-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, N/tGlOQed6sv24byUQExZ1122TxIUrMF0G8cREB87sygYwn+IGWckyMm6t4zymlY qvzqepp7nNoP5iT4DQfphg== 0000950109-95-001920.txt : 19950516 0000950109-95-001920.hdr.sgml : 19950516 ACCESSION NUMBER: 0000950109-95-001920 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950515 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TYCO TOYS INC CENTRAL INDEX KEY: 0000786130 STANDARD INDUSTRIAL CLASSIFICATION: GAMES, TOYS & CHILDREN'S VEHICLES (NO DOLLS & BICYCLES) [3944] IRS NUMBER: 133319358 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09357 FILM NUMBER: 95539243 BUSINESS ADDRESS: STREET 1: 6000 MIDLANTIC DR CITY: MT LAUREL STATE: NJ ZIP: 08054-1516 BUSINESS PHONE: 6092347400 MAIL ADDRESS: STREET 1: BAER MARKKS & UPHAM STREET 2: 805 THIRD AVENUE CITY: NEW YORK STATE: NY ZIP: 10022 10-Q 1 FORM 10-Q SECURITIES & EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Period Ended March 31, 1995 -------------- [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition period from _____ to _____ Commission File Number 1-9357 ------ TYCO TOYS, INC. - ------------------------------------------------------------------------------- (Exact name of Registrant as specified in its charter) Delaware 13-3319358 ----------------------- -------------------- (State of incorporation) (I.R.S. Employer Identification No.) 6000 Midlantic Drive, Mt. Laurel, New Jersey 08054 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code (609) 234-7400 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 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, and (2) has been subject to such filing requirements for the past 90 days. YES X NO ------ ------ Number of shares outstanding of each class of Registrant's Stock as of May 12, 1995 Common, $.01 par value...................................... 34,757,926 shares Preferred, $.10 par value................................... 50,535 shares TYCO TOYS, INC. FORM 10-Q MARCH 31, 1995 INDEX Part I. Financial Information Page - ------------------------------ ---- Item 1. Financial Statements Consolidated Balance Sheets - March 31, 1995 and 1994 and December 31, 1994 3 Consolidated Statements of Operations - For the Quarters Ended March 31, 1995 and 1994 4 Consolidated Statements of Stockholders' Equity - For the Quarter Ended March 31, 1995 and the Year Ended December 31, 1994 5 Consolidated Statements of Cash Flows - For the Quarters Ended March 31, 1995 and 1994 6 Notes to Consolidated Financial Statements 7-11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12-14 Part II. Other Information - ----------------------------- Item 1. Legal Proceedings 15 Item 5. Other Information 15 Item 6. Exhibits and Reports on Form 8-K 15 2 Part I. Financial Information. Item 1. Financial Statements. Tyco Toys, Inc. Consolidated Balance Sheets (in thousands, except share amounts)
March 31, ---------------------- December 31, 1995 1994 1994 ---------- ---------- ------------ (Unaudited) ASSETS - ------ Current assets Cash and cash equivalents $ 13,280 $ 12,826 $ 30,476 Receivables, net 132,658 111,889 211,400 Inventories, net 74,070 105,477 66,284 Prepaid expenses and other current assets 23,514 20,649 24,389 Deferred taxes 17,275 17,651 17,231 -------- -------- -------- Total current assets 260,797 268,492 349,780 Property and equipment, net 46,498 50,707 47,240 Goodwill, net of accumulated amortization 231,010 235,412 231,292 Deferred taxes 27,998 25,635 23,732 Other assets 21,660 17,020 18,591 -------- -------- -------- Total assets $587,963 $597,266 $670,635 -------- -------- -------- LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Current liabilities Notes payable $ 37,008 $ 34,532 $ 57,531 Current portion of long-term debt 1,123 15,205 21,465 Accounts payable 36,002 44,575 51,325 Accrued expenses and other current liabilities 76,418 68,099 95,107 -------- -------- -------- Total current liabilities 150,551 162,411 225,428 Long-term debt 147,359 168,787 146,851 Other liabilities 2,371 1,503 2,124 Stockholders' equity Preferred stock, $.10 par value, $1,050 liquidation value per share, 1,000,000 shares authorized; 49,789 and 49,055 shares issued and outstanding as of March 31, 1995 and December 31, 1994, respectively 5 - 5 Common stock, $.01 par value, 50,000,000 shares authorized; 34,933,516, 34,852,316 and 34,893,516 shares issued as of March 31, 1995 and 1994 and December 31, 1994, respectively 349 348 349 Additional paid-in capital 344,067 294,522 343,213 Accumulated deficit (35,285) (6,077) (27,832) Treasury stock, at cost; 175,590 shares (1,595) (1,595) (1,595) Cumulative translation adjustment (19,859) (22,633) (17,908) -------- -------- -------- Total stockholders' equity 287,682 264,565 296,232 -------- -------- -------- Total liabilities and stockholders' equity $587,963 $597,266 $670,635 -------- -------- --------
