-----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, Dz0ILQbpu8eECodwperetTQrvpMHwmRbIHGOULBktlP9Wifbn5ymZj7qrbpKKi0f PZUtvOtPFAoSeh28Hnabsg== 0000950135-96-003542.txt : 19960814 0000950135-96-003542.hdr.sgml : 19960814 ACCESSION NUMBER: 0000950135-96-003542 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 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: 96609940 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 10-Q 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, 1996 - -------------------------------------------------------------------------------- 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) - -------------------------------------------------------------------------------- (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, 1996 was 4,936,570. 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 - 7 SIGNATURES 7 3 THE FIRST YEARS INC. Condensed Balance Sheets
ASSETS June 30, December 31, 1996 1995 ----------- ----------- (Unaudited) CURRENT ASSETS: Cash and cash equivalents $ 641,182 $ 552,568 Accounts receivable, net 17,364,144 14,191,630 Inventories 20,453,800 19,009,784 Prepaid insurance, taxes, etc 328,362 778,074 Current deferred taxes 872,300 872,300 ----------- ----------- Total current assets 39,659,788 35,404,356 ----------- ----------- PROPERTY, PLANT, AND EQUIPMENT: Land 167,266 167,266 Building 3,743,943 3,737,861 Machinery and molds 7,155,450 6,481,504 Furniture and equipment 3,456,882 3,183,379 ----------- ----------- Total 14,523,541 13,570,010 Less accumulated depreciation 7,829,935 7,262,286 ----------- ----------- Property, plant, and equipment-net 6,693,606 6,307,724 TOTAL ASSETS $46,353,394 $41,712,080 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of long-term debt $ 133,333 $ 133,333 Short-term borrowings 8,000,000 6,200,000 Accounts payable and accrued expenses 9,327,205 8,868,187 Federal and state income taxes payable 227,800 0 ----------- ----------- Total current liabilities 17,688,338 15,201,520 ----------- ----------- LONG-TERM DEBT-Less portion due currently 33,334 100,001 ----------- ----------- DEFERRED INCOME TAXES 647,300 647,300 ----------- ----------- STOCKHOLDERS' EQUITY: Common stock 453,657 451,514 Paid-in capital 118,910 0 Retained earnings 27,411,855 25,311,745 ----------- ----------- Total stockholders' equity 27,984,422 25,763,259 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS'EQUITY $46,353,394 $41,712,080 =========== ===========
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, --------------------------- -------------------------- 1996 1995 1996 1995 ------------ ----------- ----------- ----------- NET SALES $23,349,264 $20,076,749 $46,358,545 $35,878,526 COST OF PRODUCTS SOLD 14,012,342 11,717,221 27,959,513 20,973,464 ----------- ----------- ----------- ----------- GROSS PROFIT 9,336,922 8,359,528 18,399,032 14,905,062 SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES 6,922,684 6,178,087 13,848,531 11,335,877 ----------- ----------- ----------- ----------- OPERATING INCOME 2,414,238 2,181,441 4,550,501 3,569,185 OTHER INCOME (EXPENSES): Interest expense (131,836) (34,810) (297,209) (48,243) Interest income 1,692 2,869 2,875 11,566 ----------- ----------- ----------- ----------- INCOME BEFORE INCOME TAXES 2,284,094 2,149,500 4,256,167 3,532,508 PROVISION FOR INCOME TAXES 917,000 859,800 1,702,500 1,413,000 ----------- ----------- ----------- ----------- NET INCOME $ 1,367,094 $ 1,289,700 $ 2,553,667 $ 2,119,508 =========== =========== =========== =========== EARNINGS PER SHARE $ 0.29 $ 0.28 $ 0.54 $ 0.45 =========== =========== =========== =========== AVERAGE NUMBER OF SHARES OUTSTANDING 4,762,330 4,660,798 4,725,891 4,661,312 =========== =========== =========== =========== CASH DIVIDENDS PAID PER SHARE $ 0.100 $ 0.085 $ 0.100 $ 0.085 =========== =========== =========== ===========
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)
1996 1995 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 2,553,667 $ 2,119,508 Adjustments to reconcile net income to net cash provided by (used for) operations: Depreciation 602,136 465,155 Provision for doubtful accounts 70,674 73,009 Gain on disposal of equipment 6,359 200 Increase (decrease) arising from working capital items: Accounts receivable (3,243,188) (4,441,245) Inventories (1,444,016) (3,396,665) Prepaid insurance, taxes, etc 449,712 61,089 Accounts payable and accrued expenses 459,018 1,048,987 Federal and state income taxes - net 227,800 495,423 ----------- ----------- Net cash used for operating activities (317,838) (3,574,939) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Expenditures for property, plant, and equipment (994,377) (457,495) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Cash dividend (453,557) (382,851) Common stock issued under stock option plans 121,053 18,943 Net proceeds from short-term borrowings 1,800,000 3,300,000 Repayment of industrial revenue bonds (66,667) (66,667) ----------- ----------- Net cash provided by financing activities 1,400,829 2,869,425 ----------- ----------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 88,614 (1,163,009) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 552,568 2,329,041 ----------- ----------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 641,182 $ 1,166,032 =========== =========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for: Interest $ 297,209 $ 48,243 =========== =========== Income taxes $ 1,092,400 $ 917,577 =========== ===========
