<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED MARCH 31, 1994
COMMISSION FILE NUMBER 33-7264
FIRST BRANDS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 06-1171404
State of Incorporation (IRS Employer Identification No.)
83 Wooster Heights Rd., Building 301
P.O. Box 1911
Danbury, Connecticut 06813-1911
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 203-731-2300
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
YES X NO
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
CLASS Outstanding at March 31, 1994
Common Stock, $.01 par value 21,997,353 shares
<PAGE>
FIRST BRANDS CORPORATION
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Statements of Income
For the Three Month Periods
Ended March 31, 1994 and 1993 3
Consolidated Condensed Statements of Income
For the Nine Month Periods
Ended March 31, 1994 and 1993 4
Consolidated Condensed Balance Sheets -
March 31, 1994 and June 30, 1993 5
Consolidated Condensed Statement of Stockholders'
Equity - For the Nine Month Period
Ended March 31, 1994 6
Consolidated Condensed Statements of Cash
Flows - For the Nine Month Periods
Ended March 31, 1994 and 1993 7
Notes to Consolidated Condensed Financial
Statements 8-11
Item 2. Management's Discussion and Analysis
of Results of Operations and Financial Condition 12-14
Independent Accountants' Report 15
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 16
Items 2 - 6 16
SIGNATURE 17
</TABLE>
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<PAGE>
FIRST BRANDS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, MARCH 31,
1994 1993
<S> <C> <C>
(in thousands - except
per share amounts)
Net sales $ 244,364 $ 219,496
Cost of goods sold 152,807 137,622
Selling, general and
administrative expenses 60,311 54,961
Amortization and other depreciation 5,717 5,700
Interest expense 4,972 5,370
Discount on sale of receivables 1,035 948
Other income (expense), net (15) 239
Income before provision for income taxes 19,507 15,134
Provision for income taxes 8,120 6,202
Net income $ 11,387 $ 8,932
Net income per common share and common
equivalent share (Note 6): $ 0.51 $ 0.41
Weighted average common and common
equivalent shares outstanding (Note 6) 22,251 21,933
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS.
-3-
<PAGE>
FIRST BRANDS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
ENDED ENDED
MARCH 31, MARCH 31,
1994 1993
<S> <C> <C>
(in thousands - except
per share amounts)
Net sales $ 794,570 $ 756,511
Cost of goods sold 492,409 475,304
Selling, general and
administrative expenses 188,763 179,720
Amortization and other depreciation 17,613 15,734
Interest expense 15,636 17,553
Discount on sale of receivables 3,059 3,133
Other income (expense), net (303) 443
Income before provision for income taxes 76,787 65,510
Provision for income taxes 32,636 26,688
Net income $ 44,151 $ 38,822
Net income per common share and common
equivalent share (Note 6): $ 1.99 $ 1.78
Weighted average common and common
equivalent shares outstanding (Note 6) 22,138 21,868
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS.
-4-
<PAGE>
FIRST BRANDS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
(in thousands) 1994 1993
(UNAUDITED)
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 11,587 $ 11,672
Accounts and notes receivable - net 67,221 85,257
Inventories 161,978 177,148
Prepaid expenses 4,812 5,674
Total current assets 245,598 279,751
Property, plant and equipment (net of
accumulated depreciation of $84,717
and $69,570) 255,013 252,372
Patents, trademarks, proprietary technology
and other intangibles (net of accumulated
amortization of $189,594 and $177,621) 235,927 247,226
Deferred charges and other assets (net of
accumulated amortization of $47,822
and $45,078) 22,992 27,455
Total assets $ 759,530 $ 806,804
LIABILITIES AND STOCKHOLDERS' EQUITY:
Notes payable $ 8,231 $ 178
Current maturities of long-term debt 4,808 5,079
Accrued income and other taxes 25,675 26,035
Accounts payable 30,191 82,298
Accrued liabilities 118,982 130,535
Total current liabilities 187,887 244,125
Long-term debt 186,773 226,250
Deferred taxes payable 22,187 9,651
Deferred gain on sale of assets 5,819 7,107
Other long-term obligations 11,477 14,218
STOCKHOLDERS' EQUITY
Preferred stock, $1 par value, 10,000,000
shares authorized; none issued - -
Common stock, $0.01 par value,
50,000,000 shares authorized; issued
21,997,353 shares at March 31, 1994
and 21,827,878 shares at June 30, 1993 220 218
Capital in excess of par value 116,125 112,535
Cumulative foreign currency
translation adjustment (4,671) (1,690)
Retained earnings 233,713 194,390
Total stockholders' equity 345,387 305,453
Total liabilities
and stockholders' equity $ 759,530 $ 806,804
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS.
