-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FGIFYLiqKsiWdYCoewiFYHCFEX6vzeXJG1t1c19auSlWnjF6sH1o1vTHO/nQ0NZL 0b4RUpF256yAInCJuitcYg== 0000950144-00-006783.txt : 20000516 0000950144-00-006783.hdr.sgml : 20000516 ACCESSION NUMBER: 0000950144-00-006783 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: APPLICA INC CENTRAL INDEX KEY: 0000217084 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC HOUSEWARES & FANS [3634] IRS NUMBER: 591028301 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-10177 FILM NUMBER: 634075 BUSINESS ADDRESS: STREET 1: 5980 MIAMI LAKES DR CITY: MIAMI LAKES STATE: FL ZIP: 33014 BUSINESS PHONE: 3053622611 MAIL ADDRESS: STREET 1: 5980 MIAMI LAKES DRIVE CITY: MIAMI LAKES STATE: FL ZIP: 33014 FORMER COMPANY: FORMER CONFORMED NAME: WINDMERE DURABLE HOLDINGS INC DATE OF NAME CHANGE: 19970224 FORMER COMPANY: FORMER CONFORMED NAME: WINDMERE CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: SAVE WAY INDUSTRIES INC DATE OF NAME CHANGE: 19830815 10-Q 1 APPLICA INCORPORATED 1 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 MARCH 31, 2000 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 1-10177 APPLICA INCORPORATED (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) FLORIDA 59-1028301 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) 5980 MIAMI LAKES DRIVE, MIAMI LAKES, FLORIDA 33014 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (305) 362-2611 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) WINDMERE-DURABLE HOLDINGS, INC. FORMER NAME, IF CHANGED SINCE LAST REPORT 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 report(s), and (2) has been subject to such filing requirement for the past 90 days. Yes [X] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: NUMBER OF SHARES OUTSTANDING CLASS ON MAY 8, 2000 ----- ----------------------------- Common Stock, $.10 Par Value 22,951,106 2 APPLICA INCORPORATED INDEX
PART I. FINANCIAL INFORMATION ITEM 1. Consolidated Statements of Operations for the Three Months Ended March 31, 2000 and 1999......................................... 3 Consolidated Balance Sheets as of March 31, 2000, and December 31, 1999.............................................. 4-5 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2000 and 1999................................. 6 Notes to Consolidated Financial Statements......................................... 7-13 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...................................... 14-20 ITEM 3. Quantitative and Qualitative Disclosures About Market Risk......................... 20 PART II. OTHER INFORMATION ITEM 1. Legal Proceedings ................................................................. 21 ITEM 6. Exhibits and Reports on Form 8-K................................................... 21 SIGNATURES........................................................................................... 22
2 3 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS APPLICA INCORPORATED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (IN THOUSANDS EXCEPT PER SHARE INFORMATION)
THREE MONTHS ENDED MARCH 31, ------------------------------------------------------------ 2000 1999 ------------------------- ------------------------------ Sales and Other Revenues .................................... $ 146,691 100.0% $ 118,853 100.0% Cost of Goods Sold .......................................... 102,277 69.7 81,895 68.9 --------- --------- --------- --------- Gross Profit ........................................... 44,414 30.3 36,958 31.1 Selling, General and Administrative Expenses ................................ 42,597 29.1 39,128 32.9 --------- --------- --------- --------- Operating Profit ....................................... 1,817 1.2 (2,170) (1.8) Other (Income) Expense Interest Expense ....................................... 6,280 4.3 6,205 5.2 Interest and Other Income .............................. (430) (.3) (289) (.2) --------- --------- --------- --------- 5,850 4.0 5,916 5.0 --------- --------- --------- --------- Loss before Equity in Net Loss of Joint Ventures and Income Taxes .............................. (4,033) (2.8) (8,086) (6.8) Equity in Net Loss of Joint Ventures ...................................... -- -- (519) (.4) --------- --------- --------- --------- Loss Before Income Taxes ........................................... (4,033) (2.8) (8,605) (7.2) Provision (Benefit) for Income Taxes ........................................... (1,005) (.7) (2,076) (1.7) --------- --------- --------- --------- Net Loss .................................................... $ (3,028) (2.1)% $ (6,529) (5.5)% ========= ========= ========= ========= Earnings Per Share - basic .................................. $ (.13) $ (.30) ========= ========= Earnings Per Share - diluted ................................ $ (.13) (.30) ========= =========
The accompanying notes are an integral part of these statements. 3 4 APPLICA INCORPORATED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (IN THOUSANDS)
MARCH 31, 2000 DECEMBER 31, 1999 -------------- ----------------- ASSETS CURRENT ASSETS Cash & Cash Equivalents ............................................... $ 9,604 $ 13,768 Accounts and Other Receivables, less allowances of $8,751 and $8,761, respectively ............................................. 161,931 172,500 Receivables from Affiliates (Note 1) .................................. 3,440 3,533 Other Receivables ..................................................... -- 12,962 Inventories Raw Materials .................................................... 8,780 9,045 Work-in-process .................................................. 21,239 18,547 Finished Goods ................................................... 150,636 136,114 -------- -------- Total Inventories ............................................ 180,655 163,706 Prepaid Expenses ...................................................... 16,135 12,703 Refundable Income Taxes ............................................... 1,122 1,122 Future Income Tax Benefits ............................................ 8,490 8,490 -------- -------- Total Current Assets ............................................. 381,377 388,784 INVESTMENT IN JOINT VENTURE (NOTE 2) ......................................................... 2,342 2,608 PROPERTY, PLANT & EQUIPMENT - AT COST, less accumulated depreciation of $71,913 and $69,597, respectively ............................................ 81,184 75,983 Long-term future income tax benefits .................................. 2,049 2,049 OTHER ASSETS .......................................................... 238,624 243,249 -------- -------- TOTAL ASSETS ........................................................ $ 705,576 $712,673 ======== ========
(Continued) 4 5 APPLICA INCORPORATED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (CONTINUED) (IN THOUSANDS)
