<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the period ended June 29, 1997
-----------------------------------------------------------
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from _______________________ to ____________________
Commission File Number: 0-19912
---------------------------------------------------------
Signature Brands USA, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 36-3635286
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7005 Cochran Road, Glenwillow, Ohio 44139-4312
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(216) 542-4000; after August 16, 1997 (440) 542-4000
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
24700 Miles Road, Bedford Heights, Ohio 44146-1399
- --------------------------------------------------------------------------------
(Former Address)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section l3 or l5(d) of the Securities Exchange Act of l934 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
----- -----
As of July 31, 1997, the issuer had 9,080,534 shares of common stock
outstanding.
<PAGE> 2
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the period ended June 29, 1997
-----------------------------------------------------------
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from _______________________ to ____________________
Commission File Number: 33-80000
---------------------------------------------------------
Signature Brands, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 36-3330781
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7005 Cochran Road, Glenwillow, Ohio 44139-4312
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(216) 542-4000; after August 16, 1997 (440) 542-4000
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
24700 Miles Road, Bedford Heights, Ohio 44146-1399
- --------------------------------------------------------------------------------
(Former Address)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section l3 or l5(d) of the Securities Exchange Act of l934 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
----- -----
The Registrant is a wholly-owned subsidiary of Signature
Brands USA, Inc. Accordingly, none of its equity securities are owned by
non-affiliates.
<PAGE> 3
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SIGNATURE BRANDS USA, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
June 29 September 29
1997 1996
----------------------- -----------------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets
Cash $ 1,270 736
Trade accounts receivable, net 45,843 57,960
Inventories 38,262 43,626
Deferred income taxes 5,206 5,206
Other current assets 992 1,479
----------------------- -----------------------
Total current assets 91,573 109,007
Property, plant and equipment, net 17,101 18,522
Other assets
Excess of cost over fair value
of net assets acquired, net 136,878 139,830
Deferred financing costs, net 3,937 4,579
Other 1,496 1,552
----------------------- -----------------------
Total other assets 142,311 145,961
----------------------- -----------------------
Total assets $ 250,985 273,490
======================= =======================
</TABLE>
(Continued)
2
<PAGE> 4
SIGNATURE BRANDS USA, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
June 29 September 29
1997 1996
-------------- -----------
(Unaudited)
<S> <C> <C>
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $ 7,500 6,000
Accounts payable 18,231 22,851
Accrued liabilities 19,805 19,542
--------- ---------
Total current liabilities 45,536 48,393
Long-term debt
Revolving credit facility 26,300 41,600
Term note 54,008 60,250
Senior subordinated notes 68,848 68,681
--------- ---------
Total long-term debt 149,156 170,531
Product liability 3,270 3,516
Other 3,717 2,043
--------- ---------
Total liabilities 201,679 224,483
Stockholders' equity
Common stock, par value $.01 per share;
authorized 20,000 shares; issued and
outstanding 9,080 shares 91 91
Paid-in capital 51,772 51,772
Warrants 1,773 1,773
Accumulated deficit (4,330) (4,629)
--------- ---------
Total stockholders' equity 49,306 49,007
--------- ---------
Total liabilities and stockholders' equity $ 250,985 273,490
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 5
SIGNATURE BRANDS USA, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Thirteen weeks ended Thirty-nine weeks ended
----------------------- ------------------------
June 29 June 30 June 29 June 30
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $ 64,194 59,339 213,255 213,021
Operating costs and expenses
Cost of goods sold 44,176 40,328 147,565 145,729
Selling, general and
administrative expenses 14,453 14,041 48,298 44,929
Amortization of intangible assets 984 1,000 2,952 3,000
-------- -------- -------- --------
Total operating costs and expenses 59,613 55,369 198,815 193,658
-------- -------- -------- --------
Operating income 4,581 3,970 14,440 19,363
Interest expense 4,484 4,637 14,041 14,451
Other income (101) (94) (349) (260)
-------- -------- -------- --------
Income (loss) before income taxes 198 (573) 748 5,172
Income tax (benefit) expense 123 (355) 449 3,403
-------- -------- -------- --------
Net income (loss) $ 75 (218) 299 1,769
======== ======== ======== ========
Net income (loss) per share $ 0.01 (0.02) 0.03 0.20
======== ======== ======== ========
Weighted average shares outstanding 9,080 9,071 9,080 9,071
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 6
SIGNATURE BRANDS USA, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Thirty-nine weeks ended
-----------------------
June 29 June 30
1997 1996
-------- --------
<S> <C> <C>
Cash flows from operating activities
Net income $ 299 1,769
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation and amortization
of plant and equipment 5,189 4,418
Loss on asset write-offs and disposals - 106
Amortization of intangible assets 2,952 3,000
Amortization of deferred financing costs 642 643
Accretion of debt discount 168 168
Changes in
Accounts receivable 12,117 8,530
Inventories 5,364 7,132
Other assets 543 1,050
Accounts payable (4,620) (11,564)
Accrued liabilities 263 2,105
Noncurrent liabilities 1,428 (583)
-------- --------
Net cash provided by operating activities 24,345 16,774
-------- --------
Cash flows from investing activities
Capital expenditures (3,768) (2,910)
-------- --------
Net cash used in investing activities (3,768) (2,910)
-------- --------
Cash flows from financing activities
Proceeds from revolving credit facility 46,700 52,800
Repayments of revolving credit facility (62,000) (62,600)
Repayment of long-term debt (4,743) (3,750)
-------- --------
Net cash used in financing activities (20,043) (13,550)
-------- --------
Increase in cash 534 314
Cash at beginning of the period 736 835
-------- --------
Cash at end of the period $ 1,270 1,149
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for
Interest $ 11,024 11,453
Income taxes 1,890 3,454
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 7
SIGNATURE BRANDS USA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
(1) Basis of Presentation
---------------------
The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiary. All significant intercompany
accounts and transactions are eliminated in consolidation.
In the opinion of management, the information furnished herein includes
all adjustments of a normal recurring nature that are necessary for a
fair presentation of results for the interim periods shown in
accordance with generally accepted accounting principles. The unaudited
interim consolidated financial statements have been prepared using the
same accounting principles that were used in preparation of the
Company's annual report on Form 10-K for the year ended September 29,
1996, and should be read in conjunction with the consolidated financial
statements and notes thereto. Because of the seasonal nature of the
small appliance and consumer scale industries, the results of
operations for the interim period are not necessarily indicative of
results for the full fiscal year.