See accompanying notes to consolidated financial statements. 3 Tyco Toys, Inc. Consolidated Statements of Operations (in thousands, except per share amounts) (Unaudited)
For the Quarters Ended March 31, ------------------------- 1995 1994 -------- -------- Net sales $116,060 $106,791 Cost of goods sold 66,957 62,570 ------ ------ Gross profit 49,103 44,221 ------ ------ Marketing, advertising and promotion 28,868 30,263 Selling, distribution and administrative expenses 27,399 27,896 Amortization of goodwill 1,593 1,520 ------ ------ Total operating expenses 57,860 59,679 ------ ------ Operating loss (8,757) (15,458) Interest expense, net 5,865 6,012 Other income, net (4,329) (893) ----- ------ Loss before income taxes (10,293) (20,577) Income tax benefit (3,624) (7,202) ----- ----- Net loss (6,669) (13,375) Preferred stock dividends 784 - ----- ------ Net loss applicable to common shareholders $ (7,453) $ (13,375) ----- ------ Net loss per common share: Primary $ (0.21) $ (0.39) Fully diluted $ (0.21) $ (0.39) Weighted average number of common shares outstanding: Primary 34,757 34,676 Fully diluted 34,757 34,676
See accompanying notes to consolidated financial statements. 4 Tyco Toys, Inc. Consolidated Statements of Stockholders' Equity For the Three Months Ended March 31, 1995 (Unaudited) and the Year Ended December 31, 1994 (in thousands, except share data)
Preferred Stock Common Stock Additional Retained Treasury Stock --------------- ------------ Paid - In Earnings -------------- Shares Amount Shares Amount Capital (Deficit) Shares Amount - ------------------------------------------------------------------------------------------------------------------------- Balance at December 31, 1993 - $- 34,847,316 $348 $294,499 $ 7,298 (175,590) $(1,595) Exercise of stock options - - 46,200 1 208 - - - Issuance of preferred stock 47,619 5 - - 46,995 - - - Preferred stock dividends 1,436 - - - 1,511 (2,157) - - Foreign currency translation adjustment - - - - - - - - Net loss - - - - - (32,973) - - - ------------------------------------------------------------------------------------------------------------------------- Balance at December 31, 1994 49,055 5 34,893,516 349 343,213 (27,832) (175,590) (1,595) - ------------------------------------------------------------------------------------------------------------------------- Restricted stock issued - - 40,000 - 81 - - - Preferred stock dividends 734 - - - 773 (784) - - Foreign currency translation adjustment - - - - - - - - Net loss - - - - - (6,669) - - - ------------------------------------------------------------------------------------------------------------------------- Balance at March 31, 1995 49,789 $5 34,933,516 $349 $344,067 $(35,285) (175,590) $(1,595) - ------------------------------------------------------------------------------------------------------------------------- Cumulative Translation Adjustment Total - ---------------------------------------------------------------------- Balance at December 31, 1993 $(23,101) $277,449 Exercise of stock options - 209 Issuance of preferred stock - 47,000 Preferred stock dividends - (646) Foreign currency translation adjustment 5,193 5,193 Net loss - (32,973) - ---------------------------------------------------------------------- Balance at December 31, 1994 (17,908) 296,232 - ---------------------------------------------------------------------- Restricted stock issued - 81 Preferred stock dividends - (11) Foreign currency translation adjustment (1,951) (1,951) Net loss - (6,669) - ---------------------------------------------------------------------- Balance at March 31, 1995 $(19,859) $287,682 - ----------------------------------------------------------------------
See accompanying notes to consolidated financial statements. 5 Tyco Toys, Inc. Consolidated Statements of Cash Flows For the Three Months Ended March 31, 1995 and 1994 (Unaudited) (in thousands)
