-----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, CwyivwLTJ+BQKo1DqkZQEIKj3571t6sbcSD2hFrgvCEwb2JiNffEzDtCCzfUS1LU kGETlP8KJBmFVUMpAiOZbw== 0000950117-96-000091.txt : 19960213 0000950117-96-000091.hdr.sgml : 19960213 ACCESSION NUMBER: 0000950117-96-000091 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960212 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST BRANDS CORP CENTRAL INDEX KEY: 0000797320 STANDARD INDUSTRIAL CLASSIFICATION: UNSUPPORTED PLASTICS FILM & SHEET [3081] IRS NUMBER: 061171404 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10395 FILM NUMBER: 96515337 BUSINESS ADDRESS: STREET 1: 83 WOOSTER HEIGHTS RD BLDG 301 STREET 2: PO BOX 1911 CITY: DANBURY STATE: CT ZIP: 06813-1911 BUSINESS PHONE: 2037312300 MAIL ADDRESS: STREET 1: P.O. BOX 1911 CITY: DANBURY STATE: CT ZIP: 06813-1911 10-Q 1 FIRST BRANDS CORP. 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR QUARTER ENDED DECEMBER 31, 1995 COMMISSION FILE NUMBER 33-7264 FIRST BRANDS CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 06-1171404 State of Incorporation (IRS Employer Identification No.) 83 Wooster Heights Rd., Building 301 P.O. Box 191 Danbury, Connecticut 06813-1911 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 203-731-2300 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 Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. CLASS Outstanding at January 31, 1996 Common Stock, $.01 par value 20,803,126 shares FIRST BRANDS CORPORATION INDEX TO FORM 10-Q
PAGE PART I - FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Condensed Statements of Income For the Three Month Periods Ended December 31, 1995 and 1994...................................................... 3 Consolidated Condensed Statements of Income For the Six Month Periods Ended December 31, 1995 and 1994...................................................... 4 Consolidated Condensed Balance Sheets - December 31, 1995 and June 30, 1995................................................... 5 Consolidated Condensed Statement of Stockholders' Equity - For the Six Month Period Ended December 31, 1995............................................................... 6 Consolidated Condensed Statements of Cash Flows - For the Six Month Periods Ended December 31, 1995 and 1994...................................................... 7 Notes to Consolidated Condensed Financial Statements............................................................................ 8-10 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition...................................... 11-13 Independent Accountants' Report........................................................ 14 PART II - OTHER INFORMATION Item 1. Legal Proceedings.............................................................. 15 Items 2 - 6............................................................................ 15-19 SIGNATURE.............................................................................. 20 - ---------
-2- FIRST BRANDS CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS THREE MONTHS ENDED ENDED DECEMBER 31, DECEMBER 31, 1995 1994 ------------ ------------- (in thousands - except per share amounts) Net sales................................................... $ 263,084 $ 233,008 Cost of goods sold........................................ 172,956 143,781 Selling, general and administrative expenses.................................. 57,283 59,178 Amortization and other depreciation....................... 3,592 3,836 Interest expense and amortization of debt discount and expense.................................... 4,572 4,573 Discount on sale of receivables........................... 1,018 742 Other income (expense), net............................... 1,508 (591) --------- --------- Income before provision for income taxes and extraordinary loss.................................... 25,171 20,307 Provision for income taxes.................................. 10,534 8,465 ---------- -------- Income before extraordinary loss............................ 14,637 11,842 Extraordinary loss relating to the repurchase of subordinated note, net of taxes........................ - (4,493) ------------ -------- Net income.................................................. $ 14,637 $ 7,349 ========= ======== Per common share and common equivalent share (Note 6): Income before extraordinary loss ........................ $ 0.69 $ 0.55 Extraordinary loss....................................... - (.21) -------- -------- Net income............................................... $ 0.69 $ 0.34 ======= ======= Weighted average common and common equivalent shares outstanding (Note 6).................... 21,281 21,449 ======== =========
SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS. -3- FIRST BRANDS CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
SIX MONTHS SIX MONTHS ENDED ENDED DECEMBER 31, DECEMBER 31, 1995 1994 ------------ ------------- (in thousands - except per share amounts) Net sales................................................... $ 513,873 $ 497,175 Cost of goods sold........................................ 339,183 304,607 Selling, general and administrative expenses.................................. 105,738 126,339 Amortization and other depreciation....................... 7,790 8,118 Interest expense and amortization of debt discount and expense.................................... 8,886 9,540 Discount on sale of receivables........................... 2,055 1,936 Other income (expense), net............................... 1,686 (242) --------- ---------- Income before provision for income taxes and extraordinary loss.................................... 51,907 46,393 Provision for income taxes.................................. 21,737 19,477 ---------- --------- Income before extraordinary loss............................ 30,170 26,916 Extraordinary loss relating to the repurchase of subordinated note, net of taxes........................ - (4,493) --------- --------- Net income.................................................. $ 30,170 $ 22,423 ========= ========= Per common share and common equivalent share (Note 6): Income before extraordinary loss ........................ $ 1.42 $ 1.24 Extraordinary loss....................................... - (.21) ------- ------- Net income............................................... $ 1.42 $ 1.03 ======= ======= Weighted average common and common equivalent shares outstanding (Note 6).................... 21,286 21,751 ======== =========
SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS. -4- FIRST BRANDS CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS
DECEMBER 31, JUNE 30, (in thousands, except share amounts) 1995 1995 ------------ -------- (UNAUDITED) ASSETS: Cash and cash equivalents....................................... $ 10,744 $ 5,225 Accounts and notes receivable - net............................. 106,471 121,763 Inventories..................................................... 143,565 156,245 Deferred tax assets............................................. 34,670 34,038 Prepaid expenses................................................ 4,041 3,561 --------- -------- Total current assets.......................................... 299,491 320,832 Property, plant and equipment (net of accumulated depreciation of $101,459 and $88,447)......................... 304,317 290,960 Patents, trademarks, proprietary technology and other intangibles (net of accumulated amortization of $176,018 and $170,584)........................ 180,737 202,323 Deferred charges and other assets (net of accumulated amortization of $50,994 and $50,214).............. 24,897 25,831 --------- --------- Total assets.......................................... $ 809,442 $ 839,946 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY: Liabilities Notes payable................................................... $ 12,916 $ 5,128 Current maturities of long-term debt............................ 955 912 Accrued income and other taxes.................................. 7,696 27,279 Accounts payable................................................ 33,918 70,106 Accrued liabilities............................................. 91,588 144,863 ---------- ---------- Total current liabilities.................................. 147,073 248,288 Long-term debt.................................................. 207,825 166,279 Deferred taxes payable.......................................... 66,551 54,524 Deferred gain on sale of assets................................. 1,732 2,637 Other long-term obligations..................................... 15,537 16,040 Stockholders' Equity Preferred stock, $1 par value, 10,000,000 shares authorized; none issued................................ - - Common stock, $0.01 par value, 50,000,000 shares authorized; issued 22,261,681 shares at December 31, 1995 and 22,146,014 shares at June 30, 1995........................ 223 221 Capital in excess of par value.................................. 124,181 120,914 Cumulative foreign currency translation adjustment.............. (7,473) (7,173) Common stock in treasury, at cost; 1,446,000 shares at December 31, 1995 and 1,210,700 at June 30, 1995.............. (50,328) (40,433) Retained earnings............................................... 304,121 278,649 --------- --------- Total stockholders' equity................................. 370,724 352,178 --------- --------- Total liabilities and stockholders' equity............ $ 809,442 $ 839,946 ========= =========
SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS. -5- FIRST BRANDS CORPORATION CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE SIX MONTH PERIOD ENDED DECEMBER 31, 1995 (UNAUDITED)
Cumulative Capital Foreign Common in Excess Currency Stock of Par Translation Treasury Retained (in thousands) Par Value Value Adjustment Stock Earnings Total --------- --------- ----------- --------- -------- ----- Balance as of June 30, 1995 .............. $ 221 $ 120,914 $ (7,173) $ (40,433) $ 278,649 $ 352,178 Exercise of Stock Options............... 2 3,267 - - - 3,269 Cash Dividends............... - - - - (4,698) (4,698) Purchase of Treasury Stock.............. - - - (9,895) - (9,895) Net Income................... - - - - 30,170 30,170 Foreign Currency Translation Adjustment...... - - (300) - - (300) ------ ------------ ------- ------------- ------------ ------------ Balance as of December 31, 1995........... $ 223 $ 124,181 $ (7,473) $ (50,328) $ 304,121 $ 370,724 ===== ========= ========= ========== ========= =========
SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS. -6- FIRST BRANDS CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS SIX MONTHS ENDED ENDED DECEMBER 31, DECEMBER 31, (in thousands) 1995 1994 -------------------- ------------- Cash flows from operating activities: Net income................................................... $ 30,170 $ 22,423 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization.............................. 18,624 17,593 Deferred income taxes...................................... 11,386 4,215 Loss on repurchase of subordinated note.................... - 7,463 Net loss on disposal of automotive service centers and sale of the Prestone business................ - 348 Change in certain non-cash current assets and liabilities, net of effect of businesses sold and acquired: Decrease (increase) in accounts receivable.............. 16,128 (7,328) Decrease (increase) in inventories...................... 12,680 (16,448) (Increase) decrease in prepaid expenses................. (480) 936 (Decrease) in accrued income and other taxes............ (3,041) (6,415) (Decrease) in accounts payable.......................... (36,188) (8,451) (Decrease) increase in accrued liabilities.............. (53,275) 6,086 Net change in current assets and current liabilities of businesses sold........................................ - (21,024) Other changes................................................ (1,895) (2,650) --------- --------- Total adjustments........................................ (36,061) (25,675) --------- --------- Net cash (used for) operating activities....................... (5,891) (3,252) --------- --------- Cash flows from investing activities: Capital expenditures........................................ (16,846) (14,805) Acquisition of leased assets................................ (9,797) (13,240) Proceeds from sale of antifreeze/coolant and car care business, net of note received....................... - 142,000 Acquisition of business..................................... - (45,195) Other....................................................... - (4,900) --------- --------- Net cash (used for) provided by investing activities........... (26,643) 63,860 --------- --------- Cash flows from financing activities: Increase in revolving credit borrowings, net............... 41,100 29,300 Increase in other borrowings, net.......................... 8,277 305 (Decrease) in accounts receivable securitization, net...... - (45,000) Proceeds from exercise of stock options.................... 3,269 487 Purchase of common stock for treasury...................... (9,895) (34,793) Dividends paid............................................. (4,698) (3,829) --------- --------- Net cash provided by (used for) financing activities........... 38,053 (53,530) --------- --------- Net increase in cash and cash equivalents...................... 5,519 7,078 Cash and cash equivalents at beginning of period............... 5,225 13,384 --------- -------- Cash and cash equivalents at end of period..................... $ 10,744 $ 20,462 ======== ========
SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS. -7- FIRST BRANDS CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION In the opinion of management, the accompanying unaudited consolidated condensed financial statements include all adjustments (all of which were of a normal recurring nature) necessary to fairly present the results of operations for the interim periods. Certain prior year amounts have been reclassified to conform with the current year's presentation. All material intercompany transactions and balances have been eliminated. The results of operations for the six month period ended December 31, 1995 are not necessarily indicative of the results for a full year. First Brands Corporation ("First Brands" or the "Company") is engaged in the development, manufacture, marketing and sales of consumer products under branded and private labels. Principal branded products include: GLAD and GLAD-LOCK (plastic wrap and bags); STP (oil and fuel additives and other specialty automotive products); SIMONIZ (car waxes and polishes) and SCOOP AWAY, EVER CLEAN and JONNY CAT (cat litters). On August 26, 1994, the Company sold the Prestone antifreeze/coolant and car care business. The net assets of that business have been removed from the balance sheet, resulting in a gain during fiscal 1995 which was included in other income (expense), net, in the Consolidated Condensed Statement of Income. Sales from the PRESTONE business were $31,684,000 for the period ended August 25, 1994, and together with the operating results of this business, through such dates, are included in the fiscal 1995 period. INVENTORIES
Inventories were comprised of: December 31, June 30, 1995 1995 ----------- ------- (in thousands) Raw materials............................................. $ 27,740 $ 28,766 Work-in-process........................................... 5,929 5,531 Finished goods............................................ 109,896 121,948 --------- --------- Total................................................. $ 143,565 $ 156,245 ========= =========
-8- 2. LONG-TERM DEBT First Brands had long-term debt outstanding as of December 31, 1995 and June 30, 1995 as follows:
December 31, June 30, 1995 1995 ------------ ------- Senior Debt: (in thousands) $300,000,000 Revolving Credit Facility, 5 year term expiring December 1999, interest at prime rate, LIBOR plus .30% or CD rate plus .425%; facility fee of .20%............................................. $ 101,100 $ 60,000 Other..................................................... 7,680 7,191 ---------- ---------- 108,780 67,191 Less: current maturities.................................. (955) (912) ----------- ---------- Senior Debt........................................... 107,825 66,279 ---------- ---------- Subordinated Debt: 9 1/8% Senior Subordinated Notes Due 1999................. 100,000 100,000 --------- --------- Total Long-term debt.............................. $ 207,825 $ 166,279 ========= =========
The Company's revolving credit facility has no compensating balance requirements, however, it does contain certain restrictive covenants pertaining to the ratio of subordinated debt to equity, dividend payments and capital stock repurchases. The 9 1/8% Senior Subordinated Notes Indenture has restrictive covenants or limitations on the payment of dividends, the distribution of capital stock or the redeeming of capital stock, as well as limitations on Company and subsidiary debt and limitations on the sale of assets. First Brands was in compliance with all the covenants of all debt agreements at December 31, 1995. 3. ACCOUNTS RECEIVABLE During the first quarter of fiscal 1996, the Company renegotiated its agreement to sell a $100,000,000 fractional ownership interest, without recourse, in a defined pool of eligible trade accounts receivable. Under the terms of the renegotiated agreement, this facility will automatically renew each year and the facility servicing fees have been reduced. The fractional interest sold as of December 31, 1995 totalled $60,000,000. The amounts sold are reflected as a reduction in accounts receivable on the accompanying balance sheets and costs associated with this program are recorded on the Consolidated Condensed Statements of Income as discount on sale of receivables. 4. NOTES PAYABLE Notes payable at December 31, 1995 of $12,916,000 consisted of a fully utilized $10,000,000 unsecured domestic line of credit and $2,916,000 of the Company's international subsidiaries' working capital borrowings with local lenders. The Company's international current and long-term working capital credit facilities aggregated $27,610,000, of which $21,364,000 was available at December 31, 1995. The international facilities are generally secured by the assets of the respective subsidiaries, with approximately $1,474,000 of the availability at one subsidiary being guaranteed by First Brands Corporation (U.S.). -9- 5. TAXES The provision for income tax expense for the three and six months ended December 31, 1995 and 1994 consists of the following:
