SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
[ ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
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 July 31, 1997: 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 3
Operations for the Three Months and Six
Months Ended June 30, 1997 and June 30, 1996
Condensed Consolidated Balance Sheets at 4
June 30, 1997 and December 31, 1996
Condensed Consolidated Statements of Cash 5
Flows for the Six Months Ended June 30,
1997 and June 30, 1996
Notes to Condensed Consolidated Financial 6
Statements
Item 2: Management's Discussion and Analysis of 8
Financial Condition and Results of Operations
Part II - OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K 12
Signature 13
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<PAGE>
J.B. Williams Holdings, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In Thousands)
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
1997 1996 1997 1996
------ ------ ------ ------
Net sales $11,739 $9,843 $23,513 $19,195
Cost of sales 3,467 3,048 7,036 5,571
Gross margin 8,272 6,795 16,477 13,624
Distribution and cash discounts 973 787 2,006 1,550
Advertising and promotion 2,633 1,107 5,687 3,419
Selling, general and
administrative expenses 2,047 1,759 4,155 3,344
Depreciation and amortization 1,061 1,142 2,181 2,275
------ ------ ------ ------
Operating income 1,558 2,000 2,448 3,036
Other Income --- --- 750 ---
Interest expense-net (1,216) (1,327) (2,435) (2,691)
------ ------ ------ ------
Income before income taxes 342 673 763 345
Income tax provision 134 275 298 141
------ ------ ------ ------
Net income $ 208 $ 398 $ 465 $ 204
====== ====== ====== ======
See Notes to Condensed Consolidated Financial Statements
-3-
<PAGE>
J.B. Williams Holdings, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
(In Thousands)
AT JUNE 30, 1997 AT DECEMBER 31, 1996
ASSETS
Current Assets:
Cash and cash equivalents $22,054 $21,201
Accounts receivable, net 5,561 8,054
Inventories 4,620 3,235
Other current assets 915 570
------- -------
Total Current Assets 33,150 33,060
Property and Equipment, Net 887 929
Intangible Assets, Net 37,382 39,222
Other Assets 3,509 3,584
------- -------
TOTAL ASSETS $74,928 $76,795
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities:
Accounts payable $2,296 $3,579
Accrued expenses 5,307 6,356
------- -------
Total Current Liabilities 7,603 9,935
------- -------
Long Term Debt 50,345 50,345
------- -------
Shareholder's Equity:
Common stock and paid-in capital 9,600 9,600
Retained earnings 7,380 6,915
------- -------
Total Shareholder's Equity 16,980 16,515
------- -------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $74,928 $76,795
======= =======
See Notes to Condensed Consolidated Financial Statements
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<PAGE>
J.B. Williams Holdings, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(In Thousands)
SIX MONTHS ENDED JUNE 30,
1997 1996
OPERATING ACTIVITIES:
Net income $ 465 $ 204
Adjustments to reconcile net income to
net cash provided by operating activities:
Amortization of intangibles and debt
issuance costs 1,983 2,105
Depreciation and amortization of
property and equipment 198 170
Changes in operating assets and liabilities:
Accounts receivable 2,493 2,819
Inventories (1,385) (548)
Other current assets (345) (260)
Accounts payable (1,283) (930)
Accrued expenses (1,049) (1,935)
Other assets (68) 68
------- -------
Net Cash Provided By Operating Activities 1,009 1,693
------- -------
INVESTING ACTIVITIES:
Purchases of property and equipment (156) (399)
------- -------
Net Cash Used in Investing Activities (156) (399)
------- -------
FINANCING ACTIVITIES:
Repurchase of Senior Notes --- (4,655)
------- -------
Net Cash Used in Financing Activities --- (4,655)
------- -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 853 (3,361)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 21,201 19,478
------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $22,054 $16,117
======= =======
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid $424 $779
Interest paid $3,021 $3,380
See Notes to Condensed Consolidated Financial Statements
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<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 June 30, 1997 and for the three month and six month periods ended June 30,
1997 and 1996 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 and six month periods ended June 30, 1997 and
1996 have been reflected. All such adjustments are of a normal recurring
nature. The June 30, 1997 condensed consolidated financial statements should
be read in conjunction with the consolidated financial statements and notes
thereto for the year ended December 31, 1996 included in the Company's Annual
Report on Form 10-K.
The results of operations for the period ended June 30, 1997 are not
necessarily indicative of the operating results for the full year.
2. Long Term Debt
Long term debt consists of $50.3 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.
