures were $29,546,000 in
1994, $20,000,000 of which represents the purchase price of the Company's
executive office facility in Stamford, Connecticut. Capital expenditures
in 1993 were $7,647,000 compared to $5,858,000 in 1992. Capital
expenditures for 1995 are anticipated to be approximately $20,000,000, of
which approximately $7,000,000 is for the completion of the Company's
warehouse and distribution facility in Glendale, Arizona and $4,000,000 is
for the exercise of the Company's option to purchase lease rights in its
executive office facility in Stamford, Connecticut from Leandro P.
Rizzuto.
Historically, approximately 60% of the Company's sales and 70% of its
operating profit are achieved in the second half of the year. The Company
relies on short-term bank debt to finance its seasonal operating needs
which result in a build-up of receivables and inventory during the first
nine months of each year with a substantial reduction in receivables,
inventories and bank credit during the fourth quarter. As of December 31,
1994, the Company had short-term lines of credit aggregating $64,400,000,
which do not include an additional $25,000,000 available for the period
June 1 to November 30 to finance its seasonal business needs. In
addition, the Company had a long-term revolving credit line of
$21,000,000, of which $11,000,000 was unutilized at December 31, 1994.
In connection with the Babyliss acquisition, the Company increased its
bank revolving credit line by $37,500,000. This additional debt has
mandatory principal repayments of $5,000,000 on December 15, 1996;
$7,500,000 on December 15, 1997; $10,000,000 on each of December 15, 1998
and December 15, 1999 and $5,000,000 on March 15, 2000. The interest rate
on this facility is variable and is subject to change based on the
leverage and operating performance of the Company.
For the year ended December 31, 1994, the Company's cash flows from
operations included $20,487,000 from net income, $7,239,000 from
depreciation and $4,784,000 from amortization of goodwill and intangibles.
This was supplemented with cash flow from trade creditors in the amount of
$9,635,000. The Company's cash flow has been sufficient to cover the
increased investment in receivables from customers of $10,372,000 and
additional inventories $18,804,000 for future sales. During 1994, the
Company borrowed $24,000,000 in additional long-term debt, which together
with available cash resources, was used to finance its net capital
additions of $27,621,000 and reduce long-term debt by $3,520,000. The
Company believes its capital resources are adequate to finance normal
growth and service the Company's debt obligations.
Historically, foreign currency exchange rate fluctuations have not had a
material impact on the results of operations or liquidity of the Company
due to the small proportion of the Company's sales reported and costs
incurred in foreign currencies. The Company hedged certain of its foreign
exchange transactions; however, these transactions were not significant
with respect to the Company's overall operations. As a result of the
Company's acquisition of Babyliss, the Company is reassessing its foreign
currency risks and will develop a hedging program designed to hedge firm
purchase commitments of goods and services denominated in foreign
currencies.
In December 1990, the FASB issued SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions", and in November 1992, the
FASB issued SFAS No. 112, "Employers' Accounting for Postemployment
Benefits". The Company does not presently offer such benefits and,
therefore, is not affected by such pronouncements.
In 1992, the FASB issued SFAS No. 109, "Accounting for Income Taxes",
which was adopted by the Company in 1993. SFAS No. 109 requires
determination of income taxes in accordance with the asset and liability
method. The effect of the adoption of SFAS No. 109 on the Company's
Consolidated Financial Statements in 1993 was not material.
Effects of Inflation
The Company believes that the relatively moderate rate of inflation over
the past few years has not had a significant impact on the Company's
results of operations.
Item 8: Financial Statements and Supplementary Data
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page No.
CONAIR CORPORATION and Subsidiaries
Independent Auditors' Report 14
Consolidated Balance Sheets at December 31, 1993 and 1994 15
Consolidated Statements of Operations for the years ended
December 31, 1992, 1993 and 1994 16
Consolidated Statements of Stockholders' Equity for the
years ended December 31, 1992, 1993 and 1994 17
Consolidated Statements of Cash Flows for the years ended
December 31, 1992, 1993 and 1994 18
Notes to Consolidated Financial Statements 20
Independent Auditors' Report
To the Board of Directors and Stockholder
Conair corporation
East Windsor, New Jersey
We have audited the accompanying consolidated balance sheets of Conair
Corporation and its subsidiaries as of December 31, 1993 and 1994, and the
related consolidated statements of operations, stockholders' equity and
cash flows for each of the three years in the period ended December 31,
1994. Our audits also include the financial statement schedule in the
index at Item 14(a)2. These financial statements and financial statement
schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Conair Corporation and
subsidiaries as of December 31, 1993 and 1994, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1994 in conformity with generally accepted accounting
principles. Also, in our opinion, such financial statement schedule when
considered in relation to the basic consolidated financial statements
taken as a whole, presents fairly in all material respects the information
set forth therein.
February 11, 1995 (February 28, 1995 as to Note 15)
New York, New York
Conair Corporation and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share information)
ASSETS December 31,
CURRENT ASSETS: 1993 1994
Cash and cash equivalents $ 15,856 $ 23,702
Accounts receivable, net of
allowance for doubtful accounts
of $1,337 and $1,458, respectively 70,244 80,616
Inventories 85,416 104,220
Prepaid expenses 1,753 1,610
Deferred income tax benefits 2,885 2,040
176,154 212,188
PROPERTY, PLANT AND EQUIPMENT:
At cost, net of accumulated
depreciation and amortization 44,685 66,992
INVESTMENTS AND OTHER ASSETS:
Investments in affiliated companies 1,141 464
Excess of cost over net assets
of acquired companies 73,829 70,575
Deferred expenses and other assets 14,309 12,485
89,279 83,524
$310,118 $362,704
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and other
current liabilities $ 41,014 $ 50,649
Income taxes 6,756 8,611
Current portion of long-term debt 3,625 6,275
51,395 65,535
OTHER LIABILITIES:
Long-term debt 87,575 100,405
Deferred income taxes 19,511 21,310
107,086 121,715
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Convertible preferred stock,
$1.00 par value:
Authorized 10,000 shares
Issued and Outstanding 5,000 shares 5 5
Common stock, $100.00 par value:
Authorized 5,000 shares
Issued and Outstanding 2,814 shares 281 281
Reduction for ESOP Loan Guarantee (5,000)
Additional paid-in capital 7,633 7,633
Cumulative translation adjustments 129 (18)
Retained earnings 148,589 167,553
151,637 175,454
$310,118 $362,704
See notes to consolidated financial statements
Conair Corporation and Subsidiaries
Consolidated Statements of Operations
(in thousands)
Years Ended December 31,
1992 1993 1994
NET SALES $361,838 $442,562 $524,398
COSTS AND EXPENSES:
Cost of goods sold 239,011 298,416 357,987
Selling, general and
administrative 101,007 115,672 124,597
340,018 414,088 482,584
INCOME FROM OPERATIONS 21,820 28,474 41,814
OTHER (INCOME) EXPENSE:
Interest expense 12,966 7,524 8,511
Interest income (592) (89) (158)
12,374 7,435 8,353
INCOME BEFORE INCOME TAXES
AND EXTRAORDINARY ITEM 9,446 21,039 33,461
Income tax provision 4,361 8,978 12,974
INCOME BEFORE EXTRAORDINARY ITEM 5,085 12,061 20,487
EXTRAORDINARY ITEM:
Loss on repurchase and redemption
of debt (net of income taxes) (3,866)
NET INCOME $ 1,219 $ 12,061 $ 20,487
See notes to consolidated financial statements
CONAIR CORPORATION AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
Years Ended December 31, 1992, 1993 and 1994
(in thousands, except number of shares)
Reduction
Preferred Stock Common Stock for ESOP
Shares Amount Shares Amount Loan Guar.
