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Previous: GOOD IDEAS ENTERPRISES INC, 8-K, 1996-09-18 |
Next: COMSTOCK TAILINGS CO INC, 10KSB/A, 1996-09-18 |
<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q-A-No. 1
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 1996
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 0-23312
HELEN OF TROY LIMITED
----------------------
(Exact name of registrant as specified in its charter)
Bermuda 74-2692550
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6827 Market Avenue
El Paso, TX 79915
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (915) 779-6363
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
--- ---
As of July 8, 1996 there were 13,021,662 shares of Common Stock, $.10
Par Value, outstanding.
<PAGE> 2
HELEN OF TROY LIMITED AND SUBSIDIARIES
INDEX
Page No.
PART I. FINANCIAL INFORMATION
<TABLE>
<S> <C> <C>
Item 1 Consolidated Condensed Balance
------ Sheets as of May 31, 1996 and
February 29, 1996 . . . . . . . . . . . . . . . 3
Consolidated Condensed Statements
of Income for the Three Months
Ended May 31, 1996 and May 31, 1995 . . . . . . 5
Consolidated Condensed Statements
of Cash Flows for the Three Months
Ended May 31, 1996 and May 31, 1995 . . . . . . 6
Notes to Consolidated Condensed
Financial Statements . . . . . . . . . . . . . 8
Item 2 Management's Discussion and Analysis of
------ Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . 10
PART II. OTHER INFORMATION
Item 5 Other information . . . . . . . . . . . . . . . . . . . 12
------
Item 6 Exhibits and Reports on Form 8-K . . . . . . . . . . . . 12
------
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
HELEN OF TROY LIMITED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands, except shares)
<TABLE>
<CAPTION>
May 31, February 29,
1996 1996
---- ----
(unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 36,805 44,195
Receivables - principally trade,
less allowance for doubtful
receivables of $744 at May 31, 1996
and $390 at February 29, 1996 34,347 28,854
Inventories 51,414 48,572
Prepaid expenses 1,082 422
Deferred income tax benefits 992 823
--------- -------
Total current assets 124,640 122,866
Property and equipment
net of accumulated depreciation of
$3,419 at May 31, 1996 and
$3,229 at February 29, 1996 17,428 15,750
License agreements, at cost, less accumulated
amortization of $6,550 at May 31, 1996
and $6,361 at February 29, 1996 10,502 8,191
Note receivable 850 1,006
Other assets, net of amortization 6,686 6,775
--------- -------
Total assets $ 160,106 154,588
========= =======
</TABLE>
(continued)
3
<PAGE> 4
HELEN OF TROY LIMITED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands, except shares)
<TABLE>
<CAPTION>
May 31, February 29,
1996 1996
---- ----
(unaudited)
<S> <C> <C>
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $ -- 2,593
Accounts payable, principally trade 3,724 1,005
Accrued expenses:
Advertising and promotional 3,943 1,740
Other 4,931 4,912
Income taxes payable 2,769 2,010
--------- --------
Total current liabilities 15,367 12,260
Long-term Debt 40,450 40,450
--------- --------
Total liabilities 55,817 52,710
Stockholders' equity:
Cumulative preferred stock, non-voting,
$1.00 par value. authorized 2,000,000
shares; none issued -- --
Common stock, $.10 par value.
