SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 10-Q
[ ] QUARTERLY REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
Commission file number: 33-83734
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J. B. WILLIAMS HOLDINGS, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 06-1387159
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification number)
65 HARRISTOWN ROAD
GLEN ROCK, NEW JERSEY 07452
(Address of Principal Executive Offices, including Zip Code)
(201) 251-8100
(Registrant's Telephone Number, Including Area Code)
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 No X
----- -----
Number of shares of the issuer's Common Stock, par value $0.01, outstanding as
of May 1, 1996: 9,000
<PAGE>
J.B. WILLIAMS HOLDINGS, INC.
I N D E X
PAGE
PART I - FINANCIAL INFORMATION
Item 1: Financial Statements (Unaudited):
Condensed Consolidated Statements of Operations for the 1
Three Months Ended March 31, 1996 and March 31, 1995
Condensed Consolidated Balance Sheets at March 31, 1996 2
and December 31, 1995
Condensed Consolidated Statements of Cash Flows for 3
the Three Months Ended March 31, 1996 and March 31, 1995
Notes to Condensed Consolidated Financial Statements 4
Item 2: Management's Discussion and Analysis of Financial 6
Condition and Results of Operations
PART II - OTHER INFORMATION
-----------------
Item 6: Exhibits and Reports on Form 8-K 9
Signature 10
<PAGE>
J.B. WILLIAMS HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
(IN THOUSANDS)
THREE MONTHS ENDED MARCH 31,
----------------------------
1996 1995
---- ----
NET SALES $9,352 $10,274
Cost of sales 2,523 2,680
------ ------
GROSS MARGIN 6,829 7,594
Distribution and cash discounts 763 1,042
Advertising and promotion 2,312 1,518
Selling, general and administrative expenses 1,585 1,689
Depreciation and amortization 1,133 1,132
------ ------
OPERATING INCOME 1,036 2,213
Interest expense-net 1,364 1,435
------ ------
INCOME (LOSS) BEFORE INCOME TAXES (328) 778
Income tax provision (benefit) (134) 311
------ ------
NET INCOME (LOSS) $ (194) $ 467
====== ======
See Notes to Condensed Consolidated Financial Statements
-1-
<PAGE>
J.B. WILLIAMS HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
UNAUDITED
(IN THOUSANDS)
AT MARCH 31, 1996 AT DECEMBER 31, 1995
----------------- --------------------
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $18,982 $19,478
Accounts receivable, net 4,881 7,712
Inventories 3,926 3,267
Other current assets 396 188
------ ------
Total Current Assets 28,185 30,645
PROPERTY AND EQUIPMENT, NET 917 796
INTANGIBLE ASSETS, NET 42,164 43,145
OTHER ASSETS 3,477 3,612
------ ------
TOTAL ASSETS $74,743 $78,198
====== ======
LIABILITIES AND SHAREHOLDER'S EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $1,326 $1,600
Accrued expenses 3,559 6,546
------- ------
Total Current Liabilities 4,885 8,146
------- ------
LONG TERM DEBT 55,000 55,000
------ ------
SHAREHOLDER'S EQUITY:
Common stock and paid-in capital 9,600 9,600
Retained earnings 5,258 5,452
------- ------
Total Shareholder's Equity 14,858 15,052
------- ------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $74,743 $78,198
======= ======
See Notes to Condensed Consolidated Financial Statements
-2-
<PAGE>
J.B. WILLIAMS HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
(IN THOUSANDS)
THREE MONTHS ENDED MARCH 31,
----------------------------
1996 1995
---- ----
OPERATING ACTIVITIES:
Net income (loss) $(194) $ 467
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Amortization of intangibles and debt issuance cost 1,052 1,068
Depreciation and amortization of property and
equipment 8 64
Provision for doubtful accounts 4 (20)
Changes in operating assets and liabilities:
Accounts receivable 2,827 1,417
Inventories (659) (326)
Other current assets (208) (267)
Accounts payable (274) (316)
Accrued expenses (2,987) (2,265)
Other assets 63 ---
------- -------
NET CASH USED IN OPERATING ACTIVITIES (295) (178)
------- -------
INVESTING ACTIVITIES:
Purchases of property and equipment (201) (14)
------- -------
NET CASH USED IN INVESTING ACTIVITIES (201) (14)
------- -------
DECREASE IN CASH AND CASH EQUIVALENTS (496) (192)
Cash and cash equivalents, beginning of period 19,478 14,072
------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $18,982 $13,880
======= =======
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid $469 $480
Interest paid $3,300 $3,368
See Notes to Condensed Consolidated Financial Statements
-3-
<PAGE>
J.B. WILLIAMS HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF ACCOUNTING AND ORGANIZATION
The consolidated financial statements include J.B. Williams Holdings, Inc.
and its wholly-owned subsidiaries: J.B. Williams Company, Inc., After
Shave Products Inc., Pre-Shave Products Inc., Hair Care Products Inc., and
CEP Holdings Inc. (collectively the "Company"). Brynwood Partners II
L.P., a private partnership formed under Delaware law, is the owner of all
of the issued and outstanding capital stock of the Company.