BALANCE, January 1, 1992 2,814 281
Net Income
Cumulative Translation
Adjustments
Dividends Declared
Shares Issued 5,000 5
BALANCE, December 31, 1992 5,000 5 2,814 281
Net Income
Cumulative Translation
Adjustments
Reduction for ESOP Loan
Guarantee (5,000)
Dividends Declared
Tax Benefit on Dividends
Paid to ESOP
BALANCE, December 31, 1993 5,000 5 2,814 281 (5,000)
Net Income
Cumulative Translation
Adjustments
ESOP Loan Guarantee
Adjustment 5,000
Dividends Declared
Tax Benefit on Dividends
Paid to ESOP
BALANCE, December 31, 1994 5,000 $ 5 2,814 $281 $
See notes to consolidated financial statements.
CONAIR CORPORATION AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
Years Ended December 31, 1992, 1993 and 1994
(in thousands, except number of shares)
Additional Cumulative Total
Paid In Retained Translation Stockholders'
Capital Earnings Adjustments Equity
2,638 135,841 211 138,971
1,219 1,219
(41) (41)
(119) (119)
4,995 5,000
7,633 136,941 170 145,030
12,061 12,061
(41) (41)
(5,000)
(500) (500)
87 87
7,633 148,589 129 151,637
20,487 20,487
(147) (147)
5,000
(1,699) (1,699)
176 176
$ 7,633 $167,553 $ (18) $175,454
See notes to consolidated financial statements.
Conair Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
Years Ended December 31,
1992 1993 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,219 $ 12,061 $ 20,487
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 5,323 6,500 7,239
Amortization of goodwill 3,060 2,532 2,960
Loss on repurchase and redemption
of debt (before income tax benefit) 6,137
Amortization of deferred expenses
and other assets 1,511 282 1,824
Deferred income taxes (571) 3,177 2,644
Tax benefit on dividends paid to ESOP 87 176
Other, net (142) (161) (1,101)
Changes in operating assets and
liabilities:
Accounts receivable 2,829 (12,182) (10,372)
Inventories (11,972) (6,872) (18,804)
Prepaid expenses (695) 834 143
Accounts payable and other
current liabilities (4,954) 6,402 9,635
Income taxes (983) 2,647 1,855
762 15,307 16,686
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in joint venture (575)
Additions to property, plant and
equipment (5,858) (7,647) (29,546)
Proceeds from sale of affiliate 2,500
(5,858) (7,647) (27,621)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase and redemption of debt (96,107)
Reduction of long-term debt (3,017) (39,313) (3,520)
Proceeds from issuance of long-term
debt 90,500 28,455 24,000
Proceeds from issuance of convertible
preferred stock 5,000
Dividends declared (500) (1,699)
(3,624) (11,358) 18,781
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (8,720) (3,698) 7,846
CASH AND CASH EQUIVALENTS
January 1, 28,274 19,554 15,856
CASH AND CASH EQUIVALENTS
December 31, $ 19,554 $ 15,856 $ 23,702
(continued)
Conair Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
(continued)
Years Ended December 31,
1992 1993 1994
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the year for:
Interest (net of amount capitalized) $ 13,289 $ 7,450 $ 7,698
Income taxes $ 3,644 $ 3,067 $ 8,299
See notes to consolidated financial statements
Conair Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 1992, 1993 and 1994
1. SIGNIFICANT ACCOUNTING POLICIES
Consolidation
The accompanying consolidated financial statements include the accounts of
Conair Corporation and its subsidiaries (the "Company"), all of which are
wholly-owned. All significant intercompany accounts and transactions have
been eliminated in consolidation.
Fair Value of Financial Instruments
During October 1994, the Financial Accounting Standards Board issued SFAS
119, "Disclosure about Derivative Financial Instruments and Fair Value of
Financial Instruments". This statement requires the disclosure of
estimated fair values for all financial instruments for which it is
practicable to estimate fair value.
For financial instruments including cash and cash equivalents, accounts
receivable and payable, accruals and short-term debt, the carrying amount
approximates fair value because of their short-term maturity and recording
at the lower of cost or net realizable value. The carrying amount of
long-term debt which bears interest at floating rates also approximates
the fair value.
The fair value of long-term debt with fixed interest rates is estimated
based on the quoted market price for similar issues. As of December 31,
1994, the carrying amount and the fair value of such long-term debt were
$93,299,000 and $89,903,000, respectively. The fair value amounts are not
necessarily indicative of the amounts for which the debt could be
liquidated.
Cash Equivalents
Cash equivalents consist principally of commercial paper and time deposits
having original maturity of less than 90 days, and amounted to $4,096,000
and $17,176,000 at December 31, 1993 and 1994, respectively.
Inventory
Inventories are stated at the lower of cost (first-in, first-out) or
market.
Income Taxes
The Company has adopted Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes". SFAS No. 109 requires the Company to
compute deferred income taxes based on the difference between the
financial statement and tax bases of assets and liabilities using enacted
tax rates in effect in the years in which differences are expected to
reverse. The effect of the adoption of SFAS No. 109 on the Consolidated
Financial Statements of the Company in 1993 was not material.
Property, plant and equipment
Depreciation and amortization of property, plant and equipment are
computed primarily on the straight-line method over the estimated useful
lives of the related assets.
Excess of cost over net assets of acquired companies
The excess of cost over net assets of acquired companies is being
amortized on the straight-line basis over periods of up to 40 years and is
shown net of accumulated amortization of $25,945,000 and $27,897,000
at December 31, 1993 and 1994, respectively. The Company's policy of
reviewing the recoverability of goodwill is based on projections of
undiscounted future income from operations.
Deferred Expenses and Other Assets
Deferred expenses and other assets include various intangible assets
acquired in the Company's purchase of certain net assets of Cuisinart.
