-----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, E654F2z+A6UBRAXZ5RmYhjDzYUpF18ACVYKPwMDHncH3vrejshsdpkJiLYzkYtK8 3Omr/ojInxbuag+u0bJykw== 0000912057-97-017669.txt : 19970515 0000912057-97-017669.hdr.sgml : 19970515 ACCESSION NUMBER: 0000912057-97-017669 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: DEL LABORATORIES INC CENTRAL INDEX KEY: 0000027751 STANDARD INDUSTRIAL CLASSIFICATION: PERFUMES, COSMETICS & OTHER TOILET PREPARATIONS [2844] IRS NUMBER: 131953103 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05439 FILM NUMBER: 97605321 BUSINESS ADDRESS: STREET 1: 565 BROADHOLLOW RD CITY: FARMINGDALE STATE: NY ZIP: 11735 BUSINESS PHONE: 5162937070 MAIL ADDRESS: STREET 1: 565 BROAD HOLLOW ROAD CITY: FARMINGDALE STATE: NY ZIP: 11735 FORMER COMPANY: FORMER CONFORMED NAME: MARADEL PRODUCTS INC DATE OF NAME CHANGE: 19670706 10-Q 1 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE --- SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997 --- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ---------- ---------- Commission File No. 1-5439 DEL LABORATORIES, INC. (Exact name of registrant as specified in its charter) DELAWARE 13-1953103 - ------------------- ------------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 565 Broad Hollow Road, Farmingdale, New York 11735 -------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (516) 844-2020 -------------------- 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 ( ) The number of shares of Common Stock, $1 par value, outstanding as of May 9, 1997 was 5,666,157. DEL LABORATORIES, INC. AND SUBSIDIARIES INDEX
PAGE NO. -------- Financial Statements: Consolidated Condensed Balance Sheets as of March 31, 1997 and December 31, 1996.....................................3 Consolidated Condensed Statements of Earnings for the three months ended March 31, 1997 and 1996..............4 Consolidated Condensed Statements of Cash Flows for the three months ended March 31, 1997 and 1996............5 Notes to Consolidated Condensed Financial Statements.....................6 Management's Discussion and Analysis of Financial Condition and Results of Operations............................................7 Other Information.............................................................10 Signatures....................................................................11
2 PART 1--FINANCIAL INFORMATION Item 1. Financial Statements DEL LABORATORIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS MARCH 31, 1997 AND DECEMBER 31, 1996 (In thousands except for share and per share data)
Assets MARCH 31 DECEMBER 31 ------ 1997 1996 ----------- ----------- (UNAUDITED) Current assets: Cash and cash equivalents.............................. $ 15,259 $ 14,516 Accounts receivable-less allowance for doubtful accounts of $1,450 and $1,500, respectively............................... 34,396 30,781 Inventories............................................ 36,069 33,788 Income taxes receivable................................ -- 324 Deferred income taxes.................................. 2,250 2,250 Prepaid expenses and other current assets.............. 1,556 1,840 ---------- ----------- Total current assets.......................... 89,530 83,499 Property, plant and equipment, net..................... 26,662 26,628 Intangibles arising from acquisitions, net............. 8,409 8,497 Other assets........................................... 4,041 3,758 ---------- ----------- Total assets.................................. $ 128,642 $ 122,382 ---------- ----------- ---------- ----------- Liabilities and Shareholders' Equity ------------------------------------ Current liabilities: Accounts payable....................................... $ 17,778 $ 17,338 Accrued liabilities.................................... 16,165 14,895 Income taxes payable................................... 1,512 -- ---------- ----------- Total current liabilities..................... 35,455 32,233 Long-term pension liability, less current portion...... 4,132 4,132 Deferred income taxes.................................. 1,175 1,175 Long-term debt, less current portion................... 40,000 40,000 ---------- ----------- Total liabilities............................. 80,762 77,540 ---------- ----------- Shareholders' equity: Preferred stock $.01 par value, authorized 1,000,000 shares; no shares issued................... -- -- Common stock $1 par value, authorized 10,000,000 shares; issued 8,784,514 shares........... 8,785 8,785 Additional paid-in capital............................. 4,321 4,321 Foreign currency translation adjustment................ (406) (547) Retained earnings...................................... 64,451 61,353 ---------- ----------- 77,151 73,912 Less: Treasury stock, at cost, 3,157,367 shares and 3,141,949 shares, respectively................... (27,679) (27,334) Receivable for stock options exercised................. (1,592) (1,736) ---------- ----------- Total shareholders' equity.................... 47,880 44,842 ---------- ----------- Total liabilities and shareholders' equity.... $ 128,642 $ 122,382 ---------- ----------- ---------- -----------