-5-
<PAGE>
FIRST BRANDS CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTH PERIOD ENDED MARCH 31, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
Cumulative
Capital Foreign
Common in Excess Currency
Stock of Par Translation Retained
(in thousands) Par Value Value Adjustment Earnings Total
<S> <C> <C> <C> <C> <C>
Balance as of
June 30, 1993 $218 $112,535 $(1,690) $194,390 $305,453
Exercise of
Stock Options 2 3,590 - - 3,592
Common Stock
Dividends - - - (4,828) (4,828)
Net Income - - - 44,151 44,151
Foreign Currency
Translation
Adjustment - - (2,981) - (2,981)
Balance as of
March 31, 1994 $ 220 $ 116,125 $ (4,671) $ 233,713 $ 345,387
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS.
-6-
<PAGE>
FIRST BRANDS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
ENDED ENDED
MARCH 31, MARCH 31,
(in thousands) 1994 1993
<S> <C> <C>
Cash flows from operating activities:
Net income $ 44,151 $ 38,822
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 31,227 27,784
Deferred income taxes 12,833 7,675
Change in non-cash current assets and liabilities:
Decrease in accounts receivable 19,099 17,209
Decrease (Increase) in inventories 15,412 (4,551)
Decrease in prepaid expenses 1,280 2,574
(Decrease) in accrued income and other taxes (752) (8,324)
(Decrease) in accounts payable (52,420) (49,003)
(Decrease) in accrued liabilities (12,187) (27,828)
Other changes (304) (2,171)
Total adjustments 14,188 (36,635)
Net cash provided by operating activities 58,339 2,187
Cash flows from investing activities:
Capital expenditures (21,778) (28,045)
Patents and other proprietary technology - (1,950)
Net cash (used) for investing activities (21,778) (29,995)
Cash flows from financing activities:
(Decrease) Increase in revolving credit
borrowings, net (15,500) 9,000
Increase in other borrowings, net 7,251 9,358
Repayment of term loan (23,569) (3,569)
Sale of accounts receivable, net - 10,000
Dividends paid (4,828) (2,828)
Net cash (used) provided by financing activities (36,646) 21,961
Net (Decrease) in cash and cash equivalents (85) (5,847)
Cash and cash equivalents at beginning of period 11,672 12,516
Cash and cash equivalents at end of period $ 11,587 $ 6,669
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS.
-7-
<PAGE>
FIRST BRANDS CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Basis of Presentation
In the opinion of management, the accompanying unaudited
consolidated condensed financial statements include all adjustments
(all of which were of a normal recurring nature) necessary to
fairly present the results of operations for the interim periods.
Certain prior year amounts have been reclassified to conform with
the current year's presentation. All material intercompany
transactions and balances have been eliminated. Due to the
seasonal nature of some of its product lines, primarily in the
Company's antifreeze/coolant business, the sales of which are
concentrated in the first half of the Company's fiscal year, the
results of operations for the nine month period ended March 31,
1994 and the balance sheet at March 31, 1994 are not indicative of
the results for a full year.
First Brands Corporation ("First Brands" or the "Company") is
engaged in the development, manufacture, marketing and sales of
consumer products under branded and private labels. Principal
branded products include: GLAD and GLAD-LOCK (plastic wrap and
bags), PRESTONE (antifreeze/coolant and car care products), STP
(oil and fuel treatment and other specialty automotive products);
SIMONIZ (car waxes and polishes) and SCOOP AWAY and EVER CLEAN
(clumping cat litter products).
Accounting Changes
The Company provides certain medical and life insurance benefits
for retirees and their eligible dependents. Employees who have
reached the age of 55, and have met the Company's minimum service
requirements, become eligible for these benefits. The medical and
life insurance benefits available are partially contributory in
nature, and it is the Company's practice to fund these benefits as
incurred. Effective July 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 106 -Employers' Accounting for
Postretirement Benefits Other than Pensions (SFAS No. 106). SFAS
No. 106 requires that companies accrue the projected future cost of
providing postretirement benefits during the period that employees
render the services necessary to be eligible for such benefits.