These assets are being amortized on the straight-line basis over periods
ranging from 3 to 40 years and are shown net of accumulated amortization
of $7,738,000 and $10,101,000 at December 31, 1993 and 1994, respectively.
Foreign currency translation
Gains and losses arising from the translation of foreign subsidiary
financial statements are excluded from the determination of net income and
included in a separate component of stockholders' equity.
2. LICENSING AND DISTRIBUTION AGREEMENT
On March 16, 1993, the Company signed a Licensing and Distribution
Agreement with Southwestern Bell Telecommunications, Inc. under which it
received an exclusive license to market one and two-line residential
telephones - including cordless telephones, answering machines and caller
ID devices - to be sold to U.S. retailers. The Company markets telephones
under the CONAIRPHONE name as well as the BELL logo, the Southwestern Bell
name and the FREEDOM PHONE trademark. This agreement became effective on
April 9, 1993 after approval from the Federal Trade Commission.
3. EXTRAORDINARY ITEM
In 1992, the Company repurchased portions of its 14% senior subordinated
debentures and 14 1/2% subordinated debentures which were carried at
$12,500,000 and $17,368,000, respectively. On November 19, 1992, the
$27,184,000 par value of 14% of senior subordinated debentures and
$34,721,000 par value of 14 1/2% subordinated debentures which remained
outstanding were redeemed by the Company. The loss resulting from the
repurchase and redemption in 1992 was approximately $3,866,000, net of
income tax benefit of $2,271,000. Such loss includes the difference
between the repurchase price and the carrying value which includes the
related deferred financing expenses.
4. INVENTORIES
Inventories are summarized as follows:
December 31,
1993 1994
(in thousands)
Components and
raw materials $ 11,441 $ 12,728
Finished goods 73,975 91,492
$ 85,416 $104,220
5. PROPERTY, PLANT AND EQUIPMENT
The major classes of these assets are as follows:
December 31, Estimated
1993 1994 Useful Life
(in thousands)
Land $ 5,160 $ 9,160
Buildings 21,416 37,615 15-40 yrs.
Building improvements 1,355 1,582 7-20 yrs.
Furniture and fixtures 7,670 8,255 5-10 yrs.
Machinery and equipment 37,987 44,632 3-11 yrs.
Construction in progress 455 2,345
74,043 103,589
Less accumulated
depreciation and
amortization 29,358 36,597
$ 44,685 $ 66,992
6. SHORT-TERM DEBT
At December 31, 1994, the Company had available short-term lines of credit
with banks in the United States and abroad aggregating $64,400,000. The
trade credit lines are available for letters of credit and bankers'
acceptances which are secured by an interest in the goods underlying such
borrowings and the trade receivables resulting from the sale of such
goods. During the years ended December 31, 1992, 1993 and 1994, the
Company had short-term borrowings of up to $17,400,000, $35,000,000 and
$32,000,000, respectively, to finance its seasonal business needs. The
average borrowings during 1992, 1993 and 1994 were $3,890,000,
$15,739,000 and $11,581,000, respectively, and the approximate weighted
average interest rates were 4.5%, 4.9% and 5.5%, respectively. At
December 31, 1992, 1993 and 1994, the Company had no borrowings against
these lines. The Company has various informal compensating balance
arrangements with its banks which do not legally restrict withdrawal of
funds.
7. LONG-TERM DEBT
Long-term debt consists of the following: (in thousands)
December 31,
1993 1994
8.05% Industrial Development Bonds (A) $ 3,833 $ 3,353
Mortgage Note Payable (B) 1,934 1,881
Floating Rate Industrial Development Bonds (C) 1,875 1,500
6.25% Promissory Note due 2001 (D) 10,500 9,188
7.44% Series A Senior Fixed-Rate Notes due 2002 (E) 40,000 40,000
6.56% Series B Senior Rate Reset Notes due 2002 (F) 10,000 10,000
10% Subordinated Promissory Note due 2003 (G) 6,000 6,000
Revolving Credit Loan due 2000 (H) 6,000 10,000
5.8% Term Loan due 1998 (I) 3,933 3,133
10% ESOP Loan Guarantee (J) 5,000
6.5% Mortgage Note due 1998 (K) 2,125 1,625
7.0% Term Loan due 2004 (L) 20,000
91,200 106,680
Less current portion of long-term debt 3,625 6,275
$87,575 $100,405
(A) On December 16, 1986, the Company completed a $9,600,000 industrial
development bond financing which was used to fund the building of an
office/warehouse/distribution center located in East Windsor, New Jersey.
The bonds, which mature on December 15, 2001, are payable in monthly
installments of $110,186 which began January 15, 1988 until December 15,
1990; $60,186 commencing January 15, 1991 until June 15, 1992; $39,912
commencing July 15, 1992 until November 15, 2001; $79,812 on December 15,
2001. The bonds may be redeemed prior to maturity on December 15, 1996.
This indebtedness is collateralized by the land and building purchased
with the proceeds which have a net carrying value of $9,317,000 at
December 31, 1994. The bonds contain certain restrictions relating to net
income and net worth. Interest is payable monthly.
(B) On May 15, 1991, the Company completed a variable rate mortgage in
the amount of $2,060,000 due June 1, 1996 payable in monthly installments,
which began June 1, 1991. The opening rate of interest was 9.125% and
will be reset annually at 3% over the rate on one-year U.S. Treasury
Bills. The indebtedness was collateralized by the land and building at
the existing facility in Phoenix, Arizona which have a net carrying value
of $1,674,000 at December 31, 1994. The interest rate at December 31,
1994 was 7.75%.
(C) On April 13, 1989, the Company assumed $5,307,692 of floating rate
Industrial Development Revenue Bonds in the purchase of its toiletry
products manufacturing facility in Rantoul, Illinois. The bonds, which
mature on December 1, 1998, are payable annually which began December 11,
1989 for $230,769; December 1, 1990 for $2,076,923; $375,000 commencing
December 1, 1991 until December 1, 1998. Interest is payable quarterly at
70% of the prime rate. This indebtedness is collateralized by the land
and building which have a net carrying value of $5,504,000 at December 31,
1994. The interest rate at December 31, 1994 was 5.95%.
(D) On June 11, 1992, the Company received a $10,500,000 loan which
matures on November 15, 2001 and had an interest rate of 9.7%. Interest
is payable quarterly commencing August 15, 1992. Semi-annual principal
payments of $656,250 begin on May 15, 1994. The loan was refinanced in
1993 reducing its interest rate to 6.25%. The loan is collateralized by
a pledge of a portion of the stock of one of the Company's subsidiaries.
