-----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, WjD58KITRa/78gYfSDWtpuhxFTE3dNSm4l9zKtPMhtwHMTz6jwT6+31CN0QztJN7 zoo5/QchV3gwAlhOm8Ek1A== 0000950135-97-002406.txt : 19970515 0000950135-97-002406.hdr.sgml : 19970515 ACCESSION NUMBER: 0000950135-97-002406 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 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: 97603997 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. FORM 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 March 31, 1997 - -------------------------------------------------------------------------------- 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 April 30, 1997 was 4,962,754. 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 - 6 PART II - OTHER INFORMATION Other information 7 SIGNATURES 7 EXHIBIT INDEX 8 3 THE FIRST YEARS INC. Condensed Balance Sheets ASSETS
March 31, December 31, 1997 1996 ----------- ----------- (Unaudited) CURRENT ASSETS: Cash and cash equivalents $ 1,578,609 $ 4,164,587 Accounts receivable, net 20,650,817 15,929,465 Inventories 20,279,200 18,588,044 Prepaid expenses and other assets 565,952 375,317 Deferred tax assets 946,400 946,400 ----------- ----------- Total current assets 44,020,978 40,003,813 ----------- ----------- PROPERTY, PLANT, AND EQUIPMENT: Land 167,266 167,266 Building 4,016,405 4,016,405 Machinery and molds 7,595,424 7,329,240 Furniture and equipment 3,220,413 3,092,356 ----------- ----------- Total 14,999,508 14,605,267 Less accumulated depreciation 7,925,826 7,559,543 ----------- ----------- Property, plant, and equipment-net 7,073,682 7,045,724 ----------- ----------- TOTAL ASSETS $51,094,660 $47,049,537 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of long-term debt $ 66,667 $ 100,000 Short-term borrowings 1,700,000 0 Accounts payable and accrued expenses 8,656,863 9,462,426 Accrued royalties 1,403,696 848,671 Federal and state income taxes payable 872,300 0 ----------- ----------- Total current liabilities 12,699,526 10,411,097 ----------- ----------- DEFERRED TAX LIABILITY 772,000 772,000 ----------- ----------- STOCKHOLDERS' EQUITY: Common stock 496,275 494,898 Paid-In capital 5,360,690 5,271,875 Retained earnings 31,766,169 30,099,667 ----------- ----------- Total stockholders' equity 37,623,134 35,866,440 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $51,094,660 $47,049,537 =========== ===========
See accompanying notes to condensed financial statements. Page 1 4 THE FIRST YEARS INC. Condensed Statements of Income for the Three Months Ended March 31, 1997 and 1996 (Unaudited)
1997 1996 ----------- ----------- NET SALES $27,822,044 $23,009,281 COST OF PRODUCTS SOLD 16,644,939 13,947,171 ----------- ----------- GROSS PROFIT 11,177,105 9,062,110 SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES 8,404,199 6,925,847 ----------- ----------- OPERATING INCOME 2,772,906 2,136,263 OTHER INCOME (EXPENSES): Interest Expense (10,306) (165,373) Interest Income 14,902 1,183 ----------- ----------- INCOME BEFORE INCOME TAXES 2,777,502 1,972,073 PROVISION FOR INCOME TAXES 1,111,000 785,500 ----------- ----------- NET INCOME $ 1,666,502 $1,186,573 =========== =========== EARNINGS PER SHARE $0.32 $0.25 ===== ===== AVERAGE NUMBER OF SHARES OUTSTANDING 5,136,011 4,689,426 =========== ===========
See accompanying notes to condensed financial statements. Page 2 5 THE FIRST YEARS INC. Condensed Statements of Cash Flows for the Three Months Ended March 31, 1997 and 1996 (Unaudited)
1997 1996 ---------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $1,666,502 $1,186,573 Adjustments to reconcile net income to net cash provided by (used for) operations: Depreciation 366,283 292,127 Provision for doubtful accounts 126,261 53,746 Increase (decrease) arising from working capital items: Accounts receivable (4,847,613) (2,105,324) Inventories (1,691,155) (628,116) Prepaid expenses and other assets (190,635) 348,926 Accounts payable and accrued expenses (805,563) (1,709,092) Accrued royalties 555,025 196,447 Federal and state income taxes - net 872,300 283,600 ----------- ---------- Net cash used for operating activities (3,948,595) (2,081,113) CASH FLOWS FROM INVESTING ACTIVITIES: Expenditures for property, plant, and equipment (394,241) (692,177) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Common