-6-
<PAGE>
4. Other Income
The Company received a one-time payment of $750,000, in January 1997,
representing a break-up fee payable to the Company pursuant to the terms of a
letter of intent entered into by the Company in connection with a potential
transaction.
5. Reclassifications
Certain reclassifications have been made to the 1996 financial statements
to conform with the current year's presentation.
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<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 JUNE 30, 1997
The following table sets forth certain operating data for the three months
ended June 30, 1997 and 1996.
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
(In Thousands)
PERSONAL CARE PRODUCTS ORAL CARE PRODUCTS TOTAL COMPANY
---------------------- ------------------ -------------
1997 1996 1997 1996 1997 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Sales $8,092 $6,504 $3,647 $3,339 $11,739 $9,843
Cost of Goods Sold 2,077 1,695 1,390 1,353 3,467 3,048
------ ------ ------ ------ ------- ------
Gross Margin 6,015 4,809 2,257 1,986 8,272 6,795
Distribution and Cash Discounts 540 424 433 363 973 787
Advertising and Promotion 2,146 678 487 429 2,633 1,107
------ ------ ------ ------ ------- ------
Brand Contribution $3,329 $3,707 $1,337 $1,194 4,666 4,901
====== ====== ====== ======
Selling, General and Admin. Exp. 2,047 1,759
------- ------
Depreciation and Amortization 1,061 1,142
Operating Income 1,558 2,000
Interest Expense, Net 1,216 1,327
------- ------
Income Before Income Taxes 342 673
Income Tax Provision 134 275
------- ------
Net Income $ 208 $ 398
======= ======
</TABLE>
For the three month period ended June 30,1997, net sales increased 19.3% to
$11,739,000 from $9,843,000 for the same period in 1996. Volumes, with the
exception of Cepacol mouthwash, are up versus 1996 across all brands. Aqua
Velva is leading the way fueled by strong shares on existing products and
incremental sales associated with the introduction of a new line of deodorants
and anti-perspirants.
For the three month period ended June 30, 1997, cost of goods sold increased
13.7% to $3,467,000 from $3,048,000 for the same period in 1996. This increase
is primarily related to the higher sales volumes.
-8-
<PAGE>
For the three month period ended June 30,1997, distribution expenses and cash
discounts increased 23.6% to $973,000 from $787,000 for the same period in
1996. This increase is primarily associated with the increased sales volumes
and the costs related to the consolidation of the Company's distribution
operations.
For the three month period ended June 30, 1997, advertising and promotion
expenses increased 137.9% to $2,633,000 from $1,107,000 for the same period in
1996. This increase is primarily due to higher levels of marketing support
behind the continued introduction of new Aqua Velva items.
For the three month period ended June 30, 1997, selling, general, and
administrative expenses increased 16.4% to $2,047,000 from $1,759,000 for the
same period in 1996. This increase is related to a combination of increased
staffing and higher broker commission payments related to the increased sales.
For the three month period ended June 30, 1997, depreciation and amortization
of $1,061,000 was down slightly versus $1,142,000 for the same period in 1996.
For the three month period ended June 30, 1997, interest expense, net of
interest income, decreased 8.4% to $1,216,000 from $1,327,000 for the same
period in 1996. This reduction is primarily due to lower interest expense
related to a reduction in the outstanding principal amount of the Senior Notes
as a result of the repurchase by the Company of $4,655,000 in outstanding
principal amount during 1996.
For the three month period ended June 30, 1997, income taxes were $134,000
versus $275,000 for the same period in 1996. The effective tax rate was 39%
for the 1997 interim period and 41% for the same period in 1996.
Results of Operations for the Six Month Period Ended June 30, 1997
The following table sets forth certain operating data for the six months ended
June 30, 1997 and 1996.
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
(In Thousands)
PERSONAL CARE PRODUCTS ORAL CARE PRODUCTS TOTAL COMPANY
---------------------- ------------------ -------------
1997 1996 1997 1996 1997 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Sales $15,064 $12,260 $8,449 $6,935 $23,513 $19,195
Cost of Goods Sold 3,961 3,046 3,075 2,525 7,036 5,571
------ ------ ------ ------ ------- ------
Gross Margin 11,103 9,214 5,374 4,410 16,477 13,624
Distribution and Cash Discounts 1,062 816 944 734 2,006 1,550
Advertising and Promotion 4,033 1,894 1,654 1,525 5,687 3,419
------ ------ ------ ------ ------- ------
Brand Contribution $6,008 $6,504 $2,776 $2,151 8,784 8,655
====== ====== ====== ======
Selling, General and Admin. Exp. 4,155 3,344
Depreciation and Amortization 2,181 2,275
------- ------
Operating Income 2,448 3,036
Other Income 750 ---
Interest Expense, Net (2,435) (2,691)
------- ------
Income Before Income Taxes 763 345
Income Tax Provision 298 141
------- ------
Net Income $ 465 $ 204
======= ======
</TABLE>
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<PAGE>
For the six month period ended June 30,1997, net sales increased 22.5% to
$23,513,000 from $19,195,000 for the same period in 1996. Volumes are up
versus 1996 across all brands. Aqua Velva is leading the way fueled by
strong shares on existing products and incremental sales associated with
the introduction of a new line of deodorants and anti-perspirants.