authorized 25,000,000 shares;
issued and outstanding 12,966,662 shares at
May 31, 1996 and 12,965,162 shares at
February 29, 1996 648 648
Additional paid-in capital 25,872 25,863
Retained earnings 77,769 75,367
--------- --------
Total stockholders' equity 104,289 101,878
--------- --------
Commitments and contingencies (Note 2) -- --
Total liabilities and stockholders' equity $ 160,106 154,588
========= ========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
4
<PAGE> 5
HELEN OF TROY LIMITED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(unaudited)
(in thousands, except shares and earnings per share)
<TABLE>
<CAPTION>
Three Months Ended
May 31,
1996 1995
---- ----
<S> <C> <C>
Net Sales $ 43,836 33,544
Cost of sales 27,496 21,048
--------- ----------
Gross profit 16,340 12,496
Selling, general and administrative expenses 13,119 10,238
--------- ----------
Operating income 3,221 2,258
Other income (expense):
Interest expense (755) (256)
Other income, net 633 158
--------- ----------
Total other income (expense) (122) (98)
--------- ----------
Earnings before income taxes 3,099 2,160
Income tax expense (benefit):
Current 866 523
Deferred (169) (37)
--------- ----------
Net earnings $ 2,402 1,674
========= ==========
Net earnings per common and common equivalent
share: (Note 3) $ .18 .13
Weighted average number of common and common
equivalent shares used in computing net
earnings per share -
Primary 13,619,014 13,377,226
</TABLE>
See accompanying notes to consolidated condensed financial statements.
5
<PAGE> 6
HELEN OF TROY LIMITED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
<TABLE>
<CAPTION>
Three Months Ended
May 31,
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 2,402 1,674
Adjustments to reconcile net income
to net cash used by operating activities:
Depreciation and amortization 592 578
Provision for doubtful receivables 354 (17)
Provision for deferred tax benefit (169) (37)
Changes in operating assets and liabilities:
Accounts receivable (5,847) (1,083)
Inventory (2,842) (7,020)
Prepaid expenses (660) (681)
Accounts payable 2,719 1,432
Accrued expenses 2,222 634
Income taxes payable 759 506
------- ------
Net cash used by
operating activities (470) (4,014)
Cash flows from investing activities:
Capital and license expenditures (4,348) (1,154)
Other assets (144) 202
Collection on note receivable 156 129
-------- ------
Net cash used by investing activities (4,336) (823)
</TABLE>
(continued)
6
<PAGE> 7
HELEN OF TROY LIMITED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
<TABLE>
<CAPTION>
Three Months Ended
May 31,
1996 1995
---- ----
<S> <C> <C>
Cash flows from financing activities:
Net payments on revolving
line of credit (2,593) (6,530)
Proceeds from exercise of options 9 112
---------- ---------
Net cash used by financing activities (2,584) (6,418)
--------- --------
Net decrease in cash and cash equivalents (7,390) (11,255)
--------- --------
Cash and cash equivalents, beginning of period 44,195 31,917
--------- --------
Cash and cash equivalents, end of period $ 36,805 $ 20,662
========= ========
Supplemental cash flow disclosures:
Interest paid $ 821 $ 282
Income taxes paid, net of refund 427 --
</TABLE>
See accompanying notes to consolidated condensed financial statements.
7
<PAGE> 8
HELEN OF TROY LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENT
May 31, 1996
Note 1 - In the opinion of the Company, the accompanying consolidated
condensed financial statements contain all adjustments
(consisting of only normal recurring adjustments) necessary to
present fairly its financial condition of the results of its
operations for the periods ended May 31, 1996 and 1995. While
the Company believes that the disclosures presented are
adequate to make the information not misleading, it is
suggested that these statements be read in conjunction with
the financial statements and the notes included in the
Company's latest annual report on Form 10-K.
Note 2 - The Company is involved in various claims and legal actions
arising in the ordinary course of business. In the opinion of
management, the ultimate disposition of such claims and legal
actions will not have a material adverse effect on the
financial position of the Company.