The Company has elected to recognize the cumulative effect of the
change to SFAS No. 106 by amortizing the transition obligation of
$16,767,000 over 20 years. While the adoption of this standard
does have an impact on the Company's reported net income, it does
not impact First Brand's cash flow because the Company intends to
continue its current practice of paying the cost of postretirement
benefits as incurred.
The Company's accumulated postretirement benefit obligation (the
transition obligation) at July 1, 1993 is comprised of the
following components (in thousands):
<PAGE>
Accumulated postretirement benefit obligations:
<TABLE>
<S> <C>
Retirees $ (8,656)
Fully eligible active plan participants (2,506)
Active plan participants not fully eligible (5,605)
Total (16,767)
Unrecognized transition obligation 16,767
Net amount recognized in balance sheet $ 0
</TABLE>
The components of the Company's net periodic postretirement benefit
cost for the three and nine months ended March 31, 1994 were as
follows (in thousands):
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
March 31, 1994 March 31, 1994
<S> <C> <C>
Service cost - benefits earned $ 95 $ 285
Interest cost on accumulated
postretirement benefit obligation 327 981
Amortization of transition obligation 210 630
Net periodic postretirement
benefit cost $ 632 $ 1,896
</TABLE>
The discount rate used in determining the accumulated
postretirement benefit obligation was 8%. The assumed health care
cost trend rate used to measure the accumulated postretirement
benefit obligation was 13%, trending down 1% per year after fiscal
year 1995 to an ultimate rate of 7% in fiscal year 2001. A
one-percentage-point increase in the assumed health care cost trend
rate for each year would increase the accumulated postretirement
benefit obligation as of July 1, 1993 by approximately $750,000 and
would have increased the postretirement benefit expense for the
nine month period ended March 31, 1994 by approximately $90,000.
Change in Accounting Estimate
As a result of the trend of declining long-term interest rates, the
Company remeasured its pension obligation during October of 1993.
The requirement of Financial Accounting Standards Board Statement
No. 87 - Employers' Accounting for Pensions (SFAS No. 87) to adjust
the discount rate in line with current and expected to be available
interest rates on high quality fixed-income bonds has resulted in
a decision by the Company to reduce its assumed discount rate from
9.0%, which was used at June 30, 1993, to a rate of 8.0%. In
addition, the Company has also reduced its expected long-term rate
of return on plan assets from 10.0% to 9.5% and its expected rate
of increase in future compensation levels from 4.75% to 4.5%.
Based upon these revised assumptions, the Company's projected
benefit obligation increased by $8,400,000, and the Company's
annual pension cost increased by $800,000.
<PAGE>
Inventories
Inventories were comprised of:
<TABLE>
<CAPTION>
March 31, June 30,
1994 1993
<S> <C> <C>
(in thousands)
Raw materials . . . . . . . . . . $ 24,219 $ 28,344
Work-in-process . . . . . . . . . 6,318 5,272
Finished goods. . . . . . . . . . 131,441 143,532
Total . . . . . . . . . . . . $ 161,978 $ 177,148
</TABLE>
2. Long-term Debt
First Brands had long-term debt outstanding as of March 31, 1994
and June 30, 1993 as follows:
<TABLE>
<CAPTION>
March 31, June 30,
1994 1993
(in thousands)
<S> <C> <C>
Senior Debt:
$165,000,000 Revolving Credit Facility,
4 year term expiring June, 1995,
interest at prime rate, LIBOR plus
3/4% or CD rate plus 7/8%; commitment
fee of .35% on unused portion $ 30,000 $ 45,500
10 year Term Loan, expiring
November, 2001, interest at 90 day
LIBOR plus 2% 12,123 35,692
Other 4,458 5,137
46,581 86,329
Less: current maturities (4,808) (5,079)
Senior Debt 41,773 81,250
Subordinated Debt:
9 1/8% Senior Subordinated Notes Due 1999 100,000 100,000
13 1/4% Subordinated Notes Due 2001 45,000 45,000
Subordinated Debt 145,000 145,000
Total Long Term Debt $ 186,773 $ 226,250
</TABLE>
The Revolving Credit Facility has no compensating balance
requirements, however it does have restrictive covenants, the most
significant of which include the maintenance of certain minimum
levels for the ratio of current assets to current liabilities,
interest coverage and the ratio of total liabilities to equity.
