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 April 1, 2000
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
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(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, 2000: 10,000
<PAGE>
J.B. WILLIAMS HOLDINGS, INC.
I N D E X
Page
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PART I - FINANCIAL INFORMATION
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Item 1: Financial Statements (Unaudited):
Condensed Consolidated Statements of Operations 1
for the Thirteen Weeks Ended April 1, 2000 and
April 3, 1999
Condensed Consolidated Balance Sheets at April 1, 2
2000 and January 1, 2000
Condensed Consolidated Statements of Cash Flows 3
for the Thirteen Weeks Ended April 1, 2000 and
April 3, 1999
Notes to Condensed Consolidated Financial Statements 4
Item 2: Management's Discussion and Analysis of Financial 5
Condition and Results of Operations
Part II - OTHER INFORMATION
-----------------
Item 6: Exhibits and Reports on Form 8-K 8
Signature 9
<PAGE>
J.B. Williams Holdings, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In Thousands)
Thirteen Weeks Ended
----------------------
April 1, April 3,
2000 1999
-------- --------
NET SALES ...................................... $ 12,597 $ 14,209
Cost of sales .................................. 4,597 5,651
-------- --------
GROSS MARGIN ................................... 8,000 8,558
Distribution and cash discounts ................ 880 1,243
Advertising and promotion ...................... 3,980 3,904
Selling, general and administrative expenses.... 2,919 2,790
Depreciation and amortization .................. 1,053 1,049
-------- --------
OPERATING LOSS ................................. (832) (428)
Interest expense-net ........................... 1,325 1,503
-------- --------
LOSS BEFORE INCOME TAX BENEFIT ................. (2,157) (1,931)
Income tax benefit ............................. (884) (791)
-------- --------
NET LOSS ....................................... $ (1,273) $ (1,140)
======== ========
Loss per share - basic and diluted ............. $ 127.30 $ 114.00
Weighted average shares outstanding ............ 10,000 10,000
See Notes to Condensed Consolidated Financial Statements
-1-
<PAGE>
J.B. Williams Holdings, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
(In Thousands)
At April At January
1, 2000 1, 2000
-------- --------
ASSETS
- ------
Current Assets:
Cash and cash equivalents ................. $ 11,881 $ 11,113
Accounts receivable, net .................. 8,914 14,144
Inventories ............................... 8,204 6,404
Other current assets ...................... 457 831
-------- --------
Total Current Assets .................. 29,456 32,492
Property and Equipment, Net ...................... 2,051 2,005
Intangible Assets, Net ........................... 38,996 39,744
Other Assets ..................................... 4,892 4,956
-------- --------
TOTAL ASSETS ..................................... $ 75,395 $ 79,197
======== ========
LIABILITIES AND SHAREHOLDER'S EQUITY
- ------------------------------------
Current Liabilities:
Accounts payable .......................... $ 3,561 $ 3,195
Accrued expenses .......................... 4,395 7,290
-------- --------
Total Current Liabilities ............. 7,956 10,485
-------- --------
Due To Sellers Of Acquired Businesses ............ 463 463
-------- --------
Long Term Debt ................................... 50,345 50,345
-------- --------
Shareholder's Equity:
Common stock and paid-in capital .......... 10,804 10,804
Notes receivable from sales of common stock (1,204) (1,204)
Retained earnings ......................... 7,031 8,304
-------- --------
Total Shareholder's Equity ............ 16,631 17,904
-------- --------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY ....... $ 75,395 $ 79,197
======== ========
See Notes to Condensed Consolidated Financial Statements
-2-
<PAGE>
<TABLE>
J.B. Williams Holdings, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(In Thousands)
<CAPTION>
Thirteen Weeks Ended
April 1, April 3,
2000 1999
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss ..................................................... $ (1,273) $ (1,140)
Adjustments to reconcile net loss to net cash used in
operating activities:
Amortization of intangibles and debt issuance costs ... 893 906
Depreciation and amortization of property and equipment 160 143
Changes in operating assets and liabilities:
Accounts receivable ................................ 5,230 3,892
Inventories ........................................ (1,800) 398
Other current assets ............................... 374 41
Accounts payable ................................... 366 (454)
Accrued expenses ................................... (2,895) (3,109)
Other assets ....................................... (81) (1,267)
-------- --------
Net Cash Provided By (Used In) Operating Activities .......... 974 (590)
-------- --------
INVESTING ACTIVITIES - Purchases of property and equipment .... (206) (474)
-------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS .............. 768 (1,064)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD ................ 11,113 6,263
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD ...................... $ 11,881 $ 5,199
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid ............................................ $ 2 $ 242
Interest paid ................................................ $ 3,021 $ 3,021
</TABLE>
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 majority owner of all
of the issued and outstanding capital stock of the Company.