stock issued under stock option plans 90,191 13,362 Net proceeds from short term borrowings 1,700,000 2,300,000 Repayment of industrial revenue bonds (33,333) (33,334) ---------- ---------- Net cash provided by financing activities 1,756,858 2,280,028 ---------- ---------- DECREASE IN CASH AND CASH EQUIVALENTS (2,585,978) (493,262) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 4,164,587 552,568 ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD $1,578,609 $ 59,306 ========== ========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for: Interest $ 10,306 $ 165,373 ========== ========== Income taxes $ 212,370 $ 119,600 ========== ==========
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, 1996 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 March 31, 1997, and the results of operations and cash flows for the periods ended March 31, 1997 and 1996. 2. The Company has 15,000,000 authorized shares of $.10 par value common stock with 4,962,754 and 4,948,980 shares issued and outstanding as of March 31, 1997 and December 31, 1996, respectively. On May 8, 1997 the Board of Directors authorized a $0.10 per share annual cash dividend payable on June 2, 1997 to holders of record at the close of business on May 21, 1997. 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 three months ended March 31, 1997 and 1996. In February 1997 the Financial Accounting Standards Board issued SFAS No. 128, "Earnings per Share" which will become effective for the Company effective December 15, 1997. SFAS No. 128 replaces the presentation of primary earnings per share with a basic earnings per share (which excludes dilution) and a diluted earnings per share. Had the Company used SFAS No. 128, the Company's basic and diluted earnings per share would have been $0.34 and $0.32, respectively for the three months ended March 31, 1997 and $0.26 and $0.25, respectively for the three months ended March 31, 1996. 4. The results of operations for the three month period ended March 31, 1997 and 1996 are not necessarily indicative of the results to be expected for the full year. 5. During 1997, the Company borrowed various amounts up to $2,200,000 under unsecured lines of credit totaling $20,000,000 available from banks. As of March 31, 1997 a balance of $1,700,000 remained outstanding which bears interest at a weighted average rate of 7.94%. During 1996, the Company borrowed various amounts up to $9,900,000 of which $8,500,000 remained outstanding as of March 31, 1996 at a weighted average interest rate of 7.55%. No other short-term borrowings were incurred by the Company during the first three months of 1997 or 1996. Page 4 7 Management's Discussion and Analysis of Financial Condition and Results of Operations Statements in this Report on Form 10-Q that are not strictly historical are "forward-looking" statements, as defined in the Private Securities Litigation Reform Act of 1995. The actual results may differ from those projected in the forward-looking statements due to risks and uncertainties that exist in the Company's operations and business environment in the development and introduction of new products, described more fully in the Company's Annual Report on From 10-K for the year ended December 31, 1996, and the Report on Form 10-Q for the quarter ended September 30, 1996, filed with the Securities and Exchange Commission. Net sales for the first three months of 1997 were $27.8 million, an increase of $4.8 million or 20.9%, as compared to $23.0 million for the comparable period last year. The increase was due to new product introductions and expanded retail distribution in domestic and foreign markets. Cost of products sold for the first three months of 1997 was $16.6 million, an increase of $2.7 million or 19.3%, as compared to $13.9 million for the comparable period last year. As a percentage of sales, cost of products sold in the first three months of 1997 decreased to 59.8% from 60.6% in the comparable period of 1996. The decrease was primarily due to decreased cost of products resulting from manufacturing efficiencies. Selling, general, and administrative expenses for the first three months of 1997 were $8.4 million, an increase of $1.5 million or 21.4%, as compared to $6.9 million over such expenses for the first three months of 1996. 