MARCH 31, 2000 DECEMBER 31, 1999 -------------- ----------------- LIABILITIES CURRENT LIABILITIES Notes and acceptances payable ................... $ 1,716 $ 898 Current Maturities of Long-Term Debt ............ 15,342 13,587 Accounts Payable and Accrued Expenses ........... 78,668 95,103 Income taxes payable ............................ 1,015 4,723 Deferred Income, current portion ................ 585 585 Other current liabilities ....................... -- 10,573 --------- --------- Total Current Liabilities ......... 97,326 125,469 LONG-TERM DEBT .................................. 266,338 243,571 DEFERRED INCOME, less current portion ........... 227 236 SHAREHOLDERS' EQUITY (Note 2) Special Preferred Stock - Authorized 40,000 shares of $.01 par value; none issued ............ -- -- Common Stock - authorized 40,000 shares of $.10 par value; shares outstanding: 22,920 and 22,641, respectively ............................... 2,292 2,264 Paid-in Capital ................................. 150,996 149,548 Retained Earnings ............................... 191,654 194,682 Accumulated Other Comprehensive Loss ............ (1,761) (1,601) Note receivable - officer ....................... (1,496) (1,496) --------- --------- Total Shareholders' Equity ...................... 341,685 343,397 --------- --------- TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 705,576 $ 712,673 ========= =========
The accompanying notes are an integral part of these statements. 5 6 APPLICA INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS)
THREE MONTHS ENDED MARCH 31, ---------------------------- 2000 1999 ---- ---- Cash flows from operating activities: Net loss ..................................................................... $ (3,028) $ (6,529) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation of property, plant and equipment ................................ 4,508 4,400 Amortization of intangible assets ............................................ 4,952 4,330 Amortization of deferred income .............................................. (9) -- Net change in allowance for losses on accounts receivable .................... 10 1,107 Changes in assets and liabilities Decrease in accounts and other receivables ............................... 10,559 37,626 Decrease (increase) in inventories ....................................... (16,949) 10,192 Increase in prepaid expenses ............................................. (3,432) (906) Increase in other assets ................................................. (327) (1,845) Decrease in other receivables ............................................ 12,962 -- Decrease in accounts payable and accrued expenses ........................ (16,435) (25,420) Decrease in current and deferred income taxes ............................ (3,708) (8,587) Decrease in other liabilities ............................................ (10,573) -- Decrease in deferred income .............................................. -- (1,181) Decrease in other accounts ............................................... (160) (52) -------- -------- Net cash provided by (used in) operating activities .............................................. (21,630) 13,135 Cash flows from investing activities: Additions to property, plant and equipment - net ............................. (9,709) (4,745) Equity in net earnings (loss) of joint ventures .............................. 266 526 Decrease in receivable accounts and notes from affiliates ................................................ 93 1,318 -------- -------- Net cash used in investing activities ............................... (9,350) (2,901) Cash flows from financing activities: Net borrowings under lines of credit ......................................... $ 818 $ -- Long-term debt - net ......................................................... 24,522 (16,878) Exercise of stock options and warrants ....................................... 1,476 23 -------- -------- Net cash provided by (used in) financing activities ...................... 26,816 (16,855) Decrease in cash and cash equivalents .............................................. (4,164) (6,621) Cash and cash equivalents at beginning of year .................................... 13,768 20,415 -------- -------- Cash and cash equivalents at end of quarter ....................................... $ 9,604 $ 13,794 ======== ======== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid for: Interest ..................................................................... $ 9,698 $ 9,615 Income taxes ................................................................. $ 1,204 $ 2,505
The accompanying notes are an integral part of these statements. 6 7 APPLICA INCORPORATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF ACCOUNTING POLICIES INTERIM REPORTING In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all normal recurring adjustments necessary to present fairly the Company's financial position as of March 31, 2000 and the results of its operations and changes in financial position for the interim periods. Results for interim periods should not be considered indicative of results for a full year. Reference should be made to the financial statements contained in the registrant's Annual Report on Form 10-K for the year ended December 31, 1999. RECLASSIFICATIONS Certain prior period amounts have been reclassified for comparability. RECEIVABLES FROM AFFILIATES Receivables from Affiliates include accounts receivable which arise in the ordinary course of business and are settled as trade obligations, as well as the current portion of notes receivable due from certain of the Company's joint venture partners (affiliates) and a Company officer. Notes receivable are due upon demand and bear interest at prevailing market interest rates. DERIVATIVE FINANCIAL INSTRUMENTS The Company uses forward exchange contracts to reduce fluctuations in foreign currency cash flows related to third party raw material and other operating purchases. The terms of the currency instruments used are generally consistent with the timing of the committed or anticipated transactions being hedged. Outstanding at March 31, 2000 is $11,000,000, in contracts and/or options to purchase foreign currency, forward. There is no significant unrealized gain or loss on these contracts. All contracts have terms of six months or less. The Company uses interest rate swaps of one to five years in duration to reduce the impact of changes in interest rates on its floating rate debt. The notional amounts of the swap agreements are used to measure interest to be paid or received and do not represent the amount of exposure to credit loss. The differential paid or received on the agreements is recognized as an adjustment of interest expense. In February 2000, the Company exited contracts with a notional value of $60,000,000 and received a payment of $248,300 which was recorded as an adjustment to interest expense. As of March 31, 2000, the Company had purchased a swap on $80,000,000 notional principal amount with a market value of approximately ($1,840,000). The market value represents the amount the Company would have to pay to exit the contract at March 31, 2000. The Company does not intend to exit the contract at this time. 2. SHAREHOLDERS' EQUITY EARNINGS PER SHARE Basic shares for the three month periods ended March 31, 2000 and 1999 were 22,719,389 and 22,090,966, respectively. All common stock equivalents have been excluded from the per share calculations as the Company incurred net losses in both periods and their inclusion would have been anti-dilutive. 