See accompanying notes to unaudited consolidated condensed financial statements. 3 DEL LABORATORIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996 (In thousands except for per share data) (UNAUDITED)
MARCH 31 MARCH 31 1997 1996 --------- --------- Net sales........................................................... $ 61,319 $ 56,094 --------- --------- Cost of goods sold.................................................. 23,809 22,815 Selling and administrative expenses................................. 31,196 28,361 --------- --------- 55,005 51,176 --------- --------- Operating income.............................................. 6,314 4,918 --------- --------- Interest expense.................................................... 950 952 Interest income..................................................... (128) (82) --------- --------- Interest expense, net........................................ 822 870 --------- --------- Earnings before income taxes........................................ 5,492 4,048 Income taxes........................................................ 2,197 1,660 --------- --------- Net earnings.................................................. $ 3,295 $ 2,388 --------- --------- --------- --------- Weighted average common shares outstanding (A)...................... 6,338 6,500 --------- --------- --------- --------- Earnings per common share (A)....................................... $ 0.52 $ 0.37 --------- --------- --------- --------- Dividends per common share (A)...................................... $ 0.035 $ 0.026 --------- --------- --------- ---------
(A) March 31, 1996 amounts are adjusted to reflect a 4-for-3 stock split effective November 8, 1996. See accompanying notes to unaudited consolidated condensed financial statements. 4 DEL LABORATORIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996 (In thousands) (UNAUDITED)
MARCH 31 MARCH 31 1997 1996 --------- --------- Cash flows from operating activities: Net earnings........................................................ $ 3,295 $ 2,388 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization.................................... 1,396 1,199 Provision for doubtful accounts.................................. 52 138 Other non-cash operating items................................... 282 77 Changes in operating assets and liabilities: Accounts receivable.............................................. (3,667) (6,935) Inventories...................................................... (2,281) (2,178) Prepaid expenses and other current assets........................ 284 878 Other assets and other liabilities............................... (283) 260 Accounts payable................................................. 440 2,661 Accrued liabilities.............................................. 1,270 2,983 Income taxes..................................................... 1,836 258 --------- --------- Net cash provided by operating activities.................... 2,624 1,729 --------- --------- Cash flows used in investing activities: Property, plant and equipment additions.......................... (1,341) (1,353) --------- --------- Net cash used in investing activities........................ (1,341) (1,353) --------- --------- Cash flows used in financing activities: Principal payments of long-term debt............................. -- (17) Proceeds from issuance of common stock upon exercise of options....................................... 9 136 Decrease in receivable for stock options exercised............... 5 145 Purchase of treasury stock....................................... (355) (362) Dividends paid................................................... (197) (292) --------- --------- Net cash used in financing activities........................ (538) (390) --------- --------- Effect of exchange rate changes on cash............................. (2) -- --------- --------- Net increase (decrease) in cash and cash equivalents................ 743 (14) Cash and cash equivalents beginning of year......................... 14,516 8,563 --------- --------- Cash and cash equivalents at end of period.......................... $ 15,259 $ 8,549 --------- --------- --------- ---------