(E) On October 20, 1992, the Company issued $40,000,000 Series A Senior
Fixed Rate Notes. The notes mature on December 28, 2002, and have an
interest rate of 7.44% per annum to be paid on the 28th day of each
December, March, June and September. The principal payments are due as
follows: $2,750,000 on December 28, 1995; $4,000,000 on December 28, 1996;
and $5,500,000 commencing with December 28, 1997 and every December 28th
thereafter until December 28, 2001 and a final payment of $5,750,000 on
December 28, 2002. The notes contain covenants requiring the Company to,
among other things, maintain certain levels of tangible net worth,
liquidity and leverage. The loan is collateralized by a pledge of a
portion of the stocks of the Company's subsidiaries.
(F) On October 20, 1992, the Company issued $10,000,000 Series B Senior
Rate Reset Notes. The notes mature on December 28, 2002, and have an
interest rate initially set at 6.56% to be paid on the 28th day of each
December, March, June and September. The reset date is October 20, 1996
and the reset rate is based on the U.S. Treasury rate equal to the
remaining average life of the Series B Notes plus 1.75% per annum. The
principal payments are scheduled to commence with a payment of $1,500,000
on December 28, 1996 and every December 28th thereafter and ending on
December 28, 2001 and a final payment of $1,000,000 on December 28, 2002.
The notes contain covenants requiring the Company to, among other things,
maintain certain levels of tangible net worth, liquidity and leverage.
The loan is collateralized by a pledge of a portion of the stocks of the
Company's subsidiaries.
(G) On October 20, 1992, the Company issued a 10% Subordinated Promissory
Note due April 27, 2003. Interest payments are payable semi-annually on
June 15 and December 15. In 1993 the Company repaid $4,000,000 of this
loan at par. The principal balance is due at maturity.
(H) On October 20, 1992, the Company entered into a Bank Credit Agreement
with a syndicate of domestic banks providing for a $20,000,000 revolving
credit loan. This loan was restructured in 1993 and the availability
under the Revolving Credit line was increased to $30,000,000 ($21,000,000
at December 31, 1994). Interest rates on this facility are at variable
rates subject to changes in short-term interest rates and changes in the
leverage and operating performance of the Company. The loan commitment of
$21,000,000 is scheduled to be reduced by the following amounts:
$6,000,000 on December 15, 1995 and $7,500,000 on December 15, 1996 and
December 15, 1997. The Agreement contains covenants requiring the Company
to, among other things, maintain certain levels of tangible net worth,
liquidity and leverage. The loan is collateralized by a pledge of a
portion of the stocks of the Company's subsidiaries. The interest rate at
December 31, 1994 was 7.5%. See Note 15.
(I) On November 24, 1993, the Company completed a term loan in the amount
of $4,000,000 due November 1, 1998 payable in monthly installments which
began December 1, 1993. The interest rate on this loan is 5.8%. The loan
was used to prepay $4,000,000 of principal due on its 10% Subordinated
Promissory Note due in 2003. The Company's obligations under this loan
are unsecured.
(J) On December 31, 1994 as a result of the merger of the Conair
Corporation Employee Stock Ownership Plan with the Profit Sharing Plan of
Conair Corporation, this debt obligation was satisfied and the Loan
Guarantee is no longer outstanding. See Note 11.
(K) On February 1, 1993, the Company completed a fixed rate mortgage in
the amount of $2,500,000 due on February 1, 1998. Repayment of principal
is at the rate of $125,000 per quarter commencing on June 30, 1993.
Interest is payable monthly. The proceeds of this loan were used to
expand the distribution capacity of the Rantoul, Illinois facility. This
indebtedness is collateralized by the land and building which have a net
carrying value of $5,504,000 at December 31, 1994.
(L) On March 15, 1994, the Company obtained a ten-year term loan in the
amount of $20,000,000. This loan was used to finance the acquisition of
its executive office facility in Stamford, Connecticut. The loan is
unsecured and has a fixed interest rate of 7%. Principal repayments on
the loan begin on June 1, 1996 with a payment of $625,000 and variable
sums are due semi-annually on June 1 and December 1 with a final payment
of $4,000,000 at maturity on February 28, 2004.
The various debt covenants place limitations on the payment of dividends
on preferred and common stock. The Company is in compliance with all
covenants under its debt obligations at December 31, 1994.
At December 31, 1994, projected maturities of long-term debt are as
follows:
Year Ending December 31, Amount
(in thousands)
1995 $ 6,275
1996 12,039
1997 21,966
1998 11,775
1999 10,791
Thereafter 43,834
$106,680
All of the Company's Serial Zero Coupon Senior Notes were retired or
defeased in 1989.
8. Capital Stock
On October 19, 1992, pursuant to the written consent of the sole common
stockholder of the Company, the Company's Certificate of Incorporation was
amended to provide for the authorization of an aggregate of 15,000 shares
of capital stock, consisting of 5,000 authorized shares of common stock,
par value $100 per share, and 10,000 shares of preferred stock, par value
$1.00 per share.
On October 20, 1992, the Company sold 5,000 shares of Convertible
Preferred Stock to the Profit Sharing Plan of Conair Corporation for the
sum of $5,000,000. These shares receive a cumulative dividend at an
annual rate of $100 per share payable on the fifteenth day of January,
April, July and October of each year. The shares may be redeemed, under
certain conditions, at the option of the Company. The shares are
presently convertible into 69 shares of common stock.
9. INCOME TAXES
The provision for income taxes consists of the following:
Years Ended
December 31,
1992 1993 1994
(in thousands)
Current Tax Expense:
U.S. Federal $ 3,214 $ 3,121 $ 6,318
State and Local 88 317 369
Foreign 2,324 2,344 3,643
Total Current 5,626 5,782 10,330
Deferred Tax Expense (Benefit):
U.S. Federal (1,265) 3,196 2,644
$ 4,361 $ 8,978 $12,974
The following table reconciles taxes on income to the Federal statutory
rate of 34% for the year ended December 31, 1992 and 35% for the years
ended December 31, 1993 and 1994:
Years Ended
December 31,
1992 1993 1994
(in thousands)
Computed tax at statutory rate $ 3,222 $ 7,390 $11,752
State and local income taxes, net
of Federal income tax benefit 58 209 240
Amortization of excess of cost
over net assets of acquired
companies 963 971 1,040
Other, net 118 408 (58)
$ 4,361 $ 8,978 $12,974
Deferred tax liabilities (assets) are comprised of the following:
December 31,
1992 1993 1994
(in thousands)
Deferred Tax Liabilities:
Depreciation $ 1,100 $ 1,338 $ 1,012
Unremitted earnings of
foreign subsidiaries 15,562 18,173 20,298
16,662 19,511 21,310
Deferred Tax Assets:
Vacation (330) (308) (203)
Bad debt (573) (590) (223)
Inventory (586) (557) (356)
Warranty (1,041) (919) (919)
Other (683) (511) (339)
(3,213) (2,885) (2,040)
Net Deferred Tax Liabilities $13,449 $16,626 $19,270
10. COMMITMENTS AND CONTINGENCIES
The Company was contingently liable for letters of credit amounting to
approximately $24,661,000 at December 31, 1994.