(2) Inventories
-----------
The components of inventories are as follows:
<TABLE>
<CAPTION>
June 29 September 29
1997 1996
----------- -----------
<S> <C> <C>
Inventories at FIFO cost
Raw materials and purchased parts $12,940 13,446
Finished goods 24,733 29,591
------- -------
37,673 43,037
Excess of LIFO cost over FIFO 589 589
------- -------
Inventories $38,262 43,626
======= =======
</TABLE>
Work-in-process inventories are not significant and are included with
raw materials. Inventories accounted for under the last-in, first-out
(LIFO) method represent 61 percent and 62 percent of inventories at
June 29, 1997 and September 29, 1996, respectively.
6
<PAGE> 8
SIGNATURE BRANDS USA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
(3) Condensed Consolidated Financial Information
--------------------------------------------
Condensed consolidated financial information for Signature Brands, Inc.
at June 29, 1997 and September 29, 1996, and for the thirteen-week and
thirty-nine-week periods ended June 29, 1997 and June 30, 1996 is as
follows:
<TABLE>
<CAPTION>
June 29 September 29
1997 1996
------------ -----------
<S> <C> <C>
Current assets $ 91,573 109,007
Noncurrent assets 159,412 164,483
--------- ---------
Total assets $ 250,985 273,490
========= =========
Current liabilities $ 45,536 48,393
Noncurrent liabilities 156,143 176,090
Intercompany payables 47,658 47,658
--------- ---------
Total liabilities 249,337 272,141
Stockholder's equity
Common stock - $1.00 stated value; authorized 850 shares; issued and
outstanding 100 shares in 1997 and $.01 par value; authorized and
outstanding 1,000,000 shares in 1996 - 10
Paid-in capital 2,811 2,821
Accumulated deficit (1,472) (1,173)
--------- ---------
Total stockholder's equity 1,349 1,648
--------- ---------
Total liabilities and stockholder's equity $ 250,985 273,490
========= =========
</TABLE>
<TABLE>
<CAPTION>
Thirteen-week period ended Thirty-nine-week period ended
-------------------------------- -----------------------------------
June 29 June 30 June 29 June 30
1997 1996 1997 1996
------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
Net sales $ 64,194 59,339 213,255 213,021
Gross profit 20,018 19,011 65,690 67,292
Net income (loss) 75 (218) 299 1,769
</TABLE>
7
<PAGE> 9
SIGNATURE BRANDS USA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
(4) Name Change
-----------
On March 6, 1997, the stockholders of the Company approved an amendment
to the Company's Certificate of Incorporation to change the name of the
Company to "Signature Brands USA, Inc." In view of the Company's name
change, on April 30, 1997, Health o meter, Inc. the Company's operating
subsidiary, was merged with and into a wholly-owned subsidiary of the
Company, Signature Brands, Inc., an Ohio corporation, formed by the
Company solely for the purpose of changing the name of Health o meter,
Inc. to "Signature Brands, Inc."
8
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
COMPANY OVERVIEW
- ----------------
Signature Brands USA, Inc. (the "Company") is a holding
company which, through its wholly owned subsidiary, Signature Brands, Inc.
("Signature Brands"), designs, manufactures, markets, and distributes a
comprehensive line of consumer and professional products. The Company's consumer
products, marketed under the Mr. Coffee(R) and Health o meter(R) brand names
include automatic drip coffeemakers, teamakers, filters, water filtration
products, accessories, and other kitchen counter top appliances as well as bath,
kitchen, and diet scales and therapeutic devices. Professional products include
the Pelouze(R) and Health o meter(R) brands of office, food service and medical
scales.
RESULTS OF OPERATIONS
- ---------------------
THIRTEEN WEEKS ENDED JUNE 29, 1997 AND JUNE 30, 1996
Overview. Net sales in the third quarter of fiscal 1997
increased approximately 8.2 percent to $64.2 million, compared with $59.3
million for the same period in fiscal 1996. The Company's gross profit in the
third quarter of fiscal 1997 was $20.0 million, or approximately 31.2 percent of
net sales, compared with $19.0 million, or approximately 32.0 percent of net
sales in the same period in fiscal 1996.
Net Sales and Gross Profit
Consumer Products Division. In the third quarter of 1997, the
Consumer Products Division's net sales were $54.3 million compared with $50.3
million in 1996, an increase of 7.9 percent. The increase in net sales was
primarily attributable to increased sales of coffeemakers, consumer scales and
water filtration products somewhat offset by reduced filter and hot teamaker
sales.
The Consumer Products Division's gross profit in the third
quarter of 1997 increased 5.1 percent to $16.8 million from $16.0 million in
1996. The gross profit margin was 30.9 percent of net sales in 1997, compared
with 31.8 percent in 1996. The Consumer Products Division experienced reduced
margins because the mix of teamaker sales shifted toward lower margin
promotional products.
Historically, gross profit margins on individual product lines
have been greatest near the point of introduction, gradually decreasing as the
product matures and becomes subject to pricing pressure. There continues to be
intense pressure on retail prices and there can be no assurance as to the
Company's ability to achieve price increases or maintain current price levels in
the future. For these reasons, the Company continues its efforts to introduce
new products and to reduce the cost of existing products as a means of
protecting margins.
9
<PAGE> 11
Professional Products Division. In the third quarter of 1997,
the Professional Products Division's net sales increased 9.9 percent to $9.9
million compared with $9.0 million in 1996. The Company experienced increased
sales across all of its distribution channels. The Professional Products
Division's gross profit was $3.4 million, or 34.8 percent of net sales, in the
third quarter of 1997, compared with $3.0 million, or 33.6 percent of net sales,
in 1996. The margin improvement resulted from increased margins due to lower
defective product rates primarily for office products, offset in part by reduced
margins for commercial products.
Selling, General and Administrative Expenses. Selling, general
and administrative expenses ("SG&A") for the third quarter of fiscal 1997
totaled $14.5 million, or approximately 22.5 percent of net sales, compared
with $14.0 million, or approximately 23.7 percent of net sales, for the third
quarter of fiscal 1996. SG&A as a percent of net sales declined in the current
period because fixed general and administrative costs are being measured against
a larger net sales amount.
