SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 28, 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: 1-13736
U.S. INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of 22-3369326
incorporation or organization) (I.R.S.Employer Identification No.)
101 WOOD AVENUE SOUTH
ISELIN, NJ 08830
(Address of principal executive offices)
(908) 767-0700
(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 X No
--- ---
As of January 31, 1997, U.S. Industries, Inc. had one class of common stock, of
which 50,517,017 shares were outstanding.
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U.S. INDUSTRIES, INC.
INDEX
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Page
No.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Statements of Operations
for the Three Months Ended December 31, 1996 and 1995................................... 1
Consolidated Balance Sheets, December 31, 1996
and September 30, 1996.................................................................. 2
Consolidated Statements of Cash Flows
for the Three Months Ended December 31, 1996 and 1995................................... 3
Consolidated Statement of Changes in Stockholders'
Equity for the Three Months Ended December 31, 1996..................................... 4
Notes to Consolidated Financial Statements.............................................. 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................................... 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K........................................................ 15
SIGNATURE ................................................................................................... 16
EXHIBIT INDEX ................................................................................................... 17
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PART I. FINANCIAL INFORMATION.
ITEM 1. FINANCIAL STATEMENTS.
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U.S. INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN MILLIONS EXCEPT PER SHARE DATA)
(unaudited)
THREE MONTHS ENDED
December 31,
1996 1995
---- ----
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Net sales $ 527 $ 464
Operating costs and expenses:
Cost of products sold 355 309
Selling, general and administrative expenses 124 116
----------- ----------
Operating income 48 39
Interest expense 12 20
Interest income (1) (2)
Other expense (income), net 1 (1)
----------- -----------
Income before income taxes, discontinued operations and
extraordinary loss 36 22
Provision for income taxes 16 10
----------- ----------
Income from continuing operations 20 12
Discontinued operations:
Income from operations of discontinued operations
(net of income taxes of $2 and $1) 2 1
Gain on disposal of discontinued operations
(net of income taxes of $1 and $10) 1 68
----------- ----------
Income from discontinued operations 3 69
----------- ----------
Income before extraordinary loss 23 81
Extraordinary loss (net of income tax benefits of $1 and $16) (2) (25)
----------- -----------
Net income $ 21 $ 56
=========== ==========
Income from continuing operations per share $ 0.39 $ 0.23
Income from discontinued operations per share 0.07 1.28
Extraordinary loss per share (0.04) (0.46)
----------- -----------
Net income per share $ 0.42 $ 1.05
=========== ==========
Weighted average common shares outstanding 50.9 53.4
=========== ==========
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SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
1
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U.S. INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS EXCEPT SHARE DATA)
December 31, September 30,
1996 1996
---- ----
(unaudited)
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ASSETS
Current assets:
Cash and cash equivalents $ 42 $ 45
Trade receivables, net of allowance of $41 and $38 341 383
Inventories, net 385 366
Deferred income taxes 44 43
Other current assets 26 22
Net assets held for disposition 69 86
--------------- -------------
Total current assets 907 945
Property, plant and equipment, net of accumulated
depreciation of $390 and $380 297 287
Deferred income taxes 27 26
Other assets 124 113
Goodwill, net 413 416
--------------- -------------
$ 1,768 $ 1,787
=============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 3 $ 1
Current maturities of long-term debt 165 16
Trade accounts payable 127 162
Accrued expenses and other liabilities 147 171
Income taxes payable 52 43
--------------- -------------
Total current liabilities 494 393
Long-term debt 592 717
Other liabilities 156 150
--------------- -------------
Total liabilities 1,242 1,260
--------------- -------------
Commitments and contingencies
Stockholders' equity:
Common stock (par value $.01 per share), authorized 200,000,000 shares;
issued 53,767,314 and 53,734,565,
respectively; outstanding 50,546,178 and 51,392,001, respectively) 1 1
Paid in capital 563 563
Retained earnings 50 29
Minimum pension liability adjustment (2) (2)
Unearned restricted stock (17) (19)
Cumulative translation adjustment 1 -
Treasury stock (3,221,136 and 2,342,564 shares, respectively) at cost (70) (45)
--------------- --------------
Total stockholders' equity 526 527
--------------- -------------
$ 1,768 $ 1,787
=============== =============
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SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
2
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U.S. INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS-UNAUDITED)
THREE MONTHS ENDED
DECEMBER 31,
1996 1995
---- ----
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OPERATING ACTIVITIES:
Income from continuing operations $ 20 $ 12
Adjustments to reconcile income from continuing operations to net cash
(used in) provided by operating activities of continuing operations:
Depreciation and amortization 13 14
Provision for doubtful accounts 2 3
Gain on sale of excess real estate (1) (1)
Changes in operating assets and liabilities, excluding the effects of
acquisitions and dispositions:
Decrease in trade receivables 40 46
Increase in inventories (19) (9)
Increase in other current assets (7) (2)
Increase in other assets (14) (13)
Decrease in trade accounts payable (35) (22)
Increase (decrease) in income taxes payable 4 (6)
Decrease in accrued expenses and other liabilities (19) (12)
Increase in other liabilities 2 9
--------------- ---------------
NET CASH (USED IN) PROVIDED BY OPERATING
ACTIVITIES OF CONTINUING OPERATIONS (14) 19
Income from discontinued operations 3 69
Adjustments to reconcile income from discontinued operations to
net cash provided by discontinued operations:
Gain on disposal of net assets held for disposition (1) (68)
Decrease in net assets held for disposition 4 4
--------------- ---------------
NET CASH PROVIDED BY DISCONTINUED OPERATIONS 6 5
--------------- ---------------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (8) 24
--------------- ---------------
INVESTING ACTIVITIES:
Proceeds from sale of net assets held for disposition 21 165
Proceeds from real estate transactions 3 4
Purchases of property, plant and equipment (21) (12)
Proceeds from sale of property, plant and equipment 1 -
--------------- ---------------
NET CASH PROVIDED BY INVESTING ACTIVITIES 4 157
--------------- ---------------
FINANCING ACTIVITIES:
Proceeds from long-term debt 878 783
Repayment of long-term debt (854) (959)
Proceeds (repayment) of notes payable 2 (3)
Purchase of treasury stock (25) (11)
--------------- ----------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 1 (190)
--------------- ----------------
DECREASE IN CASH AND CASH EQUIVALENTS (3) (9)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 45 51
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 42 $ 42
=============== ===============
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SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
3
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U.S. INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED DECEMBER 31, 1996
(IN MILLIONS EXCEPT SHARE DATA)
(UNAUDITED)
Minimum
Pension Unearned Cumulative Total
Common Paid in Retained Liability Restricted Translation Treasury Stockholders'
Stock Capital Earnings Adjustment Stock Adjustment Stock Equity
----- ------- -------- ---------- ----- ---------- ----- ------
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Balance at September 30, 1996 $ 1 $ 563 $ 29 $ (2) $ (19) $ - $ (45) $ 527
Net income 21 21
Amortization of unearned restricted
stock 2 2
Purchase of 880,000 shares of common
stock (25) (25)
Common stock issued (32,749 shares)
upon exercise of options - - -
Treasury stock issued (1,428 shares) to
directors - - -
Translation adjustment 1 1
-------- --------- --------- --------- --------- -------- --------- ---------
Balance at December 31, 1996 $ 1 $ 563 $ 50 $ (2) $ (17) $ 1 $ (70) $ 526
======== ========= ========= ========= ========= ======== ========= =========
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SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
4
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U.S. INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 1 - BASIS OF PRESENTATION
U.S. Industries, Inc. (together with its subsidiaries, the "Company") is a
diversified manufacturer of a broad range of consumer, building and industrial
products. The Company was incorporated in Delaware in February 1995 and has been
publicly-owned since May 31, 1995, at which time Hanson PLC ("Hanson") paid a
dividend to its shareholders of the Company's common stock. Prior to May 31,
1995, the Company was a wholly-owned subsidiary of Hanson. Certain businesses,
assets and liabilities were transferred to the Company by Hanson pursuant to
transactions consummated on May 31, 1995 and June 5, 1995 (collectively, the
"Demerger").
