-----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, OehO7+eMpkic8vLIXD3f+YWjTGF1um0+ayZGtmlBFAiiXojiUDQnZo+HgU33qpv5 rUDM7TS1/x0bjG0nHIZn4Q== 0000950135-97-003416.txt : 19970814 0000950135-97-003416.hdr.sgml : 19970814 ACCESSION NUMBER: 0000950135-97-003416 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970813 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: 97657917 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, 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 July 31, 1997 was 4,974,550. 2 THE FIRST YEARS INC. INDEX -----
PAGE ---- PART I - FINANCIAL INFORMATION: Condensed Balance Sheets 1 Condensed Statements of Income 2 Condensed Statements of Cash Flows 3 Notes to Condensed Financial Statements 4 - 5 Management's Discussion and Analysis of Financial Condition and Results of Operations 6 - 7 PART II - OTHER INFORMATION Other information 8 - 9 SIGNATURES 9 EXHIBIT INDEX 10
3 THE FIRST YEARS INC. Condensed Balance Sheets
ASSETS June 30, December 31, 1997 1996 ---- ---- (Unaudited) CURRENT ASSETS: Cash and cash equivalents $ 2,465,148 $ 4,164,587 Accounts receivable, net 22,291,420 15,929,465 Inventories 18,805,100 18,588,044 Prepaid expenses and other assets 456,209 375,317 Deferred tax assets 946,400 946,400 ----------- ----------- Total current assets 44,964,277 40,003,813 ----------- ----------- PROPERTY, PLANT, AND EQUIPMENT: Land 167,266 167,266 Building 4,016,405 4,016,405 Machinery and molds 7,888,224 7,329,240 Furniture and equipment 3,653,914 3,092,356 ----------- ----------- Total 15,725,809 14,605,267 Less accumulated depreciation 8,313,192 7,559,543 ----------- ----------- Property, plant, and equipment-net 7,412,617 7,045,724 ----------- ----------- TOTAL ASSETS $52,376,894 $47,049,537 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of long-term debt $ 33,334 $ 100,000 Short-term borrowings 200,000 0 Accounts payable and accrued expenses 10,337,117 9,462,426 Accrued royalties 1,715,250 848,671 Federal and state income taxes payable 9,200 0 ----------- ----------- Total current liabilities 12,294,901 10,411,097 ----------- ----------- DEFERRED TAX LIABILITY 772,000 772,000 ----------- ----------- STOCKHOLDERS' EQUITY: Common stock 497,455 494,898 Paid-In capital 5,533,553 5,271,875 Retained earnings 33,278,985 30,099,667 ----------- ----------- Total stockholders' equity 39,309,993 35,866,440 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS'EQUITY $52,376,894 $47,049,537 =========== ===========
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, -------- -------- 1997 1996 1997 1996 ---- ---- ---- ---- NET SALES $32,697,252 $23,349,264 $60,519,296 $46,358,545 COST OF PRODUCTS SOLD 19,353,753 14,012,342 35,998,692 27,959,513 ----------- ----------- ----------- ----------- GROSS PROFIT 13,343,499 9,336,922 24,520,604 18,399,032 SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES 9,882,207 6,922,684 18,286,407 13,848,531 ----------- ----------- ----------- ----------- OPERATING INCOME 3,461,292 2,414,238 6,234,197 4,550,501 OTHER INCOME (EXPENSES): Interest expense (15,393) (131,836) (25,699) (297,209) Interest income 7,164 1,692 22,066 2,875 ----------- ----------- ----------- ----------- INCOME BEFORE INCOME TAXES 3,453,063 2,284,094 6,230,564 4,256,167 PROVISION FOR INCOME TAXES 1,443,500 917,000 2,554,500 1,702,500 ----------- ----------- ----------- ----------- NET INCOME $ 2,009,563 $ 1,367,094 $ 3,676,064 $ 2,553,667 =========== =========== =========== =========== EARNINGS PER SHARE $ 0.39 $ 0.29 $ 0.71 $ 0.54 =========== =========== =========== =========== AVERAGE NUMBER OF SHARES OUTSTANDING 5,216,674 4,762,330 5,176,361 4,725,891 =========== =========== =========== =========== CASH DIVIDENDS PAID PER SHARE $ 0.10 $ 0.10 $ 0.10 $ 0.10 =========== =========== =========== ===========
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, 1997 and 1996 (Unaudited)
1997 1996 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $3,676,064 $2,553,667 Adjustments to reconcile net income to net cash provided by (used for) operations: Depreciation 753,649 602,136 Provision for doubtful accounts 169,564 70,674 Gain on disposal of equipment 6,359 Increase (decrease) arising from working capital items: Accounts receivable (6,531,519) (3,243,188) Inventories (217,056) (1,444,016) Prepaid expenses and other assets (80,892) 449,712 Accounts payable and accrued expenses 874,691 242,909 Accrued royalties 866,579 216,109 Federal and state income taxes - net 9,200 227,800 ---------- ---------- Net cash used for operating activities (479,720) (317,838) ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Expenditures for property, plant, and equipment (1,120,542) (994,377) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Cash Dividend (496,746) (453,557) Common stock issued under stock option plans 164,235 121,053 Tax benefit of stock option compensation 100,000 0 Net proceeds from short-term borrowings 200,000 1,800,000 Repayment of industrial revenue bonds (66,666) (66,667) ---------- ---------- Net cash provided by financing activities (99,177) 1,400,829 ---------- ---------- DECREASE IN CASH AND CASH EQUIVALENTS (1,699,439) 88,614 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 4,164,587 552,568 ---------- ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD $2,465,148 $ 641,182 ========== ========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for: Interest $ 25,699 $ 297,209 ========== ========== Income taxes $2,518,970 $1,092,400 ========== ==========