Amortization of Intangible Assets. The amortization of
intangible assets relates primarily to intangible assets associated with the
acquisition by the Company of Mr. Coffee, inc. on August 17, 1994 ("the
Acquisition").
Interest Expense. Net interest expense for the third quarter
of fiscal 1997 was approximately $4.5 million, compared with $4.6 million for
the same period in the prior year. The decrease in interest expense is
attributable to lower overall borrowings offset in part by higher interest
rates.
Income Taxes. The effective tax rate was 62.1 percent for the
third quarter of fiscal 1997, compared with an effective tax rate benefit of
62.0 percent in 1996. Expenses not deductible for tax purposes, primarily the
amortization of intangible assets associated with the Acquisition, resulted in
an effective tax rate significantly higher than the statutory tax rate in both
periods.
Net Income. Based on the foregoing, the Company experienced
net income of $0.1 million in the third quarter of fiscal 1997 compared with a
net loss of $0.2 million in 1996.
THIRTY-NINE WEEKS ENDED JUNE 29, 1997 AND JUNE 30, 1996
Overview. Net sales in the first nine months of fiscal 1997
increased approximately 0.1 percent to $213.3 million, compared with $213.0
million for the same period in fiscal 1996. The Company's gross profit in the
first nine months of fiscal 1997 was 65.7 million, or approximately 30.8 percent
of net sales, compared with $67.3 million, or approximately 31.6 percent of net
sales in the same period in fiscal 1996.
Net Sales and Gross Profit
Consumer Products Division. In the first nine months of 1997,
the Consumer Products Division's net sales were $183.3 million compared with
$186.2 million in 1996, a decrease of 1.5 percent. The decrease in net sales was
primarily attributable to reduced teamaker and filter sales somewhat offset by
increased sales of coffeemakers, therapeutic devices and
10
<PAGE> 12
consumer scales. The Consumer Products Division's gross profit in the first nine
months of 1997 decreased 4.2 percent to $55.3 million from $57.7 million in
1996. The gross profit margin was 30.1 percent of net sales in 1997, compared
with 31.0 percent in 1996. The decrease in gross profit as a percent of sales
was primarily the result of a reduction in high margin teamaker sales.
Professional Products Division. In the first nine months of
1997, the Professional Products Division's net sales increased 11.6 percent to
$29.9 million compared with $26.8 million in 1996. The Company experienced
increased sales in the first nine months of 1997 across all distribution
channels. The Professional Products Division's gross profit was $10.2 million,
or 34.1 percent of net sales, in the first nine months of 1997, compared with
$9.6 million, or 36.0 percent of net sales, in 1996. The decrease in gross
margin as a percent of sales was primarily attributable to reduced margins in
the international and commercial distribution channels.
Selling, General and Administrative Expenses. Selling, general
and administrative expenses ("SG&A") for the first nine months of fiscal 1997
totalled $48.3 million, or approximately 22.6 percent of net sales, compared
with $44.9 million, or approximately 21.1 percent of net sales, for the first
nine months of fiscal 1996. The increase in SG&A as a percentage of net sales is
mainly attributable to increased national advertising expenditures primarily to
support the marketing of teamaker and water filtration products.
Amortization of Intangible Assets. The amortization of
intangible assets relates primarily to intangible assets associated with the
Acquisition.
Interest Expense. During the first nine months of fiscal 1997
net interest expense was approximately $14.0 million, compared with $14.5
million in the same period of fiscal 1996. The decrease in interest expense is
attributable to lower overall borrowings offset in part by higher interest
rates.
Income Taxes. In the first nine months of fiscal 1997 and 1996
the effective tax rate was 60.0 percent and 65.8 percent, respectively. Expenses
not deductible for tax purposes, primarily the amortization of intangible assets
associated with the Acquisition, resulted in an effective tax rate significantly
higher than the statutory tax rate in both periods.
Net Income. Based on the foregoing, the Company experienced
net income of approximately $0.3 million and $1.8 million in the first nine
months of fiscal 1997 and 1996, respectively.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company's primary sources of liquidity are internally
generated cash and borrowings under a Credit Agreement among Signature Brands
and a group of Banks represented by Banque Nationale de Paris, New York Branch
("BNP") as agent and as issuer of letters of credit, ("the Bank Credit
Agreement") entered into in connection with the Acquisition.
11
<PAGE> 13
Cash flow activity for the first nine months of fiscal 1997
and 1996 is presented in the Consolidated Statements of Cash Flows. During the
first nine months of fiscal 1997, the Company generated approximately $24.3
million in cash flow from operating activities. Net income plus non-cash charges
provided approximately $9.3 million. Changes in working capital components
generated approximately $15.0 million in fiscal 1997, compared with $6.7 million
during the first nine months of fiscal 1996 as a result of improved working
capital management. The decrease in accounts receivable and inventories, which
generated approximately $17.5 million, was offset partially by a reduction in
accounts payable, which required $4.6 million, and is attributable to seasonal
factors.
The Company's business is seasonal, with a large portion of
its sales and earnings generated in the first fiscal quarter of the year. During
fiscal 1996, the Company generated approximately 34 percent of its annual net
sales in this quarter.
The Company's aggregate capital expenditures during the first
nine months of fiscal 1997 were approximately $3.8 million. The Company
anticipates making $2.4 million of capital expenditures for the remainder of
fiscal 1997. These capital expenditures relate primarily to new product tooling,
information systems and production equipment. Management plans to fund these
capital expenditures with available cash, cash flow from operations and, if
necessary, borrowings under the revolving credit facility provided under the
Bank Credit Agreement.
Indebtedness incurred in connection with the Acquisition has
significantly increased the Company's cash requirements and imposes various
restrictions on its operations. The Acquisition and related transactions were
financed with approximately $98 million in borrowings under the Bank Credit
Agreement, approximately $70 million in proceeds from a unit offering of 13%
senior subordinated notes due 2002, (the "Notes") and warrants to purchase
shares of Common Stock at a price of $6.25 per share, and approximately $17.2
million in net proceeds received from the exercise of certain transferable
rights to purchase 3,543,433 shares of Common Stock issued to the stockholders
of the Company. The Notes are generally not redeemable at the option of the
Company until August 15, 1999. For more detailed information, see the Company's
Annual Report on Form 10-K for the year ended September 29, 1996.