7 8 3. COMMITMENTS AND CONTINGENCIES The Company is a defendant in SHERLEIGH ASSOCIATES LLC AND SHERLEIGH ASSOCIATES INC. PROFIT SHARING PLAN, ON THEIR OWN BEHALF AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED V. WINDMERE-DURABLE HOLDINGS, INC., DAVID M. FRIEDSON, HARRY D. SCHULMAN AND NATIONSBANC MONTGOMERY SECURITIES LLC, 98-2273-CIV-LENARD which was filed in the United States District Court, Southern District of Florida on October 8, 1998. This matter is a class action complaint, which is the consolidation of eight separate class action complaints with substantially similar allegations. On June 30, 1999, a consolidated amended class action complaint was filed. The consolidated amended class action complaint was purportedly filed on behalf of those security holders of the Company who purchased such securities during a certain period in the second and third quarters of 1998, alleging violations of the federal securities laws (including Rule 10b-5 promulgated pursuant to the Securities Exchange Act of 1934, as amended) in connection with the acquisition by the Company of certain product categories of the Household Products Group of the Black & Decker Corporation. Among other things, the plaintiffs allege that the Company and certain of its directors and officers, along with NationsBanc Montgomery Securities LLC, provided false information in connection with a public offering of debt and equity securities. The plaintiffs seek, among other relief, to be declared a class, to be awarded compensatory damages, rescission rights, unspecified damages and attorneys' fees and costs. The defendants have moved to dismiss the consolidated class action complaint. The motion is pending consideration by the Court. By Order dated March 9, 1999, in addition to consolidating the above-referenced cases, the Court provisionally certified the class of plaintiffs who purchased Windmere stock between May 12, 1998 and September 22, 1998, and provisionally certified Sherleigh Associates LLC and Sherleigh Associates, Inc. Profit Sharing Plan as lead plaintiff. By Order dated June 3, 1999, the Court, among other things, appointed lead counsel and directed the filing of a joint scheduling order. On June 23, 1999, the parties submitted a Joint Scheduling Report and a proposed scheduling order, which is still under consideration by the Court. The Company is currently advancing the legal expenses of the directors and officers who were named as defendants. Such defendants have agreed to repay the Company for all or any portion of such advances to which they are ultimately found not to be entitled pursuant to applicable law. Based on the information currently available to the Company, management does not believe that the indemnification of the officers and directors named as defendants in the above-listed matters will have a material adverse effect on the financial condition, results of operations or liquidity of the Company. However, the actual effects of such indemnification on the Company cannot be finally determined until the amount of such indemnification, if any, is fixed. The Company is subject to other legal proceedings and claims which arise in the ordinary course of its business. In the opinion of management, the amount of ultimate liability, if any, in excess of applicable insurance coverage, is not likely to have a material effect on the financial position of the Company. However, as the outcome of litigation or other claims is difficult to predict, significant changes in the estimated exposures could occur. 4. BUSINESS SEGMENT INFORMATION Effective January 1, 2000, the Company reorganized into three new business units: Consumer Products North America, Consumer Products International and Manufacturing. The information for 1999 has been restated in order to conform to the new presentation. The Consumer Products North America segment distributes kitchen electric, personal care and home environment products under licensed brand names such as Black & Decker, as well as the Windmere and private label brand names. The sales are handled primarily through in house sales representatives to mass merchandisers, specialty retailers and appliance distributors in the United States and Canada. The Consumer Products International segment distributes kitchen electric, personal care and home environment products under the Black & 8 9 Decker and Windmere brand names. Products are marketed throughout all countries in Latin America except for Brazil. The Manufacturing segment includes the Company's operations located in Bao An County, Guangdong Province of the Peoples' Republic of China (PRC) and in Queretaro, Mexico. The majority of the Company's products are manufactured in these two facilities. Summarized financial information concerning the Company's reportable segments is shown in the following table. Corporate related items, results of insignificant operations and, as it relates to segment profit (loss), income and expense not allocated to reportable segments are included in the reconciliations to consolidated results. Segment information for the three month periods ended March 31, are as follows: (In Thousands)
CONSUMER PRODUCTS CONSUMER NORTH PRODUCTS AMERICA INTERNATIONAL MANUFACTURING TOTAL ------- ------------- ------------- ----- 2000: Net Sales...................... $ 108,534 $ 20,414 $ 93,613 $ 222,561 Intersegment net sales......... 1,625 -- 80,374 81,999 Operating earnings (loss) ..... (10,125) 510 9,968 353 1999: Net Sales...................... 89,604 14,901 48,374 152,879 Intersegment net sales......... -- -- 36,891 36,891 Operating earnings (loss) ..... (11,194) 602 5,770 (4,822) Reconciliation to consolidated amounts: 2000 1999 ---- ---- REVENUES: Total revenues for reportable segments............................ $ 222,561 $ 152,879 Other revenues.................................................... 6,129 2,865 Eliminations of intersegment revenues............................. (81,999) (36,891) ------------- -------------- Total consolidated revenues.................................. $ 146,691 $ 118,853 ============= ============== Operating earnings: Total earnings for reportable segments....................... $ 353 $ (4,822) Other earnings .............................................. 1,894 2,941 Interest expense............................................. (6,280) (6,205) Equity in net earnings (loss) of joint ventures.............. -- (519) ------------- -------------- Consolidated earnings before income taxes.................... $ (4,033) $ (8,605) ============= ==============