The accompanying unaudited condensed consolidated financial statements as
of April 1, 2000 and for the thirteen weeks ended April 1, 2000 and April
3, 1999 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 thirteen weeks ended April 1, 2000 and April
3, 1999, have been reflected. All such adjustments are of a normal
recurring nature. The April 1, 2000 condensed consolidated financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto for the year ended January 1, 2000 included in
the Company's Annual Report on Form 10-K.
The results of operations for the period ended April 1, 2000 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.
5. RECLASSIFICATIONS
Certain reclassifications have been made to the 1999 financial statements
to conform with the current year's presentation.
-4-
<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 and health care products in the United States,
Canada and Puerto Rico. The personal care products business includes the Aqua
Velva, Brylcreem, Williams Lectric Shave, Williams Mug Soap, Total Hair Fitness
and the San Francisco Soap Company brands. The health care products business is
comprised of the Cepacol and Viractin brands, a broad line of oral health care
products that includes mouthwash, sore throat lozenges and sprays, children's
sore throat formulas and cold sore medications.
Results of Operations for the Thirteen Weeks Ended April 1, 2000
- ----------------------------------------------------------------
The following table sets forth certain operating data for the thirteen weeks
ended April 1, 2000 and April 3, 1999.
<TABLE>
<CAPTION>
Periods Ended April 1, 2000 and April 3, 1999
----------------------------------------------------------------------
(In Thousands)
Personal Care Products Health Care Products Total Company
---------------------- -------------------- -------------
2000 1999 2000 1999 2000 1999
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net Sales ...................... $ 8,315 $ 8,739 $ 4,282 $ 5,470 $12,597 $14,209
Cost of Goods Sold ............. 2,964 3,651 1,633 2,000 4,597 5,651
------- ------- ------- ------- ------- -------
Gross Margin ................... 5,351 5,088 2,649 3,470 8,000 8,558
Distribution and Cash Discounts 519 745 361 498 880 1,243
Advertising and Promotion ...... 2,169 2,740 1,811 1,164 3,980 3,904
------- ------- ------- ------- ------- -------
Brand Contribution ............. $ 2,663 $ 1,603 $ 477 $ 1,808 3,140 3,411
======= ======= ======= =======
Selling, General and Admin. Exp 2,919 2,790
Depreciation and Amortization .. 1,053 1,049
------- -------
Operating Loss ................. (832) (428)
Interest Expense, Net .......... 1,325 1,503
------- -------
Loss Before Income Tax Benefit . (2,157) (1,931)
Income Tax Benefit ............. (884) (791)
------- -------
Net Loss ....................... $(1,273) $(1,140)
======= =======
</TABLE>
For the period ended April 1, 2000, net sales decreased 11.3% to $12,597,000
from $14,209,000 for the comparable period in 1999. This decrease is primarily
due to lower sales on the health care products business, particularly on the
Cepacol cough/cold products. Of the $1,612,000 decrease in total company sales
versus 1999, approximately $1,100,000 reflects the impact of lower sales of
cough/cold products resulting from an early end to the 1999 - 2000 cough/cold
season. The remaining sales shortfall of approximately $500,000 reflects lower
sales of San Francisco Soap gift sets resulting from the Company's decision to
not offer a gift set program for the 2000 Mothers Day season.
-5-
<PAGE>
For the period ended April 1, 2000, cost of goods sold decreased 18.7% to
$4,597,000 from $5,651,000 for the comparable period in 1999. This decrease is
directly linked to the Company's lower sales volumes combined with generally
lower manufacturing costs on the San Francisco Soap products. During 1999 the
San Francisco Soap business incurred certain one-time expenses associated with
the shutdown of the gift set/special pack assembly operation that the Company
operated during 1998 and with the March 1999 re-launch of the entire San
Francisco Soap product line.
For the period ended April 1, 2000, distribution expenses and cash discounts
decreased 29.2% to $880,000 from $1,243,000 for the comparable period in 1999.
This decrease is primarily due to lower sales volumes, reduced levels of
shipping penalties and other warehouse charges.