The Bank Credit Agreement includes a $75.0 million term loan
facility, which is subject to amortization on a quarterly basis in aggregate
annual amounts of $6.0 million, $8.75 million, $17.5 million, $15.0 million and
$19.0 million during fiscal 1997 through fiscal 2001, respectively, and a $60.0
million revolving credit facility. Signature Brands is required to make
prepayments on the term loan and revolving credit facility with a percentage of
Excess Cash Flow (as defined) and 100% of the proceeds from certain asset sales,
issuances of debt and equity securities and extraordinary items outside the
ordinary course of business. The required term loan repayment of $1.0 million
for fiscal 1997 was paid in the second quarter. Signature Brands may also make
optional prepayments, in full or in part, on the term loan.
The Bank Credit Agreement and the indenture governing the
Notes contain various customary covenants which the Company was in compliance
with at June 29, 1997. Borrowing availability under the revolving credit
facility at June 29, 1997 was $15.8 million after considering outstanding
letters of credit of $1.0 million, actual borrowings of
12
<PAGE> 14
$26.3 million, and sufficiency of collateral. Signature Brands' obligations
under the Bank Credit Agreement are secured by substantially all of Signature
Brands' assets and a pledge of all of its issued and outstanding common stock.
Signature Brands' obligations under the Bank Credit Agreement and the Notes are
guaranteed by the Company.
Based upon current levels of operations, anticipated sales
growth and plans for expansion, management believes that the Company's cash flow
from operations (including favorable cost savings estimated to be achieved in
the future), combined with borrowings available under the Bank Credit Agreement,
will be sufficient to enable the Company to meet all of its cash operating
requirements over both the short term and the longer term, including scheduled
interest and principal payments, capital expenditures and working capital needs.
This expectation is predicated upon continued growth in revenues in the
Company's core businesses consistent with historical experience, achievement of
operating cash flow margins consistent with historical experience, and the
absence of significant increases in interest rates.
INFLATION
Increases in interest rates, the costs of materials and labor,
and Federal, state and local tax rates can significantly affect the Company's
operations. Management believes that the current practices of maintaining
adequate operating margins through a combination of new product introductions,
product differentiation, cost reduction, outsourcing, manufacturing and overhead
expense control and careful management of working capital are its most effective
tools for coping with inflation.
NEW ACCOUNTING PRONOUNCEMENTS
During 1995, the Financial Accounting Standards Board ("FASB")
issued two pronouncements which are effective for financial statements for years
beginning after December 15, 1995. The Company has considered the requirements
of Statement of Financial Accounting Standards ("SFAS") No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of
and has determined that it will not require recognition of any impairment
losses. The Company has also determined to remain within the accounting
prescribed by APB Opinion No. 25, Accounting for Stock Issued to Employees, and
accordingly the implementation of SFAS No. 123, Accounting for Stock-Based
Compensation will result in additional disclosures without any impact on the
statements of operations or financial condition.
During 1997, the FASB issued SFAS No. 128 Earnings per Share,
which changes the computation and presentation of earnings per share
information. SFAS No. 128 is effective for financial statements issued for
periods ending after December 15, 1997 and, accordingly, will be adopted by the
Company in the first quarter of the fiscal year beginning October 1998. Adoption
of this statement will not materially impact the current computation and
presentation of earnings per share.
During 1997, the FASB also issued SFAS No. 129, Disclosure of
Information about Capital Structure, with an effective date for periods ending
after December 15, 1997; SFAS No. 130 Reporting Comprehensive Income, and SFAS
No. 131, Disclosures about
13
<PAGE> 15
Segments of an Enterprise and Related Information: SFAS No. 130 and 131 are
effective for periods beginning after December 15, 1997. The disclosure
requirements of these standards will, accordingly, be included in the financial
statements of the Company for the appropriate periods relating to fiscal 1998.
ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K
- --------------------------------------------
(a) See the Exhibit Index at page 15 of this Form 10-Q.
(b) No reports on Form 8-K were filed during the quarter for
which this report is filed.
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.
SIGNATURE BRANDS USA, INC.
SIGNATURE BRANDS, INC.
Date: August 13, 1997 /s/ Steven M. Billick
----------------------------------
Steven M. Billick
Senior Vice President, Treasurer
and Chief Financial Officer
14
<PAGE> 16
Exhibit Index
-------------
Exhibit Number Description of Document
- -------------- -----------------------
3.2 Articles of Incorporation of Signature Brands, Inc.
3.4 Code of Regulations of Signature Brands, Inc.
4.4 First Supplemental Indenture Dated as of April 30, 1997 Between
Signature Brands, Inc. and Firstar Bank of Minnesota as Trustee
27 Financial Data Schedule
15
<PAGE> 1
Exhibit 3.2
05729-0106 Approved
ARTICLES OF INCORPORATION By LO
---------
OF Date 1-29-97
---------
SIGNATURE BRANDS, INC. Amount $85
---------
* * * * * 97012918801
The undersigned, a citizen of the United States, desiring to form a
corporation, FOR PROFIT, does hereby CERTIFY:
ARTICLE I
---------
The name of the corporation is Signature Brands, Inc.
ARTICLE II
----------
The principal office of the corporation shall be located in Cleveland,
Cuyahoga County, Ohio.
ARTICLE III
-----------
The purpose or purposes for which, or for any of which, it is formed are to
enter into, promote or conduct any kind of business, contract or undertaking
permitted to corporations for profit organized under the General Corporation
Laws of the State of Ohio, to engage in any lawful act or activity for which
corporations may be formed under Sections 1701.01 to 1701.98, inclusive, of the
Revised Code of Ohio, and, in connection therewith, to exercise all express and
incidental powers normally permitted such corporations.
ARTICLE IV
----------
The authorized number of shares of capital stock of the corporation shall
consist of Eight Hundred Fifty (850) shares, all of which shall be common
shares, without par value.
ARTICLE V
---------
The corporation may purchase, from time to time, and to the extent
permitted by the laws of Ohio, shares of any class of stock issued by it. Such
purchases may be made either in the open market or at private or public sale,
and in such manner and amounts, from such holder or
<PAGE> 2
05729-0107
holders of outstanding shares of the corporation and at such prices as the Board
of Directors of the corporation shall from time to time determine, and the Board
of Directors is hereby empowered to authorize such purchases from time to time
without any vote of the holders of any class of shares now or hereafter
authorized and outstanding at the time of any such purchase.