In accordance with provisions set forth in the Term Loan agreement,
the Company exercised it's right to prepay a portion of the
outstanding balance. On March 1, 1994, the Company prepaid
$20,000,000 of the Term Loan principal.
The 13 1/4% Subordinated Note Purchase Agreement (the "Note
Purchase Agreement") requires the principal amount to be paid in
annual installments, subject to reduction for prior repurchases, of
$9,000,000 on July 1, 1997 and on each July 1 thereafter through
the year 2001. The 9 1/8% Notes contain limitations on the
Company's right to incur additional debt. Both the 9 1/8% Notes
<PAGE>
Indenture and the Note Purchase Agreement have restrictive
covenants or limitations on the payment of dividends, the
distribution of capital stock or the redeeming of capital stock, as
well as limitations on Company and subsidiary debt and limitations
on the sale of assets.
First Brands was in compliance with all the covenants of all debt
agreements at March 31, 1994.
3. Accounts Receivable
In May 1992, the Company entered into a $100,000,000 extendable
three year agreement to sell fractional ownership interest, without
recourse, in a defined pool of eligible trade accounts receivable.
As of March 31, 1994 the entire $100,000,000 had been sold. The
amounts sold are reflected as a reduction in accounts receivable on
the accompanying balance sheet. The costs associated with this
program are recorded on the Consolidated Condensed Statement of
Income as "Discount on sale of receivables".
4. Notes Payable
Notes payable at March 31, 1994 of $8,231,000 consisted of a
$7,900,000 unsecured domestic line of credit and international
subsidiaries' working capital borrowings with local lenders. The
Company's international working capital credit facilities
aggregated $19,529,000 at March 31, 1994 and are generally secured
by the assets of the respective international subsidiary, with
approximately $1,475,000 of the availability at one subsidiary
being guaranteed by First Brands Corporation (U.S.).
5. Taxes
The provision for income taxes for the three and nine months ended
March 31, 1994 and 1993 consists of the following:
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
March 31, March 31,
1994 1993 1994 1993
(in thousands)
<S> <C> <C> <C> <C>
Current:
Federal . . . . . . . . $ 3,019 $ 1,305 $ 13,956 $ 13,127
State . . . . . . . . . 714 257 3,191 3,070
Foreign . . . . . . . . 794 754 2,656 2,816
Total current . . . 4,527 2,316 19,803 19,013
Deferred:
Federal . . . . . . . . 2,998 3,787 10,776 6,958
State . . . . . . . . . 685 210 2,317 966
Foreign . . . . . . . . (90) (111) (260) (249)
Total deferred. . . 3,593 3,886 12,833 7,675
Total Provision $ 8,120 $ 6,202 $ 32,636 $ 26,688
</TABLE>
<PAGE>
In August 1993, the U.S. Congress enacted legislation which
increased the corporate federal income tax rate from 34% to 35%,
retroactive to January 1, 1993. As a result of the increased rate,
tax expense for the first quarter was increased by $980,000
reflecting the net impact of remeasuring the Company's June 30,
1993 deferred tax assets and liabilities, and current taxes
payable.
6. Earnings Per Share
Net income per share has been computed using the weighted average
number of common shares and common share equivalents outstanding
for the periods.
<PAGE>
FIRST BRANDS CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The following discussion and analysis of the consolidated results
of operations for the three and nine month periods ended March 31,
1994 should be read in conjunction with the accompanying unaudited
Consolidated Condensed Financial Statements and related Notes. The
Company is primarily engaged in the development, manufacture,
marketing and sale of branded and private label consumer products
for the home and automotive markets. The Company's products which
include "GLAD", "GLAD-LOCK" "PRESTONE", "STP", "SIMONIZ", "SCOOP
AWAY" and "EVER CLEAN" can be found in large mass merchandise
stores, chain supermarkets and other retail outlets. The Company
believes that the significant market positions occupied by its
products are attributable to brand name recognition, comprehensive
product offerings, continued product innovation, strong emphasis on
vendor support and aggressive advertising and promotion.