9 10 5. CONDENSED CONSOLIDATING FINANCIAL INFORMATION The following condensed consolidating financial information presents the results of operations, financial position and cash flows of the Company (on a stand alone basis), the guarantor subsidiaries of the Company's Senior Subordinated Notes ("Notes") (on a combined basis), the non-guarantor subsidiaries (on a combined basis) and the eliminations necessary to arrive at the consolidated results of the Company. The results of operations and cash flows presented below assume as if the guarantor subsidiaries were in place for all periods presented. The Company and subsidiary guarantors have accounted for investments in their respective subsidiaries on an unconsolidated basis using the equity method of accounting. The Subsidiary Guarantors are wholly-owned subsidiaries of the Company and have fully and unconditionally guaranteed the Notes on a joint and several basis. The guarantors include the following: Windmere Corporation, Windmere Holdings Corporation, Windmere Holdings Corporation II, Fortune Products, Inc., Bay Books & Tapes, Inc., HP Delaware, Inc., HP Americas, Inc., HPG LLC, HP Intellectual Corp. and WD Delaware, Inc. The Notes contain certain covenants which, among other things, will restrict the ability of the Subsidiary Guarantors to make distributions to the Company. The Company has not presented separate financial statements and other disclosures concerning the guarantors and non-guarantor subsidiaries because it has determined they would not be material to investors. 10 11 THREE MONTHS ENDED MARCH 31, 2000 (IN THOUSANDS)
APPLICA NON INCORPORATED GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED ------------ ---------- ----------------------- ------------ STATEMENT OF OPERATIONS Net Sales ..................................... -- 112,683 116,007 (81,999) 146,691 Cost of goods sold ............................ -- 86,701 97,575 (81,999) 102,277 -------- -------- -------- -------- -------- Gross Profit .................................. -- 25,982 18,432 -- 44,414 Operating Expenses ............................ (1,272) 36,509 7,270 90 42,597 -------- -------- -------- -------- -------- Operating Profit (loss) ....................... 1,272 (10,527) 11,162 (90) 1,817 Other (income) expense, net ................... 6,348 (470) (28) -- 5,850 -------- -------- -------- -------- -------- Earnings (loss) before income taxes and equity in earnings (loss) of joint ventures ................................. (5,076) (10,057) 11,190 (90) (4,033) Provision (benefit) for income taxes .......... -- 43 2,107 (3,155) (1,005) Equity in net earnings (loss) of joint ventures ........................ -- -- -- -- -- -------- -------- -------- -------- -------- Net earnings (loss) ........................... (5,076) (10,100) 9,083 3,065 (3,028) ======== ======== ======== ======== ======== BALANCE SHEET Cash .......................................... 7 (3,460) 13,057 -- 9,604 Accounts and other receivables ................ -- 110,790 51,141 -- 161,931 Receivables from affiliates ................... (673) (39,941) 44,052 2 3,440 Inventories ................................... -- 118,227 64,278 (1,850) 180,655 Other current assets .......................... -- 17,936 13,313 (5,502) 25,747 -------- -------- -------- -------- -------- Total current assets ..................... (666) 203,552 185,841 (7,350) 381,377 Investments in joint ventures ................. 426,067 113,052 70,543 (607,320) 2,342 Property, plant and equipment, net ............ -- 16,311 64,873 -- 81,184 Other assets .................................. -- 399,148 11,177 (169,652) 240,673 -------- -------- -------- -------- -------- Total assets ............................. 425,401 732,063 332,434 (784,322) 705,576 ======== ======== ======== ======== ======== LIABILITIES: Notes payable ................................. -- -- 1,716 -- 1,716 Accounts payable and accrued expenses ......... -- 22,173 56,495 -- 78,668 Current maturities of long term debt .......... 15,342 -- -- -- 15,342 Deferred income, current portion .............. -- 585 -- -- 585 Income taxes payable .......................... -- 1,034 6,293 (6,312) 1,015 -------- -------- -------- -------- -------- Total current liabilities ................ 15,342 23,792 64,504 (6,312) 97,326 Long term debt ................................ 266,338 163,572 9,350 (172,922) 266,338 Deferred income, less current portion ......... -- 227 -- -- 227 Deferred income taxes ......................... -- 16,253 2,847 (19,100) -- -------- -------- -------- -------- -------- Total liabilities ........................ 281,680 203,844 76,701 (198,334) 363,891 Shareholders' equity ..................... 143,721 528,219 255,733 (585,988) 341,685 -------- -------- -------- -------- -------- Total liabilities and shareholders' equity 425,401 732,063 332,434 (784,322) 705,576 ======== ======== ======== ======== ======== Cash Flow Information Net cash provided by (used in) operating activities ............................... (5,077) (927,718) 20,785 890,540 (21,470) Net cash provided by (used in) investing activities ............................... (20,918) 983,020 (17,231) (954,221) (9,350) Net cash provided by (used in) financing activities ............................... 25,998 (62,701) (162) 63,681 26,816 Effect of exchange rate ....................... -- -- (160) -- (160) Cash at beginning ............................. 4 3,939 9,825 -- 13,768 Cash at end ................................... 7 (3,460) 13,057 -- 9,604
11 12 THREE MONTHS ENDED MARCH 31, 1999 (IN THOUSANDS)
APPLICA NON INCORPORATED GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED ------------ ---------- ---------- ------------ ------------ STATEMENT OF OPERATIONS Net Sales ..................................... -- 91,517 50,854 (23,518) 118,853 Cost of goods sold ............................ -- 65,563 40,163 (23,831) 81,895 -------- -------- -------- -------- -------- Gross Profit .................................. -- 25,954 10,691 313 36,958 Operating Expenses ............................ (176) 33,114 6,100 90 39,128 -------- -------- -------- -------- -------- Operating Profit (loss) ....................... 176 (7,160) 4,591 223 (2,170) Other (income) expense, net ................... 5,986 248 (318) -- 5,916 -------- -------- -------- -------- -------- Earnings (loss) before income taxes and equity in earnings (loss) of joint ventures ................................. (5,810) (7,408) 4,909 223 (8,086) Provision (benefit) for income taxes .......... -- 1,692 60 (3,828) (2,076) Equity in net earnings (loss) of joint ventures ........................ 393 (912) -- -- (519) -------- -------- -------- -------- -------- Net earnings (loss) ........................... (5,417) (10,012) 4,849 4,051 (6,529) ======== ======== ======== ======== ======== BALANCE SHEET Cash .......................................... 10 (1,100) 14,884 -- 13,794 Accounts and other receivables ................ -- 75,919 47,005 4,180 127,104 Receivables from affiliates ................... 1,744 4,207 1,357 (3,038) 4,270 Inventories ................................... -- 89,570 63,754 1,949 155,273 Other current assets .......................... -- 25,914 4,596 17,830 48,340 -------- -------- -------- -------- -------- Total current assets ..................... 1,754 194,510 131,596 20,921 348,781 Investments in joint ventures ................. 426,306 22,252 70,500 (503,876) 15,182 Property, plant and equipment, net ............ -- 12,587 63,835 -- 76,422 Other assets .................................. -- 601,226 20,280 (371,886) 249,620 -------- -------- -------- -------- -------- Total assets ............................. 428,060 830,575 286,211 (854,841) 690,005 ======== ======== ======== ======== ======== LIABILITIES: Accounts payable and accrued expenses ......... 3 74,393 36,872 (17,077) 94,191 Current maturities of long term debt .......... 