ARTICLE VI
----------
Notwithstanding any provision of the laws of the State of Ohio now or
hereafter in force requiring, for any purpose, the vote of the holders of
greater than a majority but less than all of the voting power of the corporation
or of any class or classes of shares thereof, such action (unless otherwise
expressly prohibited by statute) may be taken by vote of the holders of shares
entitling them to exercise a majority of the voting power of the corporation or
of such class or classes.
ARTICLE VII
-----------
The preemptive right to purchase additional shares or any other securities
of the corporation is expressly denied to all shareholders of all classes.
ARTICLE VIII
------------
Section 1701.831 of the Revised Code of Ohio shall not apply to any control
share acquisition (as defined in Section 1701.01(Z)(1) of the Revised Code of
Ohio, as the same may be amended from time to time, or in any successor thereto,
however denominated) of shares of any class of capital stock of the corporation.
ARTICLE IX
----------
Chapter 1704 of the Revised Code of Ohio shall not apply to the corporation
or to any transaction between the corporation and any holder of shares of any
class of capital stock of the corporation.
<PAGE> 3
05729-0108
IN WITNESS WHEREOF, I have subscribed my name to these Articles of
Incorporation on January 28, 1997.
/s/ Gregory J. Dziak
-----------------------------
Gregory J. Dziak
(Sole Incorporator)
<PAGE> 1
Exhibit 3.4
CODE OF REGULATIONS
OF
SIGNATURE BRANDS, INC.
Adopted April 25, 1997
ARTICLE I
---------
Fiscal Year
-----------
The fiscal year of the Corporation shall be such period as the Board of
Directors may designate by resolution from time to time.
ARTICLE II
----------
Shareholders
------------
Section 1. Meetings of Shareholders.
------------------------
(a) ANNUAL MEETING. The annual meeting of the Shareholders of this
Corporation, for the election of Directors, the consideration of financial
statements for the most recently concluded fiscal year and other reports, and
the transaction of such other business as may properly be brought before such
meeting, shall be held at such date after the annual financial statements for
the fiscal year of the Corporation have been prepared as the Board of Directors
shall determine from time to time. Upon due notice there may also be considered
and acted upon at an annual meeting any matter which could properly be
considered and acted upon at a special meeting, in which case and for which
purpose the annual meeting shall also be considered as, and shall be, a special
meeting. In the event that the annual meeting is not held or if Directors are
not elected thereat, a special meeting may be called and held for that purpose.
(b) SPECIAL MEETING. Special meetings of the Shareholders may be held on
any business day when called by any person or persons who may be authorized by
law to do so. Calls for special meetings shall specify the purpose or purposes
thereof, and no business shall be considered at any such meeting other than
that specified in the call therefor.
(c) PLACE OF MEETINGS. Any meeting of Shareholders may be held at such
place within or without the State of Ohio as may be designated in the Notice of
said meeting.
<PAGE> 2
(d) NOTICE OF MEETING AND WAIVER OF NOTICE.
(1) NOTICE. Written notice of the time, place and purposes of any meeting
of Shareholders shall be given to each Shareholder entitled to vote on a matter
to come before the meeting not less than seven (7) days nor more than sixty (60)
days before the date fixed for the meeting and as prescribed by law. Such notice
shall be given either by personal delivery or by mail. If such notice is mailed,
it shall be directed, postage prepaid, to the Shareholders at their respective
addresses as they appear upon the records of the Corporation, and notice shall
be deemed to have been given on the day so mailed. If any meeting is adjourned
to another time or place, no notice as to such adjourned meeting need be given
other than by announcement at the meeting at which such an adjournment is taken.
No business shall be transacted at any such adjourned meeting except as might
have been lawfully transacted at the meeting at which such adjournment was
taken.
(2) NOTICE TO JOINT OWNERS. All notices with respect to any shares to which
persons are entitled by joint or common ownership may be given to that one of
such persons who is named first upon the books of this Corporation, and notice
so given shall be sufficient notice to all the holders of such shares.
(3) WAIVER. Notice of any meeting, however, may be waived in writing by any
Shareholder either before or after any meeting of Shareholders, or by attendance
at such meeting without protest prior to the commencement thereof.
(e) RECORD DATE. If a record date shall not be fixed or the books of the
Corporation shall not be closed against transfers of shares pursuant to
statutory authority, the record date for the determination of Shareholders
entitled to vote at any meeting of Shareholders shall be the date next preceding
the day on which notice is given or the date next preceding the day on which the
meeting is held, as the case may be, and only Shareholders of record as of the
close of business on such record date shall be entitled to vote at such meeting.
Such record date shall continue to be the record date for all adjournments of
such meeting unless a new record date shall be fixed and notice thereof and of
the date of the adjourned meeting be given to all Shareholders entitled to
notice in accordance with the new record date so fixed.
(f) QUORUM. At any meeting of Shareholders, the holders of shares entitling
them to exercise a majority of the voting power of the Corporation, present in
person or by proxy, shall constitute a quorum for such meeting; provided,
however, that no action required by law, the Articles, or these Regulations to
be authorized or taken by the holders of a designated proportion of the shares
of the Corporation may be authorized or taken by a lesser proportion. The
Shareholders present in person or by proxy, whether or not a quorum be present,
may adjourn the meeting from time to time without notice other than by
announcement at the meeting.
2
<PAGE> 3
(g) ORGANIZATION OF MEETINGS
(1) PRESIDING OFFICER. The Chairman of the Board, or, in his absence, the
President, or in the absence of both of them, a Vice President of the
Corporation shall call all meetings of the Shareholders to order and shall act
as Chairman thereof. If all are absent, the Shareholders shall select a
Chairman.
(2) MINUTES. The Secretary of the Corporation, or, in his absence, an
Assistant Secretary, or, in the absence of both, a person appointed by the
Chairman of the meeting, shall act as Secretary of the meeting and shall keep
and make a record of the proceedings thereat.
(h) ORDER OF BUSINESS. The order of business at all meetings of the
Shareholders, shall be as determined by the Chairman of the meeting.
(i) VOTING. Except as provided by law or in the Articles, every Shareholder
entitled to vote shall be entitled to cast one vote on each proposal submitted
to the meeting for each share held of record by him on the record date for the
determination of the Shareholders entitled to vote at the meeting. At any
meeting at which a quorum is present, all questions and business which may come
before the meeting shall be determined by a majority of votes cast, except when
a greater proportion is required by law, the Articles, or these Regulations.