1995 1994 ---- ---- Cash Flows From Operating Activities: Net loss $ (6,669) $(13,375) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 5,750 4,137 Amortization 2,722 1,761 Decrease in allowance for bad debts, returns, markdowns, discounts and other receivable reserves (19,471) (14,167) Increase (decrease) in allowance for obsolescence and other inventory reserves 48 (2,394) Change in assets and liabilities: Decrease in receivables 98,941 123,799 Increase in inventories (9,511) (6,809) Decrease in prepaid expenses and other current assets 2,425 6,558 Increase in other assets (1,217) (3,343) Decrease in accounts payable (15,091) (18,627) Decrease in accrued expenses and other current liabilities (18,251) (42,233) Increase in deferred taxes (4,310) - Increase in other liabilities 198 - -------- -------- Total adjustments 42,233 48,692 -------- -------- Net cash provided by operating activities 35,564 35,317 -------- -------- Cash Flows From Investing Activities: Disposition of property and equipment 98 327 Capital expenditures (4,078) (5,498) Acquisitions (1,144) - -------- -------- Net cash utilized by investing activities (5,124) (5,171) -------- -------- Cash Flows From Financing Activities: Repayment of long-term debt (20,501) (3,700) Repayment of notes and acceptances payable, net (21,646) (42,431) Financing fees and expenses (4,545) - Proceeds from issuance of common stock - 23 -------- -------- Net cash utilized by financing activities (46,692) (46,108) Effect of Exchange Rate Changes on Cash ( 944) (3,248) -------- -------- Net Decrease in Cash and Cash Equivalents (17,196) (19,210) Cash and Cash Equivalents, Beginning of Year 30,476 32,036 -------- -------- Cash and Cash Equivalents, End of Period $ 13,280 $ 12,826 -------- -------- Cash Payments During Period For: Interest $ 10,661 $ 9,593 Taxes 150 210
See accompanying notes to consolidated financial statements. 6 TYCO TOYS, INC. Notes to Consolidated Financial Statements (Unaudited) (1) Basis of Presentation --------------------- The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. The consolidated financial statements include the accounts of Tyco Toys, Inc. (the Company, Tyco or Tyco Toys) and its subsidiaries. All intercompany transactions have been eliminated in consolidation. Investments in unconsolidated joint ventures and other companies are accounted for on the equity method or cost basis depending upon the level of the investment and/or the Company's ability to exercise influence over operating and financial policies. In the opinion of management, all adjustments (consisting of a normal recurring nature) considered necessary for a fair presentation of results for interim periods have been made. Certain items in the prior period's financial statements have been reclassified to confirm with the current year's presentation. Due to the seasonal nature of the Company's business, the results of operations for the interim periods are not necessarily indicative of the results for a full year. The unaudited financial statements herein should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 1994 which is on file with the Securities and Exchange Commission. (2) Accounting For Income Taxes --------------------------- The Company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109), effective January 1, 1993. In accordance with SFAS 109, deferred income taxes reflect the impact of temporary differences between values recorded for assets and liabilities for financial reporting purposes and the values utilized for measurement in accordance with current tax laws. 7 TYCO TOYS, INC. Notes to Consolidated Financial Statements (Unaudited) Management has determined, considering all available evidence, including the Company's history of earnings from prior years (after adjustments for nonrecurring items, restructuring charges and permanent differences), it is more likely than not that the Company will generate sufficient taxable income in the appropriate carryforward periods to realize the benefit of certain net operating loss and tax credit carryforwards, and other temporary differences. The total net deferred tax assets (both current and noncurrent) have been reduced to the amount management considers realizable by establishing valuation allowances aggregating $56,983,000. Based on the weight of available evidence, management has concluded that more likely than not, its future taxable income will be sufficient to support the current recognition of the total net deferred tax assets of $45,273,000. The valuation allowances have been established due to management's analysis indicating that certain tax credit and net operating loss carryforwards, which are limited under the income tax laws, may expire prior to their full utilization. The valuation allowances include $16,836,000 related to the preacquisition net operating losses of Matchbox. Any subsequently recognized benefits related to these net operating losses will be allocated to reduce goodwill. 8 TYCO TOYS, INC. Notes to Consolidated Financial Statements (Unaudited) (3) Receivables, Net (in thousands): ----------------