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information,
Article 10 of Regulation S-X and with the instructions to Form 10-Q.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
The interim financial data for the three months ended December 31, 1996 and 1995
are unaudited and, in the opinion of management, reflect all adjustments
necessary for a fair presentation of the financial position and results of
operations for the interim periods on a consistent basis. Such adjustments were
of a normal and recurring nature. The results of operations for the three month
period ended December 31, 1996 are not necessarily indicative of those for the
full fiscal year ending September 27, 1997. For further information, refer to
the Consolidated (Combined) Financial Statements and footnotes thereto included
in the Company's Annual Report on Form 10-K for the fiscal year ended September
28, 1996.
The Company's fiscal year ends on the Saturday nearest to September 30. All
three month data contained herein reflect results of operations for the 13-week
periods ended on the Saturday closest to December 31, but are presented as of
such date for convenience.
Prior periods presented have been restated to reflect divestitures of businesses
which are included in net assets held for disposition. See Note 4.
NOTE 2 - INVENTORIES
Inventories consist of the following:
(in millions)
December 31, September 30,
1996 1996
---- ----
(unaudited)
Finished products $ 181 $ 187
In-process products 94 79
Raw materials 110 100
------------------ ----------------
Inventories, net $ 385 $ 366
================== ================
5
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NOTE 3 - DEPRECIATION AND AMORTIZATION
Depreciation and amortization consists of the following:
(in millions-unaudited)
Three Months Ended
December 31,
1996 1995
---- ----
Depreciation $ 10 $ 9
Amortization of goodwill 3 3
Amortization of unearned restricted stock 2 2
Amortization of deferred income (2) -
-------------- -------------
$ 13 $ 14
============== =============
NOTE 4 - DISCONTINUED OPERATIONS
In the first quarter of fiscal 1996 the Company sold Blue Mountain Industries
and the Office Furniture Group for an aggregate of $165 million in cash and a
note for $5 million, resulting in an aggregate gain of $68 million, net of tax.
In October 1996, the Company sold its Tubular Textile Machinery business for $21
million in cash and a note for $1 million resulting in a gain of approximately
$1 million, net of tax.
At December 31, 1996 the Company owned the following businesses and investment
which were classified as discontinued operations: SCM Metal Products, Inc. ("SCM
Metals"), QPF, Inc. ("QPF"), Bearing Inspection, Inc. and an equity investment
in Ground Round Restaurants, Inc. SCM Metals and QPF were disposed of in January
1997 in separate transactions. See Note 7.
The following is a summary of the operating results of the businesses and the
equity investment classified as discontinued operations:
(in millions-unaudited)
Three Months Ended
December 31,
1996 1995
---- ----
Net Sales $ 38 $ 115
Pre-tax income $ 4 $ 2
Amounts classified as net assets held for disposition relate to the businesses
and equity investment referred to as discontinued operations and consist of the
following after accrual for anticipated net-of-tax losses on dispositions not
yet consummated:
(in millions)
December 31, September 30,
1996 1996
---- ----
(unaudited)
Net current assets $ 19 $ 30
Property, plant and equipment, net 50 63
Other non-current liabilities, net - (7)
--------------- --------------
Net assets held for disposition $ 69 $ 86
=============== =============
6
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NOTE 5 - LONG-TERM DEBT
Long-term debt consists of the following:
(in millions)
December 31, September 30,
1996 1996
---- ----
(unaudited)
7.25% Senior Notes $ 123 $ -
Term loan - 370
Revolving credit facility 500 250
Other long-term debt 134 113
----------------- ------------------
757 733
Less current maturities 165 16
----------------- ------------------
Long-term debt $ 592 $ 717
================= ==================
On December 12, 1996, the Company issued $125 million aggregate principal amount
of 7.25% Senior Notes due December 1, 2006 (the "Notes"). The net cash proceeds
were $123 million after transaction fees and discounts. The Notes bear interest
at 7.25% payable semiannually on June 1 and December 1, commencing June 1, 1997,
and are redeemable at any time at the option of the issuer, in whole or in part,
at a redemption price equal to the greater of (i) 100% of the principal amount
to be redeemed, or (ii) the sum of the present values of the remaining scheduled
payments of principal and interest on the Notes to be redeemed, discounted at a
rate based on the yield to maturity of comparable U.S. Government securities
plus 10 basis points, plus, in each case, accrued interest to the date of
redemption. The Notes are unsecured but the indenture places restrictions on
liens, subsidiary indebtness and dividends, among other things.
The proceeds from the sale of the Notes were used to repay a portion of the term
loan under the Company's then existing credit agreement (the "Previous Credit
Agreement"), the remainder of which was repaid using proceeds from the initial
borrowing under a credit agreement dated as of December 12, 1996 (the "New
Credit Agreement") consisting of a five year unsecured revolving line of credit
of up to an aggregate amount of $750 million. The revolving credit commitment
will be permanently reduced by $100 million on December 12, 1999 and by an
additional $150 million on December 12, 2000.
The New Credit Agreement includes (i) short-term committed advances ("Committed
Advances") and (ii) uncommitted bid option advances. The Committed Advances bear
interest at lower rates than the Previous Credit Agreement based on, at the
option of the Company, (i) specified spreads over the London Interbank Offered
Rate ("LIBOR") or (ii) the higher of the rate of interest publicly announced by
Bank of America in San Francisco, California as its reference rate or 50 basis
points above the federal funds rate in effect on such date (the "Base Rate").
The spreads on the LIBOR-based borrowings range between 15 and 62.5 basis
points, based upon the Company's senior unsecured debt ratings for the relevant
period. At December 31, 1996 three-month LIBOR was 5.56% per annum and the
spread over LIBOR was 25 basis points. A facility fee will accrue and be payable
on a quarterly basis in arrears to the lenders under the New Credit Agreement on
the full amount of the facility, regardless of the amount utilized. The facility
fee ranges between 7.5 and 25 basis points per annum, based upon the Company's
senior unsecured debt ratings for the relevant period. At December 31, 1996, the
facility fee was 12.5 basis points per annum.
The New Credit Agreement places restrictions on, among other things, liens,
mergers, consolidations and additional indebtedness. Its financial covenants
require the Company to maintain a maximum ratio of total funded debt to capital
and a maximum consolidated leverage ratio.
7
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NOTE 5 - LONG-TERM DEBT (CONTINUED)
In conjunction with the repayment of all outstanding indebtedness under the
Previous Credit Agreement, a net-of-tax, non-cash, extraordinary charge of $2
million was incurred to write-off unamortized deferred financing costs and to
accrue for previously deferred losses associated with interest rate protection
agreements. In the first quarter of fiscal 1996, in connection with entering
into the Previous Credit Agreement, the Company recorded a net-of-tax,
non-cash extraordinary charge of $25 million to write-off unamortized deferred
financing costs and to accrue for previously deferred losses associated with
interest rate protection agreements.
On December 12, 1996 the Company paid approximately $2 million to settle
interest rate protection agreements entered into in connection with the Notes.