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 June 30, 1997, and the results of operations and cash flows for the periods ended June 30, 1997 and 1996. 2. The Company has 15,000,000 authorized shares of $.10 par value common stock with 4,974,550 and 4,948,980 shares issued and outstanding as of June 30, 1997 and December 31, 1996, respectively. On May 8, 1997 the Board of Directors authorized a $0.10 per share annual cash dividend which was paid 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 six months ended June 30, 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 $0.74 and $0.71, respectively for the six months ended June 30, 1997 and $0.56 and $0.54, respectively for the six months ended June 30, 1966. 4. The results of operations for the six month period ended June 30, 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 $2,500,000 under unsecured lines of credit totaling $20,000,000 available from banks. As of June 30, 1997 a balance of $200,000 remained outstanding which bears interest at a weighted average rate of 7.38%. During 1996, the Company borrowed various amounts up to $9,900,000 of which $8,000,000 remained outstanding as of June 30, 1996 at a weighted average interest rate of 7.42%. No other short-term borrowings were incurred by the Company during the first six months of 1997 or 1996. Page 4 7 THE FIRST YEARS INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (Con't) 6. In June 1997 the Financial Accounting Standards Board issued SFAS No. 130, "Reporting Comprehensive Income" which will become effective for the Company effective December 15, 1997. SFAS No. 130 establishes standards for reporting and display of comprehensive income and its components (revenues, expenses, gains, and losses) in a full set of general purpose financial statements. SFAS No. 130 requires that all items that are required to be recognized under accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. SFAS No. 130 requires that a Company (a) classify items of other comprehensive income by their nature in a financial statement and (b) display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in-capital in the equity section of the balance sheet. Reclassification of financial statements for earlier periods provided for comparative purposes is required. The Company has not determined the effects, if any, that SFAS No. 130 will have on its financial statements. In June 1997 the Financial Accounting Standards Board issued SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information" which will become effective for the Company effective December 15, 1997. SFAS No. 131 establishes standards for the way that public companies report selected information about operating segments in annual financial statements and requires that those companies report selected information about segments in interim financial reports issued to shareholders. It also establishes standards for related disclosure about products and services, geographic areas, and major customers. SFAS No. 131, which supersedes SFAS No. 14, "Financial Reporting Segments of a Business Enterprise" but retains the requirement to report information about major customers, requires that a public company report financial and descriptive information about its reportable operating segments. The Company has not determined the effects, if any, that SFAS No. 131 will have on its financial statements. Page 5 8 THE FIRST YEARS INC. 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 six months of 1997 were $60.5 million, an increase of $14.2 million or 30.5%, as compared to $46.4 million for the comparable period last year. The increase was due to new product introductions, including the Sesame Street brand licensed from the Children's Television Workshop, and expanded retail distribution in domestic and foreign markets. Cost of products sold for the first six months of 1997 was $36.0 million, an increase of $8.0 million or 28.8%, as compared to $28.0 million for the comparable period last year. As a percentage of sales, cost of products sold in the first six months of 1997 decreased to 59.5% from 60.3% in the comparable period of 1996. The decrease was primarily due to decreased cost of products resulting from manufacturing efficiencies and increased sales of higher margin products. Selling, general, and administrative expenses for the first six months of 1997 were $18.3 million, an increase of $4.4 million or 32.0%, as compared to $13.8 million over such expenses for the first six months of 1996. The increase resulted primarily from costs related to increased sales volume, payroll and payroll related costs, and Integrated Marketing Communication program expenses. As a percentage of net sales, selling, general, and administrative expenses for the first six months of 1997 and 1996 remained consistent at 30.2% and 29.9%, respectively. Income tax expense as a percentage of pretax income was 41% and 40% for the first six months of 1997 and 1996, respectively. Net working capital increased by $3.1 million in the first six months primarily due to profitable operations. Accounts receivable increased by $6.4 million primarily as a result of increased sales. Cash decreased by $1.7 million primarily resulting from increases in accounts receivable and was partially offset by funds generated from operations. Page 6 9 THE FIRST YEARS INC. 