March 31, ------------------ December 31, 1995 1994 1994 -------- -------- ------------ Trade receivables $151,177 $141,495 $251,141 Other receivables 12,791 12,893 11,040 Less: Doubtful accounts 4,549 13,253 6,312 Returns, markdowns, discounts and other reserves 26,761 29,246 44,469 -------- -------- -------- $132,658 $111,889 $211,400 -------- -------- --------
In the second and fourth quarters of 1994, the Company wrote-off receivables and corresponding reserves established in prior years of approximately $8,800,000 related to certain customers. (4) Inventories, Net (in thousands): ----------------
March 31, ----------------- December 31, 1995 1994 1994 ------- -------- ------------ Raw materials $15,868 $ 29,207 $16,655 Work-in-process 2,331 2,503 1,893 Finished goods 68,891 87,794 60,708 Less obsolescence and other reserves 13,020 14,027 12,972 ------- -------- ------- $74,070 $105,477 $66,284 ------- -------- -------
(5) Acquisition ----------- In accordance with the Purchase Agreement dated April 30, 1993, the 25% owners of Ensueno - Tyco elected to sell such interest to Tyco for the sum of approximately $1,100,000. This transaction was completed in March 1995. 9 TYCO TOYS, INC. Notes to Consolidated Financial Statements (Unaudited) (6) Legal Proceedings ----------------- Italian Litigation - ------------------ The former managing director of the Company's Italian sales and marketing subsidiary initiated two court actions against the Company in Italy as the result of the Company's previously announced decision to close or sell the subsidiary. One action, alleging violations of Italian employment laws and regulations, has been dismissed. The second action, alleging breach of a letter of intent with the plaintiff for the sale of the subsidiary, resulted in the sequestration of the Company's shares in the subsidiary and prevented the completion of the announced sale of the subsidiary to Giochi Preziosi S.A., an Italian toy distributor. The Company's Italian subsidiary has been closed and is in the process of being liquidated. In the opinion of management and its outside counsel, the Company has meritorious legal and factual defenses to the claims made in this litigation; therefore, the outcome is not likely to have a material adverse impact on the Company's earnings, financial condition or liquidity. The liquidating Trustee has also lodged claims against the former managing director on behalf of the subsidiary. Shareholder Suits - ----------------- In October 1994, the U.S. District Court in New Jersey entered judgment in favor of the Company in litigation filed in 1992 on behalf of the stockholders alleging violations of federal securities laws. The plaintiff has appealed this judgment. In December 1993 and January 1994, two additional stockholders filed litigation in the same court asserting claims under federal and state securities laws as a result of the Company's financial performance in 1993. Both are class action cases and have been consolidated. The Company's outside counsel is of the opinion that the Company has substantial and meritorious defenses to these claims and there is a likelihood that the Company will prevail. Accordingly, it is the opinion of management that the outcome of this litigation is not likely to have a material adverse effect on the earnings, financial condition or liquidity of the Company. U.S. Customs - ------------ In 1992, the U.S. Customs Service issued a penalty notice of an assessment for lost duty in the amount of $1,500,000, penalties for gross negligence of $5,800,000, and penalties for fraud of $5,600,000. All of the claims arise from activities of the Company's View-Master subsidiary for periods prior to its acquisition by the Company in 1989. Management and the Company's outside counsel are of the opinion that the Company has legal and factual defenses to the penalty claims made by the U.S. Customs Service, and that the outcome of the proceedings relating to these claims, which proceedings may be protracted, are not likely to have a material adverse impact on the earnings, financial condition or liquidity of the Company. 