The accompanying unaudited condensed consolidated financial statements as
of March 31, 1996 and for the three month periods ended March 31, 1996 and
1995 have been prepared in accordance with the instructions to Form 10-Q.
All adjustments which, in the opinion of the management of the Company,
are necessary for a fair presentation of the condensed consolidated
financial statements for the three month periods ended March 31, 1996 and
1995 have been reflected. All such adjustments are of a normal recurring
nature. The March 31, 1996 condensed consolidated financial statements
should be read in conjunction with the consolidated financial statements
and notes thereto for the year ended December 31, 1995 included in the
Company's Annual Report on Form 10-K.
The results of operations for the period ended March 31, 1996 are not
necessarily indicative of the operating results for the full year.
2. LONG TERM DEBT
Long term debt consists of $55 million 12% Senior Notes, due 2004 (the
"Senior Notes").
3. FINANCIAL INFORMATION CONCERNING GUARANTORS
The Senior Notes are guaranteed by each of the Company's wholly-owned
subsidiaries, which constitute all of the Company's direct or indirect
subsidiaries (the "Subsidiary Guarantors"). The Subsidiary Guarantors
have fully and unconditionally guaranteed the Senior Notes on a joint and
several basis; and the aggregate assets, liabilities, earnings and equity
of the Subsidiary Guarantors are substantially equivalent to the assets,
liabilities, earnings and equity of the Company on a consolidated basis.
There are no restrictions on the ability of the Subsidiary Guarantors to
make distributions to the Company. In management's opinion separate
financial statements and other disclosures concerning the Subsidiary
Guarantors would not be material to investors. Accordingly, separate
financial statements and other disclosures concerning the Subsidiary
Guarantors are not included herein.
-4-
<PAGE>
4. RECLASSIFICATIONS
Certain reclassifications have been made to the 1995 financial statements
to conform with the current year's presentation.
-5-
<PAGE>
J. B. WILLIAMS HOLDINGS, INC.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
J. B. Williams Holdings, Inc. (the "Company"), through its subsidiaries,
distributes and sells personal care products (Aqua Velva, Brylcreem, Lectric
Shave, and Williams Mug Soap) in the United States, Canada, and Puerto Rico,
and oral care products (Cepacol) in the United States and Puerto Rico. The
Company acquired its personal care products business in January 1993 and its
oral care products business in February 1994, in each case from certain
affiliates of SmithKline Beecham Corporation (collectively, "SKB").
RESULTS OF OPERATIONS FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1996
The following table sets forth certain operating data for the three months
ended March 31, 1996 and 1995.
<TABLE>
Three Months Ended March 31,
-----------------------------------------------------------------------
(In Thousands)
<CAPTION>
PERSONAL CARE PRODUCTS ORAL CARE PRODUCTS TOTAL COMPANY
---------------------- ------------------ -------------
1996 1995 1996 1995 1996 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
NET SALES $5,756 $6,613 $3,596 $3,661 $9,352 $10,274
Cost of Goods Sold 1,351 1,490 1,172 1,190 2,523 2,680
----- ----- ----- ----- ----- -----
GROSS MARGIN 4,405 5,123 2,424 2,471 6,829 7,594
Distribution and Cash Discounts 392 649 371 393 763 1,042
Advertising and Promotion 1,216 588 1,096 930 2,312 1,518
----- ----- ----- ----- ----- -----
BRAND CONTRIBUTION $2,797 $3,886 $957 $1,148 3,754 5,034
====== ====== ===== ======
Selling, General and Admin. Exp. 1,585 1,689
Depreciation and Amortization 1,133 1,132
----- -----
OPERATING INCOME 1,036 2,213
Interest Expense, Net 1,364 1,435
----- -----
INCOME BEFORE INCOME TAXES (328) 778
Income Tax Provision (Benefit) (134) 311
------ -----
NET INCOME (LOSS) $ (194) $ 467
====== =====
</TABLE>
For the three month period ended March 31, 1996, net sales decreased 9.0% to
$9,352,000 from $10,274,000 for the same period in 1995. This decrease is
primarily attributable to lower shipments of the personal care products which
were 13% lower in 1996 compared to 1995. Although brand shares are up
slightly, shipments of Lectric Shave and Brylcreem are behind last year
reflecting overall declines in category sales. Additionally, sales across all
products continue to be negatively affected by inventory reduction programs
being initiated by our trade customers.
-6-
<PAGE>
For the three month period ended March 31, 1996, cost of goods sold decreased
5.9% to $2,523,000 from $2,680,000 for the same period in 1995. This
decrease is primarily related to the lower sales volumes, but is partially
offset by higher manufacturing costs caused by price increases from the
Company's contract manufacturers and component suppliers.