7,842 -- -- -- 7,842 Deferred income, current portion .............. -- 637 -- -- 637 Income taxes payable .......................... -- 394 900 (1,294) -- -------- -------- -------- -------- -------- Total current liabilities ................ 7,845 75,424 37,772 (18,371) 102,670 Long term debt ................................ 256,280 370,918 -- (370,918) 256,280 Deferred income, less current portion ......... -- 17,943 -- (16,479) 1,464 Deferred income taxes ......................... -- 16,253 2,984 (7,106) 12,131 -------- -------- -------- -------- -------- Total liabilities ........................ 264,125 480,538 40,756 (412,874) 372,545 Shareholders' equity ..................... 163,935 350,037 245,455 (441,967) 317,460 -------- -------- -------- -------- -------- Total liabilities and shareholders' equity 428,060 830,575 286,211 (854,841) 690,005 ======== ======== ======== ======== ======== Cash Flow Information Net cash provided by (used in) operating activities ............................... (5,414) 116,007 (43,382) (53,498) 13,713 Net cash provided by (used in) investing activities ............................... 10,279 (20,548) 5,305 1,537 (3,427) Net cash provided by (used in) financing activities ............................... (4,855) (99,642) 35,681 51,961 (16,855) Effect of exchange rate ....................... -- -- (52) -- (52) Cash at beginning ............................. -- 3,083 17,332 -- 20,415 Cash at end ................................... 10 (1,100) 14,884 -- 13,794
12 13 6. SUBSEQUENT EVENTS On May 9, 2000, the shareholders of the Company voted to change the name of the Company to Applica Incorporated. The name change was effective on May 10, 2000. In addition, the shareholders voted to approve the Second Amended and Restated Articles of Incorporation of the Company, which increases the authorized number of shares of Common Stock from 40,000,000 to 75,000,000 and eliminates the Company's Special Preferred Stock. The Special Preferred Stock and the applicable Special Preferred Rights Plan (the "Rights Plan") were adopted by the Company's shareholders at the 1986 Annual Meeting of Shareholders. The Rights Plan was intended to preserve for the Company and its shareholders the benefits of any recovery in the Company's lawsuit with North American Philips Corporation, U.S. Philips Corporation and N.V. Philips by preventing those benefits from being obtained by Philips or any other party that might attempt to appropriate the value of any ultimate recovery from the lawsuit by acquiring shares of the Company's common stock at a price not fully reflective of such recovery. During 1992, the Company received $57 million from Philips in settlement of the lawsuit. Pursuant to the Rights Plan, the right to purchase shares of Special Preferred Stock expired on the last day of the end of the seven-year period following the entry of non-appealable court order favorable to the Company, which was in May 1992. 13 14 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This document contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Such statements are indicated by words or phrases such as "anticipate," "projects," "management believes," "the Company believes," "intends," "expects," and similar words or phrases. Such forward-looking statements are subject to certain risks, uncertainties or assumptions and may be affected by certain other factors. Should one or more of these risks, uncertainties or other factors materialize, or should underlying assumptions prove incorrect, actual results, performance, or achievements of the Company may vary materially from any future results, performance or achievements expressed or implied by such forward-looking statements. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements in this paragraph. The Company disclaims any obligation to publicly announce the results of any revisions to any of the forward-looking statements contained herein to reflect future events or developments. The Company, through its subsidiaries, is a leading diversified manufacturer and distributor of a broad range of branded and private label small household appliances, including electric housewares (kitchen and garment care), personal care, and other products. The Company manufactures and markets products under licensed brand names, such as Black & Decker(R) and White-Westinghouse(R), under the Windmere(R) and other Company-owned brand names and under private-label brand names. The Company's customers for such products include mass merchandisers, specialty retailers and appliance distributors primarily in North America, Latin America and the Caribbean. In addition, the Company manufactures products on an OEM basis for other major consumer products companies. The Company also manufactures and markets the LitterMaid(R) self-cleaning cat litter box. RESULTS OF OPERATIONS The operating results of the Company expressed as a percentage of sales and other revenues are set forth below:
THREE MONTHS ENDED MARCH 31, ---------------------------- 2000 1999 ---- ---- Net Sales ......................................................... 100.0% 100.0% Cost of goods sold..................................................... 69.7 68.9 ----------- ----------- Gross Profit ......................................................... 30.3 31.1 Selling, general and administrative expenses........................... 29.1 32.9 Other (income) expense - net........................................... 4.0 5.0 Equity in net earnings (loss) of joint ventures........................ -- (.4) ----------- ----------- Earnings (loss) before income taxes.................................... (2.8) (7.2) Provision (benefit) for income taxes................................... (.7) (1.7) ----------- ----------- Net earnings (loss).................................................... (2.1)% (5.5)% =========== ===========
THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999 SALES AND OTHER REVENUES Sales and other revenues ("Revenues") for the Company increased by $27.8 million to $146.7 million, an increase of 23.4% over Revenues for the first quarter of 1999. Sales to Walmart accounted for 20% and 18% of total sales for the 2000 and 1999 periods, respectively. The change is primarily the result of a $19.4 million increase in sales of Black & Decker and Windmere branded kitchen products. An increase of $3.8 million in sales of White-Westinghouse electronics as well as a $1.7 million increase in Durable OEM sales also contributed to the overall increase. 14 15 GROSS PROFIT MARGIN Gross profit increased by $7.5 million yet decreased slightly as a percentage of sales to 30.3% of revenues in 2000 from 31.1% in the 1999 period. The decrease is attributed to a change in the Company's overall product mix, as well as pricing changes that did not become effective until the third quarter of 1999. Included in 2000 results were increases in lower margin Windmere branded kitchen product, White-Westinghouse electronic and OEM sales. Changes in product mix and pricing were substantiallly offset by productivity gains at the Company's manufacturing facilities. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses for the Company increased by $3.5 million in the first quarter of 2000 yet decreased as a percentage of sales, to 29.1% from 32.9% in the 1999 period. The dollar increase consists of approximately $1.4 million in volume related selling and promotional expenses, $600,000 in amortization expense related to the June 1999 Newtech asset purchase and $1.5 million in warehousing and distribution expenses. EQUITY IN NET EARNINGS OF JOINT VENTURES In June 1999, the Company wrote down its remaining investment in Newtech and, therefore, discontinued recording its interest in the joint ventures operations. TAXES The Company's tax expense is based on the earnings of each of its foreign and domestic operations and it includes such additional U.S. taxes as are applicable to any repatriation of foreign earnings. Foreign earnings, other than in Canada, Mexico and certain other countries in Latin America, are generally taxed at rates lower than in the United States. EARNINGS PER SHARE Basic shares for the three month periods ended March 31, 2000 and 1999 were 22,719,389 and 22,090,966, respectively. All common stock equivalents have been excluded from the per share calculations as the Company incurred net losses in both periods and their inclusion would have been anti-dilutive. CONSUMER PRODUCTS NORTH AMERICA ("NORTH AMERICA") North America sales increased by $18.9 million to $108.5 million in the first quarter of 2000. A $16.7 million increase in Black & Decker and Windmere branded kitchen electrics and home environment products contributed significantly to the growth in segment sales. Gross profit margin for the segment decreased to 22.0% in the 2000 period as compared to 25.0% in 1999. The decrease is the result of increased sales of lower margin items comprising the period's product mix. Selling, general and administrative expenses decreased by $347,000 in the 2000 period to $34.0 million, and decreased as a percentage of sales to 31.3% from 37.5% in 1999. 15 16 CONSUMER PRODUCTS INTERNATIONAL ("INTERNATIONAL") Sales for the International segment increased by $5.5 million to $20.4 million or 37.0% from the 1999 period. The increase may be attributed to growth in sales of existing products as well as the introduction of new products, under both the Black & Decker and Windmere brand names. The gross profit margin for the International segment increased to 34.9% in 2000 from 33.7% of sales in 1999. Selling, general and administrative expenses for the International segment increased by approximately $2.2 million in the 2000 first quarter to $6.6 million. Volume related sales and promotional expenses as well as various other country-specific operating costs comprised most of the increase. Selling, general and administrative expenses represented 32.4% and 29.7% of segment sales in the 2000 and 1999 periods, respectively. MANUFACTURING Sales at the Company's Manufacturing subsidiaries increased by $45.2 million to $93.6 million in the 2000 period as compared to 1999, primarily as a result of increased Company-wide sales. Included in total sales are OEM sales totaling $13.2 million, a $1.7 million or 14.8% increase over the 1999 period. Operating earnings for the Manufacturing segment increased by $4.2 million to $10.0 million in the 2000 period. Operating results benefited from the increased volume. LIQUIDITY AND CAPITAL RESOURCES At March 31, 2000, the Company's working capital was $284.1 million, as compared to $246.1 million at March 31, 1999. At March 31, 2000 and 1999, the Company's current ratio was 3.9 to 1 and 3.4 to 1, respectively, and its quick ratio was 2.0 to 1 and 1.7 to 1, respectively. The change in ratios is primarily the result of the use of the Company's increased cash flow and long-term credit facilities to meet short-term working capital requirements. Cash balances decreased by $4.2 million for the three month period ended March 31, 2000. The net cash used in operating activities reflects cash used to begin building inventories, which are higher than last period, for future periods and to meet other working capital needs. Cash used in investing activities totaled approximately $9.4 million for the period and consists of capital expenditures at the Company's manufacturing facilities. Funds provided by financing activities totaled approximately $26.8 million in the period reflecting increased borrowings used to meet working capital requirements. No provision for U.S. taxes has been made on undistributed earnings of the Company's foreign subsidiaries and joint ventures because management plans to reinvest such earnings in their respective operations or in other foreign operations. Repatriating those earnings or using them in some other manner which would give rise to a U.S. tax liability would reduce after tax earnings and available working capital. Certain of the Company's foreign subsidiaries have approximately $33.0 million in trade finance lines of credit, payable on demand, which are secured by the subsidiaries' tangible and intangible property, and in some cases, a Company guarantee. Outstanding borrowings by the Company's Hong Kong subsidiaries are primarily in U.S. dollars. The Company's primary sources of liquidity are its cash flow from operations and borrowings under the Senior Secured Credit Facilities. The Company is currently borrowing $125.3 million under the term loan portion of its Senior Secured Credit Facilities. The Senior Secured Revolving Credit Facility as amended, provides for borrowings by the Company of up to $160.0 million. As of May 10, 2000, the Company is borrowing $44.3 million under the Senior Secured Revolving Credit Facility and has approximately $84.1 million available for future 16 17 borrowings, under all its credit facilities. Advances under the Senior Secured Revolving Credit Facility are based upon percentages of outstanding eligible accounts receivable and inventories. The Company's aggregate capital expenditures for the three months ended March 31, 2000 were $9.7 million. The Company anticipates that the total capital expenditures for 2000 will be approximately $25.0 million, which includes the cost of new tooling. The Company plans to fund those capital expenditures from cash flow from operations and, if necessary, borrowings under the Senior Secured Revolving Credit Facility. At March 31, 2000, debt as a percent of total capitalization was 45.3 percent. The Company's ability to make scheduled payments of principal of, or to pay the interest on, or to refinance, its indebtedness, or to fund planned capital expenditures, product research and development expenses and marketing expenses will depend on its future performance, which, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory, and international and United States domestic political factors and other factors that are beyond the Company's control. Based upon the current level of operations and anticipated cost savings and revenue growth, management believes that cash flow from operations and available cash, together with available borrowings under the Senior Credit and other facilities, will be adequate to meet the Company's future liquidity needs for at least the next several years. The Company may, however, need to refinance all or a portion of the principal of the indebtedness on or prior to maturity. There can be no assurance that the Company's business will generate sufficient cash flow from operations, that anticipated