(j) PROXIES. A person who is entitled to attend a Shareholders' meeting, to
vote thereat, or to execute consents, waivers and releases, may be represented
at such meeting or vote thereat, and execute consents, waivers, and releases,
and exercise any of his rights, by proxy or proxies appointed by a writing
signed by such person, or by his duly authorized attorney, as provided by the
laws of the State of Ohio.
(k) LIST OF SHAREHOLDERS. At any meeting of Shareholders a list of
Shareholders, alphabetically arranged, showing the number and classes of shares
held by each on the record date applicable to such meeting shall be produced on
the request of any Shareholder.
Section 2. ACTION OF SHAREHOLDERS WITHOUT A MEETING.
Any action which may be taken at a meeting of Shareholders may be taken
without a meeting if authorized by a writing or writings signed by all of the
holders of shares who would be entitled to notice of a meeting for such purpose,
which writing or writings shall be filed or entered upon the records of the
Corporation.
3
<PAGE> 4
ARTICLE III
-----------
Directors
---------
Section 1. GENERAL POWERS.
The business, power and authority of this Corporation shall be exercised,
conducted and controlled by a Board of Directors, except where the law, the
Articles or these Regulations require action to be authorized or taken by the
Shareholders.
Section 2. ELECTION, NUMBER AND QUALIFICATION OF DIRECTORS.
(a) ELECTION. The Directors shall be elected at the annual meeting of
Shareholders, or if not so elected, at a special meeting of Shareholders called
for that purpose. At any meeting of Shareholders at which Directors are to be
elected, only persons nominated as candidates shall be eligible for election.
(b) NUMBER. The number of Directors, which shall not be less than the
lesser of three or the number of shareholders of record, may be fixed or changed
at a meeting of the Shareholders called for the purpose of electing Directors at
which a quorum is present, by the affirmative vote of the holders of a majority
of the shares represented at the meeting and entitled to vote on such proposal.
The number of Directors elected shall be deemed to be the number of Directors
fixed unless otherwise fixed by resolution adopted at the meeting at which such
Directors are elected.
(c) QUALIFICATION. Directors need not be Shareholders of the Corporation.
Section 3. TERM OF OFFICE OF DIRECTORS.
(a) TERM. Each Director shall hold office until the next annual meeting of
the Shareholders and until his successor has been elected or until his earlier
resignation, removal from office, or death. Directors shall be subject to
removal as provided by statute or by other lawful procedures and nothing herein
shall be construed to prevent the removal of any or all Directors in accordance
therewith.
(b) RESIGNATION. A resignation from the Board of Directors shall be deemed
to take effect immediately upon its being received by any incumbent corporate
officer other than an officer who is also the resigning Director, unless some
other time is specified therein.
(c) VACANCY. In the event of any vacancy in the Board of Directors for any
cause, the remaining Directors, though less than a majority of the whole Board,
may fill any such vacancy for the unexpired term.
4
<PAGE> 5
Section 4. MEETINGS OF DIRECTORS.
(a) REGULAR MEETINGS. A regular meeting of the Board of Directors shall be
held immediately following the adjournment of the annual meeting of the
Shareholders or a special meeting of the Shareholders at which Directors are
elected. The holding of such Shareholders' meeting shall constitute notice of
such Directors' meeting and such meeting may be held without further notice.
Other regular meetings shall be held at such other times and places as may be
fixed by the Directors.
(b) SPECIAL MEETINGS. Special meetings of the Board of Directors may be
held at any time upon call of the Chairman of the Board, the President, any Vice
President, or any two Directors.
(c) PLACE OF MEETING. Any meeting of Directors may be held at any place
within or without the State of Ohio in person and/or through any communications
equipment if all persons participating in the meeting can hear each other.
(d) NOTICE OF MEETING AND WAIVER OF NOTICE. Notice of the time and place of
any regular or special meeting of the Board of Directors (other than the regular
meeting of Directors following the adjournment of the annual meeting of the
Shareholders or following any special meeting of the Shareholders at which
Directors are elected) shall be given to each Director by personal delivery,
telephone, mail, telegram or cablegram at least two (2) days before the meeting,
which notice need not specify the purpose of the meeting. Such notice, however,
may be waived in writing by any Director either before or after any such
meeting, or by attendance at such meeting (including attendance (presence) by
means of participation through any communications equipment as above provided)
without protest prior to the commencement thereof.
Section 5. QUORUM AND VOTING.
At any meeting of Directors, no fewer than one-half of the whole authorized
number of Directors must be present, in person and/or through any communications
equipment, to constitute a quorum for such meeting, except that a majority of
the remaining Directors in office constitutes a quorum for filling a vacancy in
the Board. At any meeting at which a quorum is present, all acts, questions and
business which may come before the meeting shall be determined by a majority of
votes cast by the Directors present at such meeting, unless the vote of a
greater number is required by the Articles, Regulations or bylaws.
Section 6. COMMITTEES.
(a) APPOINTMENT. The Board of Directors may from time to time appoint
certain of its members (but in no event less than three (3)) to act as a
committee or committees in the intervals between meetings of the Board and may
delegate to such committee or committees powers to be exercised under the
control and direction of the Board. Each such committee and each member thereof
shall serve at the pleasure of the Board.
5
<PAGE> 6
(b) EXECUTIVE COMMITTEE. In particular, the Board of Directors may create
from its membership and define the powers and duties of an Executive Committee.
During the intervals between meetings of the Board of Directors the Executive
Committee shall possess and may exercise all of the powers of the Board of
Directors in the management and control of the business of the Corporation to
the extent permitted by law. All action taken by the Executive Committee shall
be reported to the Board of Directors at its first meeting thereafter.
(c) COMMITTEE ACTION. Unless otherwise provided by the Board of Directors,
a majority of the members of any committee appointed by the Board of Directors
pursuant to this Section shall constitute a quorum at any meeting thereof and
the act of a majority of the members present at a meeting at which a quorum is
present shall be the act of such committee. Action may be taken by any such
committee without a meeting by a writing signed by all its members. Any such
committee shall prescribe its own rules for calling and holding meetings and its
method of procedure, subject to any rules prescribed by the Board of Directors,
and shall keep a written record of all action taken by it.
Section 7. ACTION OF DIRECTORS WITHOUT A MEETING.