In 1993, the Company leased a 60,000 sq. ft. manufacturing facility in
Highland Park, IL for a term beginning November 1, 1993 and continuing
until December 31, 1996. The rent during this term is $162,266 per year.
The lease is a net lease requiring the Company to pay all taxes, charges
and expenses.
In January 1993, the Company entered into a five-year lease of computer
equipment for approximately $1,700,000. Monthly lease payments in the
first year were $13,288 and in subsequent years increased to $40,874.
In 1994, the Company, through its wholly-owned subsidiary, Continental
Conair Limited, renewed its lease of a 16,500 sq. ft. facility in Kowloon,
Hong Kong. The term of the renewal is three years with rent of $525,000
per year. The lease is a net lease requiring the Company to pay all
taxes, charges and expenses.
11. EMPLOYEE BENEFIT PLANS
The Company provides for a non-contributory employee benefit program
consisting of a defined contribution plan which covers substantially all
U.S. full-time employees. Company contributions, approved by the Board
of Directors (not in excess of amounts deductible for Federal income tax
purposes) are paid into a trust. Total contributions to this plan charged
to expense for the years ended December 31, 1992, 1993 and 1994 were
$1,268,000, $1,285,000 and $1,022,000, respectively.
On June 1, 1993, the Company formed a new employee benefit plan, an
Employee Stock Ownership Plan (ESOP). On July 1, 1993, the ESOP acquired
the Convertible Preferred Stock from the Profit Sharing Plan of Conair
Corporation. The ESOP issued a 10% $5,000,000 note payable to the Profit
Sharing Plan. The ESOP note was guaranteed by the Company. Total
contributions to this plan charged to expense for the years ended
December 31, 1993 and 1994 were $100,000 and $500,000, respectively.
On December 31, 1994, the Company merged the Conair Corporation ESOP with
the Profit Sharing Plan of Conair Corporation. As a result of this
transaction, the Profit Sharing Plan acquired the Conair Convertible
Preferred Stock and the obligations under the ESOP Note and its
corresponding guarantee by the Company were satisfied.
12. INTERNATIONAL OPERATIONS AND OTHER
The Company operates in one industry segment and is engaged in the design,
manufacture, assembly and marketing of personal care consumer products and
consumer electronic and kitchen appliances.
During the years ended December 31, 1992, 1993 and 1994, sales to the
largest customer aggregated approximately $41,212,000, $50,147,000 and
$62,811,000, respectively. Sales to the Company's second largest customer
in 1992, 1993 and 1994 were $55,938,000, $50,828,000 and $59,362,000,
respectively. No other customer represented sales in excess of 10% of
consolidated revenues.
Continental Conair Limited, a wholly-owned subsidiary, is located in Hong
Kong. Sales of this subsidiary to unaffiliated customers for the years
ended December 31, 1992, 1993 and 1994 were $44,150,000, $36,200,000 and
$38,197,000, respectively; operating income was $8,711,000, $6,536,000
and $6,872,000, respectively; and identifiable assets at December 31,
1992, 1993 and 1994 were $26,873,000, $28,466,000 and $27,183,000,
respectively. Conair Costa Rica, S.A., a wholly-owned subsidiary, is
located in Costa Rica. Sales of this subsidiary to unaffiliated customers
for the years ended December 31, 1993 and 1994 were $13,223,000 and
$10,483,000, respectively; operating income was $3,316,000 and $2,235,000,
respectively; and identifiable assets at December 31, 1993 and 1994 were
$18,615,000 and $20,281,000, respectively. Conair Costa Rica, S.A. sales
to unaffiliated customers were not significant in 1992.
International sales were approximately $12,826,000, $19,160,000, and
$28,804,000 for 1992, 1993 and 1994, respectively.
13. CONDENSED UNAUDITED QUARTERLY RESULTS OF OPERATIONS
Condensed unaudited quarterly results of operations for the years ended
December 31, 1993 and 1994 are as follows:
Quarter Ended
1993 March 31 June 30 September 30 December 31
(in thousands)
Net sales $83,987 $93,472 $132,108 $132,995
Gross profit $28,694 $30,495 $ 41,422 $ 43,535
Net income $ 907 $ 1,213 $ 4,555 $ 5,386
Quarter Ended
1994 March 31 June 30 September 30 December 31
(in thousands)
Net sales $95,575 $117,060 $157,197 $154,566
Gross profit $31,814 $ 37,554 $ 48,384 $ 48,659
Net income $ 1,603 $ 3,634 $ 7,403 $ 7,847
14. RELATED PARTY TRANSACTIONS
See Item 13 for a description of related party transactions.
15. SUBSEQUENT EVENTS
On February 18, 1995, the Company acquired 100% of the common stock of
Babyliss, S.A. for approximately $38,000,000 which is subject to a maximum
downward adjustment of approximately $4,000,000 based on the terms of the
agreement. Babyliss, S.A. is a manufacturer and marketer of personal care
appliance products principally in France, the United Kingdom, Germany,
Belgium, the Netherlands and Spain. Through its distributors Babyliss
products are also marketed in Scandinavia and several non-European markets
including North America, Africa and East Asia. In connection with this
acquisition, the Company increased its bank revolving credit line by
$37,500,000. This additional debt has mandatory principal repayments of
$5,000,000 on December 15, 1996; $7,500,000 on December 15, 1997;
$10,000,000 on each of December 15, 1998 and December 15, 1999 and
$5,000,000 on March 15, 2000. The interest rate on this facility is
variable and is subject to change based on the leverage and operating
performance of the Company.
On February 28, 1995, the Company exercised its option to purchase the
portion of its Stamford, Connecticut executive office facility leased to
Leandro P. Rizzuto. The option price is $4,000,000 and the closing is
scheduled for March 31, 1995.
Item 9: Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None.
PART III
Conair Corporation and Subsidiaries
Item 10: Directors and Executive Officers of the Registrant
(a) Directors
Year First Served
Principal Occupations During Past as Director (in-
Five Years, Other Directorships, cludes predecessor
Name and Age Company)
Leandro P. Rizzuto Director, Chairman of the Board and 1959
President of the Company (for more
than past five years) 56
Walter Margulies Director, Secretary, Attorney, Partner 1967
with the law firm of Margulies &
Margulies, P.C., General Counsel to
the Company (for more than past five
years) 85
Maurice Lucas Director and Executive Vice President of 1973
the Company (for more than past five
years) 61
John P. Lomenzo Director; Attorney, Partner with the 1975
law firm of Field, Lomenzo & Turret,
P.C. (for more than past five years)
79
Dave Sommer Director; Senior Vice President- 1980
Retired, Rite Aid Corporation.