This amount will be amortized over the life of the Notes as deferred financing
costs.
In order to manage its floating interest rate exposure, the Company may enter
into interest rate protection agreements whereby the Company receives a floating
rate based on three-month LIBOR and pays a weighted average fixed rate.
Currently the Company is party to such agreements with interest rates ranging
from 6.23% to 6.95% per annum. The aggregate notional amounts and periods
covered by such agreements are as follows:
December 31, 1996 through May 30, 1997 . . . . . . . . . . $500 million
May 30, 1997 through September 30, 1997. . . . . . . . . . $450 million
September 30, 1997 through May 30, 1998. . . . . . . . . . $300 million
May 30, 1998 through September 30, 1998. . . . . . . . . . $200 million
At inception, all interest rate protection agreements were of notional amounts
and maturities that related to specific portions of then outstanding debt and
accordingly, have been accounted for as hedge transactions.
Other long-term debt at December 31, 1996 includes $117 million of notes payable
with maturities due within one year which the Company expects to repay using
borrowings under the New Credit Agreement. Of this amount, $94 million was
borrowed under uncommitted short-term lines of credit with aggregate
availability of $200 million. At December 31, 1996, $165 million of long-term
debt was reclassified to current maturities because subsequent to the
quarter-end, the Company repaid indebtedness with the proceeds of asset sales in
accordance with its earlier announced intentions. See Note 7
NOTE 6 - COMMITMENTS AND CONTINGENCIES
Certain present and former operating sites, or portions thereof, currently or
previously owned and/or leased by current or former operating units of the
Company are the subject of investigations, monitoring or remediation under the
federal Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA" or "superfund"), the Federal Resource Conservation and Recovery Act or
comparable state statutes or agreements with third parties. These proceedings
are in various stages ranging from initial investigations to active settlement
negotiations to implementation of the clean-up or remediation of sites.
A number of present and former operating units of the Company have been named as
Potentially Responsible Parties ("PRPs") at approximately 13 off-site disposal
sites under CERCLA or comparable state statutes in a number of federal and state
proceedings. In each of these matters the operating unit of the Company is
working with the governmental agencies involved and other PRPs to address
environmental claims in a responsible and appropriate manner.
At December 31, 1996, the Company had accrued $15 million for environmental
related liabilities of which the Company is aware. The Company believes that the
range of liability for such matters is between $7 million and $18 million.
Also, certain of the Company's subsidiaries are defendants or plaintiffs in
lawsuits that have arisen in the normal course of business. While certain of
these matters involve substantial amounts, it is management's opinion, based
8
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NOTE 6 - COMMITMENTS AND CONTINGENCIES (CONTINUED)
on the advice of counsel, that the ultimate resolution of such litigation and
environmental matters will not have a material adverse effect on the Company's
financial condition, results of operations or cash flows.
NOTE 7 - SUBSEQUENT EVENTS
In January 1997, the Company, in separate transactions, sold SCM Metals and the
assets of QPF for cash of $122 million and $43 million, respectively. Management
estimates the aggregate gain on these transactions will approximate $79 million,
net of tax. See Note 4.
In January 1997, an initial public offering of approximately 25% of the
shares of Jade Technologies Singapore Ltd ("Jade") on the Stock Exchange of
Singapore was completed. Net proceeds to Jade were approximately $4 million.
In January 1997, the Company purchased the assets of Woodings-Verona Tool Works,
Inc. ("Woodings-Verona") for $5 million in cash plus the assumption of
approximately $1 million of debt. Woodings-Verona manufactures hot-forged heavy
striking tools including sledge hammers, axes, bars, picks and railroad tools.
On February 10, 1997, the Company entered into an agreement to acquire certain
assets of the outdoor furniture division of Sunbeam Corporation ("Sunbeam") for
$84.5 million, subject to adjustments based on a closing date audit. The
transaction is expected to close in March 1997 and is subject to
Hart-Scott-Rodino approval and other customary closing conditions. Sunbeam
produces casual outdoor furniture in the U.S., offering a complete line of
aluminum, wrought iron and resin outdoor furniture and accessories such as
cushions and umbrellas.
9
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
The Company's operations are grouped into three segments: Consumer, Building
Products and Industrial Products. The results of all operations sold or
classified as discontinued operations are excluded from the table and discusion
below for all periods presented. See Note 4 to the Consolidated Financial
Statements.
<TABLE>
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RESULTS OF OPERATIONS
(IN MILLIONS)
THREE MONTHS ENDED
DECEMBER 31,
1996 1995
---- ----
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NET SALES
Consumer Group
Housewares .......................................... $ 111 $ 86
Recreation and Leisure............................... 75 67
Footwear and Textiles................................ 58 63
-------------- ---------------
244 216
-------------- ---------------
Building Products Group
Bath Products........................................ 68 60
Lighting Products and Systems........................ 131 119
-------------- ---------------
199 179
-------------- ---------------
Industrial Products Group............................... 84 69
-------------- ---------------
TOTAL NET SALES................................... $ 527 $ 464
============== ===============
OPERATING INCOME
Consumer Group
Housewares........................................... $ 21 $ 18
Recreation and Leisure............................... 5 2
Footwear and Textiles................................ 5 5
-------------- ---------------
31 25
-------------- ---------------
Building Products Group
Bath Products........................................ 6 7
Lighting Products and Systems........................ 10 8
-------------- ---------------
16 15
-------------- ---------------
Industrial Products Group............................... 8 5
-------------- ---------------
Corporate expenses...................................... (7) (6)
-------------- ---------------
TOTAL OPERATING INCOME........................... $ 48 $ 39
============== ===============
</TABLE>
10
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DISCLOSURE CONCERNING FORWARD-LOOKING STATEMENTS
All statements, other than statements of historical fact, included in the
following Management's Discussion or elsewhere in this Quarterly Report are, or
may deemed to be, forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. Various economic and competitive factors could cause actual results to
differ materially from those discussed in such forward-looking statements,
including factors which are outside of the control of the Company, such as
consumer spending patterns, availability of, and interest rates for, consumer
credit, levels of residential and commercial construction, levels of automotive
production and changes in raw material costs, along with the other factors noted
in this Quarterly Report and the Company's Annual Report on Form 10-K for fiscal
1996 with respect to the Company's businesses.
THREE MONTHS ENDED DECEMBER 31, 1996
COMPARED TO THREE MONTHS ENDED DECEMBER 31, 1995
INTRODUCTION
The Company had sales of $527 million and operating income of $48 million for
the quarter ended December 31, 1996, increases of $63 million (13.6%) and $9
million (23.1%), respectively, compared to the first quarter of fiscal 1996.
CONSUMER GROUP
The Consumer Group had sales of $244 million and operating income of $31 million
for the quarter ended December 31, 1996, increases of $28 million (13.0%) and $6
million (24.0%), respectively, over the first quarter of fiscal 1996.
The Housewares Operations had sales of $111 million and operating income of $21
million for the quarter ended December 31, 1996, increases of $25 million
(29.1%) and $3 million (16.7%), respectively, over the first quarter of fiscal
1996. The increases reflect strong shipments of both spring and winter tools and
shovels, continued growth of international vacuum cleaner sales and the first
time inclusion of the Company's ladder operations. Growth in higher-margin
international vacuum cleaner sales offset continued weakness in domestic vacuum
cleaner sales.