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 three months of 1997 and 1996 remained consistent at 30.2% and 30.1%, respectively. Income tax expense as a percentage of pretax income was 40% for the first three months of 1997 and 1996. Net working capital increased by $1.7 million in the first three months primarily due to profitable operations. Accounts receivable increased by $4.7 million primarily as a result of increased sales and inventories increased by $1.7 to meet continued demand for the Company's products. Cash decreased by $2.6 million primarily resulting from increases in accounts receivable and inventories which were partially offset by increases in short-term borrowings and by funds generated from operations. Page 5 8 Management's Discussion and Analysis of Financial Condition and Results of Operations (Con't) 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 three months of 1997, the Company borrowed various amounts up to $2.2 million of which $1.7 million remained outstanding as of March 31, 1997. During the first three months of 1996, the Company borrowed various amounts up to $9.9 million of which $8.5 million remained outstanding as of March 31, 1996. The Company did not incur any other short-term borrowings during the first three months of 1997 and 1996. Recent Accounting Pronouncements In February 1997 the Financial Accounting Standards Board issued SFAS No. 128, "Earnings per Share" which will become effective for the Company effective December 15, 1997. SFAS No. 128 replaces the presentation of primary earnings per share with a basic earnings per share (which excludes dilution) and a diluted earnings per share. Had the Company used SFAS No. 128, the Company's basic and diluted earnings per share would have been $0.34 and $0.32, respectively for the three months ended March 31, 1997 and $0.26 and $0.25, respectively for the three months ended March 31, 1996. Page 6 9 PART II - OTHER INFORMATION Items 1 through 5 - Not Applicable Item 6: Exhibits and Reports on Form 8-K (a) Exhibits - The following exhibits are filed as part of this Report: Exhibit Description ------- ----------- 11 Statement re Computation of Per Share Earnings 27 Financial Data Schedule (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 5/14/97 /s/ Benjamin Peltz ------------------ -------------------------------- Benjamin Peltz, Senior Vice President and Treasurer, Duly Authorized Officer and Principal Financial Officer Page 7 10 EXHIBIT INDEX Exhibit Description Page ------- ----------- ---- 11 Statement re Computation of Per Share Earnings 9 27 Financial Data Schedule 10 Page 8 EX-11 2 COMPUTATION OF PER SHARE EARNINGS 1 EXHIBIT 11 THE FIRST YEARS INC. PRIMARY NET INCOME PER SHARE AND FULLY DILUTED NET INCOME PER SHARE
Three Months Ended ------------------ March 31, --------- 1997 1996 ---------- ---------- PRIMARY NET INCOME PER SHARE Net income available for common shares and common stock equivalent shares $1,666,502 $1,186,573 ---------- ---------- Primary net income per share $ 0.32 $ 0.25 ---------- ---------- SHARES USED IN COMPUTATION Weighted average common shares outstanding 4,950,701 4,515,487 Common stock equivalents - options 185,310 173,939 ---------- ---------- Total common stock and common stock equivalent dilutive shares 5,136,011 4,689,426 ========== ========== FULLY DILUTED NET INCOME PER SHARE Net income available for common shares and common stock equivalent shares $1,666,502 $1,186,573 ---------- ---------- Fully diluted net income per share $ 0.32 $ 0.25 ---------- ---------- SHARES USED IN COMPUTATION Weighted average common shares outstanding 4,950,701 4,515,487 Common stock equivalents - options 185,310 202,600 ---------- ---------- Total common stock and common stock equivalent dilutive shares 5,136,011 4,718,087 ========== ==========
Page 9 EX-27 3 FINANCIAL DATA SCHEDULE
5 1 U.S. DOLLAR 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 1 1,578,609 0 20,835,817 185,000 20,279,200 44,020,978 14,999,508 7,925,826 51,094,660 12,699,526 0 0 0 496,275 37,126,859 51,094,660 27,822,044 27,836,946 16,644,939 25,049,138 0 0 10,306 2,777,502 1,111,000 1,666,502 0 0 0 1,666,502 0.32 0.32
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