See accompanying notes to unaudited consolidated condensed financial statements. 5 DEL LABORATORIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS MARCH 31, 1997 AND 1996 (UNAUDITED) 1. In the opinion of management, the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of March 31, 1997, the results of operations for the three months ended March 31, 1997 and 1996 and the statements of cash flows for the three months ended March 31, 1997 and 1996. Results for an interim period are not necessarily indicative of results for the entire year and such results are subject to year-end adjustments and independent audit. These financial statements should be read in conjunction with the consolidated financial statements of the Company contained in the Company's Form 10-K for the year ended December 31, 1996. 2. Classification of inventories at March 31, 1997 and December 31, 1996 were as follows (in thousands): 1997 1996 --------- --------- Raw Materials.............................. $ 18,173 $ 15,346 Work In Process............................ 3,853 3,862 Finished Goods............................. 14,043 14,580 --------- --------- $ 36,069 $ 33,788 --------- --------- --------- --------- 3. Earnings per common share is computed under the "modified treasury stock method" which assumes the exercise of all outstanding options and warrants and the use of the proceeds thereof to acquire up to 20% of the outstanding common stock of the Company. Excess proceeds not utilized for the purchase of such shares are assumed utilized, first to reduce outstanding debt and then any remainder is assumed invested in interest bearing securities with net earnings increased for the hypothetical interest expense savings or interest income, net of taxes. 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ----------------------------------- (1) LIQUIDITY AND CAPITAL RESOURCES ------------------------------- Under its institutional debt covenants, the Company is permitted a level of short-term borrowing not to exceed $15,000,000. Currently, the Company has arrangements with banks which provide up to $27,500,000 of short-term lines of credit at the prime rate of interest. There were no borrowings under these lines during the quarter ended March 31, 1997 or the year ended December 31, 1996. The Company has, from time to time, acquired shares of its common stock pursuant to a plan approved by the Board of Directors in 1987. The Company will generally undertake such purchases if, as and when management believes that the prevailing market price for its Common Stock does not adequately reflect the intrinsic value of the Company's business. During the quarter ended March 31, 1997 the Company purchased 17,000 shares at an average cost of $20.88 per share, and such shares were placed in treasury. The shares purchased were predominantly from employees who held shares issued pursuant to the Company's stock option plans, with the balance through open market purchases. As of March 31, 1997 the Company was authorized to purchase up to 170,725 additional shares based on the then existing Board authorization. Net accounts receivable at March 31, 1997 increased by $3,615,000 from the December 31, 1996 level. The increase is attributable to a sales concentration in the latter part of the quarter. Inventories at March 31, 1997 increased by $2,281,000 from December 31, 1996. This increase was comparable to the increase during the quarter ended March 31, 1996. During the quarter ended March 31, 1997, the Company generated $2,624,000 cash from operations. The Company believes that cash from future operations, cash on hand and amounts available from short-term lines of credit, referred to above, will be sufficient to satisfy the Company's liquidity needs for the foreseeable future. In March 1997, the Company entered into an agreement to purchase land and buildings in North Carolina. This property is to be used as a distribution center and is replacing facilities leased under a lease expiring in 1997. The Company expects to close on the property during the second quarter of 1997. The cost of the property is $5,500,000 with the seller financing the transaction interest free. The agreement calls for payments over the next three years, with a final payment of $3,850,000 in April, 2000. When the closing is completed, the Company will record the transaction based on the present value of the loan on the date of closing and will accrete interest over the life of the loan. Any remaining leasehold improvements related to the leased facility will be fully amortized by the end of the lease term. (2) RESULTS OF OPERATIONS --------------------- SALES ----- Sales for the first quarter of 1997 were $61.3 million, 9.3% above the $56.1 million of sales for the first quarter of 1996. The first quarter 1997 results reflect a sales increase in both the Cosmetics and Pharmaceutical Divisions, although the percentage of sales growth in the