Other Directorships: Cytologics,
Inc. 77
Uzi Zucker Director; Senior Managing Director of 1985
Bear, Stearns & Co. (for more than
past five years). Other
Directorships: The Bear Stearns
Company Inc., Carnival Corporation,
The Jerusalem Economic Corporation Ltd.,
Alliance Tire Company (1992) Ltd., Titan
Pharmaceuticals Inc., Industrial
Buildings Corp., Ltd., Tnuport Ltd.
and Mivnat Ltd. 59
Melvin Braun Director; Partner-Retired, Deloitte 1987
& Touche LLP. Other Directorships:
Shorewood Packaging Corp. 73
(b) Executive Officers (Other than Directors)
Principal Occupations During the
Past Five Years, Other Directorships,
Name and Age
Paul M. Ackels Vice President, Cuisinarts Marketing (since May,
1990); Vice President Sales, Hamilton Beach, Inc.
(prior thereto) 54
Ann Marie Cioffi Vice President, Human Resources (since June, 1990);
Corporate Director Human Resources (prior thereto)
46
Ralph R. Coccaro Vice President, Professional Marketing (since
October, 1994); Director of Marketing, ABBA Pure &
Natural Products (since August, 1993); Senior Vice
President, Business Development, Sebastian
International Inc. (since January, 1993); Vice
President, Sales and Marketing (since January,
1991); General Manager of Berner Company (prior
thereto) 44
John Denis Vice President, Consumer Toiletries Sales and
Marketing (for more than past five years) 47
Ronald T. Diamond Senior Vice President, Consumer Appliances and
Consumer Toiletries (for more than past five
years) 43
John T. Errett Vice President, Strategic Services (for more than
past five years) 64
Maryellen Flynn Vice President, Creative Services (since April,
1993); Consultant, Shiseido International Co.
(since May, 1992); Co-Creative Director, GEM
Division of Grey Advertising Co. (prior thereto)
55
Stuart D. Fox Vice President, Sales, Consumer Appliances (since
January 1995); Vice President, Sales, Hamilton
Beech Proctor Silex, Inc. (prior thereto) 52
Barry Haber Senior Vice President, Consumer Electronics
and Cuisinarts (since June, 1990); Senior Vice
President and General Manager, Consumer
Electronics (prior thereto) 44
Barbara Hodges- Vice President, QC and R&D - Rantoul (for more
Leinhart than past five years) 49
Kevin R. Hudak Senior Group Controller (since January, 1994);
Divisional Controller (since June, 1990); Special
Assistant to the President (prior thereto) 41
(b) Executive Officers (Other than Directors) (contd.)
Principal Occupations During the
Past Five Years, Other Directorships,
Name and Age
John B. Kilroy Vice President, Treasurer (since December, 1993);
Treasurer (since August, 1990); Director of
Corporate Finance, Betz Laboratories, Inc. (prior
thereto) 52
Francis Lindsey Vice President, Consumer Appliance Marketing, (for
more than past five years) 45
Richard A. Margulies Vice President, Legal (since August, 1990);
Corporate Counsel (prior thereto) 48
Eugene Marotta Senior Vice President, Professional Division (for
more than past five years) 42
John J. Mayorek Senior Vice President, Administration (for more
than past five years) 47
Jaime M. Morozowski Vice President, Consumer Toiletries, Marketing (for
more than past five years) 43
Jules Nachtigal Vice President,Consumer Toiletries, Research and
Development (for more than past five years) 56
Thomas Perko Vice President, Consumer Electronics, Sales (since
January, 1993); National Sales Manager, Consumer
Electronics (since November, 1990); Regional Sales
Manager, Consumer Electronics (prior thereto) 46
James A. Porcelli Vice President, Corporate Controller (since
December, 1994); Corporate Controller (prior
thereto) 39
Denis Rizzuto Vice President, Private Label Liquids (since
December,1992); Director Sales/Marketing
Private Label (prior thereto) 31
John A. Rusk Vice President, Purchasing and Planning (for more
than past five years) 51
Kenneth Russo Vice President, Professional, Sales (since
September, 1994); Director of Marketing,
Professional (prior thereto) 40
Ludwig Salce Vice President, Perm Development (since February,
1993); Director Perm Technology, Zotos
International, Inc. (prior thereto) 61
Anthony P. Solomita Vice President, Consumer Electronics, Marketing
(since December, 1994); Director of Marketing,
Consumer Electronics (since January, 1993);
Marketing Manager, Consumer Electronics (prior
thereto) 33
(b) Executive Officers (Other than Directors) (contd.)
Principal Occupations During the
Past Five Years, Other Directorships,
Name and Age
Jack W. Wilson II Vice President, Cuisinarts Sales (since October,
1992); National Sales Manager, Cuisinarts (since
November, 1990); Regional Sales Manager, Consumer
Electronics (prior thereto) 41
Patrick P. Yannotta Senior Vice President, Finance (since December,
1993); Vice President, Finance (prior thereto) 58
Item 11: Executive Compensation
The following tabulation shows the cash compensation for services in all
capacities paid by the Company in respect of the calendar years ended
December 31, 1992, 1993 and 1994 to each of the five most highly
compensated executive officers of the Company whose aggregate cash
compensation exceeded $100,000.
The information included in this table represents amounts applicable only
to the portion of the year in which such person actually served.
All Other
Annual
Principal Salary Bonus Compensation
Name Position Year $ $ $ (1)
Leandro P. Rizzuto Chairman and 1994 1,000,000 51,200
President 1993 1,750,000 300,000 53,400
1992 1,750,000 56,300
Ronald T. Diamond Senior Vice 1994 446,000 200,000 17,300
President, 1993 398,000 150,000 20,200
Consumer Appliances 1992 356,000 100,000 24,300
and Consumer
Toiletries
Barry Haber Senior Vice 1994 356,000 150,000 20,600
President, 1993 316,000 125,000 23,600
Consumer Electronics 1992 280,700 100,000 25,700
and Cuisinart
John J. Mayorek Senior Vice 1994 275,600 108,800 14,900
President, 1993 250,600 35,000 18,800
Administration 1992 228,600 25,000 22,000
Richard A. Margulies Vice President, 1994 259,800 65,000 18,900
Legal and Assistant 1993 229,800 60,000 22,500
Secretary 1992 204,800 50,000 31,100
(1) Includes amounts paid or reimbursed by the Company to purchase life
and disability insurance under its Executive Life and Disability
Insurance Program which benefits officers of the Company, amounts
paid by the Company for medical reimbursement under the Company's
Executive Medical Reimbursement Plan which benefits officers and
amounts set aside for these individuals under the Company's Profit
Sharing Plan and Employee Stock Ownership Plan. (The Company's
Employee Stock Ownership Plan was merged into the Profit Sharing
Plan, effective December 31, 1994.)