For the period ended April 1, 2000, advertising and promotion expenses of
$3,980,000 increased 1.9% versus the $3,904,000 spent during the comparable
period in 1999. All of this increase is related to the Health Care Products
business as there was a national marketing program supporting the Cepacol
business that occurred in January 2000. Marketing spending for the Personal Care
Products business actually decreased during this period in 2000 as support
levels behind the Total Hair Fitness line of shampoos and conditioners for men
were significantly reduced.
For the period ended April 3, 1999, selling, general and administrative expenses
increased by 4.6% to $2,919,000 from $2,790,000 for the comparable period in
1999. Most of this increase is related to generally higher levels of salaries
and management consulting expenses partially offset by lower broker commission
payments associated with the decline in net sales.
For the period ended April 1, 2000, depreciation and amortization of $1,053,000
remained essentially unchanged from $1,049,000 for the comparable period in
1999.
For the period ended April 1, 2000, interest expense, net of interest income,
decreased 11.8% to $1,325,000 from $1,503,000 for the comparable period in 1999.
Higher levels of cash have resulted in a corresponding increase in interest
income, thereby resulting in an overall net decrease in interest expense.
For the period ended April 1, 2000, the Company recorded an income tax benefit
of $884,000 versus an income tax benefit of $791,000 for the comparable period
in 1999. The effective tax rate was 41% for both interim periods.
As a result of the foregoing, the Company realized a net loss of $(1,273,000)
for the period ended April 1, 2000. This compares unfavorably with a net loss of
$(1,140,000) for the comparable period in 1999. Most of this variance can be
attributed to the profit effect of the lower sales volumes.
-6-
<PAGE>
Liquidity and Capital Resources
- -------------------------------
The following chart summarizes the net funds provided and/or used in operating,
financing and investing activities for the thirteen weeks ended April 1, 2000
and April 3, 1999 (in thousands).
Period Ended
------------
April 1, April 3,
-------- --------
2000 1999
---- ----
Net cash provided by (used in) operating activities .. $ 974 $ (590)
Net cash used in investing activities ................ (206) (474)
Increase (decrease) in cash and cash equivalents ..... $ 768 $(1,064)
The principal adjustments to reconcile net loss of $(1,273,000) for the period
ended April 1, 2000 to net cash provided by operating activities of $974,000 are
depreciation and amortization of $1,053,000, combined with a net decrease in
working capital requirements of $1,194,000. The working capital decrease is
primarily linked to generally lower levels of accounts receivable.
Capital expenditures, which were $206,000 for the period ended April 1, 2000,
are generally not significant in the Company's business. The Company has
approximately $.6 million budgeted in 2000 for continued enhancements to its
computer network and for the development of certain new plastic bottle molds.
As a result of the Senior Notes, the Company had $50.3 million of total debt
outstanding as of January 1, 2000 and April 1, 2000. 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. Since there can be no guarantee that the Company will generate internal
funds sufficient to finance its operations and debt requirements, the Company
has arranged for a secured line of credit with the Bank of New York through
August 31, 2000 to provide funds, should they be required, in order for the
Company to meet its liquidity requirements. The line of credit is in the maximum
amount of $5,000,000, with the amount available being subject to reduction based
on certain criteria relative to the Company's accounts receivable and inventory.
-7-
<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.
-8-
<PAGE>
SIGNATURES
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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 11, 2000 /s/ Kevin C. Hartnett
------------- ---------------------------------
Name: Kevin C. Hartnett
Title: Vice President and Chief
Financial Officer
-9-
<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 APRIL 1, 2000 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-30-2000
<PERIOD-END> APR-01-2000
<CASH> 11,881
<SECURITIES> 0
<RECEIVABLES> 9,496
<ALLOWANCES> 582
<INVENTORY> 8,204
<CURRENT-ASSETS> 29,456
<PP&E> 4,743
<DEPRECIATION> 2,692
<TOTAL-ASSETS> 75,395
<CURRENT-LIABILITIES> 7,956
<BONDS> 50,345
0
0
<COMMON> 10,804
<OTHER-SE> 5,827
<TOTAL-LIABILITY-AND-EQUITY> 75,395
<SALES> 12,597
<TOTAL-REVENUES> 12,597
<CGS> 4,597
<TOTAL-COSTS> 4,597
<OTHER-EXPENSES> 8,832
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,325
<INCOME-PRETAX> (2,157)
<INCOME-TAX> (884)
<INCOME-CONTINUING> (2,157)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,273)
<EPS-BASIC> (127.30)
<EPS-DILUTED> (127.30)
</TABLE>