Cosmetics Division was slightly higher than the percentage of sales growth in the Pharmaceutical Division. COST OF SALES ------------- Cost of sales for the first quarter of 1997, as a percentage of net sales, decreased to 38.8%, as compared with 40.7 % in the corresponding period of 1996. The decrease in cost of sales resulted from decreases in both the Cosmetics and Pharmaceutical Divisions. These decreases were the result of increased production levels and production efficiencies that allowed a greater absorption of manufacturing overhead. In addition, the Company constantly reviews product cost in order to produce its products at the lowest possible cost. 7 SELLING AND ADMINISTRATIVE EXPENSES ----------------------------------- Selling and administrative expenses increased by $2.8 million in the first quarter of 1997 versus the first quarter of 1996 and also increased as a percentage of net sales to 50.9% from 50.6%. The increase of .3% as a percentage of sales is attributable to increased advertising and promotional expenses during the 1997 period. NET INTEREST EXPENSE -------------------- Net interest expense for the first quarter of 1997 was $822,000 compared with $870,000 incurred in the first quarter of 1996. This reduction was attributable to increased interest income from investment of cash balances. PROVISION FOR INCOME TAXES -------------------------- The provision for income taxes is based on the Company's expected effective tax rate for the year, which is 40% of earnings in 1997. In 1996, the Company's effective tax rate was 41%. NET EARNINGS ------------ Net earnings for the first quarter of 1997 were $3,295,000, 38.0% above the $2,388,000 reported for the first quarter of 1996. LEGAL MATTERS ------------- In July 1994, the Equal Employment Opportunity Commission ("EEOC") filed suit against the Company in the United States District Court for the Eastern District of New York alleging sexual discrimination against certain present and former employees of the Company, in violation of Title VII of the Civil Rights Act of 1964, as amended. On August 3, 1995, the Court approved a consent decree between the Company and the EEOC settling the case. The Company denied that it engaged in any unlawful conduct, and the consent decree expressly acknowledges that the settlement does not constitute an admission by the Company of any violation of any law, rule or regulation relating to employment discrimination. The Board of Directors determined that the settlement was in the best interest of the Company and its shareholders, considering the expense that would have resulted from continued litigation and the time and attention of management and employees that would necessarily have been required. Pursuant to the settlement, the Company agreed to pay 15 former employees a total sum of $1,185,000. The settlement also incorporated the Company's revised sexual harassment policy which includes a revised complaint procedure. In August 1995, two stockholder derivative actions were filed in the State of Delaware Chancery Court against the members of the Company's Board of Directors, alleging breaches of fiduciary duties and waste of corporate assets in connection with the Company's settlement with the EEOC relating to claims of sexual harassment by an executive of the Company. This action was consolidated into a single action, In Re Del Laboratories, Inc., Derivative Litigation, Consolidated C.A. No. 14466. In March 1997, the parties agreed, subject to Court approval, to a proposed settlement in which the Company's insurance carrier, on behalf of the individual defendants, will pay $400,000 to the Company, and the Board will make the Human Resources Committee a permanent committee of the Board to be composed only of "independent" directors (as defined in the Internal Revenue Code). The Human Resources Committee will be charged with review and oversight of the Company's compliance with the requirements of Title VII relating to employment practices, including discrimination, wrongful discharge and retaliation. The Company has agreed not to oppose an application to the Court by the plaintiffs' attorneys for an attorneys' fee of $150,000 which has been provided for in the consolidated financial statements of the Company. The defendants continue to deny all allegations of wrongdoing and have advised the Company that they are entering into the proposed settlement to eliminate the burden and expense of further litigation. 