The Board of Directors currently maintains an Executive Committee, an
Audit Committee and a Compensation Committee. Messrs. Lomenzo and Sommer
are members of the Executive Committee, Messrs. Braun, Lomenzo and Sommer
are members of the Audit Committee and Messrs. Margulies and Rizzuto are
members of the Compensation Committee. Mr. Rizzuto is President of the
Company. Directors receive $3,000 for each meeting of the Board of
Directors and $1,000 for each Executive, Audit and Compensation Committee
meeting attended. Directors who are also officers, as well as directors
who are also consultants or legal advisors to the Company, receive no
additional compensation for services rendered as a director. All
directors hold office until the next meeting of the stockholders of the
Company and until their successors are elected and qualified. Approval of
the Company's independent directors will be required in connection with
transactions between the Company and related parties.
Item 12: Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners
All of the Company's outstanding shares of common stock are beneficially
owned by Leandro P. Rizzuto, whose business address is 1 Cummings Point
Road, Stamford, Connecticut 06904.
(b) Security Ownership of Management
See (a) above.
Item 13: Certain Relationships and Related Transactions
Conair Corporation and Leandro P. Rizzuto are parties to an employment
agreement, dated June 20, 1985, for a term through June 30, 1996, subject
to automatic renewals of successive one year periods, pursuant to which
the Company employs Mr. Rizzuto as Chairman and President of the Company
at a base annual salary and incentive compensation to be determined
annually by the Board of Directors. Mr. Rizzuto's base salary and
incentive compensation will be subject to upward adjustments at the
discretion of the Board of Directors.
In 1986, the Company leased its Stamford, Connecticut executive office
facility from Leandro P. Rizzuto. In 1993, such lease was at a cost of
$2,622,500 under a net lease requiring the Company to pay all taxes,
charges and expenses. The rental was determined by an independent
appraisal. On March 15, 1994, the Company acquired this facility from
Leandro P. Rizzuto for $20,000,000. The purchase price was based on an
independent appraisal. A ten-year unsecured loan in the amount of
$20,000,000 was obtained by the Company to finance this acquisition. The
interest rate on this loan is 7%. The Company leased back to Mr. Rizzuto
a portion of the facility for a period of ninety-nine years subject to the
Company's option, for a period of ten 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. On February 28, 1995, the Company exercised this
option and the closing is scheduled for March 31, 1995.
The Company occasionally charters a jet that is beneficially owned by
Leandro P. Rizzuto. In 1992, 1993 and 1994, the Company paid $376,200,
$350,100 and $323,200, respectively, to Mr. Rizzuto as charter payments.
These payments approximate amounts charged by Mr. Rizzuto to unaffiliated
parties.
On October 20, 1992, the Company received $10,000,000 upon the issuance to
Leandro P. Rizzuto of a $10,000,000 par value 10% Subordinated Promissory
Note due April 27, 2003. Interest is payable semi-annually on June 15 and
December 15. The principal balance is due at maturity. These notes are
subordinated to the Series A Senior Fixed Rate Notes, The Series B Senior
Rate Reset Notes and certain bank credit facilities of the Company. In
1993, the Company prepaid $4,000,000 of this loan at par.
On July 1, 1994, the Company purchased from Leandro P. Rizzuto his 50%
interest in Rusk, Inc. at his cost of $575,000. Rusk, Inc. is a marketer
of upscale, professional-only hair care products.
In 1992, 1993 and 1994, the Company paid $69,000 each year to Melvin L.
Braun for consulting fees. Mr. Braun is a Director of the Company.
In 1992, 1993 and 1994, the Company paid $75,000 each year to John P.
Lomenzo for legal fees. Mr. Lomenzo is a Director of the Company.
Maurice Lucas, an officer and director of the Company, is an officer and
principal stockholder of L&R Distributors, Inc., an independent New York
based distributor of hair care and personal care products. In 1992, 1993
and 1994, L&R Distributors, Inc. purchased products from the Company in
the amounts of $1,701,000, $1,401,000 and $1,668,000, respectively. The
prices charged to L&R Distributors, Inc. were consistent with the amounts
charged by the Company to other independent distributors.
In 1992, 1993 and 1994, the Company paid approximately $54,000, $43,000
and $43,000, respectively, to the law firm of Margulies & Margulies, P.C.
for legal fees. Walter Margulies, a director of the Company, and Richard
A. Margulies, a vice president of the Company, are partners in this law
firm. Richard Margulies now works full time for the Company.
PART IV
Conair Corporation and Subsidiaries
Item 14: Exhibits, Financial Statements, Schedules and Reports on Form 8 K
(a) 1. Financial Statements
See Part II Item 8.
2. Financial Statement Schedule Page No.
Schedule II Valuation and qualifying accounts 41
All other schedules are omitted from this report because they are
inapplicable, not required under Regulation S X, or the required
information is included in the consolidated financial statements
and notes thereto.
3. Exhibits
The following exhibits are filed with this Form 10 K or
incorporated herein by reference to the document set forth
herein by reference to the document set forth next to the exhibit
in the list below:
(3) (a) Articles of Incorporation and By-Laws incorporated by
reference to Exhibit 3.1 and 3.2 of the Company's Registration
Statement No. 2-45310.
(3) (b) Amendments to Company's Articles of Incorporation dated
May 20, 1976, May 20, 1983 and August 19, 1983 filed with the
Secretary of the State of Delaware incorporated by reference to
the Company's Form 10 K for the period ended December 31, 1984.
(3) (c) Amendments to Company's Articles of Incorporation dated
September 10, 1985, August 6, 1986 and August 25, 1988 filed with
the Secretary of the State of Delaware incorporated by reference
to the Company's Form 10 K for the period ended December 31,
1993.
(3) (d) Amendment to Company's Articles of Incorporation dated
October 13, 1992 filed with the Secretary of the State of
Delaware incorporated by reference to the Company's Form 10 K for
the period ended December 31, 1992.
(3) (e) Amendment to Company's Articles of Incorporation dated
December 17, 1993 filed with the Secretary of the State of
Delaware incorporated by reference to the Company's Form 10 K for
the period ended December 31, 1993.
3. Exhibits (contd.)
(3) (f) Material Contracts
(1) Employment Agreement with Leandro P. Rizzuto,
incorporated by reference to Exhibit No. 10 to the
Exhibit Volume filed with Amendment No. 2 to Conair
Acquisition Corporation's Registration Statement
Form S 1 No. 2-97868.