The Recreation and Leisure Operations had sales of $75 million and operating
income of $5 million for the quarter ended December 31, 1996, increases of $8
million (11.9%) and $3 million (150.0%), respectively, from the first quarter of
fiscal 1996. The improvement over the comparable period of the prior year
reflects continued strength in golf putter and iron sales, and a significant
improvement in the results of toy operations. Following the Company's exit from
the promotional toy business, the agricultural and collectible toy categories
performed particularly well relative to the comparable period of the prior year.
The Footwear and Textiles Operations had sales of $58 million and operating
income of $5 million for the quarter ended December 31, 1996, a decrease in
sales of $5 million (7.9%) and unchanged operating income compared to the first
quarter of fiscal 1996. The Footwear and Textiles Operations continued to suffer
from weak market conditions in the western footwear category.
BUILDING PRODUCTS GROUP
The Building Products Group had sales of $199 million and operating income of
$16 million for the quarter ended December 31, 1996, increases of $20 million
(11.2%) and $1 million (6.7%), respectively, over the first quarter of fiscal
1996.
The Bath Products Operations had sales of $68 million and operating income of $6
million for the quarter ended December 31, 1996, an increase of $8 million
(13.3%) and a decrease of $1 million (14.3%), respectively, compared to the
first quarter of fiscal 1996. While domestic sales of bath products continue to
grow, the trend toward lower margins on domestic sales also continued, resulting
in reduced operating income. Results from
11
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foreign operations were below the prior year due to the first time inclusion of
seasonal operating losses of the Company's above-ground swimming pool
operations, softer European markets and start-up costs related to Singapore
operations.
The Lighting Products and Systems Operations had sales of $131 million and
operating income of $10 million for the quarter ended December 31, 1996,
increases of $12 million (10.1%) and $2 million (25.0%), respectively, over the
first quarter of fiscal 1996. The Lighting Products and Systems Operations
benefitted from strong sales and improved operating margins in the residential
and outdoor lighting businesses.
INDUSTRIAL PRODUCTS GROUP
The Industrial Products Group had sales of $84 million and operating income of
$8 million for the quarter ended December 31, 1996, increases of $15 million
(21.7%) and $3 million (60.0%), respectively, over the first quarter of fiscal
1996. These results reflect strong sales volume at the Company's automotive
leather operations as well as its metal parts fabrication and plastic automotive
components businesses. Sales and operating income further benefitted from higher
automotive leather selling prices.
INTEREST AND TAXES
Interest expense was $12 million in the three months ended December 31, 1996, an
$8 million (40.0%) decrease from the first quarter of fiscal 1996. The decrease
reflects lower levels of debt outstanding and lower average interest rates.
Interest income was $1 million in the three months ended December 31, 1996, a $1
million (50.0%) decrease from the first quarter of fiscal 1996.
The provision for income taxes on continuing operations was $16 million in the
three months ended December 31, 1996, on pre-tax income of $36 million as
compared to a $10 million provision on pre-tax income of $22 million in the
first quarter of fiscal 1996. The effective tax rate approximated 45% in each
period.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of liquidity and capital resources are cash
provided from operations, borrowings under the New Credit Agreement and proceeds
from the issuance of the Notes described below.
Net cash used in operating activities was $8 million for the three months ended
December 31, 1996 compared to net cash provided of $24 million for the
comparable period of fiscal 1996. In the current period, continuing operations
used $14 million compared to generating $19 million for the comparable period of
fiscal 1996. This change relates primarily to increases in cash payments to
vendors, increased inventory build and advertising expenditures at the Company's
golf subsidiary due to new product introduction and the seasonal cash
requirements of the Company's above ground swimming pool operations (acquired in
the third quarter of fiscal 1996).
Net cash provided by investing activities was $4 million for the three months
ended December 31, 1996 compared to $157 million for the comparable period of
fiscal 1996. The three months ended December 31, 1996 included proceeds of $21
million from the sale of net assets held for disposition, which resulted in an
after-tax gain of $1 million, and $4 million from real estate transactions and
sales of property plant and equipment, partially offset by capital expenditures
of $21 million. The prior year period included $165 million generated from the
sale of net assets held for disposition, which resulted in an after-tax gain of
$68 million.
Net cash provided by financing activities was $1 million for the three months
ended December 31, 1996 compared to net cash used in financing activities of
$190 million for the comparable period of fiscal 1996. The three months ended
December 31, 1996 included new borrowings under long-term debt and notes payable
in excess of repayments totaling $26 million offset by the purchase of $25
million of the Company's common stock for treasury. In the first quarter of
fiscal 1996, proceeds from the sale of businesses resulted in a significant
reduction in borrowings.
On December 12, 1996, the Company issued $125 million aggregate principal amount
of 7.25% Senior Notes due December 1, 2006 (the "Notes"). The net cash proceeds
were $123 million after transaction fees and discounts. The Notes bear interest
at 7.25% payable semiannually on June 1 and December 1, commencing June 1, 1997,
and are
12
<PAGE>
redeemable at any time at the option of the issuer, in whole or in part, at a
redemption price equal to the greater of (i) 100% of the principal amount to be
redeemed, or (ii) the sum of the present values of the remaining scheduled
payments of principal and interest on the Notes to be redeemed, discounted at a
rate based on the yield to maturity of comparable U.S. Government securities
plus 10 basis points, plus, in each case, accrued interest to the date of
redemption. The Notes are unsecured but the indenture places restrictions on
liens, subsidiary indebtness and dividends, among other things.
The proceeds from the sale of the Notes were used to repay a portion of the term
loan under the Company's then existing credit agreement (the "Previous Credit
Agreement"), the remainder of which was repaid using proceeds from the initial
borrowing under a credit agreement dated as of December 12, 1996 (the "New
Credit Agreement") consisting of a five year unsecured revolving line of credit
of up to an aggregate amount of $750 million. The revolving credit commitment
will be permanently reduced by $100 million on December 12, 1999 and by an
additional $150 million on December 12, 2000.
The New Credit Agreement includes (i) short-term committed advances ("Committed
Advances") and (ii) uncommitted bid option advances. The Committed Advances bear
interest at lower rates than the Previous Credit Agreement based on, at the
option of the Company, (i) specified spreads over the London Interbank Offered
Rate ("LIBOR") or (ii) the higher of the rate of interest publicly announced by
Bank of America in San Francisco, California as its reference rate or 50 basis
points above the federal funds rate in effect on such date (the "Base Rate").
The spreads on the LIBOR-based borrowings range between 15 and 62.5 basis
points, based upon the Company's senior unsecured debt ratings for the relevant
period. At December 31, 1996 three-month LIBOR was 5.56% per annum and the
spread over LIBOR was 25 basis points. A facility fee will accrue and be payable
on a quarterly basis in arrears to the lenders under the New Credit Agreement on
the full amount of the facility, regardless of the amount utilized. The facility
fee ranges between 7.5 and 25 basis points per annum, based upon the Company's
senior unsecured debt ratings for the relevant period. At December 31, 1996, the
facility fee was 12.5 basis points per annum.
The New Credit Agreement places restrictions on, among other things, liens,
mergers, consolidations and additional indebtedness. Its financial covenants
require the Company to maintain a maximum ratio of total funded debt to capital
and maximum consolidated leverage ratio.
In conjunction with the repayment of all outstanding indebtedness under the
Previous Credit Agreement, a net-of-tax, non-cash, extraordinary charge of $2
million was incurred to write-off unamortized deferred financing costs and to
accrue for previously deferred losses associated with interest rate protection
agreements. In the first quarter of fiscal 1996, in connection with entering
into the Previous Credit Agreement, the Company recorded a net-of-tax,
non-cash extraordinary charge of $25 million to write-off unamortized deferred
financing cost and to accrue for previously deferred losses associated with
interest rate protection agreements.