For the three month period ended March 31, 1996, distribution expenses and
cash discounts decreased 26.8% to $763,000 from $1,042,000 for the same
period in 1995. This decrease is associated with a combination of lower
sales volumes, lower levels of customer returns and more efficient use of the
Company's distribution network.
For the three month period ended March 31, 1996, advertising and promotion
expenses increased 52.3% to $2,312,000 from $1,518,000 for the same period in
1995. While this increase reflects higher levels of marketing support on
both the personal care and oral care businesses, most of the change versus
1995 is associated with increased spending on the Aqua Velva brand re-stage
program initiated during the second half of 1995.
For the three month period ended March 31, 1996, selling, general, and
administrative expenses decreased 6.2% to $1,585,000 from $1,689,000 for the
same period in 1995. This decrease is attributable to a combination of lower
broker commission payments, associated with the lower sales revenue, and with
savings in certain other administrative expenses.
For the three month period ended March 31, 1996, depreciation and
amortization of $1,133,000 was essentially unchanged versus the same period
in 1995.
For the three month period ended March 31, 1996, interest expense, net of
interest income decreased 4.9% to $1,364,000 from $1,435,000 for the same
period in 1995. The reduction is entirely related to an increase in
interest income.
For the three month period ended March 31, 1996, there was an income tax
benefit of $(194,000) versus income taxes of $311,000 for the same period in
1995. The effective tax rate was 41% for the 1996 interim period and 40% for
the same period in 1995.
LIQUIDITY AND CAPITAL RESOURCES
The following chart summarizes the net funds provided and/or used in
operating, financing and investing activities for the periods ended March 31,
1996 and 1995 (in thousands).
THREE MONTHS ENDED MARCH 31,
----------------------------
1996 1995
---- ----
Net cash used in operating activities $(295) $(178)
Net cash used in investing activities (201) (14)
Decrease in cash and cash equivalents $(496) $(192)
-7-
<PAGE>
The principal adjustments to reconcile net loss of $(194,000) for the period
ended March 31, 1996 to net cash used in operating activities of $295,000 are
depreciation and amortization of $1,133,000, offset by a net increase in
working capital requirements of $1,234,000. The working capital increase is
primarily linked to a decrease in accrued expenses resulting from the March
1, 1996 semi-annual interest payment associated with the Senior Notes.
Capital expenditures, which were $.2 million for the three months ended March
31, 1996, are generally not significant in the Company's business and the
Company currently has no material commitments for future capital
expenditures.
As a result of the Senior Notes, the Company had $55 million of total debt
outstanding as of March 31, 1996. Pursuant to the terms of the Senior Notes,
on March 15, 1996, the Company made an offer to purchase from the holders
thereof on a pro rata basis an aggregate principal amount of Senior Notes
equal to the Company's Free Cash Flow (as defined in the Senior Notes) at a
purchase price equal to 100% of the principal amount of the Senior Notes plus
accrued interest. Pursuant to this offer, on April 15, 1996, the Company
purchased Senior Notes from certain holders thereof for an aggregate of
$4,055,000. As a result, the Company's total debt outstanding was reduced
to $50,945,000. Management expects that cash on hand and internally generated
funds will provide sufficient capital resources to finance the Company's
operations and meet interest requirements on the Senior Notes, both in
respect of the short term as well as during the long term. However, there
can be no guarantee that the Company will generate funds sufficient to meet
these needs or that it will have access to bank financing to meet any
shortfall. Because the Company does not currently have a revolving credit
facility, if such a shortfall occurs, alternative sources of financing would
be necessary in order for the Company to meet its liquidity requirements.
-8-
<PAGE>
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
- Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K
- No reports on Form 8-K were filed by the registrant during
the period covered by this report.
-9-
<PAGE>
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.
J.B. WILLIAMS HOLDINGS, INC.
Date: MAY 13, 1996 /S/ KEVIN C. HARTNETT
------------ ---------------------------
Name: Kevin C. Hartnett
Title: Vice President and Chief Financial Officer
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<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
J.B. WILLIAMS HOLDINGS, INC. FINANCIAL STATEMENTS FOR THE QUARTERLY PERIOD
ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 18,982
<SECURITIES> 0
<RECEIVABLES> 5,207
<ALLOWANCES> 326
<INVENTORY> 3,926
<CURRENT-ASSETS> 28,185
<PP&E> 1,624
<DEPRECIATION> 707
<TOTAL-ASSETS> 74,743
<CURRENT-LIABILITIES> 4,885
<BONDS> 55,000
0
0
<COMMON> 9,600
<OTHER-SE> 5,258
<TOTAL-LIABILITY-AND-EQUITY> 74,743
<SALES> 9,352
<TOTAL-REVENUES> 9,352
<CGS> 2,523
<TOTAL-COSTS> 2,523
<OTHER-EXPENSES> 5,793
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,364
<INCOME-PRETAX> (328)
<INCOME-TAX> (134)
<INCOME-CONTINUING> (194)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (194)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