8 The Company is of the opinion, on the basis of currently available information, that none of the matters referred to above will have a material effect on the Company's results of operations or financial condition. NEW ACCOUNTING PRONOUNCEMENTS ----------------------------- The Financial Accounting Standards Board issued Statement of Financial Accounting Standard (SFAS) No. 128, "Earnings Per Share". This pronouncement must be implemented for annual and interim periods that end after December 15, 1997. SFAS No. 128 does not permit early application. When implemented, SFAS No. 128 requires restatement of all prior period earnings per share data. SFAS No. 128 calls for the calculation of basic earnings per share, which is calculated using only weighted average shares outstanding during the period and does not consider the assumed exercise of shares utilizing the treasury stock method (see note 3 to consolidated condensed financial statements). The Company believes that the adoption of SFAS No. 128 will increase basic earnings per share as compared with previously reported primary earnings per share. In addition, SFAS No. 128 requires the disclosure of diluted earnings per share. The Company is evaluating the requirements of calculating diluted earnings per share but does not believe that the adoption of SFAS No. 128 will have a material effect on previously reported primary earnings per share as compared with diluted earnings per share. 9 PART II--OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K -------------------------------- (a) Exhibit Index
ITEM NO. EXHIBIT EXHIBIT NO. DESCRIPTION - -------- ------- ----------- ----------- 2 Plan of acquisition reorganization, -- Not Applicable arrangement, liquidation, or succession 3 Articles of Incorporation and By-Laws -- Not Applicable 4 Instruments defining the rights of security -- Not Applicable holders, including indentures 10 Material Contracts 1 First Amendment to Loan Agreement dated as of March 31, 1997 by and among the Registrant, Jackson National Life Insurance Company and Jackson National Life Insurance Company of Michigan 11 Statement re: computation of per share -- Not Applicable earnings 15 Letter re: unaudited interim financial -- Not Applicable information 18 Letter re: change in account- -- Not Applicable ing principles 19 Report furnished to security holders -- Not Applicable 22 Published report regarding matters submitted -- Not Applicable to vote of security holders 24 Power of Attorney -- Not Applicable 27 Financial Data Schedule 2 -- 99 Additional exhibits -- Not Applicable
(b) Reports on Form 8-K ------------------- NONE 10 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.
DEL LABORATORIES, INC. ------------------------------- (Registrant) Date: May 14, 1997 /s/ Dan K. Wassong - ------------------ ------------------------------- Dan K. Wassong Chairman, President and Chief Executive Officer Date: May 14, 1997 /s/ Melvyn C. Goldstein - ------------------ ------------------------------- Melvyn C. Goldstein Vice President of Finance and Principal Financial Officer
11 EX-1 2 FIRST AMENDMENT TO LOAN AGREEMENT EX-1 First Amendment to Loan Agreement DEL LABORATORIES, INC. ------------------------ FIRST AMENDMENT TO LOAN AGREEMENT ------------------------ FIRST AMENDMENT, dated as of March 31, 1997 (this "Amendment"), to the Loan Agreement, dated as of May 26, 1993 (the "Loan Agreement"), by and among Del Laboratories, Inc., a Delaware corporation (the "Company"), Jackson National Life Insurance Company, a Michigan insurance corporation and Jackson National Life Insurance Company of Michigan, a Michigan insurance corporation (Jackson National Life Insurance Company and Jackson National Life Insurance Company of Michigan are collectively referred to herein as "Lenders"). R E C I T A L S: WHEREAS, the Company has requested that Lenders consent to modify the Loan Agreement in order to increase the ability of the Company to redeem certain of its capital stock; and WHEREAS, Lenders have agreed that upon this Amendment becoming effective certain provisions of the Loan Agreement will be amended as provided below; NOW, THEREFORE, the parties agree as follows: A. Defined Terms. Terms defined in the Loan Agreement and used herein shall have the same meanings given to them in the Loan Agreement. B. Amendments to Loan Agreement. 1. Clause (A) in Section 5.8 of the Loan Agreement shall be deleted in its entirety and replaced with the following: "(A) the aggregate amount of all Restricted Payments made during the period commencing on January 1, 1993, and ending on and including the date of any action (the "Computation Period") shall not exceed the sum of (1) $6,000,000, plus (2) 50% (or, in the case of a net loss, minus 100%) of Consolidated Net Income for the Computation Period, plus (3) the amount of the net proceeds, in excess of the first $6,500,000 of net proceeds, received by the Company at any time during the period commencing on January 1, 1997, and ending on and including the date of such Restricted Payment, directly from the issuance of any