On December 12, 1996 the Company paid approximately $2 million to settle
interest rate protection agreements entered into in connection with the Notes.
This amount will be amortized over the life of the Notes as deferred financing
costs.
In order to manage its floating interest rate exposure, the Company utilizes
interest rate protection agreements whereby the Company receives a floating rate
based on three-month LIBOR and pays a weighted average fixed rate. Currently
the Company is party to such agreements with interest rates ranging from 6.23%
to 6.95% per annum. The aggregate notional amounts and periods covered by such
agreements are as follows:
December 31, 1996 through May 30, 1997 . . . . . . . . . . $500 million
May 30, 1997 through September 30, 1997. . . . . . . . . . $450 million
September 30, 1997 through May 30, 1998. . . . . . . . . . $300 million
May 30, 1998 through September 30, 1998. . . . . . . . . . $200 million
13
<PAGE>
At inception, all interest rate protection agreements were of notional amounts
and maturities that related to specific portions of then outstanding debt and
accordingly, have been accounted for as hedge transactions.
At December 31, 1996, other long-term debt includes $117 million of notes
payable with maturities due within one year which the Company expects to repay
using borrowings under the New Credit Agreement, which had unused availability
of $250 million. Of the other long-term debt referred to above, $94 million was
borrowed under uncommitted short-term lines of credit with aggregate
availability of $200 million, resulting in $106 million of unused availability.
Additionally, at December 31, 1996, $165 million of long-term debt was
reclassified to current maturities because subsequent to the quarter-end, the
Company repaid indebtedness with the proceeds of asset sales in accordance with
its earlier announced intentions. The Company believes that cash provided from
operations and availability under the unused credit facilities will provide
adequate support for the Company's cash needs for working capital and capital
expenditures for existing businesses and the proposed acquisition of the Sunbeam
outdoor furniture business. (See Note 7)
OUTLOOK
The first quarter's favorable comparison to prior year operating performance
benefits from the fact that last year's first quarter was an unusually weak one.
Looking forward, the Company believes that if the economy continues to show
reasonable strength which, if sustained, should enable the full year earnings
from continuing operations to achieve the middle of the $2.10 to $2.20 per share
range of analysts' estimates.
14
<PAGE>
PART II. OTHER INFORMATION.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
4.1 Indenture, dated as of December 12, 1996, among USI
American Holdings, Inc. ("USIAH"), U.S. Industries, Inc.
and PNC Bank, National Association, as Trustee (filed
as Exhibit 4.1 to Registration Statement No. 333-20183
on Form S-4 of USIAH and the Company (the "Form S-4")).*
10.1 Credit Agreement, dated December 12, 1996 (the "Credit
Agreement"), among USIAH, USI Funding, Inc., U.S.
Industries, Inc. and Bank of America National Trust and
Savings Association, as Agent and BA Securities, Inc.,
as Arranger (filed as Exhibit 10.1 to the Form S-4).*
10.2 First Amendment to the Credit Agreement, dated December
16, 1996.
27 Financial Data Schedule
(b) Form 8-K dated December 16, 1996
The Company filed a Current Report on Form 8-K, responsive to
Item 5 of such Form, on December 16, 1996, relating to the
sale by USI American Holdings, Inc., its wholly-owned
subsidiary, of $125 million aggregate principal amount of
senior notes due December 1, 2006, which were unconditionally
guaranteed by the Company. The senior notes were issued in a
transaction exempt from the registration requirements of the
Securities Act of 1933. No financial statements were filed.
_____________
* Incorporated by reference.
15
<PAGE>
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.
U.S. INDUSTRIES, INC.
Date: February 11, 1997 /s/ Frank R. Reilly
-----------------------------
Frank R. Reilly
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
16
<PAGE>
U.S. INDUSTRIES, INC.
EXHIBIT INDEX
4.1 Indenture, dated as of December 12, 1996, among USI American Holdings,
Inc. ("USIAH"), U.S. Industries, Inc. and PNC Bank, National
Association, as Trustee (filed as Exhibit 4.1 to Registration Statement
No. 333-20183 on Form S-4 of USIAH and the Company (the"Form S-4")).*
10.1 Credit Agreement, dated December 12, 1996 (the "Credit Agreement"), among
USIAH, USI Funding, Inc., U.S. Industries, Inc. and Bank of America
National Trust and Savings Association, as Agent and BA Securities, Inc.,
as Arranger (filed as Exhibit 10.1 to the Form S-4).*
10.2 First Amendment to the Credit Agreement, dated December 16, 1996.
27 Financial Data Schedule
_________________
* Incorporated by reference.
17
FIRST AMENDMENT TO THE CREDIT AGREEMENT
FIRST AMENDMENT TO THE CREDIT AGREEMENT (this "Amendment"),
dated as of December 16, 1996, among USI AMERICAN HOLDINGS, INC., a Delaware
corporation (the "Company"), USI FUNDING, INC., a Delaware corporation ("USI
Funding," and together with the Company, each a "Borrower," and collectively the
"Borrowers"), U.S. INDUSTRIES, INC., a Delaware corporation (the "Parent"), BANK
OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Bank (in such capacity the
"Existing Bank"), as Issuing Bank and Swingline Bank, and as Agent (in such
capacity the "Agent") and each of the lenders listed on Schedule A hereto (the
"New Banks"). All capitalized terms used herein and not otherwise defined shall
have the respective meanings provided such terms in the Credit Agreement
referred to below.
RECITALS
The Borrowers, the Parent, the Existing Bank, the Issuing
Bank and Swingline Bank, and the Agent are parties to a Credit Agreement dated
as of December 12, 1996 (the "Credit Agreement"); and
WHEREAS, the parties hereto wish to amend the Credit
Agreement as herein provided;
ARTICLE I.
AGREEMENT
1.01 The Existing Bank hereby sells and assigns to each of the
New Banks without recourse and without representation or warranty (other than as
expressly provided herein), and each New Bank hereby purchases and assumes from
the Existing Bank, that interest in and to each of the Existing Bank's rights
and obligations under the Credit Agreement as of the date hereof which in the
aggregate represents such New Bank's pro rata share (for each such New Bank, its
"Pro Rata Share") as set forth on Schedule B hereto (calculated after giving
effect to this Amendment), and such Pro Rata Share represents all of the
outstanding rights and obligations under the Credit Agreement that are being
sold and assigned to each New Bank, including, without limitation all rights and
obligations with respect to such New Bank's Pro Rata Share of the Aggregate
Commitment, including all such rights and obligations with respect to such New
Bank's Pro Rata Share of outstanding Committed Loans, Swingline Loans and
Letters of Credit. After giving effect to this Amendment, the Existing Bank's
and New Banks' Commitments will be as set forth on Schedule C hereto.
1.02 On and after the First Amendment Effective Date (as
hereinafter defined), Schedule 1.01(a) to the Credit Agreement shall be amended
by deleting Schedule
-1-
<PAGE>
1.01(a) thereto in its entirety and by inserting in lieu thereof a new Schedule
1.01(a) in the form of Schedule D hereto. For purposes of Section 12.02 of the
Credit Agreement, the address of each Bank shall be as set forth on Schedule D
hereto, or at such other address as such Bank may hereafter notify the Agent in
accordance with Section 12.10 of the Credit Agreement.
1.03 Each of the Banks (i) agrees that it will, independently
and without reliance upon Bank of America National Trust and Savings Association
as Agent or Existing Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement; (ii) appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under the Credit Agreement and the other Loan Documents as are
delegated to the Agent by the terms thereof, together with such powers as are
reasonably incidental thereto and (iii) agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Bank.