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, 1995 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, 1996, and the results of operations and cash flows for the periods ended June 30, 1996 and 1995. 2. The Company has 15,000,000 shares of $.10 par value common stock with 4,536,570 and 4,515,142 shares issued and outstanding as of June 30, 1996 and December 31, 1995, respectively. On May 2, 1996 the Board of Directors authorized a $0.10 per share annual cash dividend paid on June 3, 1996 to holders of record at the close of business on May 21, 1996. 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. Fully diluted and primary earnings per share were the same for the six months ended June 30, 1996 and 1995. 4. On June 25, 1996, the Company entered into an agreement with a group of underwriters to sell 1.6 million shares of common stock ("the shares"), consisting of 400,000 newly issued shares and 1,200,000 shares of certain selling stockholders. The closing of the sale was held on July 1, 1996 at which time the Company issued 400,000 new shares and received the net proceeds. The proceeds of the shares was used to repay certain indebtedness of the Company. Assuming the sale of approximately 400,000 shares as of January 1, 1996 and 1995, pro forma earnings per share would have been $0.27 and $0.26 for the three months ended June 30, 1996 and 1995, respectively, and $0.52 and $0.44 for the six months ended June 30, 1996 and 1995, respectivley. 5. The results of operations for the three and six month periods ended June 30, 1996 and 1995 are not necessarily indicative of the results to be expected for the full year. 6. During 1996, the Company borrowed various amounts up to $9,900,000 under unsecured lines of credit totaling $20,000,000 available from banks. As of June 30, 1996 a balance of $8,000,000 remained outstanding which bears interest at a weighted average rate of 7.42%. During 1995, the Company borrowed various amounts up to $3,300,000 of which $3,300,000 remained outstanding as of June 30, 1995. No other short-term borrowings were incurred by the Company during 1996 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 1996 were $46.4 million an increase of $10.5 million or 29.2% as compared to $35.9 million for the comparable period last year. The increase was due to new product introductions and expanded retail distribution in domestic and foreign markets. Additionally, the Company did not experience significant new product production delays in 1996 as it did in the first three months of 1995. Cost of products sold for the first six months of 1996 was $28.0 million, an increase of $7.0 million or 33.3%, as compared to $21.0 million for the comparable period last year. As a percentage of sales, cost of products sold in the first six months of 1996 increased to 60.3% from 58.5% in the comparable period of 1995. The increase was primarily due to increased sales of higher-priced, lower-margined products and licensing fees. Selling, general, and administrative expenses for the first six months of 1996 were $13.8 million, an increase of $2.5 million or 22.2% as compared to $11.3 million over such expenses for the first six months of 1995. The increase resulted primarily from costs related to increased sales volume, payroll and payroll related costs. As a percentage of net sales, selling, general, and administrative expenses for the first six months of 1996 decreased to 29.9% from 31.6% for the comparable period in 1995. The decrease reflects the economies of scale provided by higher volume of business. Income tax expense as a percentage of pretax income was 40% for the first six months of 1996 and 1995. Net working capital increased by $1.8 million in the first six months primarily due to profitable operations. Accounts receivable increased by $3.2 million primarily as a result of increased sales and inventories increased by $1.4 to meet continued demand for the Company's products. Cash increased by $89,000 primarily resulting from increases in accounts receivable and inventories which were primarily offset by increases in accounts payable, short-term borrowings and by funds generated from operations. Unsecured bank lines of credit aggregating $20.0 million are subject to annual renewal. Amounts outstanding under these lines are payable upon demand by the banks. During the first six months of 1996, the Company borrowed various amounts up to $9.9 million of which $8.0 million remained outstanding as of June 30, 1996. During the first six months of 1995, the Company borrowed various amounts up to $3.3 million of which $3.3 million remained outstanding as of June 30, 1995. The Company did not incur any other short-term borrowings during the first six months of 1996 and 1995. Page 5 8 PART II - OTHER INFORMATION Items 1 through 3 - Not Applicable Item 4: Submission of Matters to a Vote of Securityholders. (a) An Annual Meeting of the Stockholders of The First Years Inc. was held on May 16, 1996. (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 --- --------- Jerome M. Karp 4,152,144 5,800 Fred T. Page 4,152,144 5,800
ii. Proposal to ratify the selection of Deloitte & Touche LLP as auditors for the Company for the fiscal year 1996.
Number of Shares ---------------- For 4,156,344 Against 0 Abstentions 1,600
Page 6 9 PART II - OTHER INFORMATION (con't) 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 8/12/96 /s/ Benjamin Peltz ------------------------------- Benjamin Peltz, Senior Vice President and Treasurer, Duly Authorized Officer and Principal Financial Officer Page 7 EX-27 2 FINANCIAL DATA SCHEDULE
5 1 U.S. DOLLAR 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 1 641,182 0 17,549,144 185,000 20,453,800 39,659,788 14,523,541 7,829,935 46,353,394 17,688,338 33,334 453,657 0 0 27,530,765 46,353,394 46,358,545 46,361,420 27,959,513 41,808,044 0 0 297,209 4,256,167 1,702,500 2,553,667 0 0 0 2,553,667 0.54 0.54
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