0000950135-95-001672.txt : 19950810 0000950135-95-001672.hdr.sgml : 19950810 ACCESSION NUMBER: 0000950135-95-001672 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950809 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST YEARS INC CENTRAL INDEX KEY: 0000055698 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS PLASTIC PRODUCTS [3080] IRS NUMBER: 042149581 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-07024 FILM NUMBER: 95560132 BUSINESS ADDRESS: STREET 1: ONE KIDDIE DR CITY: AVON STATE: MA ZIP: 02322-1171 BUSINESS PHONE: 5085881220 MAIL ADDRESS: STREET 1: ONE KIDDIE DR CITY: AVON STATE: MA ZIP: 02322-1171 FORMER COMPANY: FORMER CONFORMED NAME: KIDDIE PRODUCTS INC DATE OF NAME CHANGE: 19920703 10-Q 1 THE FIRST YEARS INC. 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Quarterly Report Under Section 13 or 15 (d) of the Securities Exchange Act of 1934 For The Quarter Ended June 30, 1995 Commission file number 0-7024 THE FIRST YEARS INC. (Exact name of registrant as specified in its charter) MASSACHUSETTS 04-2149581 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) ONE KIDDIE DRIVE, AVON, MASSACHUSETTS 02322-1171 (Address of principal executive offices) (Zip Code) (508) 588-1220 (Registrant's telephone number, including area code) KIDDIE PRODUCTS, INC. (Former name, former address and former fiscal year, 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 reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X . No . ----- ----- The number of shares of Registrant's common stock outstanding on July 31, 1995 was 2,252,286. 2 THE FIRST YEARS INC. INDEX PART I - FINANCIAL INFORMATION: Condensed Balance Sheets Page 1 Condensed Statements of Income 2 Condensed Statements of Cash Flows 3 Notes to Condensed Financial Statements 4 Management's Discussion and Analysis of Financial Condition and Results of Operations 5 PART II - OTHER INFORMATION Other information 6-8 SIGNATURES 8
3 THE FIRST YEARS INC. CONDENSED BALANCE SHEETS
JUNE 30, DECEMBER 31, 1995 1994 ----------- ----------- (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 1,166,032 $ 2,329,041 Accounts receivable, net 13,634,471 9,266,235 Inventories 13,810,500 10,413,835 Prepaid insurance, taxes, etc 234,832 295,921 Current deferred taxes 624,500 624,500 ----------- ----------- Total current assets 29,470,335 22,929,532 ----------- ----------- PROPERTY, PLANT, AND EQUIPMENT: Land 167,266 167,266 Building 3,737,861 3,737,861 Machinery and molds 5,778,628 5,413,075 Furniture and equipment 3,079,047 2,986,905 ----------- ----------- Total 12,762,802 12,305,107 Less accumulated depreciation 6,847,009 6,381,854 ----------- ----------- Property, plant, and equipment-net 5,915,793 5,923,253 ----------- ----------- TOTAL ASSETS $35,386,128 $28,852,785 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of long-term debt $ 133,333 $ 133,333 Short-term borrowings 3,300,000 0 Accounts payable and accrued expenses 6,381,858 5,332,871 Federal and state income taxes payable 713,923 218,500 ----------- ----------- Total current liabilities 10,529,114 5,684,704 ----------- ----------- LONG-TERM DEBT-Less portion due currently 166,667 233,334 ----------- ----------- DEFERRED INCOME TAXES 584,800 584,800 ----------- ----------- STOCKHOLDERS' EQUITY: Common stock 225,229 225,043 Paid-In capital 116,951 98,194 Retained earnings 23,763,367 22,026,710 ----------- ----------- Total stockholders' equity 24,105,547 22,349,947 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $35,386,128 $28,852,785 =========== ===========
See accompanying notes to condensed financial statements. Page 1 4 THE FIRST YEARS INC. CONDENSED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30 JUNE 30 --------------------------- --------------------------- 1995 1994 1995 1994 INCOME: Net sales $20,076,749 $13,574,151 $35,878,526 $27,069,361 Interest 2,869 7,082 11,566 17,577 ----------- ----------- ----------- ----------- Total income 20,079,618 13,581,233 35,890,092 27,086,938 ----------- ----------- ----------- ----------- COSTS AND EXPENSES: Cost of products sold 11,717,221 7,628,324 20,973,464 15,208,444 Selling, general, and adminstrative expenses 6,178,087 4,608,944 11,335,877 9,244,519 Interest expense 34,810 5,739 48,243 13,593 ----------- ----------- ----------- ----------- Total costs and expenses 17,930,118 12,243,007 32,357,584 24,466,556 ----------- ----------- ----------- ----------- INCOME BEFORE TAXES ON INCOME 2,149,500 1,338,226 3,532,508 2,620,382 PROVISION FOR TAXES ON INCOME 859,800 508,500 1,413,000 995,800 ----------- ----------- ----------- ----------- NET INCOME $ 1,289,700 $ 829,726 $ 2,119,508 $ 1,624,582 =========== =========== =========== =========== EARNINGS PER SHARE $ 0.55 $ 0.37 $ 0.91 $ 0.72 =========== =========== =========== =========== AVERAGE NUMBER OF SHARES OUTSTANDING 2,330,399 2,248,260 2,330,656 2,248,260 =========== =========== =========== =========== CASH DIVIDENDS PAID PER SHARE $ 0.17 $ 0.17 $ 0.17 $ 0.17 =========== =========== =========== ===========