10 TYCO TOYS, INC. --------------- Notes to Consolidated Financial Statements (Unaudited) Environmental Litigation - ------------------------ Tyco Industries, a subsidiary of the Company, is a party to three matters arising out of waste hauled by a transporter to various sites, including the GEMS Landfill. In litigation relating directly to remediation of the landfill, Tyco Industries has signed a Consent Order and Trust Agreement and made a settlement contribution of an amount not material to Tyco Industries. In another matter, homeowners near the GEMS Landfill have filed class action claims against approximately 150 defendants, including Tyco Industries, for various types of unspecified monetary damages, including punitive damages. In management's opinion, there are meritorious factual and legal defenses to these claims. In the third matter, the New Jersey Department of Environmental Protection is asserting claims for remediation expenses at a different site in Sewell, New Jersey used as a waste transfer station by the same transporter involved in the other two matters. In the opinion of management of the Company and its outside counsel, none of these three matters is likely to have a material adverse impact on the earnings, financial condition or liquidity of the Company. In addition, the Company will receive a contribution from a third party towards certain expenses in these matters. Other Litigation - ---------------- The Company is involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company's earnings, financial condition or liquidity. (7) Net Loss Per Share ------------------ Net loss per share is computed by dividing the loss applicable to common shareholders by the weighted average number of shares of common stock and dilutive common stock equivalents outstanding during the quarter. Outstanding options, convertible subordinated notes and convertible preferred stock were determined to be anti-dilutive for the quarters ended March 31, 1995 and 1994, as applicable, and were therefore excluded from the per share calculations. 11 Item 2. Management Discussion and Analysis of Financial ----------------------------------------------- Condition and Results of Operation. ---------------------------------- Results of Operations - --------------------- Net sales for the quarter ended March 31, 1995 were $116,060,000 compared to $106,791,000 for the same period last year. The 9% increase in first quarter sales was attributable to stronger sales in the Company's Tyco U.S. and Tyco Playtime divisions. Sales for Tyco U.S. increased 10% primarily due to higher sales of Radio Control vehicles and Soft Toys, the continuing strong sales of Dr. Dreadful(TM) activity toys, and the successful introduction of several new toys, including BattleTech(R) action figures and the Liddle Kiddles(TM) small doll line. Tyco Playtime sales increased more than 20% due to higher shipments of Sesame Street(R) merchandise. Sales increased modestly for Tyco's International division, with increases in Australia and Canada offset by lower sales in Europe. Gross profit for the quarter ended March 31, 1995 was $49,103,000 (42.3% of net sales) compared to $44,221,000 (41.4% of net sales) for the comparable quarter last year. The increased gross profit margin for the quarter ended March 31, 1995 is primarily due to the increased sales volume. Margins, as a percentage of sales, improved modestly with changes in sales mix and reduced duty contributing to the increase. Total operating expenses for the quarter ended March 31, 1995 were $57,860,000 (49.8% of net sales) compared to $59,679,000 (55.9% of net sales) for the same period last year. This reduction reflects a decrease in fixed costs, more efficient marketing and advertising spending as well as the continuation of the Company's overall cost containment efforts. Interest expense, net, for the quarter ended March 31, 1995 was $5,865,000 compared to $6,012,000 for the same period last year. The decrease reflects lower average borrowings in addition to lower effective borrowing rates, offset by the amortization of financing fees and expenses associated with the new General Electric Credit Corporation credit facilities. Total average borrowings for the quarter ended March 31, 1995 were $205,774,000 at an average borrowing rate of 10.3% compared to total average borrowings of $224,219,000 with an average interest rate of 10.9% for the first quarter of 1994. Reflected in other income is a gain of approximately $2,500,000 resulting from the Company's sale of its distribution rights for Kidsongs Music Videos. The sale was made in conjunction with the Company's focus on the continued development of its core brands. Also included in other income are foreign currency gains of $1,355,000 primarily related to the devaluation of the dollar against most