Because of the seasonality in some of its product lines, primarily
in the Company's antifreeze/coolant business, the sales of which
are concentrated in the first half of the Company's fiscal year,
the results of operations for any interim period and the balance
sheet as of the end of any interim period are not indicative of a
full year's operations nor the financial condition of First Brands
at the end of any subsequent period.
Results of Operations
The following table sets forth the percentages of net sales of the
Company represented by the components of income and expense for the
three and nine month periods ended March 31, 1994 and 1993.
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
March 31, March 31,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net sales . . . . . . . . . . 100.0% 100.0% 100.0% 100.0%
Cost of goods sold. . . . . . 62.5 62.7 62.0 62.8
Gross profit. . . . . . . . . 37.5 37.3 38.0 37.2
Selling, general, and
administrative expenses . . 24.7 25.0 23.8 23.8
Amortization and
other depreciation......... 2.4 2.6 2.2 2.2
Interest expense. . . . . . . 2.0 2.5 1.9 2.3
Discount on sale of receivables 0.4 0.4 0.4 0.4
Other income (expense), net . (0.0) 0.1 (0.0) 0.1
Income before provision
for income taxes 8.0 6.9 9.7 8.6
Provision for income taxes. . 3.3 2.8 4.1 3.5
Net income. . . . . . . . . . 4.7% 4.1% 5.6% 5.1%
</TABLE>
<PAGE>
Quarter and Nine Months ended March 31, 1994 Compared to the
Quarter and Nine Months ended March 31, 1993
First Brands' consolidated sales for the three month period ended
March 31, 1994 were $244,364,000, 111% of last year's $219,496,000,
bringing nine month revenues to $794,570,000, 105% of last year's
$756,511,000. Total sales for the quarter and nine months were
above last year in all major categories. For the quarter,
increased sales dollars and quantities were reported for all major
categories of plastic wrap and bags, antifreeze/coolants and cat
litter. Due to the unusually cold weather during the third
quarter, antifreeze sales were up significantly over the prior
year. Sales of other automotive products, including STP products,
on a dollar basis, were above the prior year's level due to
increasing demand and the favorable effect of winter weather on
certain products. Year to date, strong sales of GLAD-LOCK zipper
bags offset slightly lower sales of non-zipper plastic wrap and bag
products. For the three and nine months ended March 31, higher
antifreeze/coolant volumes were partially offset by reduced selling
prices reflecting the Company's previously announced low price
marketing program.
Cost of goods sold for the three and nine month periods,
respectively, were $152,807,000, 111% of last year's and
$492,409,000, 104% of last year. Higher sales volumes for the
third quarter resulted in an increase in the cost of goods sold.
The higher costs were partially offset by lower raw material costs,
a more favorable product mix and lower manufacturing costs. Year
to date, the increased costs resulted from the increased sales
volumes, which were offset by lower manufacturing and raw material
costs and a reduction in the Company's rent expense, due to
renegotiated rental agreements.
Gross profit for the quarter of $91,557,000 (37.5% of sales) was
112% of last year's $81,874,000 (37.3% of sales). For the nine
month period, gross profit of $302,161,000 (38.0% of sales) was
107% of last year's $281,207,000 (37.2% of sales). The higher gross
profit dollars and margin, for the quarter and nine months, are due
to the increase in sales, enhanced production efficiencies, a
favorable sales mix of STP and plastic wrap and bag products, the
benefit from the aforementioned reduction in raw material costs and
the renegotiated rental agreements.
Selling, general and administrative expenses were $60,311,000 and
$188,763,000 for the three and nine months, respectively, 110% and
105% of the comparable periods last year. The higher expenditures
in both periods primarily reflects increased consumer promotion
spending in the plastic wrap and bag, STP and cat litter business.
The Company's antifreeze/coolant marketing program has partially
offset these higher selling expenditures due to the elimination of
certain consumer rebate programs in exchange for lower selling
prices.
<PAGE>
Amortization and other depreciation expense of $5,717,000, was 100%
of last year's three month period, and $17,613,000, 112% of last
year's nine month period. The increase year to date, principally
reflects the write-down of certain fixed assets expected to be sold
this year. Interest expense of $4,972,000 and $15,636,000 for the
three and nine month periods, respectively, was 93% and 89% of
prior year levels due to lower debt levels and reduced rates.