1.04 The Existing Bank and each of the New Banks hereby agrees
that all amounts accrued with respect to the Commitments, the Loans or the
Letters of Credit prior to the delivery by such New Bank of the amount referred
to in clause (ii) of Section 3.01 of this Amendment shall be for the account of
the Existing Bank and that all such amounts accrued after the delivery of such
amounts referred to in clause (ii) of such Section 3.01 shall be for the account
of such New Bank based upon its Pro Rata Share.
1.05 In accordance with Section 12.07(a) of the Credit
Agreement, on and as of the date upon which each of the New Banks delivers the
amounts referred to in clause (ii) of Section 3.01 of this Amendment, each New
Bank shall become a "Bank" under, and for all purposes of, the Credit Agreement
and the other Loan Documents.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
2.01 The Existing Bank (i) represents and warrants that it is
the legal and beneficial owner of the interest being sold and assigned by it
hereunder and that such interest is free and clear of any adverse claim; (ii)
makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in connection with
the Credit Agreement or the other Loan Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or the other Loan Documents or any other instrument or document
furnished pursuant thereto; and (iii) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrowers, the Parent or any of their Subsidiaries
-2-
<PAGE>
or the performance or observance by any of the parties to the Credit Agreement
or the other Loan Documents of any of such parties' obligations thereunder or
under any other instrument or document furnished pursuant thereto.
2.02 Each of the New Banks (i) represents and warrants that it
has received a copy of the Credit Agreement and the other Loan Documents,
together with copies of the financial statements referred to therein and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Amendment; (ii) represents and
warrants that it is an Eligible Assignee under Section 12.07(a) of the Credit
Agreement.
ARTICLE III.
CONDITIONS PRECEDENT
3.01 Subject to Section 3.02 of this Amendment, this Amendment
shall become effective on the date (the "First Amendment Effective Date") when
(i) each Borrower, the Parent, the Existing Bank and each New Bank shall have
signed a counterpart hereof (whether the same or different counterparts) and
shall have delivered (including by way of facsimile transmission) the same to
the Agent in accordance with Section 12.02(a) of the Credit Agreement and (ii)
each New Bank shall have delivered to the Agent, for the account of the Existing
Bank an amount equal to such New Bank's relevant Pro Rata Share of the
outstanding Committed Loans.
3.02 Notwithstanding Section 3.01 of this Amendment, if for
any reason any New Bank shall not have (i) signed a counterpart hereof and
delivered the same to the Agent in accordance with Section 12.02(a) of the
Credit Agreement and (ii) delivered to the Agent an amount equal to such New
Bank's Pro Rata Share of the outstanding Committed Loans, in each case on or
prior to 5:00 p.m. New York time on December 19, 1996, then, if the Existing
Bank agrees, this Amendment shall become effective notwithstanding such failure,
provided that (x) Schedules A, B, C and D hereto shall be modified to delete any
such New Bank, and such New Bank's relevant Pro Rata Share shall be reallocated
to the Existing Bank and (y) the signature pages of this Amendment shall be
deemed revised to delete such New Bank's name therefrom.
-3-
<PAGE>
ARTICLE IV.
AMENDMENTS TO THE CREDIT AGREEMENT
4.01 The definition of Interest Period appearing in the Credit
Agreement is hereby amended by deleting the text "one month" and inserting the
text "three months" in lieu thereof.
4.02 The definition of LIBOR appearing in the Credit Agreement
is deleted in its entirety and the following new definition of "LIBOR" is
inserted in lieu thereof:
"LIBOR" means, for each Interest Period for
Eurodollar Loans comprising the same Borrowing, the rate of interest
per annum determined by the Agent to be the arithmetic mean (rounded
upward to the nearest whole multiple of 1/16th%) of the rates of
interest per annum notified to the Agent by each Reference Bank as the
rate at which Dollar deposits for such Interest Period would be
offered, or in the case of a Non-Standard Interest Period that is
greater than one month the rate at which Dollar deposits for a
three-month Interest Period would be offered, or in the case of a
Non-Standard Interest Period that is less than one-month, the rate at
which Dollar deposits for a one-month Interest Period would be offered,
and in an amount approximately equal to the amount of the Eurodollar
Loan of such Reference Bank during such Interest Period would be
offered by its Eurodollar Lending office to major banks in the London
interbank market at or about 11:00 a.m. (London time) on the Second
Business Day prior to the commencement of such Interest Period."
4.03 The definition of Material Subsidiary appearing in the
Credit Agreement is hereby amended by inserting the text ",provided, that USI
Funding shall in any event constitute a Material Subsidiary of the Parent"
immediately following the text "and its consolidated Subsidiaries" appearing
therein.
4.04 Section 8.04(c) of the Credit Agreement is hereby amended
by deleting the text "and" the first time it appears therein.
4.05 Section 8.04(f) of the Credit Agreement is hereby amended
by (1) inserting the text "and" immediately preceding clause (y) thereof and (2)
deleting the text "$5,000,000 and (z) other letters of credit, so long as the
sum of undrawn face amounts and reimbursement obligations under this clause z
shall not exceed $50,000,000" and inserting the text "$55,000,000" in lieu
thereof.
-4-
<PAGE>
4.06 Section 8.04(g) of the Credit Agreement is hereby amended
by inserting the text "in an aggregate principal amount of $125,000,000"
immediately following the text "under the Senior Notes" appearing therein.
4.07 Section 12.01(a)(ii) of the Credit Agreement is hereby
amended by deleting the second parenthetical in its entirety and inserting the
new parenthetical "(pursuant to Section 2.19 or otherwise)" in lieu thereof.
4.08 Section 12.07 of the Credit Agreement is hereby amended
by inserting the text "or the then remaining commitment of such Bank"
immediately following the number "$5,000,000" appearing therein.
ARTICLE V
MISCELLANEOUS
5.01 THIS AMENDMENT IS LIMITED AS SPECIFIED AND SHALL NOT
CONSTITUTE A MODIFICATION, ACCEPTANCE OR WAIVER OF ANY OTHER PROVISION OF THE
CREDIT AGREEMENT OR ANY other Loan Document.
5.02 This Amendment may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which counterparts when executed and delivered shall be an original, but all
of which shall together constitute one and the same instrument. A complete set
of counterparts shall be lodged with each Borrower, the Issuing Bank and
Swingline Bank and the Agent.
5.03 THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW
OF THE STATE OF NEW YORK.
5.04 From and after the First Amendment Effective Date, all
references in the Credit Agreement and each of the Loan Documents to the Credit
Agreement shall be deemed to be references to such Credit Agreement as amended
hereby.
-5-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amendment to be duly executed and delivered as of the date
first above written.
USI AMERICAN HOLDINGS, INC.
By /s/ Robert M. Brier
----------------------------
Title: Vice President
USI FUNDING, INC.
By /s/ Robert M. Brier
----------------------------
Title: Vice President
U.S. INDUSTRIES, INC.
By /s/ Robert M. Brier
----------------------------
Title: Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Agent
By /s/ Steve A. Aronowitz
-----------------------------
Title: Managing Director
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Issuing Bank
By /s/ Steve A. Aronowitz
-----------------------------
Title: Managing Director
<PAGE>
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Swingline Bank
By /s/ Steve A. Aronowitz
-----------------------------
Title: Managing Director
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Bank
By /s/ Steve A. Aronowitz
-----------------------------
Title: Managing Director
BA SECURITIES, INC.
as Arranger
By /s/ Frank Britton
-----------------------------
Title: Managing Director
ABN AMRO BANK, N.V.