European currencies. The Company recorded an income tax benefit of $3,624,000 for the quarter ended March 31, 1995 compared to $7,202,000 for the same period last year, reflecting the decrease in pre-tax losses taxed at approximately the same effective rate. 12 The Internal Revenue Service has examined the consolidated federal income tax returns of Tyco Toys, Inc. for the fiscal years ended August 31, 1987 through August 31, 1990 and has proposed an assessment to the Company, which the Company has elected to appeal. Management believes that the final outcome of this appeal will not materially affect the results of operations (including realization of net operating loss and tax credit carryforwards), financial condition or liquidity of the Company. Additionally, the consolidated federal income tax returns of Tyco Toys, Inc. for the fiscal years ended December 31, 1990 through December 31, 1992 are presently being examined by the Internal Revenue Service. While the final outcome of this examination is not determinable at this time, management of the Company believes that any proposed adjustments, if sustained, will not materially affect the financial condition, results of operations (including realization of net operating loss carryforwards) or liquidity of the Company. Financial Condition and Liquidity - --------------------------------- Three Months Ended March 31, 1995 - --------------------------------- For the quarter ended March 31, 1995, cash and cash equivalents decreased $17,196,000 to $13,280,000. Seasonal significant reduction of receivables provided $79,470,000 of cash during the quarter which offset the 1995 first quarter loss of $6,669,000 and contributed to the $35,564,000 generation of cash from operating activities. Available cash and cash from operations was primarily used to reduce debt by $42,147,000, principally the maturing term-loan portion of the NationsBank Credit Facility, to acquire $4,078,000 of fixed assets and to pay financing fees and expenses associated with the Company's New Credit Facilities. New Credit Facilities - --------------------- In February and March 1995, the Company entered into $290,000,000 of new credit facilities (the New Credit Facilities). The New Credit Facilities consist of three separate three-year revolving credit facilities with General Electric Capital Corporation and affiliates in an aggregate amount of $90,000,000 and a $200,000,000 five-year receivables securitization facility arranged through General Electric Capital Corporation. Borrowings under the New Credit Facilities were used to refinance outstanding indebtedness under the principal credit facility with a bank group led by NationsBank of North Carolina, N.A. and certain other credit facilities of the Company's foreign subsidiaries. 13 The revolving credit facilities consist of up to $35,000,000 for certain domestic entities (of which up to $10,000,000 may be used for letters of credit), $20,000,000 for Tyco Canada, and $35,000,000 for the Company's subsidiaries in the United Kingdom (UK). Availability under the domestic revolving credit is based upon inventory, as defined, and availability under the foreign revolving credits is based upon an aggregate of eligible accounts receivable and inventory, as defined. The revolving credit facilities are secured by a lien on substantially all of the Company's domestic assets and are also guaranteed by certain foreign subsidiaries. Subject to the maximum commitment under each of these facilities, borrowings are permitted up to 60% of eligible inventory and, in the Canadian and UK agreements, up to 80% of eligible accounts receivable. Interest rates on borrowings are determined at the option of the borrower based on various indices, including LIBOR or bankers' acceptance rate, plus 2.5%. The Company has the following sources of liquidity to support the cyclical working capital requirements of its business: existing cash balances and related interest earnings, internally-generated funds, available borrowings under foreign lines of credit and the New Credit Facilities, and proceeds from potential equity or debt offerings. The Company believes that its new credit facilities, existing foreign facilities, and internally-generated funds will provide adequate financing for its current and foreseeable levels of operation. Dividends - --------- The New Credit Facilities restrict the Company's ability to pay cash dividends on common stock until the Company achieves a defined level of tangible net worth. The terms of the 6% Series B Voting Convertible Exchangeable Preferred Stock, the 10.125% Senior Subordinated Notes and the 7% Convertible Subordinated Notes also have limitations on the payment of common stock dividends by the Company. However, the Company was able to issue additional shares of Preferred Stock in lieu of cash dividends on such preferred shares. Preferred Stock dividends totalled $784,000 during the first quarter of 1995. 