of the Company's shares of capital stock, including but not limited to the net proceeds received by the Company upon the exercise of any stock options or other rights to purchase capital stock of the Company, less the amount of all outstanding loans and advances made by the Company or any of its Affiliates to employees of the Company or other Persons during such period for the purpose of permitting such Persons to purchase shares or exercise stock options of the Company, and less the amount of all purchases, redemptions and retirements of shares of the Company effected substantially concurrently with the issuance of any shares of the capital stock of the Company during such period which do not qualify as a "Restricted Payment" by virtue of Section (B)(2) of the definition thereof, plus (4) the amount of all Restricted Payments made by the Company, up to a maximum of $6,500,000, either directly or indirectly through a registered broker-dealer or an employee stock ownership trust (an "ESOT"), to purchase, repurchase or redeem shares of capital stock of the Company held by employees or former employees of the Company and its Subsidiaries (or their respective heirs, personal representatives, successors or assigns) during the period commencing on October 1, 1996, and ending on and including the date of the Restricted Payment, provided that (a) the total amount of all payments made to, and stock purchase made from, Martin E. Revson not exceed $1,500,000 (any excess payment being a prohibited Restricted Payment), (b) any such payment or purchase of capital stock is otherwise made in compliance with the terms of the Loan Agreement, and (c) payments made in cash to any employee or former employee of the Company or any of its Subsidiaries (or to such person's heirs, personal representatives, successors or assigns) in satisfaction of such employee's or former employee's account balances under the Company's ESOT shall not be considered Restricted Payments for purposes of this Agreement provided that such cash payments are made consistent in all respects with the terms of the ESOT and its past practices and are not made for the purpose, directly or indirectly, of purchasing or redeeming capital stock of the Company, and". 2. Section 5.14 of the Loan Agreement shall be amended by adding the following clause at the end of that Section: -2- "provided, however, that with respect to purchases of shares of the capital stock of the Company from Affiliates, any purchase made for cash at a price not greater than the average daily closing price of such shares on all national securities exchanges and/or reported through the automated quotation system of a registered securities association during the ten business day period immediately preceding the date of the purchase shall be deemed to have been made on an arm's length basis." C. Conditions to Effectiveness. This Amendment shall become effective on the date (the "Amendment Effective Date") on which the following conditions precedent have been satisfied or waived: 1. The Company shall have executed and delivered this Amendment to the Lenders. 2. The Lenders shall have received a Later Date Certificate, dated as of the Amendment Effective Date, signed by the Secretary of the Company, certifying such facts concerning the Company, the incumbency of its officers, and its authority to enter into this Amendment as the Lenders may reasonably require. 3. The Lenders shall have received the executed legal opinion, dated the Amendment Effective Date, of Zimet, Haines, Friedman & Kaplan, counsel to the Company, or such other law firm as may be acceptable to the Lenders, satisfactory in form and substance to the Lenders, which shall cover such matters incident to this Amendment or the other loan documents as the Lenders may reasonably require. D. General. 1. Representation and Warranties. To induce the Lenders to enter into this Amendment, the Company hereby represents and warrants to the Lenders as of the Amendment Effective Date that: (a) No Material Adverse Change or Default. Since May 26, 1993, there has been no development or event nor any prospective development or event, which has had or could reasonably be expected to have a material adverse effect on the assets, business or financial condition of the Company. No Event of Default has occurred and will be continuing after giving effect to this Amendment. (b) Corporate Power; Authorization; Enforceable Obligations. (i) The Company has the corporate power and authority, and the legal right, to make and deliver this Amendment and to perform all of its obligations under the Loan Agreement, as amended by this Amendment, and the other loan documents, and has taken all -3- necessary corporate action to authorize the execution and delivery