As of May 31, 1996, the Company has unused advertising
credits, with a carrying amount of $3,198,000 which are
available until used. Benefits to be received by the Company
from utilization of all remaining credits could exceed the
carrying amount. In July 1995, the company required to
provide advertising in connection with the credits (the
Bankrupt Entity) filed a voluntary Chapter 11 petition in the
United States Bankruptcy Court (Court). Through July 9, 1996,
a plan of reorganization had not been filed in the bankruptcy
proceedings and the Court had not ruled as to the treatment of
the Company's advertising credits. Management has been
informed that counsel for the Bankruptcy Entity has petitioned
in Court for approval to classify or treat these barter
credits as executory contracts. If the Court determines that
barter credits are executory contracts and the Bankrupt Entity
emerges from Chapter 11, the Company could realize the full
value of the barter credits. In the event the Court rules
that the advertising credits represent unsecured liabilities
of the Bankrupt Entity, the value of the advertising credits
to the Company would be reduced significantly, and therefore,
this reduction in the value of the advertising credits would
be charged against income in the fiscal quarter in which that
determination were made. The loss of these credits to the
company would have no impact on the liquidity or the future
operations of the Company. The ultimate outcome of the
bankruptcy proceeding cannot currently be determined.
Note 3 - Primary earnings per common and common equivalent share are
computed based upon the weighted average number of common
shares plus common share equivalents (dilutive stock options
and warrants) outstanding during the period.
8
<PAGE> 9
Fully diluted earnings per share is based on the weighted
average number of common shares plus equivalents determined on
the basis of maximum potential dilution from stock options and
warrants. Earnings per common and common equivalent share,
assuming full dilution, is not materially dilutive for any of
the periods presented.
Note 4 - The business of the Company is seasonal with greater than 60%
of annual sales volume normally occurring in the second and
third fiscal quarters.
Note 5 - On June 4, 1996, the Company's Directors approved a 2-for-1
stock split which will be paid as a 100% stock dividend. The
stock dividend is payable on July 1, 1996 to stockholders of
record on June 17, 1996. All references in the financial
statements to number of shares and per share amounts of the
Company's common stock have been retroactively restated to
reflect the increased number of common shares outstanding.
9
<PAGE> 10
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Net sales increased $10,292,000 during the first quarter of fiscal 1997, a 31%
increase in net sales when compared with the first quarter of fiscal 1996. The
increase is attributable to increased volume as the Company's market share
increased in both the Consumer Sales Division and the Professional Salon
Division. Hair care appliance sales make up the great majority of Consumer
Products Division volume. The introduction of new hair care appliance models,
increased brush and comb sales, and sales of hair care accessories were the
primary causes of the market share increase.
Gross profit, as a percentage of net sales, remained constant at 37.3% for the
first quarter of fiscal 1997, as compared to the first quarter of fiscal 1996.
Selling, general and administrative expenses decreased as a percent of net
sales to 30.0% in the first quarter of fiscal 1997 from 30.5% in the first
quarter of fiscal 1996. These costs increased $2,881,000 which was primarily
due to the variable nature of expenses associated with increased sales.
Interest expense for the quarter ended May 31, 1996, increased over interest
expense for the same quarter in the previous year due to the $40 million in
Senior Notes issued by the Company's U.S. subsidiary in January, 1996. The
increase in other income is due to interest income, which resulted from the
same Senior Notes issuance, which provided a larger balance of investible
funds.
Liquidity and Capital Resources
The Company's working capital was $109,273,000 at May 31, 1996 and the current
ratio was 8.1 to 1. Short term debt decreased $2,593,000 from February 29,
1996 to May 31, 1996.
The Company believes its capital resources are adequate to finance normal
growth and service the Company's debt obligations. Additionally, the Company
believes that internal funds and available credit will be adequate to finance a
large warehouse, which is currently being constructed, and a new headquarters
office building, which is planned for construction within the next year.