By /s/ David Cohen
-----------------------------
Title: C.B.O.
By /s/ David B. Martens
-----------------------------
Title: Vice President
BANCA NAZIONALE DEL LAVORO SPA,
NEW YORK BRANCH
By /s/ Guiliano Violetta
------------------------------
Title: First Vice President
By /s/ Giulio Giovine
------------------------------
Title: Vice President
<PAGE>
BANK OF NEW YORK
By /s/ Walter C. Parelli
------------------------------
Title: Assistant Vice President
THE BANK OF NOVA SCOTIA
By /s/ Brian Allen
------------------------------
Title: Sr. Relationship Manager
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY
By /s/ Michael C. Irwin
------------------------------
Title: Vice President
BANKERS TRUST COMPANY
By /s/ T.J. Morris
------------------------------
Title: Vice President
BANQUE PARIBAS
By /s/ Ann C. Pifer
------------------------------
Title: Vice President
By /s/ Duane P. Helkowski
------------------------------
Title: Assistant Vice President
THE CHASE MANHATTAN BANK
By /s/ Peter C. Eckstein
------------------------------
Title: Vice President
<PAGE>
CIBC, INC.
By /s/ Timothy E. Doyle
------------------------------
Title: Authorized Signatory
CITIBANK, N.A.
By /s/ William G. Martens
------------------------------
Title: Attorney-in-Fact
CREDIT LYONNAIS NEW YORK
BRANCH
By /s/ Rod Hurst
------------------------------
Title: Vice President
THE DAI-ICHI KANGYO BANK, LIMITED
By /s/ Ronald Wolinsky
------------------------------
Title: Vice President & Group Leader
DEUTSCHE BANK AG, NEW YORK
BRANCH AND/OR CAYMAN ISLANDS
BRANCH
By /s/ Stephan A. Wiedemann
------------------------------
Title: Vice President
By /s/ Thomas A. Foley
------------------------------
Title: Assistant Vice President
<PAGE>
THE FIRST NATIONAL BANK
OF CHICAGO
By /s/ Amy L. Golz
------------------------------
Title: Assistant Vice President
FLEET NATIONAL BANK
By /s/ Robert C. Rubino
------------------------------
Title: Vice President
THE FUJI BANK, LIMITED,
NEW YORK BRANCH
By /s/ Masanobu Kobayashi
------------------------------
Title: Vice President & Manager
MIDLAND BANK PLC, NEW YORK
BRANCH
By /s/ R. Forster
------------------------------
Title: Authorized Signatory
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, NEW YORK BRANCH
By /s/ John V. Veltri
------------------------------
Title: Senior Vice President
<PAGE>
LTCB TRUST COMPANY
By /s/ Noburo Kubota
------------------------------
Title: Senior Vice President
MELLON BANK, N.A.
By /s/ John Paul Marotta
------------------------------
Title: Assistant Vice President
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By /s/ Carl J. Mehldau, Jr.
------------------------------
Title: Associate
NATIONAL WESTMINSTER BANK PLC
By /s/ Greg Stoeckle
------------------------------
Title: Vice President
NATIONSBANK, N.A.
By /s/ Marcus A. Boyer
------------------------------
Title: Senior Vice President
THE NIPPON CREDIT BANK, LTD.
By /s/ Clifford Abramsky
------------------------------
Title: Senior Manager
<PAGE>
PNC BANK, NATIONAL ASSOCIATION
By /s/ Patrick Kinzler
------------------------------
Title: Vice President
ROYAL BANK OF CANADA
By /s/ John M. Crawford
------------------------------
Title: Sr. Manager
THE ROYAL BANK OF SCOTLAND
PLC
By /s/ Russell M. Gibson
------------------------------
Title: Vice President & Deputy Manager
THE SANWA BANK, LIMITED,
NEW YORK BRANCH
By /s/ Jean-Michel Fatovic
------------------------------
Title: Vice President
SOCIETE GENERALE
By /s/ Karen M. Sager
------------------------------
Title: Vice President
THE SUMITOMO BANK, LIMITED,
NEW YORK BRANCH
By /s/ Yoshinori Kawamura
------------------------------
Title: Joint General Manager
<PAGE>
THE SUMITOMO TRUST & BANKING
CO., LTD, NEW YORK BRANCH
By /s/ Hidehiko Asai
------------------------------
Title: Deputy General Manager
TORONTO-DOMINION (NEW YORK),
INC.
By /s/ David G. Parker
------------------------------
Title: Vice President
<PAGE>
SCHEDULE A
to
NEW BANKS
ABN AMRO BANK, N.V.
BANCA NAZIONALE DEL LAVORO SPA, NEW YORK BRANCH
THE BANK OF NEW YORK
THE BANK OF NOVA SCOTIA
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
BANKERS TRUST COMPANY
BANQUE PARIBAS
THE CHASE MANHATTAN BANK
CIBC, INC.
CITIBANK, N.A.
CREDIT LYONNAIS NEW YORK BRANCH
THE DAI-ICHI KANGYO BANK, LIMITED
DEUTSCHE BANK AG, NEW YORK BRANCH AND/OR CAYMAN ISLANDS
BRANCH
THE FIRST NATIONAL BANK OF CHICAGO
FLEET NATIONAL BANK
THE FUJI BANK, LIMITED, NEW YORK BRANCH
THE INDUSTRIAL BANK OF JAPAN, LIMITED, NEW YORK BRANCH
<PAGE>
SCHEDULE A
Page 2
LTCB TRUST COMPANY
MELLON BANK, N.A.
MIDLAND BANK PLC, NEW YORK BRANCH
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
NATIONAL WESTMINSTER BANK PLC
NATIONSBANK, N.A.
THE NIPPON CREDIT BANK, LTD
PNC BANK, NATIONAL ASSOCIATION
THE ROYAL BANK OF SCOTLAND PLC
ROYAL BANK OF CANADA
THE SANWA BANK, LIMITED, NEW YORK BRANCH
SOCIETE GENERALE
THE SUMITOMO BANK, LIMITED, NEW YORK BRANCH
THE SUMITOMO TRUST & BANKING CO., LTD, NEW YORK BRANCH
TORONTO-DOMINION (NEW YORK), INC.