revenue growth and operating improvements will be realized or that future borrowings will be available under the Senior Secured Credit Facilities in an amount sufficient to enable the Company to service its indebtedness, including the Senior Subordinated Notes, or to fund its other liquidity needs. In addition, there can be no assurance that the Company will be able to effect any such refinancing on commercially reasonable terms or at all. CURRENCY MATTERS While the Company transacts business predominantly in U.S. dollars and most of its revenues are collected in U.S. dollars, a portion of the Company's costs, such as payroll, rent and indirect operations costs, are denominated in other currencies, such as Chinese renminbi, Hong Kong dollars and Mexican pesos. Changes in the relation of these and other currencies to the U.S. dollar will affect the Company's cost of goods sold and operating margins and could result in exchange losses. The impact of future exchange rate fluctuations on the Company's results of operations cannot be accurately predicted. The Company uses forward exchange contracts to reduce fluctuations in foreign currency cash flows related to third party raw material and other operating purchases as well as trade receivables. The purpose of the Company's foreign currency management activity is to reduce the risk that eventual cash flows from foreign currency denominated transactions may be adversely affected by changes in exchange rates. Durable uses the Hong Kong dollar as its functional currency. The Hong Kong dollar has historically been "pegged" to a fixed exchange rate vis-a-vis the U.S. dollar. If the Hong Kong dollar were to be significantly devalued against the U.S. dollar and the exchange rate allowed to fluctuate, the Company could experience significant changes in its currency translation account which would impact the Company's future comprehensive income. The Company has acquired the Queretaro property and related assets from The Black & Decker Corporation. Because the operations of such facilities are primarily peso-denominated and the revenues derived from products manufactured at such facilities are primarily dollar-denominated, the Company is now subject to fluctuations in the value of the peso. The December 1994 devaluation of the peso had a number of effects on the Mexican economy that adversely affected the financial condition of businesses in Mexico. The devaluation caused the peso value of dollar denominated indebtedness associated with businesses in Mexico to increase significantly, and also greatly increased the rate of inflation, resulting in a sharp rise in nominal interest rates on peso-denominated financing. There can be no assurance that the peso to dollar foreign exchange rate will not be volatile in the future and that financial markets will not have a material adverse effect on the Company's business, financial condition and results of operations. 17 18 The Company uses interest rate swaps of one to four years in duration to reduce the impact of changes in interest rates on its floating rate debt. The notional amounts of the agreements are used to measure interest to be paid or received and do not represent the amount of exposure to credit loss. The differential paid or received on the agreements is recognized as an adjustment of interest expense. In February 2000, the Company exited contracts with a notional value of $60,000,000 and received a payment of $248,300 which was recorded as an adjustment to interest expense. As of March 31, 2000, the Company had purchased interest rate swaps on $80 million notional principal amount with a market value of approximately ($1,840,000). The market value represents the amount the Company would have to pay to exit the contracts at March 31, 2000. The Company does not intend to exit such contracts at this time. NEW ACCOUNTING PRONOUNCEMENTS In June 1998, the FASB issued Statement of Financial Accounting Standards (FAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities." FAS No. 133 establishes standards for accounting and reporting for derivative instruments, and conforms the requirements for treatment of different types of hedging activities. This statement is effective for all fiscal years beginning after June 15, 2000. The Company has not completed its evaluations of FAS No. 133. SEASONALITY The Company's business is highly seasonal, with operating results varying from quarter to quarter. The Company has historically experienced higher revenues in the third and fourth quarters of each fiscal year primarily due to increased demand by customers for products in the late summer for "back-to-school" sales and in the fall for holiday sales. As a result of the HPG acquisition, the fourth quarter has now become the Company's largest quarter. The Company's major sales occur during August through November. Sales are generally made on 45 to 90 day terms. Heaviest collections on its open accounts receivable are received from November through March, at which time the Company is in its most liquid state. YEAR 2000 ISSUES The Company uses a significant number of computer software programs and operating systems across its entire organization, including applications used in financial business systems, manufacturing and administrative functions. A complete evaluation was performed to identify whether any of the Company's software applications contain source code that is unable to interpret the year 2000 and beyond. The appropriate modifications were made and, to date, the Company has not experienced any immediate adverse impact on its operations from the transition to the Year 2000. The Company also received communications from its major suppliers and trading partners, some of who have filed reports with the Securities and Exchange Commission, and believes that they are also Year 2000 compliant. The cost of implementing required system changes was not material to the Company's consolidated financial statements. No assurance can be given, however, that all of the Company's systems, the systems of acquired businesses and those of significant customers and suppliers will not experience Year 2000 compliance difficulties which are not yet apparent or in a manner that may arise in the future. Difficulties that arise may result in unfavorable business consequences including disruption in product shipments, delays in receipt of materials, delay in customer receipts and payments to suppliers. LEGAL PROCEEDINGS The Company is a defendant in SHERLEIGH ASSOCIATES LLC AND SHERLEIGH ASSOCIATES INC. PROFIT SHARING PLAN, ON THEIR OWN BEHALF AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED V. WINDMERE-DURABLE HOLDINGS, INC., DAVID M. FRIEDSON, HARRY D. SCHULMAN AND NATIONSBANC MONTGOMERY SECURITIES LLC, 98-2273-CIV-LENARD which was filed in the United States District Court, Southern District of Florida on October 8, 1998. 