For the six month period ended June 30, 1997, cost of goods sold increased
26.3% to $7,036,000 from $5,571,000 for the same period in 1996. This increase
is related to the higher sales volumes combined with slightly higher
manufacturing costs caused by price increases from the Company's contract
manufacturers and component suppliers.
For the six month period ended June 30,1997, distribution expenses and cash
discounts increased 29.4% to $2,006,000 from $1,550,000 for the same period in
1996. This increase is associated with a combination of higher sales volumes
and the costs related to the consolidation of the Company's distribution
operations.
For the six month period ended June 30, 1997, advertising and promotion
expenses increased 66.3% to $5,687,000 from $3,419,000 for the same period in
1996. This increase is primarily due to higher levels of marketing support
behind the continued introduction of the new Aqua Velva items.
For the six month period ended June 30, 1997, selling, general, and
administrative expenses increased by 24.3% to $4,155,000 from $3,344,000 for
the same period in 1996. This increase is related to a combination of
increased staffing and higher broker commission payments related to the
increased sales.
For the six month period ended June 30, 1997, depreciation and amortization of
$2,181,000 was down slightly versus $2,275,000 for the same period in 1996.
For the six month period ended June 30, 1997, other income of $750,000 was
received as a result of a one-time payment that represented a break-up fee
payable to the Company pursuant to the terms of a Letter of Intent entered into
by the Company in connection with a potential transaction.
For the six month period ended June 30, 1997, interest expense, net of interest
income decreased 9.5% to $2,435,000 from $2,691,000 for the same period in
1996. This reduction is primarily due to lower interest expense related to a
reduction in the outstanding principal amount of the Senior Notes as a result
of the repurchase by the Company of $4,655,000 in outstanding principal amount
during 1996.
For the six month period ended June 30, 1997, income taxes were $298,000 versus
$141,000 for the same period in 1996. The effective tax rate was 39% for the
1997 interim period and 41% for the same period in 1996.
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<PAGE>
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 June 30, 1997 and 1996
(in thousands).
SIX MONTHS ENDED JUNE 30,
-------------------------
1997 1996
---- ----
Net cash provided by operating activities $1,009 $1,693
Net cash used in investing activities (156) (399)
Net cash used in financing activities --- (4,655)
Increase (Decrease) in cash and cash
equivalents $853 $(3,361)
The principal adjustments to reconcile net income of $465,000 for the period
ended June 30, 1997 to net cash provided by operating activities of $1,009,000
are depreciation and amortization of $2,181,000, partially offset by a net
increase in working capital requirements of $1,637,000. The working capital
increase is primarily linked to higher inventories and generally lower levels
of payables and accrued expenses.
Capital expenditures, which were $156,000 for the six months ended June
30, 1997, 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 $50.3 million of total debt
outstanding as of June 30, 1997. 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.
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<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.
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<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: AUGUST 12, 1997 /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 JUNE
30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 22,054
<SECURITIES> 0
<RECEIVABLES> 5,881
<ALLOWANCES> 320
<INVENTORY> 4,620
<CURRENT-ASSETS> 33,150
<PP&E> 2,081
<DEPRECIATION> 1,194
<TOTAL-ASSETS> 74,928
<CURRENT-LIABILITIES> 7,603
<BONDS> 50,345
0
0
<COMMON> 9,600
<OTHER-SE> 7,380
<TOTAL-LIABILITY-AND-EQUITY> 74,928
<SALES> 23,513
<TOTAL-REVENUES> 23,513
<CGS> 7,036
<TOTAL-COSTS> 7,036
<OTHER-EXPENSES> 14,029
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,435
<INCOME-PRETAX> 763
<INCOME-TAX> 298
<INCOME-CONTINUING> 763
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 465
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