Three Months Six Months Ended Ended December 31, December 31, ----------------- ----------------- 1995 1994 1995 1994 ---- ---- ---- ---- (in thousands) Current: Federal............................. $ 2,494 $ 3,076 $ 7,246 $ 11,029 State............................... 496 623 1,510 2,548 Foreign............................. 903 732 1,595 1,685 ------- ------ ------ ------ Total current................... 3,893 4,431 10,351 15,262 Deferred: Federal............................. 5,017 3,354 8,932 3,546 State............................... 1,751 733 2,619 763 Foreign............................. (127) (53) (165) (94) ------- ------ ------- ------- Total deferred.................. 6,641 4,034 11,386 4,215 ------ ----- ------ ------ Total provision............. $ 10,534 $ 8,465 $ 21,737 $ 19,477 ====== ===== ====== ======
6. EARNINGS PER SHARE Net income per share has been computed using the weighted average number of common shares and common share equivalents outstanding for the periods. During the first and second quarters of fiscal 1996 the Company paid to its shareholders cash dividends of $ 0.10 and $0.125 cents per share, respectively. -10- FIRST BRANDS CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION The following discussion and analysis of the consolidated results of operations for the three and six month periods ended December 31, 1995 should be read in conjunction with the accompanying unaudited Consolidated Condensed Financial Statements and related Notes. The Company is primarily engaged in the development, manufacture, marketing and sale of branded and private label consumer products for the home and automotive markets. The Company's products which include "GLAD", "GLAD-LOCK" "STP", "SIMONIZ", "SCOOP AWAY", "EVER CLEAN" and "JONNY CAT" can be found in large mass merchandise stores, chain supermarkets and other retail outlets. The Company believes that the significant market positions occupied by its products are attributable to brand name recognition, comprehensive product offerings, continued product innovation, strong emphasis on vendor support and aggressive advertising and promotion. The Prestone antifreeze/coolant and car care business was sold on August 26, 1994. Financial data below includes the operating information related to this business while it was still a part of the Company. Therefore, comparison of results of operations between the six month periods should take the effect of the divested business into consideration. RESULTS OF OPERATIONS The following table sets forth the percentages of net sales of the Company represented by the components of income and expense for the three and six month periods ended December 31, 1995 and 1994.
Three Months Six Months Ended Ended December 31, December 31, ----------------- ---------------- 1995 1994 1995 1994 ---- ---- ---- ---- Net sales........................................... 100.0% 100.0% 100.0 100.0 Cost of goods sold.................................. 65.7 61.7 66.0 61.3 ------ ------ ------ ----- Gross profit........................................ 34.3 38.3 34.0 38.7 Selling, general, and administrative expenses........................... 21.8 25.4 20.6 25.4 Amortization and other depreciation................. 1.4 1.6 1.5 1.6 Interest expense and amortization of debt discount and expense.............................. 1.7 2.0 1.7 1.9 Discount on sale of receivables..................... 0.4 0.3 0.4 0.4 Other income (expense), net......................... 0.6 (0.3) 0.3 (0.1) ----- ------ ----- ----- Income before provision for income taxes and extraordinary loss............................. 9.6 8.7 10.1 9.3 Provision for income taxes........................... 4.0 3.6 4.2 3.9 ----- ----- ----- ---- Income before extraordinary loss..................... 5.6 5.1 5.9 5.4 Extraordinary loss relating to the repurchase of subordinated notes, net of taxes................ -- 1.9 -- 0.9 ------ ----- ------ ---- Net income........................................... 5.6% 3.2% 5.9% 4.5% ==== ==== ==== ====