See accompanying notes to condensed financial statements. Page 2 5 THE FIRST YEARS INC. Condensed Statements of Cash Flows for the Six Months Ended June 30, (Unaudited)
1995 1994 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 2,119,508 $ 1,624,582 Adjustments to reconcile net income to net cash provided by (used for) operations: Depreciation 465,155 404,042 Provision for doubtful accounts 73,009 61,051 Gain on disposal of equipment (200) (9,926) Increase (decrease) arising from working capital items: Accounts receivable (4,441,245) (2,895,096) Inventories (3,396,665) (274,950) Prepaid insurance, taxes, etc. 61,089 (155,603) Accounts payable and accrued expenses 1,048,987 506,418 Federal and state income taxes - net 495,423 261,600 ---------- ---------- Net cash provided by (used for) operating activites (3,574,939) (477,882) ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Expenditures for property, plant, and equiptment (457,495) (599,993) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Cash dividends (382,851) (382,204) Common stock issued under stock option plans 18,943 0 Net proceeds from short-term borrowings 3,300,000 0 Repayment of industrial revenue bonds (66,667) (66,667) ---------- ---------- Net cash provided by (used for) financing activities 2,869,425 (448,871) ---------- ---------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,163,009) (1,526,746) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 2,329,041 2,712,267 ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD $1,166,032 $1,185,521 ========== ========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for: Interest $ 48,243 $ 13,593 ========== ========== Income taxes $ 917,577 $ 734,200 ========== ==========
See accompanying notes to condensed financial statements. Page 3 6 THE FIRST YEARS INC. NOTES TO CONDENSED FINANCIAL STATEMENTS 1. Amounts in the accompanying balance sheet as of December 31, 1994 are condensed from the Company's audited balance sheet as of that date. All other condensed financial statements are unaudited but, in the opinion of the Company, contain all normal and recurring adjustments necessary to present fairly the financial position as of June 30, 1995, and the results of operations and cash flows for the periods ended June 30, 1995 and June 30, 1994. 2. The Company has 15,000,000 and 7,500,000 shares of $.10 par value common stock with 2,252,286 and 2,250,430 shares issued and outstanding as of June 30, 1995 and December 31, 1994, respectively. On May 3, 1995 the Board of Directors authorized a $.17 per share annual cash dividend payable on June 1, 1995 to holders of record at the close of business on May 15,1995. 3. Earnings per share of common stock are computed on the basis of the average number of shares and common share equivalents outstanding during each quarter. Equivalents had no material effect on the computation for the three and six months ended June 30, 1994. Fully diluted and primary earnings per share were the same for the three and six months ended June 30, 1995 and 1994. 4. The results of operations for the three and six month periods ended June 30, 1995 and 1994 are not necessarily indicative of the results to be expected for the full year. 5. During 1995, the Company borrowed various amounts up to $3,300,000 under unsecured lines of credit totaling $9,000,000 available from banks. As of June 30, 1995 a balance of $3,300,000 remains outstanding which bears interest at 8.8%. No other short-term borrowings were incurred by the Company during 1994 or the first six months of 1995. Page 4 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Net sales for the first six months of 1995 increased 32.5% over the similar period last year due to increased sales from new product introductions, and expanded retail distribution in domestic and foreign markets. Net sales particularly benefited from the introduction of newly licensed "Winnie the Pooh" products and the introduction of many new bulk items which are higher priced but lower margined products than products previously offered by the Company. Gross profit margins for the first six months of 1995 decreased by 2.3% from the similar period of last year. The decrease was due to air freight shipments from overseas production facilities incurred primarily in the first three months of the period, licensing fees, and increased sales of bulk items. Increased