Any action which may be taken at a meeting of Directors may be taken
without a meeting if authorized by a writing or writings signed by all the
Directors, which writing or writings shall be filed or entered upon the records
of the Corporation.
Section 8. COMPENSATION OF DIRECTORS.
The Board of Directors may allow compensation for attendance at meetings or
for any special services, may allow compensation to members of any committee,
and may reimburse any Director for his expenses in connection with attending any
Board or committee meeting.
Section 9. ATTENDANCE AT MEETINGS OF PERSONS WHO ARE NOT DIRECTORS.
Unless waived by a majority of Directors in attendance, not less than
twenty-four (24) hours before any regular or special meeting of the Board of
Directors any Director who desires the presence at such meeting of not more than
one person who is not a Director shall so notify all other Directors, request
the presence of such person at the meeting, and state the reason in writing.
Such person will not be permitted to attend the Directors' meeting unless a
majority of the Directors in attendance vote to admit such person to the
meeting. Such vote shall constitute the first order of business for any such
meeting of the Board of Directors. Such right to attend, whether granted by
waiver or vote, may be revoked at any time during any such meeting by the vote
of a majority of the Directors in attendance.
6
<PAGE> 7
ARTICLE IV
----------
Officers
--------
Section 1. GENERAL PROVISIONS.
The Board of Directors shall elect a President, a Secretary and a
Treasurer, and may elect a Chairman of the Board, one or more Vice-Presidents,
and such other officers and assistant officers as the Board may from time to
time deem necessary. The Chairman of the Board shall be a Director, but no one
of the other officers need be a Director. Any two or more offices may be held by
the same person, but no officer shall execute, acknowledge or verify any
instrument in more than one capacity if such instrument is required to be
executed, acknowledged or verified by two or more officers.
Section 2. POWERS AND DUTIES.
All officers, as between themselves and the Corporation, shall respectively
have such authority and perform such duties as are customarily incident to their
respective offices, and as may be specified from time to time by the Board of
Directors, regardless of whether such authority and duties are customarily
incident to such office. In the absence of any officer of the Corporation, or
for any other reason the Board of Directors may deem sufficient, the Board of
Directors may delegate for the time being, the powers or duties of such officer,
or any of them, to any other officer or to any Director. The Board of Directors
may from time to time delegate to any officer authority to appoint and remove
subordinate officers and to prescribe their authority and duties. Since the
lawful purposes of this Corporation include the acquisition and ownership of
real property, personal property and property in the nature of patents,
copyrights, and trademarks and the protection of the Corporation's property
rights in its patents, copyrights and trademarks, each of the officers of this
Corporation is empowered to execute any power of attorney necessary to protect,
secure, or vest the Corporation's interest in and to real property, personal
property and its property protectable by patents, trademarks and copyright
registration and to secure such patents, copyrights and trademark registrations.
Section 3. TERM OF OFFICE AND REMOVAL.
(a) TERM. Each officer of the Corporation shall hold office at the pleasure
of the Board of Directors until his successor has been elected or until his
earlier resignation, removal from office or death. It shall not be necessary for
the officers of the corporation to be elected annually. The election or
appointment of an officer for a given term, or a general provision in the
Articles, the Regulations or the bylaws with respect to term of office, shall
not be deemed to create contract rights.
(b) REMOVAL. Any officer may be removed, with or without cause, by the
Board of Directors without prejudice to the contract rights, if any, of such
officer.
7
<PAGE> 8
(c) VACANCIES. The Board of Directors may fill any such vacancy in any
office occurring for whatever reason.
Section 4. COMPENSATION OF OFFICERS.
Unless compensation is otherwise determined by a majority of the Directors
at a regular or special meeting of the Board of Directors, or unless such
determination is delegated by the Board of Directors to another officer or
officers, the President of the Corporation from time to time shall determine the
compensation to be paid to all officers and other employees for services
rendered to the Corporation.
ARTICLE V
---------
Indemnification of Directors and Officers
-----------------------------------------
(a) RIGHT OF INDEMNIFICATION. The Corporation shall indemnify any Director
or officer to the fullest extent provided by, or permissible under, Section
1701.13(E), Ohio Revised Code; and the Corporation is hereby specifically
authorized to take any and all further action to effectuate any indemnification
of any Director or officer which any Ohio corporation may have power to take, by
any vote of the Shareholders, vote of disinterested Directors, any Agreement, or
otherwise. This Section of the Code of Regulations of the Corporation shall be
interpreted in all respects to expand such power to indemnify to the maximum
extent permissible to any Ohio corporation with regard to the particular facts
of each case, and not in any way to limit any statutory or other power to
indemnify, or right of any individual to indemnification.
(b) INSURANCE FOR INDEMNIFICATION. The Corporation may purchase and
maintain insurance for protection of the Corporation and for protection of any
Director, officer, employee and/or any other person for whose protection, and to
the fullest extent, such insurance may be purchased and maintained under Section
1701.13(E)(7), Ohio Revised Code, or otherwise. Such policy or policies of
insurance may provide such coverage and be upon such terms and conditions as
shall be authorized or approved from time to time by the Board of Directors or
the Shareholders of the Corporation.
ARTICLE VI
----------
Securities Held by the Corporation
----------------------------------
Section 1. TRANSFER OF SECURITIES OWNED BY THE CORPORATION.
All endorsements, assignments, transfers, stock powers, share powers or
other instruments of transfer of securities standing in the name of the
Corporation shall be executed for and in the name of the Corporation by the
President, by a Vice President, by the Secretary or by the
8
<PAGE> 9
Treasurer or by any other person or persons as may be thereunto authorized by
the Board of Directors.
Section 2. VOTING SECURITIES HELD BY THE CORPORATION.
The Chairman of the Board, President, any Vice President, Secretary or
Treasurer, in person or by another person thereunto authorized by the Board of
Directors, in person or by proxy or proxies appointed by him, shall have full
power and authority on behalf of the Corporation to vote, act and consent with
respect to any securities issued by other corporations which the Corporation may
own.
ARTICLE VII
-----------
Share Certificates
------------------
Section 1. TRANSFER AND REGISTRATION OF CERTIFICATES.
The Board of Directors shall have authority to make such rules and
regulations, not inconsistent with law, the Articles or these Regulations, as it
deems expedient concerning the issuance, transfer and registration of
certificates for shares and the shares represented thereby and may appoint
transfer agents and registrars thereof.