-11- QUARTER AND SIX MONTHS ENDED DECEMBER, 31 1995 COMPARED TO THE QUARTER AND SIX MONTHS ENDED DECEMBER 31, 1994 Sales for the three month period ended December 31, 1995 were $263,084,000, 13% ahead of last year's $233,008,000. For the six month period, sales were $513,873,000, 103% of the prior year's $497,175,000. On a proforma basis (excluding sales of $31,684,000 from the divested Prestone antifreeze/coolant and car care business which was sold on August 26, 1994) fiscal 1996 six month sales were 10% above the prior year's comparable sales of $465,491,000. Plastic wrap and bag sales increased 18% during the quarter due to strong growth in the GLAD-LOCK line and higher disposer bag and food category sales, along with the continued growth in the Company's international business. Sales from the Company's new South African business contributed 5% to the growth in the plastic wrap and bag business. Strong quarterly sales brought year-to-date sales of plastic wrap and bag products to 112% of the prior year's level. Automotive sales for the quarter and year-to-date were flat, reflecting an overall sluggish domestic retail market. For the three and six month periods, cat litter sales were above the comparable prior year levels by 15% and 20%, respectively, due to continued market and share growth of the SCOOP AWAY and EVER CLEAN brands, along with distribution and market share gains made by the JONNY CAT brand. Cost of goods sold for the quarter was $172,956,000, 120% of last year's $143,781,000. For the six month period, cost of goods sold was $339,183,000, 111% of the prior year's $304,607,000. Excluding costs associated with the divested business, cost of goods sold year-to-date are 120% of last year's proforma cost of $283,439,000. For the three and six month periods, increased volumes and higher polyethylene raw material costs were primarily responsible for the higher costs. Gross profit for the quarter of $90,128,000 (34.3% of sales) was 101% of last year's $89,227,000 (38.3% of sales). Year-to-date, gross profit was $174,690,000 (34.0% of sales), 91% of last year's $192,568,000 (38.7% of sales). Excluding the divested business, the six month gross profit was 96% of the prior year's proforma gross profit of $182,052,000 (39.1% of sales). For the quarter and the proforma year-to-date results, the higher gross profit dollars came from increased sales, while the reduced margin was primarily due to the aforementioned increased raw material costs and a less favorable sales mix. Selling, general and administrative expenses during the quarter of $57,283,000 (21.8% of sales), were 97% of last year's $59,178,000 (25.4% of sales). Year-to-date expenses were $105,738,000 (20.6% of sales), 84% of last year's $126,339,000 (25.4% of sales) Excluding the divested business, six month expenses were 89% of the prior year's proforma expense of $118,499,000 (25.5% of sales). Lower selling expense during the three and six month periods reflect reductions in selected marketing programs to offset the higher raw material costs, as well as a shift in the timing of certain automotive promotional spending to the second half of the fiscal year. Amortization and other depreciation expense for the quarter was $3,592,000, 94% of the prior year's $3,836,000 and for the six month period it was $7,790,000, 96% of the prior year's $8,118,000. Interest expense for the quarter was $4,572,000, 100% of the prior year. Year-to-date, interest expense of $8,886,000 is 93% of last year, reflecting a lower average borrowing rate. Discount on sale of receivables reflects the costs associated with the sale of a fractional ownership interest, without recourse, in a defined pool of the Company's eligible trade accounts receivable. Other income (expense), net reflects approximately $2,000,000 of accrued interest which was reversed as a result of a tax audit settlement. The Company's effective tax rate for the first half of both fiscal 1996 and 1995 was approximately 42%. The fiscal 1996 provision for income taxes is above the prior year's level due to the higher pre-tax income. The prior year's extraordinary loss of $4,493,000 or $0.21 per share for the three and six months ended December 31, 1994, resulted from the premium paid and the write-off of unamortized debt issuance costs related to the repurchase of $45,000,000 of the Company's Subordinated Notes. -12- FINANCIAL CONDITION Worldwide credit facilities in place at December 31, 1995 aggregated $338,617,000 of which $220,264,000 was available, but unused. The Company expects to borrow or repay up to $20,000,000 from these credit facilities over the next twelve months, primarily for working capital purposes. The Company's current forecast for the 1996 fiscal year reflects capital expenditures of approximately $38,000,000, and fixed payments (interest, principal, discount on sale of receivables and lease payments) of approximately $42,000,000. Based on the Company's ability to generate funds from operations and the availability of credit under its financing facilities, management believes it will have the funds necessary to meet all of its described financing requirements and all other financial obligations. REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS First Brands' independent certified public accountants have performed a limited review of the financial information furnished herein in accordance with standards established by the American Institute of Certified Public Accountants. The Independent Accountants' Report is presented on Page 14 of this report. -13- Independent Accountants' Report The Board of Directors First Brands Corporation: We have reviewed the consolidated condensed balance sheet of First Brands Corporation and subsidiaries as of December 31, 1995, and the related consolidated condensed statements of income for the three and six-month periods ended December 31, 1995 and 1994, the consolidated condensed statements of cash flows for the six month periods ended December 31, 1995 and 1994, and the consolidated condensed statement of stockholders' equity for the six-month period ended December 31, 1995. These consolidated condensed financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the consolidated condensed financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of First Brands Corporation and subsidiaries as of June 30, 1995, and the related consolidated statement of income, stockholders' equity, and cash flows for the year then ended (not presented herein); and in our report dated September 19, 1995, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated condensed balance sheet as of June 30, 1995, is fairly presented, in all material respects, in relation to the consolidated balance sheet from which it has been derived. /s/ KPMG Peat Marwick LLP ------------------------------ KPMG Peat Marwick LLP New York, New York January 30, 1996 -14- PART II - OTHER INFORMATION Item 1. Legal Proceedings 1. In 1994, the Federal Trade Commission (FTC) commenced an investigation that alleged that certain advertising claims for STP Engine Treatment violated a 1976 cease and desist order regarding STP advertising. While it does not believe that the challenged advertising claims violated that order or applicable advertising law, the Company agreed to settle the matter to avoid lengthy and costly litigation. In December 1995, without admitting any violation, the Company and its subsidiary STP Corporation entered into a settlement with the FTC which involved a penalty payment of $888,000, charged against a reserve set aside in fiscal year 1995, and an injunction against any future violations of the 1976 cease and desist order. 2. IQ Products Company and CSA, Limited, Inc. v. First Brands Corporation, filed on May 4, 1994 in Federal District Court in Houston, Texas, arises out of IQ Products' contractual relationship with the Corporation for the supply of various aerosol automotive products, including STP Flat Tire Repair. IQ Products is seeking compensatory damages of $10.3 million (including the approximately $800,000 withheld by the Corporation) plus interest for products allegedly supplied and in connection with the Company's recall of STP Flat Tire Repair. The Corporation has denied IQ Products' claims and counterclaimed for compensatory damages of $4.5 million (less the approximately $800,000 withheld by it), plus interest. Legal counsel believes that IQ Products' claims are without merit and that the Corporation will prevail on part or all of its claims against IQ Products. Item 2. Changes in Securities None. Item 3. Defaults Upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security Holders Submitted at the Annual Meeting of Stockholders, October 27, 1995: 1. Election of three Directors, each to serve for a three-year term expiring on the date of the Annual Meeting of Stockholders in 1998 and/or until his successor is elected or appointed and qualified:
Name For Withheld Gary E. Gardner 19,421,185 20,570 Denis Newman 19,421,485 20,270 Ervin R. Shames 19,421,485 20,270
2. Ratification of the selection by the Board of Directors of KPMG Peat Marwick LLP as independent auditors:
Abstentions and For Against Broker Non-Votes 19,427,534 4,207 10,014
-15- 3. Authorization of a Non-employee Director Stock Option Plan (the "Director Plan")
Abstentions and For Against Broker Non-Votes 19,000,467 417,674 23,614