Contingencies
As of May 31, 1996, the Company has unused advertising credits, with a carrying
amount of $3,198,000 which are available until used. Benefits to be received
by the Company from utilization of all remaining credits could exceed the
carrying amount. In July 1995, the company required to provide advertising in
connection with the credits (the Bankrupt Entity) filed a voluntary Chapter 11
petition in the United States Bankruptcy Court (Court). Through July 9,
10
<PAGE> 11
1996, a plan of reorganization had not been filed in the bankruptcy proceedings
and the Court had not ruled as to the treatment of the Company's advertising
credits. Management has been informed that counsel for the Bankruptcy Entity
has petitioned in Court for approval to classify or treat these barter credits
as executory contracts. If the Court determines that barter credits are
executory contracts and the Bankrupt Entity emerges from Chapter 11, the
Company could realize the full value of the barter credits. In the event the
Court rules that the advertising credits represent unsecured liabilities of the
Bankrupt Entity, the value of the advertising credits to the Company would be
reduced significantly, and therefore, this reduction in the value of the
advertising credits would be charged against income in the fiscal quarter in
which that determination were made. The loss of these credits to the company
would have no impact on the liquidity or the future operations of the Company.
The ultimate outcome of the bankruptcy proceeding cannot currently be
determined.
11
<PAGE> 12
PART II. OTHER INFORMATION
Item 5. Other Information
On September 18, 1996, the company filed Form 10Q-A-No. 1 to provide
additional disclosure.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11 Earnings Per Share Computation
<PAGE> 13
SIGNATURES
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.
HELEN OF TROY LIMITED
---------------------
(Registrant)
Date September 18, 1996 s/Gerald J. Rubin
---------------------------------- --------------------------------
Gerald J. Rubin
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
Date September 18, 1996 s/Sam L. Henry
----------------------------------- --------------------------------
Sam L. Henry
Senior Vice-President, Finance,
and Chief Financial Officer
(Principal Financial Officer)
13
<PAGE> 14
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
11 EARNINGS PER SHARE COMPUTATION
27 FINANCIAL DATA SCHEDULE
</TABLE>
<PAGE> 1
Exhibit 11
HELEN OF TROY LIMITED AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended
May 31,
1996 1995
---- ----
<S> <C> <C>
Primary earnings per Share:
Weighted average number of
common shares outstanding 12,966,662 12,854,576
Increase in weighted average
number of common shares outstanding
due to options and warrants 652,352 522,650
Weighted average number of
common shares outstanding, as adjusted 13,619,014 13,377,226
Net earnings $ 2,402,000 $ 1,674,000
Net earnings per common and
common equivalent share $ .18 $ .13
Fully Diluted Earnings per Share:
Weighted average number of
common shares outstanding 12,966,662 12,854,576
Increase in weighted average
number of common shares outstanding
due to options and warrants 799,250 605,792
Weighted average number of
common shares outstanding, as adjusted 13,765,912 13,460,368
Net earnings $ 2,402,000 $ 1,674,000
Net earnings per common and
common equivalent share, assuming full dilution $ .18 $ .12
</TABLE>
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED, CONDENSED FINANCIAL STATEMENTS OF HELEN OF TROY LIMITED AND
SUBSIDIARIES AS OF, AND FOR THE 3-MONTH PERIOD ENDED MAY 31, 1996, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-END> MAY-31-1996
<CASH> 36,805,000
<SECURITIES> 0
<RECEIVABLES> 35,091,000
<ALLOWANCES> 744,000
<INVENTORY> 51,414,000
<CURRENT-ASSETS> 124,640,000
<PP&E> 20,847,000
<DEPRECIATION> 3,419,000
<TOTAL-ASSETS> 160,106,000
<CURRENT-LIABILITIES> 15,367,000
<BONDS> 40,450,000
<COMMON> 648,000
0
0
<OTHER-SE> 103,641,000
<TOTAL-LIABILITY-AND-EQUITY> 160,106,000
<SALES> 43,836,000
<TOTAL-REVENUES> 43,836,000
<CGS> 27,496,000
<TOTAL-COSTS> 27,496,000
<OTHER-EXPENSES> 12,712,000
<LOSS-PROVISION> 407,000
<INTEREST-EXPENSE> 755,000
<INCOME-PRETAX> 3,099,000
<INCOME-TAX> 697,000
<INCOME-CONTINUING> 2,402,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,402,000
<EPS-PRIMARY> 0.18
<EPS-DILUTED> 0.18
</TABLE>
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