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 six months of 1997, the Company borrowed various amounts up to $2.5 million of which $200,000 remained outstanding as of June 30, 1997. 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. The Company did not incur any other short-term borrowings during the first six months of 1997 and 1996. Recent Accounting Pronouncements In June 1997 the Financial Accounting Standards Board issued SFAS No. 130, "Reporting Comprehensive Income" which will become effective for the Company effective December 15, 1997. SFAS No. 130 establishes standards for reporting and display of comprehensive income and its components (revenues, expenses, gains, and losses) in a full set of general purpose financial statements. SFAS No. 130 requires that all items that are required to be recognized under accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. SFAS No. 130 requires that a Company (a) classify items of other comprehensive income by their nature in a financial statement and (b) display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in-capital in the equity section of the balance sheet. Reclassification of financial statements for earlier periods provided for comparative purposes is required. The Company has not determined the effects, if any, that SFAS No. 130 will have on its financial statements. In June 1997 the Financial Accounting Standards Board issued SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information" which will become effective for the Company effective December 15, 1997. SFAS No. 131 establishes standards for the way that public companies report selected information about operating segments in annual financial statements and requires that those companies report selected information about segments in interim financial reports issued to shareholders. It also establishes standards for related disclosure about products and services, geographic areas, and major customers. SFAS No. 131, which supersedes SFAS No. 14, "Financial Reporting Segments of a Business Enterprise", but retains the requirement to report information about major customers, requires that a public company report financial and descriptive information about its reportable operating segments. The Company has not determined the effects, if any, that SFAS No. 131 will have on its financial statements. Page 7 10 THE FIRST YEARS INC. 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 15, 1997. (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 II Directors:
Number of Shares ---------------- Withheld For Authority --- --------- Evelyn Sidman 3,911,503 38,461 Merton N. Alperin 3,912,503 37,461
ii. Proposal to ratify the selection of Deloitte & Touche LLP as auditors for the Company for the fiscal year 1997.
Number of Shares ---------------- For 3,946,862 Against 1,800 Abstentions 1,302
Item 5: Not Applicable Page 8 11 THE FIRST YEARS INC. PART II - OTHER INFORMATION (con't) 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 8/8/97 John R. Beals ------ ----------------------------- John R. Beals, Vice President and Assistant Treasurer, Duly Authorized Officer and Principal Financial Officer Page 9 12 THE FIRST YEARS INC. EXHIBIT INDEX
Exhibit Description Page ------- ----------- ---- 11 Statement re Computation of Per Share Earnings 11 27 Financial Data Schedule 12
Page 10 EX-11 2 STATEMENT RE 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 SIX MONTHS ENDED JUNE 30, JUNE 30, -------- -------- 1997 1996 1997 1996 ---- ---- ---- ---- PRIMARY NET INCOME PER SHARE Net income available for common shares and common stock equivalent shares $2,009,563 $1,367,094 $3,676,064 $2,553,667 ---------- ---------- ---------- ---------- Primary net income per share $ 0.39 $ 0.29 $ 0.71 $ 0.54 ---------- ---------- ---------- ---------- SHARES USED IN COMPUTATION Weighted average common shares outstanding 4,968,217 4,528,534 4,959,478 4,522,024 Common stock equivalents - options 248,457 233,796 216,883 203,867 ---------- ---------- ---------- ---------- Total common stock and common stock equivalent dilutive shares 5,216,674 4,762,330 5,176,361 4,725,891 ========== ========== ========== ========== FULLY DILUTED NET INCOME PER SHARE Net income available for common shares and common stock equivalent shares $2,009,563 $1,367,094 $3,676,064 $2,553,667 ---------- ---------- ---------- ---------- Fully diluted net income per share $ 0.39 $ 0.29 $ 0.71 $ 0.54 ---------- ---------- ---------- ---------- SHARES USED IN COMPUTATION Weighted average common shares outstanding 4,968,217 4,528,534 4,959,478 4,522,024 Common stock equivalents - options 281,566 233,796 233,438 218,198 ---------- ---------- ---------- ---------- Total common stock and common stock equivalent dilutive shares 5,249,783 4,762,330 5,192,916 4,740,222 ========== ========== ========== ==========
Page 11 EX-27 3 FINANCIAL DATA SCHEDULE
5 1 US DOLLARS 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 1 2,465,148 0 22,476,420 185,000 18,805,100 44,964,277 15,725,809 8,313,192 52,376,894 12,294,901 0 0 0 497,455 38,812,538 52,376,894 60,519,296 60,541,362 35,998,692 54,285,099 0 0 25,699 6,230,564 2,554,500 3,676,064 0 0 0 3,676,064 0.71 0.71
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