14 Part II. Other Information. Item 1. Legal Proceedings. ----------------- Reference is made to note 6 of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this report. Item 5. Other Information. ----------------- Shareholders' Meeting --------------------- At the Annual Meeting of Shareholders on May 11, 1995, Directors Harry J. Pearce, Arnold Thaler, Timothy J. Danis and LaSalle D. Leffall were re-elected for terms of three years. The Company's Restated Certificate of Incorporation was amended to increase the authorized common shares to 75,000,000. The 1992 Non- Qualified Stock Option Plan was amended to increase the number of shares authorized under the Plan by 600,000 and to limit the number of options that may be granted to an individual in a single year. New Annual Incentive and Long-Term Incentive Plans were approved by the shareholders. Item 6. Exhibits and Reports on Form 8-K. -------------------------------- (a) Exhibits. -------- 11. Statements Regarding Computation of Per Share Loss - Quarters Ended March 31, 1995 and 1994. (b) Reports on Form 8-K. ------------------- On April 5, 1995 the Company filed a current report on Form 8-K with the Securities and Exchange Commission for the purpose of updating the exhibits relating to certain of the Company's credit facilities established in February and March, 1995. 15 SIGNATURE --------- 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. TYCO TOYS, INC. --------------- Registrant Date: May 12, 1995 By: /s/ Harry J. Pearce ------------ ------------------- Harry J. Pearce Vice Chairman, Chief Financial Officer, and Director 16 EXHIBIT INDEX Exhibit No. Description Page - ----------- ----------- ---- 11 Statements regarding computation of per share loss for the quarters ended March 31, 1995 and 1994. 18 17 EX-11 2 LOSS PER SHARE Exhibit 11 Tyco Toys, Inc. Computation of Per Share Loss (in thousands, except per share amounts)
1995 1994 ------- ------ Primary Loss Per Share: 1. Net loss $ (6,669) $ (13,375) 2. Less preferred dividends 784 - ------- -------- 3. Net loss applicable to common shareholders $ (7,453) $ (13,375) ------- -------- 4. Weighted average shares outstanding 34,757 34,676 5. Add additional shares issuable upon the assumed exercise of outstanding stock options * - - ------- -------- 6. Adjusted weighted average shares outstanding 34,757 34,676 ------- -------- 7. Net loss per share (3/6) $ (0.21) $ (0.39) ------- -------- Fully Diluted Loss Per Share: 8. Line 3 above $ (7,453) $ (13,375) 9. Add back preferred dividends (line 2) 784 - 10. Add back interest, net of tax, on assumed conversion of the Company's 7% Convertible Subordinated Notes 169 147 ------- -------- 11. Adjusted net loss $ (6,500) $ (13,228) ------- -------- 12. Weighted average shares outstanding (line 4) 34,757 34,676 13. Add additional shares issuable upon the assumed exercise of outstanding stock options* - - 14. Add additional shares issuable upon assumed conversion of the Company's 7% Convertible Subordinated Notes 1,497 1,397 15. Add additional shares issuable upon assumed conversion of preferred shares 4,965 - ------- -------- 16. Adjusted weighted average shares outstanding 41,219 36,073 ------- -------- 17. Net loss per share (11/16) ** $ (0.16) $ (0.37) ------- --------
* For the calculation of loss per share, the inclusion of the assumed exercise of options for the quarters ended March 31, 1995 and 1994 was anti-dilutive and therefore such assumed exercise has been excluded from the per share calculations. ** Fully diluted loss per share is not presented in the Consolidated Statements of Operations as the assumed conversions of the Company's Convertible Preferred Stock and Convertible Subordinated Notes are anti-dilutive. 18 EX-27 3 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from Form 10-Q and is qualified in its entirety by reference to such financial statements. 3-MOS DEC-31-1995 JAN-01-1995 MAR-31-1995 13,280 0 132,658 4,549 74,070 260,797 134,270 87,772 587,963 150,551 147,359 295,095 0 49,326 (56,739) 587,963 116,060 116,060 66,957 66,957 53,531 0 5,865 (10,293) (3,624) (6,669) 0 0 0 (6,669) (0.21) (0.21)
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