Section 2. SUBSTITUTED CERTIFICATES.
Any person claiming that a certificate for shares has been lost, stolen or
destroyed, shall make an affidavit or affirmation of that fact and, if required,
shall give the Corporation (and its registrar or registrars and its transfer
agent or agents, if any) a bond of indemnity, in such form and with one or more
sureties satisfactory to the Board, and, if required by the Board of Directors,
shall advertise the same in such manner as the Board of Directors may require,
whereupon a new certificate may be executed and delivered of the same tenor and
for the same number of shares as the one alleged to have been lost, stolen or
destroyed.
ARTICLE VIII
------------
Seal
----
The Directors may adopt a seal for the Corporation which shall be in such
form and of such style as is determined by the Directors. Failure to affix any
such corporate seal shall not affect the validity of any instrument.
9
<PAGE> 10
ARTICLE IX
----------
Consistency with Articles of Incorporation
------------------------------------------
If any provision of these Regulations shall be inconsistent with the
Corporation's Articles of Incorporation (and as they may be amended from time to
time), the Articles of Incorporation (as so amended at the time) shall govern.
ARTICLE X
---------
Section Headings
----------------
The headings contained in this Code of Regulations are for reference
purposes only and shall not be construed to be part of and shall not affect in
any way the meaning or interpretation of this Code of Regulations.
ARTICLE XI
----------
Amendments
----------
This Code of Regulations of the Corporation (and as it may be amended from
time to time) may be amended or added to by the affirmative vote or the written
consent of the Shareholders of record entitled to exercise a majority of the
voting power on such proposal; provided, however, that if an amendment or
addition is adopted by written consent without a meeting of the Shareholders, it
shall be the duty of the Secretary to enter the amendment or addition in the
records of the Corporation, and to mail a copy of such amendment or addition to
each Shareholder of record who would be entitled to vote thereon and did not
participate in the adoption thereof
10
<PAGE> 1
Exhibit 4.4
SIGNATURE BRANDS, INC.
13% SENIOR SUBORDINATED NOTES DUE 2002
-----------------------------------------
FIRST SUPPLEMENTAL INDENTURE
Dated as of April 30, 1997
-----------------------------------------
FIRSTAR BANK OF MINNESOTA
Trustee
(successor in interest to American Bank National Association)
(First supplement to the Indenture dated as of August 17, 1994
and related Notes)
<PAGE> 2
This First Supplemental Indenture (the "Supplemental
Indenture") dated as of the 30th day of April, 1997, is between Signature
Brands, Inc., an Ohio corporation ("Signature"), and Firstar Bank of Minnesota
as Trustee (successor in interest to American Bank National Association).
W I T N E S S E T H:
WHEREAS, Health o meter, Inc., a Delaware corporation (the
"Company"), has executed and delivered to the Trustee that certain Indenture
dated as of August 17, 1994 among the Company, Health o meter Products, Inc., a
Delaware corporation (the "Parent"), Java Acquisition Corporation, a Delaware
corporation, and American Bank National Association (the "Indenture").
WHEREAS, Signature and the Company desire to enter into a
merger wherein Signature will be the surviving corporation (the "Merger");
WHEREAS, Article Five of the Indenture permits the merger of
the Company with or into another entity provided that certain conditions are
satisfied;
WHEREAS, Section 5.01 of the Indenture provides, among other
things, that if the Company enters into a merger in which the Company is not the
surviving corporation, the corporation surviving the merger shall assume all
obligations of the Company pursuant to a supplemental indenture in a form
reasonably satisfactory to the Trustee; and
WHEREAS, Section 9.01(c) of the Indenture provides that the
Indenture may be supplemented without the consent of any Holder of a Note to
provide for the assumption of the Company's obligations to the Holders of the
Notes.
NOW, THEREFORE, Signature, the Parent and the Trustee agree as
follows for the benefit of each other and for the equal and ratable benefit of
the holders of the 13% Senior Subordinated Notes due 2002 (the "Notes") issued
pursuant to the Indenture (the "Holders").
Section 1. Assumption of the Company's obligations.
---------------------------------------
Signature agrees to assume all of the obligations of the
Company to the Holders of the Notes and to the Trustee under the Indenture and
the Notes immediately upon the effectiveness of the Merger (the "Effective
Time").
Section 2. Substitution of Signature for the Company under the Indenture.
-------------------------------------------------------------
After the Effective Time, the provisions of the Indenture
referring to the Company shall refer instead to Signature, and Signature may
exercise every right and power of the Company under the Indenture with the same
effect as if Signature had been named as the Company in the Indenture.
<PAGE> 3
Section 3. Notices.
-------
Any notice or communication made under the Indenture to
Signature or the Parent after the Effective Time shall be delivered to the
address set forth below:
Signature Brands, Inc.
24700 Miles Road
Bedford Heights, OH 44146-1399
Attention: Chief Financial Officer
with a copy to:
Calfee, Halter & Griswold LLP
1400 McDonald Investment Center
800 Superior Avenue
Cleveland, OH 44114
Attention: Thomas F. McKee
Section 4. Miscellaneous.
-------------
4.1 GOVERNING LAW. This Supplemental Indenture is to be
governed by and construed under the internal laws of the State of New York.
4.2 SUCCESSORS. All agreements of Signature and the Trustee in
this Supplemental Indenture shall bind their respective successors.
4.3 COUNTERPARTS. The parties may sign any number of copies of
this Supplemental Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.
4.4 EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction hereof.
2
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed and attested, all as of the date
first above written.
SIGNATURE BRANDS, INC.
By: /s/ Steven M. Billick
---------------------------
Name: Steven M. Billick
Title: Senior Vice President and
Chief Financial Officer
FIRSTAR BANK OF MINNESOTA
as Trustee
By: /s/ Frank P. Leslie
---------------------------
Name: Frank P. Leslie
Title: Vice President
Acknowledgment:
HEALTH O METER, INC.
By: /s/ Peter C. McC. Howell
----------------------------------
Name: Peter C. McC. Howell
Title: Chairman of the Board and
Chief Executive Officer
3
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<COMMON> 0
0
0
<OTHER-SE> 1,648
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<SALES> 213,255
<TOTAL-REVENUES> 213,255
<CGS> 147,565
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<OTHER-EXPENSES> (349)
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<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
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<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