of this Amendment and the performance of the loan documents, as so amended. (ii) No consent or authorization of, approval by, notice to, filing with or other act by or in respect of, any governmental authority or any other Person is required in connection with the execution and delivery of this Amendment or with the performance, validity or enforceability of the loan documents, as amended by this Amendment. (iii) When executed and delivered, this Amendment and the Loan Agreement, as amended by this Amendment, will constitute a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as affected by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting the enforcement of creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. (c) No Legal Bar. The execution and delivery of this Amendment and the performance of the Company's obligations under the loan documents, as amended by this Amendment, will not violate any statute, rule, law, ordinance, regulation or order (statutes, rules, laws, ordinances, regulations and orders are collectively referred to as, "Governmental Rule") applicable to the Company or any material contractual obligation of the Company and will not result in, or require, the creation or imposition of any Encumbrance on any of its properties or revenues pursuant to any such Governmental Rule or contractual obligation which could reasonably be expected to have a material adverse effect on the assets, business or financial condition of the Company. (d) Representation and Warranties. The representations and warranties made by the Company in the Loan Agreement and in Exhibit B thereto are true and correct in all material respects on and as of the Amendment Effective Date, before and after giving effect to the effectiveness of this Amendment, as if made on and as of the Amendment Effective Date, other than those that relate to an earlier or specific date provided, however, that the Company makes no representation as to the continued accuracy of the information contained in Schedules D-1 through D-8 of the Loan Agreement. 2. Payment of Expenses. The Company agrees to pay or reimburse Lenders for all of their out-of-pocket costs and reasonable expenses incurred in connection with this Amendment, any other documents prepared in connection herewith and the transactions contemplated hereby, including, without limitation, the reasonable fees and disbursements of counsel to Lenders. 3. No Other Amendments; Confirmation. -4- (a) Except as expressly amended, modified and supplemented hereby, the provisions of the Loan Agreement and each of the other loan documents are and shall remain in full force and effect. The Company may not rely in any way upon the Lenders' willingness to enter into this Amendment or assume that the Lenders will agree to any future amendment of the Loan Agreement or other loan documents. (b) The Company hereby confirms its obligations under the Loan Agreement and acknowledges that it has no defenses, claims or set-offs to the enforcement by the Lenders of any of the Company's stated obligations thereunder. 4. Governing Law; Counterparts. (a) This Amendment and the rights and obligations of the parties hereto shall be governed by, and construed and interpreted in accordance with, the internal, substantive laws of the State of Illinois without regard to its conflicts of law doctrine. (b) This Amendment may be executed by one or more of the parties to this Amendment on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Amendment signed by all the parties shall be lodged with the Company and with the Lenders. This Amendment may be delivered by facsimile transmission of the relevant signature pages hereof. [The next page is the signature page] -5- IN WITNESS HEREOF, the parties hereto have caused this First Amendment to be duly executed and delivered by their respective proper and duly authorized officers as of the date and year first above written. DEL LABORATORIES, INC. a Delaware corporation By: /s/ Melvyn C. Goldstein ---------------------------- Its: Vice President, Finance JACKSON NATIONAL LIFE INSURANCE COMPANY, a Michigan insurance corporation By: PPM America, Inc., its agent By: /s/ B.D. Gorchow ------------------------ Its: Senior Vice President JACKSON NATIONAL LIFE INSURANCE COMPANY as successor by merger to JACKSON NATIONAL LIFE INSURANCE COMPANY OF MICHIGAN, a Michigan insurance corporation By: PPM America, Inc., its agent By: /s/ B.D. Gorchow ------------------------ Its: Senior Vice President -6- EX-27 3 EXHIBIT 27
5 1,000 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 15259 0 34396 1450 36069 89530 26662 18096 128642 35455 0 0 0 8785 39095 128642 61319 0 23809 55005 0 52 822 5492 2197 3295 0 0 0 3295 .52 0
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