18 19 This matter is a class action complaint, which is the consolidation of eight separate class action complaints with substantially similar allegations. On June 30, 1999, a consolidated amended class action complaint was filed. The consolidated amended class action complaint was purportedly filed on behalf of those security holders of the Company who purchased such securities during a certain period in the second and third quarters of 1998, alleging violations of the federal securities laws (including Rule 10b-5 promulgated pursuant to the Securities Exchange Act of 1934, as amended) in connection with the acquisition by the Company of certain product categories of the Household Products Group of the Black & Decker Corporation. Among other things, the plaintiffs allege that the Company and certain of its directors and officers, along with NationsBanc Montgomery Securities LLC, provided false information in connection with a public offering of debt and equity securities. The plaintiffs seek, among other relief, to be declared a class, to be awarded compensatory damages, rescission rights, unspecified damages and attorneys' fees and costs. The defendants have moved to dismiss the consolidated class action complaint. The motion is pending consideration by the Court. By Order dated March 9, 1999, in addition to consolidating the above-referenced cases, the Court provisionally certified the class of plaintiffs who purchased Windmere stock between May 12, 1998 and September 22, 1998, and provisionally certified Sherleigh Associates LLC and Sherleigh Associates, Inc. Profit Sharing Plan as lead plaintiff. By Order dated June 3, 1999, the Court, among other things, appointed lead counsel and directed the filing of a joint scheduling order. On June 23, 1999, the parties submitted a Joint Scheduling Report and a proposed scheduling order, which is still under consideration by the Court. The Company is currently advancing the legal expenses of the directors and officers who were named as defendants. Such defendants have agreed to repay the Company for all or any portion of such advances to which they are ultimately found not to be entitled pursuant to applicable law. Based on the information currently available to the Company, management does not believe that the indemnification of the officers and directors named as defendants in the above-listed matters will have a material adverse effect on the financial condition, results of operations or liquidity of the Company. However, the actual effects of such indemnification on the Company cannot be finally determined until the amount of such indemnification, if any, is fixed. The Company is subject to other legal proceedings and claims which arise in the ordinary course of its business. In the opinion of management, the amount of ultimate liability, if any, in excess of applicable insurance coverage, is not likely to have a material effect on the financial position of the Company. However, as the outcome of litigation or other claims is difficult to predict, significant changes in the estimated exposures could occur. MANUFACTURING OPERATIONS The Company's products are manufactured primarily at the Company's facilities in the PRC and Mexico. The Company has ceased manufacturing at the Asheboro facility as of March 31, 1999 and completely exited the facility as of June 30, 1999. Prior to the HPG acquisition, the majority of the Company's products were manufactured by Durable, its wholly-owned Hong Kong subsidiary operating in Bao An County, Guangdong Province of the People's Republic of China, which is approximately 60 miles northwest of Central, Hong Kong. The Company has a significant amount of its assets in the People's Republic, primarily consisting of inventory, equipment and molds. The supply and cost of products, as well as finished products, can be adversely affected, among other reasons, by changes in foreign currency exchange rates, increased import duties, imposition of tariffs, imposition of import quotas, interruptions in sea or air transportation and political or economic changes. From time to time, the Company explores opportunities to diversify its sourcing and/or production of certain products to other low-cost locations or with other third parties or joint venture partners in order to reduce its dependence on production in the People's Republic and/or reduce Durable's dependence on the Company's existing distribution base. However, at the present time, the Company intends to continue its production in the People's Republic and Mexico. The Mexican government exercises significant influence over many aspects of the Mexican economy. Accordingly, the actions of the Mexican government concerning the economy could have a significant effect on private sector entities in general and the Company in particular. In addition, during the 1980s and 1990s, 19 20 Mexico experienced periods of slow or negative growth, high inflation, significant devaluations of the peso and limited availability of foreign exchange. As a result of the Company's reliance upon manufacturing facilities in Mexico, economic conditions in Mexico could adversely affect the Company's business, financial condition and results of operations. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company's major market risk exposure is to changing interest rates, debt obligations issued at a fixed rate and fluctuations in the currency exchange rates. The Company's policy is to manage interest rate risk through the use of a combination of fixed and floating rate instruments, with respect to both its liquid assets and its debt instruments. The Senior Credit Facilities accrue interest at variable rates; however, the company has purchased interest rate protection for such loans in the form of interest rate swaps. Based on the current amount of variable rate, as well as underlying swaps, the exposure to interest rate risk is not material. Fixed-rate debt obligations issued by the Company are not callable until July 31, 2003. The Company is subject to foreign currency exchange rate risk relating to receipts from customers and payments to suppliers in foreign currencies. As a general policy, the Company hedges foreign currency commitments of future payments and receipts by purchasing foreign currency-forward and option contracts. As of March 31, 2000, the notional value of such derivatives was approximately $11,000,000 million, with no significant unrealized gain or loss. The majority of the Company's receipts and expenditures are contracted in U.S. dollars, and the Company does not consider the market risk exposure relating to currency exchange to be material at this time. 20 21 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS See "Legal Proceedings" in Part I, Item 2 of this report. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits: None (b) Reports on Form 8-K: None 21 22 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. APPLICA INCORPORATED (Registrant) May 15, 2000 By: /s/ HARRY D. SCHULMAN -------------------------------- Harry D. Schulman CHIEF OPERATING OFFICER AND CHIEF FINANCIAL OFFICER (Duly authorized to sign on behalf of the Registrant) May 15, 2000 By: /s/ TERRY L. POLISTINA -------------------------------- Terry L. Polistina SENIOR VICE PRESIDENT - FINANCE (Duly authorized to sign on behalf of the Registrant) 22 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 9,604 0 170,682 8,751 180,655 381,377 153,097 71,913 705,576 97,326 130,000 0 0 2,292 339,393 705,576 146,691 146,691 102,277 42,597 0 415 6,280 (4,033) (1,005) (3,028) 0 0 0 (3,028) (.13) (.13)
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