<PAGE>
SCHEDULE B
to
FIRST AMENDMENT
================================================================================
New Banks Pro Rata Share
- --------------------------------------------------------------------------------
ABN AMRO BANK, N.V. 4.000000000%
- --------------------------------------------------------------------------------
BANQUE PARIBAS 4.000000000%
- --------------------------------------------------------------------------------
THE CHASE MANHATTAN BANK 4.000000000%
- --------------------------------------------------------------------------------
CITIBANK, N.A. 4.000000000%
- --------------------------------------------------------------------------------
THE INDUSTRIAL BANK OF JAPAN, LIMITED, 4.000000000%
NEW YORK BRANCH
- --------------------------------------------------------------------------------
MORGAN GUARANTY TRUST COMPANY OF NEW 4.000000000%
YORK
- --------------------------------------------------------------------------------
NATIONAL WESTMINSTER BANK PLC 4.000000000%
- --------------------------------------------------------------------------------
NATIONSBANK, N.A. 4.000000000%
- --------------------------------------------------------------------------------
THE SUMITOMO BANK, LIMITED, 4.000000000%
NEW YORK BRANCH
- --------------------------------------------------------------------------------
TORONTO-DOMINION (NEW YORK), INC. 4.000000000%
================================================================================
- --------------------------------------------------------------------------------
THE BANK OF NEW YORK 2.666666667%
- --------------------------------------------------------------------------------
THE BANK OF NOVA SCOTIA 2.666666667%
- --------------------------------------------------------------------------------
BANK OF TOKYO-MITSUBISHI TRUST COMPANY 2.666666667%
- --------------------------------------------------------------------------------
BANKERS TRUST COMPANY 2.666666667%
- --------------------------------------------------------------------------------
CREDIT LYONNAIS NEW YORK BRANCH 2.666666667%
- --------------------------------------------------------------------------------
THE FUJI BANK, LIMITED, NEW YORK BRANCH 2.666666667%
- --------------------------------------------------------------------------------
LTCB TRUST COMPANY 2.666666667%
- --------------------------------------------------------------------------------
MELLON BANK, N.A. 2.666666667%
<PAGE>
SCHEDULE B
Page 2
- --------------------------------------------------------------------------------
MIDLAND BANK PLC, NEW YORK BRANCH 2.666666667%
- --------------------------------------------------------------------------------
PNC BANK, NATIONAL ASSOCIATION 2.666666667%
- --------------------------------------------------------------------------------
ROYAL BANK OF CANADA 2.666666667%
- --------------------------------------------------------------------------------
THE SANWA BANK, LIMITED, NEW YORK BRANCH 2.666666667%
- --------------------------------------------------------------------------------
SOCIETE GENERALE 2.666666667%
- --------------------------------------------------------------------------------
CIBC, INC. 2.333333333%
- --------------------------------------------------------------------------------
THE DAI-ICHI KANGYO BANK, LIMITED 2.333333333%
- --------------------------------------------------------------------------------
DEUTSCHE BANK AG, NEW YORK BRANCH AND/OR 2.333333333%
CAYMAN ISLANDS BRANCH
- --------------------------------------------------------------------------------
THE FIRST NATIONAL BANK OF CHICAGO 2.333333333%
- --------------------------------------------------------------------------------
FLEET NATIONAL BANK 2.333333333%
- --------------------------------------------------------------------------------
THE NIPPON CREDIT BANK, LTD. 2.333333333%
- --------------------------------------------------------------------------------
THE ROYAL BANK OF SCOTLAND PLC 2.333333333%
- --------------------------------------------------------------------------------
THE SUMITOMO TRUST & BANKING CO., LTD, 2.333333333%
NEW YORK BRANCH
- --------------------------------------------------------------------------------
BANCA NAZIONALE DEL LAVORO SPA, NEW YORK 1.333333333%
BRANCH
================================================================================
<PAGE>
SCHEDULE C
to
FIRST AMENDMENT
================================================================================
New Banks Commitment
- --------------------------------------------------------------------------------
ABN AMRO BANK, N.V. $30,000,000.00
- --------------------------------------------------------------------------------
BANQUE PARIBAS $30,000,000.00
- --------------------------------------------------------------------------------
THE CHASE MANHATTAN BANK $30,000,000.00
- --------------------------------------------------------------------------------
CITIBANK, N.A. $30,000,000.00
- --------------------------------------------------------------------------------
THE INDUSTRIAL BANK OF JAPAN, LIMITED, NEW $30,000,000.00
YORK BRANCH
- --------------------------------------------------------------------------------
MORGAN GUARANTY TRUST COMPANY OF NEW $30,000,000.00
YORK
- --------------------------------------------------------------------------------
NATIONAL WESTMINSTER BANK PLC $30,000,000.00
- --------------------------------------------------------------------------------
NATIONSBANK, N.A. $30,000,000.00
- --------------------------------------------------------------------------------
THE SUMITOMO BANK, LIMITED, $30,000,000.00
NEW YORK BRANCH
- --------------------------------------------------------------------------------
TORONTO-DOMINION (NEW YORK), INC. $30,000,000.00
- --------------------------------------------------------------------------------
THE BANK OF NEW YORK $20,000,000.00
- --------------------------------------------------------------------------------
THE BANK OF NOVA SCOTIA $20,000,000.00
- --------------------------------------------------------------------------------
BANK OF TOKYO-MITSUBISHI TRUST COMPANY $20,000,000.00
- --------------------------------------------------------------------------------
BANKERS TRUST COMPANY $20,000,000.00
- --------------------------------------------------------------------------------
CREDIT LYONNAIS NEW YORK BRANCH $20,000,000.00
- --------------------------------------------------------------------------------
THE FUJI BANK, LIMITED, NEW YORK BRANCH $20,000,000.00
- --------------------------------------------------------------------------------
LTCB TRUST COMPANY $20,000,000.00
- --------------------------------------------------------------------------------
MELLON BANK, N.A. $20,000,000.00
- --------------------------------------------------------------------------------
MIDLAND BANK PLC, NEW YORK BRANCH $20,000,000.00
<PAGE>
SCHEDULE C
Page 2
- --------------------------------------------------------------------------------
PNC BANK, NATIONAL ASSOCIATION $20,000,000.00
- --------------------------------------------------------------------------------
ROYAL BANK OF CANADA $20,000,000.00
- --------------------------------------------------------------------------------
THE SANWA BANK, LIMITED, NEW YORK BRANCH $20,000,000.00
- --------------------------------------------------------------------------------
SOCIETE GENERALE $20,000,000.00
- --------------------------------------------------------------------------------
CIBC, INC. $17,500,000.00
- --------------------------------------------------------------------------------
THE DAI-ICHI KANGYO BANK, LIMITED $17,500,000.00
- --------------------------------------------------------------------------------
DEUTSCHE BANK AG, NEW YORK BRANCH AND/OR $17,500,000.00
CAYMAN ISLAND BRANCH
- --------------------------------------------------------------------------------
THE FIRST NATIONAL BANK OF CHICAGO $17,500,000.00
- --------------------------------------------------------------------------------
FLEET NATIONAL BANK $17,500,000.00
- --------------------------------------------------------------------------------
THE NIPPON CREDIT BANK, LTD. $17,500,000.00
- --------------------------------------------------------------------------------
THE ROYAL BANK OF SCOTLAND PLC $17,500,000.00
- --------------------------------------------------------------------------------
THE SUMITOMO TRUST & BANKING CO., LTD, $17,500,000.00
NEW YORK BRANCH
- --------------------------------------------------------------------------------
BANCA NAZIONALE DEL LAVORO SPA, NEW YORK $10,000,000.00
BRANCH
================================================================================
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial
information extracted from the financial
statements contained in the body of the
accompanying Form 10-Q and is qualified in
its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-28-1996
<PERIOD-END> DEC-28-1996
<CASH> 42
<SECURITIES> 0
<RECEIVABLES> 382
<ALLOWANCES> 41
<INVENTORY> 385
<CURRENT-ASSETS> 907
<PP&E> 687
<DEPRECIATION> 390
<TOTAL-ASSETS> 1,768
<CURRENT-LIABILITIES> 494
<BONDS> 592
0
0
<COMMON> 1
<OTHER-SE> 525
<TOTAL-LIABILITY-AND-EQUITY> 1,768
<SALES> 527
<TOTAL-REVENUES> 527
<CGS> 355
<TOTAL-COSTS> 355
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2
<INTEREST-EXPENSE> 12
<INCOME-PRETAX> 36
<INCOME-TAX> 16
<INCOME-CONTINUING> 20
<DISCONTINUED> 3
<EXTRAORDINARY> (2)
<CHANGES> 0
<NET-INCOME> 21
<EPS-PRIMARY> .42
<EPS-DILUTED> .42
</TABLE>