Discount on sale of receivables reflects the costs associated with
the sale of a fractional ownership interest, without recourse, in
a defined pool of the Company's eligible trade accounts receivable.
In August 1993, the U.S. Congress enacted legislation which
increased the corporate federal income tax rate from 34% to 35%,
retroactive to January 1, 1993. The Company's provision for income
taxes for the third quarter was $8,120,000, 131% of last year's
$6,202,000. Year-to-date, the provision for income taxes was
$32,636,000, 122% of last year's $26,688,000. The increased tax
expense reflects higher pre-tax income, along with the higher
effective tax rate. Year-to-date, tax expense reflects the net
impact that the new tax rate had on the Company's June 30, 1993
deferred tax assets and liabilities, and current taxes payable.
Financial Condition
Worldwide credit facilities in place at March 31, 1994 aggregated
$195,122,000 of which $156,298,000 was available, but unused. The
Company does not expect to borrow significantly beyond its current
debt level over the next twelve months.
The Company's current forecast for the 1994 fiscal year reflects
capital expenditures of approximately $40,000,000 and fixed
payments (interest, principal, discount on sale of receivables and
lease payments) of approximately $75,000,000.
Based on the Company's ability to generate funds from operations
and the availability of credit under its financing facilities,
management believes it will have the funds necessary to meet all of
its described financing requirements and all other financial
obligations.
REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
First Brands' independent certified public accountants have made a
limited review of the financial information furnished herein in
accordance with standards established by the American Institute of
Certified Public Accountants. The Independent Accountants' Report
is presented on Page 15 of this report.
<PAGE>
Independent Accountants' Report
The Board of Directors
First Brands Corporation:
We have reviewed the consolidated condensed balance sheet of First
Brands Corporation and subsidiaries as of March 31, 1994, and the
related consolidated condensed statements of income for the three
and nine-month periods ended March 31, 1994 and 1993 and the
consolidated condensed statements of cash flows for the nine-month
periods ended March 31, 1994 and 1993, and the consolidated
condensed statement of stockholders' equity for the nine month
period ended March 31, 1994. These financial statements are the
responsibility of the company's management.
We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants. A review
of interim financial information consists principally of applying
analytical procedures to financial data and making inquiries of
persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the consolidated condensed financial
statements referred to above for them to be in conformity with
generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of First Brands
Corporation and subsidiaries as of June 30, 1993, and the related
consolidated statement of income, stockholders' equity, and cash
flows for the year then ended (not presented herein); and in our
report dated August 11, 1993, we expressed an unqualified opinion
on those consolidated financial statements. In our opinion, the
information set forth in the accompanying consolidated condensed
balance sheet as of June 30, 1993, is fairly presented, in all
material respects, in relation to the consolidated balance sheet
from which it has been derived.
/s/ KPMG PEAT MARWICK
KPMG Peat Marwick
New York, New York
May 3, 1994
<PAGE>
<TABLE>
<S> <C>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
A. Exhibit Index:
Exhibit 15 - Accountants' Acknowledgement
B. Reports on Form 8-K
None.
</TABLE>
<PAGE>
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.
FIRST BRANDS CORPORATION
(Registrant)
Date: May 9th, 1994 By: /s/ DONALD A. DESANTIS
Donald A. DeSantis
Chief Financial Officer
(Principal Accounting
and Duly Authorized
Officer)
<PAGE>
Exhibit 15
Accountants' Acknowledgement
First Brands Corporation
83 Wooster Heights Road
Danbury, CT 06813-1911
Gentlemen:
Re: Form S-8 Registration Statements No. 33-35770 and No. 33-56992
With respect to the subject registration statements, we acknowledge
our awareness of the use therein of our reports dated November 8,
1993, February 1, 1994 and May 3, 1994 related to our review of
interim financial information.
Pursuant to Rule 436 (c) under the Securities Act of 1933, such
reports are not considered a part of a registration statement
prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of sections 7 and 11
of the Act.
Very truly yours,
/s/ KPMG PEAT MARWICK
KPMG Peat Marwick
New York, New York
May 3, 1994