(2) Credit Agreement dated October 20, 1992 between the
Company and certain of its banks providing the Company
with a $20,000,000 Revolving Credit loan as described
in the Notes to Consolidated Financial Statements, Note
8 (H); and a $50,000,000 short-term trade finance line
facility, as more fully set forth in the Credit
Agreement incorporated by reference to the Company's
Form 10 K for the period ended December 31, 1992.
(3) Note Agreement dated October 20, 1992 between the
Prudential Insurance Company of America and the Company
whereby the Company received $50,000,000 upon issuance
to Prudential of Notes as more fully described in the
Notes to Consolidated Financial Statement, Notes 8 (E)
& (F) and incorporated by reference to the Company's
Form 10 K for the period ended December 31, 1992.
(4) Note Purchase Agreement dated October 20, 1992 between
the Company and Leandro P. Rizzuto whereby the Company
received $10,000,000 upon issuance to Rizzuto of a
$10,000,000 ten percent Subordinated Promissory Note
due April 27, 2003, incorporated by reference to the
Company's Form 10 K for the period ended December 31,
1992.
(5) English translation of original French language Stock
Purchase Agreement dated January 22, 1995 between the
Company and Jean-Pierre Feldblum. Incorporated by
reference to exhibits to the Company's current report
on Form 8 K (File No. 1-8919).
(6) English translation of original French language Stock
Purchase Agreement dated January 22, 1995 between the
Company and Financiere de l'Europe Occidentale.
Incorporated by reference to exhibits to the Company's
current report on Form 8 K (File No. 1-8919).
(7) English translation of original French language
amendment to Stock Purchase Agreement dated
February 18, 1995 between the Company and Financiere de
l'Europe Occidentale dated January 22, 1995.
Incorporated by reference to exhibits to the Company's
current report on Form 8 K (File No. 1-8919).
(8) Amended and Restated Credit Agreement by and among the
Company, Continental Conair Ltd., the Company's wholly-
owned Hong Kong subsidiary and the banks' signators
thereto dated October 1, 1994. Incorporated by
reference to exhibits to the Company's current report
on Form 8 K (File No. 1-8919).
(9) First Amendment to the Amended and Restated Credit
Agreement dated February 17, 1995. Incorporated by
reference to exhibits to the Company's current report
on Form 8 K (File No. 1-8919).
(10) Contract of Sale between Leandro P. Rizzuto and the
Company dated March 14, 1994. Incorporated by
reference to exhibits to the Company's Registration
Statement Form S 1 filed on March 27, 1995 (File No.
33-90648).
(11) Lease between the Company and Leandro P. Rizzuto dated
March 14, 1994. Incorporated by reference to exhibits
to the Company's Registration Statement Form S 1 filed
on March 27, 1995 (File No. 33-90648).
(12) Conair Corporation Employees and Directors Stock Plan.
Incorporated by reference to exhibits to the Company's
Registration Statement Form S 1 filed on March 27, 1995
(File No. 33-90648).
(3) (g) Subsidiaries of the Registrant
Affiliate Percentage Owned
Conair Consumer Products, Inc. (a Canadian Corporation) 100%
Continental Conair Limited (a Hong Kong Corporation) 100%
Conair Costa Rica, S.A. (a Costa Rica Corporation) 100%
Conair UK, Ltd. (a British Corporation) 100%
Babyliss, S.A. (a French Corporation) 100%
Cristal Gesellschaft fur Beteiligungen und 100%
Finanzierungen, S.A. (a Swiss Company)
Cuisinart-Sanyei Co., Ltd. (a Japanese Corporation) 50%
Continental Products, S.A. (a French Corporation) 50%
Rusk, Inc. (a California Corporation) 50%
HERC Consumer Products, LLC (an Illinois Limited 50%
Liability Company)
(3) (h) Financial data schedule annexed hereto as Exhibit 3(h).
(b) Reports on Form 8 K
The Company has not filed any reports on Form 8 K during the last
quarter of 1994.
(c) Exhibits required by Item 601 of Regulation S K
See Item 14(a) 3 above.
(d) Financial Statement Schedules required by Regulation S X which are
excluded from the 1994 Annual Report
See Item 14(a) 2 above.
CONAIR CORPORATION AND SUBSIDIARIES
Schedule II Valuation and Qualifying Accounts
Column A Column B Column C
Additions
(1) (2)
Charged to Charged to
Balance profit and loss other accounts
Description at beginning or income describe
Year Ended December 31, 1992
Allowance for doubtful
accounts $ 1,375,000 $ 425,000 $
Accrued sales returns $ 6,167,000 $13,663,000 $
Year Ended December 31, 1993
Allowance for doubtful
accounts $ 1,370,000 $ 727,000 $
Accrued sales returns $ 5,559,000 $12,132,000 $
Year Ended December 31, 1994
Allowance for doubtful
accounts $ 1,337,000 $ 427,000 $
Accrued sales returns $ 5,951,000 $20,175,000 $
CONAIR CORPORATION AND SUBSIDIARIES
Schedule II Valuation and Qualifying Accounts
Column A Column D Column E
Deductions
from
reserves
Description describe Balance at end
Year Ended December 31, 1992
Allowance for doubtful
accounts $ 430,000 (A) $ 1,370,000
Accrued sales returns $14,271,000 $ 5,559,000 (B)
Year Ended December 31, 1993
Allowance for doubtful
accounts $ 760,000 (A) $ 1,337,000
Accrued sales returns $11,740,000 $ 5,951,000 (B)
Year Ended December 31, 1994
Allowance for doubtful
accounts $ 306,000 (A) $ 1,458,000
Accrued sales returns $17,382,000 $ 8,744,000 (B)
(A) Accounts considered uncollectible and charged against
reserve - net recoveries and allowance for doubtful accounts
of discontinued operations.
(B) Deducted from accounts receivable.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Conair Corporation has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
CONAIR CORPORATION
/s/ Leandro P. Rizzuto
By: Leandro P. Rizzuto
Chairman of the Board
and President
/s/ Patrick P. Yannotta
By: Patrick P. Yannotta
Sr. Vice President Finance
/s/ James A. Porcelli
By: James A. Porcelli
Vice President
DATE: March 29, 1995 Corporate Controller
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ Melvin Braun March 29, 1995
Melvin Braun Director
/s/ John P. Lomenzo March 29, 1995
John P. Lomenzo Director
/s/ Maurice Lucas March 29, 1995
Maurice Lucas Executive Vice President
and Director
/s/ Walter Margulies March 29, 1995
Walter Margulies Director
/s/ Dave Sommer March 29, 1995
Dave Sommer Director
/s/ Uzi Zucker March 29, 1995
Uzi Zucker Directo