cost of goods due to raw material increases may result in further declines in gross profit margins for the rest of 1995. Selling, general, and administrative expenses for the first six months of 1995 increased by $2,091,000 or 22.6% over such expenses for the first six months of 1994. The increase resulted mainly from costs related to increased sales volume. Selling, general and administrative expenses for the first six months of 1995 as a percent of sales decreased to 31.6% from 34.2% for the similar period in 1994. The decrease reflects the economies of scale provided by higher volume of business. Net working capital increased by $1,696,000 in the first six months primarily due to profitable operations. Accounts receivable increased by $4,369,000 primarily as a result of increased sales and inventories increased by $3,397,000 to meet continued demand for the Company's products. Cash decreased by $1,163,000 primarily resulting from increases in accounts receivable and inventories which were partially offset by increases in accounts payable and accrued expenses as well as short-term borrowings. Unsecured lines of credit of $9,000,000, which are subject to annual renewal, are available from banks. Amounts outstanding under these lines are payable upon demand by the banks. During 1995, the Company borrowed various amounts up to $3,300,000 of which $3,300,000 remained outstanding as of June 30, 1995. The Company did not incur any other short-term borrowings during 1994 or during the first six months of 1995. Management beleives sufficient liquidity exists and should continue to exist to enable the Company to respond aggressively to continuing competition in its major markets. Page 5 8 PART II - OTHER INFORMATION Items 1 through 3 - Not Applicable Item 4: Submission of Matters to a vote of security- holders. (a) An Annual Meeting of the Stockholders of The First Years Inc. was held on May 18, 1995. (c) The following matters were voted upon at such Annual Meeting and the following votes were cast as to each such matter: i. Election of Class III Directors
NUMBER OF SHARES ----------------------- Withheld For Authority --- --------- Ronald J Sidman 1,957,509 7,355 Benjamin Peltz 1,957,609 7,255
ii. Proposal to amend the Company's Articles of Organization to change the Company's name to The First Years Inc.
NUMBER OF SHARES ---------------- For 1,949,764 Against 11,900 Abstentions 3,200
iii. Proposal to amend the Company's Articles of Organization to increase the number of authorized shares of the Company's Common Stock from 7,500,000 to 15,000,000, $.10 par value per share.
NUMBER OF SHARES ---------------- For 1,942,019 Against 16,245 Abstentions 6,600
Page 6 9 PART II - OTHER INFORMATION (cont) iv. Proposal to approve an Amendment to Company's 1993 Equity Incentive Plan (i) increasing the number of shares of the Company's Common Stock authorized for issuance under the plan from 205,000 to 305,000; and (ii) limiting the number of stock options and stock appreciation rights that can be awarded to any single participant during the life of the Plan.
NUMBER OF SHARES ---------------- For 1,472,877 Against 227,671 Abstentions 2,650 Broker Non-Votes 261,366
v. Proposal to approve an Amendment to Company's 1993 Stock Option Plan for Non-Employee Directors (i) increasing the number of share of the Company's Common Stock authorized for issuance under the Plan from 15,000 to 30,000; and (ii) providing for an additional one-time award of an option for 5,000 shares to each non-employee member of the Board of Directors who has been in office for at least three years.
NUMBER OF SHARES ---------------- For 1,517,947 Against 182,251 Abstentions 3,300 Broker Non-Votes 261,366
vi. Proposal to ratify the selection of Deloitte & Touche LLP as auditors for the Company for the fiscal year 1995.
NUMBER OF SHARES ---------------- For 1,962,364 Against 2,500 Abstentions 0
Page 7 10 PART II - OTHER INFORMATION (cont) Item 5: Not Applicable Item 6: Exhibits and Reports on Form 8-K (a) Not Applicable (b) No reports on Form 8-K have been filed during the past quarter covered by this report. 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. THE FIRST YEARS INC. Registrant Date 8/9/95 /s/ Benjamin Peltz --------------------------- Benjamin Peltz, Senior Vice President and Treasurer, Duly Authorized Officer and Principal Financial Officer Page 8 EX-27 2 FINANCIAL DATA SCHEDULE
5 6-MOS DEC-31-1995 JAN-01-1995 JUN-30-1995 1,166,032 0 13,819,471 185,000 13,810,500 29,470,335 12,762,802 6,847,009 35,386,128 10,529,116 166,667 225,229 0 0 23,880,318 35,386,128 35,878,526 35,890,092 20,973,464 32,309,341 0 0 48,243 3,532,508 1,413,000 2,119,508 0 0 0 2,119,508 .91 .91