The Director Plan authorizes the issuance of up to 60,000 shares of the Company's common stock. Awards of non-qualified stock options to purchase 2000 shares of the Company's common stock during the year 1996 and 1,000 shares during the succeeding four years will be granted to each elected, re-elected or continuing non-employee Director of the Company on the first Friday following each annual meeting of stockholders during the term of the Director Plan. The Director Plan is non-discretionary and is administered by the Board of Directors of the Company. It is effective for the period beginning October 30, 1995 and ending October 30, 2000 and may be terminated or amended, within certain limitations, as the Board deems advisable. 4. Authorization of an amendment (the "Amendment") to the Annual Incentive Plan for certain key employees of the Company:
Abstentions and For Against Broker Non-Votes 15,339,198 4,077,175 25,382
The Amendment authorizes the issuance of up to 100,000 shares of common stock of the Company under the Annual Incentive Plan ("Incentive Plan") adopted in 1986 by the Board of Directors for certain key employees ("Participants") of the Company. The Incentive Plan is administered by the Compensation Committee of the Board of Directors (the "Committee"), which determines the employees to whom awards are granted, the amount of such awards, if any, and the timing and form of each award. The Amendment permits certain senior manager Participants to elect to receive all or part of their annual incentive award in common stock of the Company having a fair market value equal to 125% of the cash award which would otherwise be received pursuant to the Incentive Plan. Common stock issued under the Incentive Plan will be restricted in transferability for a period of two years after the date of issuance. The Committee has discretion to impose other restrictions on shares of common stock issued under the Incentive Plan. Item 5. Other Information None. -16- Item 6. Exhibits and Reports on Form 8-K A. Exhibit Index:
Exhibit Number Description of Exhibit 3.1 -- Restated Certificate of Incorporation of the Company, as amended by consent of the stockholders of the Company as of April 11, 1991. Incorporated by reference to Exhibit 3.1 to Form 10-K filed by the registrant on September 25, 1992. 3.2 -- By-Laws of the Company, as amended by consent of the stockholders of the Company as of April 11, 1991, and as further amended by the Board of Directors on January 20, 1995, pursuant to Article Fifth, Section G of the Restated Certificate of Incorporation. Incorporated by reference to Form 10-K filed by the Registrant on September 26, 1995. 10.1 -- Credit Agreement, dated as of February 3, 1995, among the Company, Chemical Bank, as Agent, and The Several Lenders Parties thereto. Incorporated by reference to Exhibit 10.1 to Form 10-Q for Quarter ended March 31, 1995, filed by the Registrant on May 11, 1995. 10.2 (a) -- Leasing Agreement between the Company and Citicorp North America, Inc., relating to its Glad Plastic Bag and Wrap facility in Cartersville, Georgia, dated as of November 16, 1993. Incorporated by reference to Exhibit 10.2 to Form 10-Q for Quarter ended December 31, 1993, filed by the Registrant on February 14, 1994. (b) -- Rider No. 1 thereto, dated as of December 1, 1993. Incorporated by reference to Exhibit 10.2(b) to Form 10-K filed by the Registrant on September 12, 1994. (c) -- Rider No. 2 thereto, dated as of May 11, 1994. Incorporated by reference to Exhibit 10.2(c) to Form 10-K filed by the Registrant on September 12, 1994. 10.3 (a) -- Equipment Lease Agreement between the Company and PNC Leasing Corp, relating to its Glad Plastic Bag and Wrap facility in Rogers, Arkansas, dated as of October 15, 1993. Incorporated by reference to Exhibit 10.6 to Form 10-Q for Quarter ended December 31, 1993, filed by the Registrant on February 14, 1994. (b)* -- First Amendment thereto, dated as of October 15, 1995. 10.4 (a) -- Agreement dated December 23, 1994 between the Company and Pitney Bowes Credit Corporation ("Pitney Bowes") to the exercise by the Company of an Early Purchase Option with regard to certain equipment at the Company's GLAD Plastic Wrap and Bag facility at Rogers, Arkansas. (This equipment was subject to the Equipment Lease Agreement dated as of December 23, 1991 between Pitney Bowes and the Company; the Equipment Lease Agreement was previously filed as and incorporated by reference to Exhibit 10.9 to Form S-1 filed by the Registrant on February 7, 1992.) Incorporated by reference to Exhibit 10.5(a) to Form 10-Q for Quarter ended December 31, 1994, filed by the Registrant on February 14, 1995. (b) -- Bill of Sale by Pitney Bowes dated December 23, 1994 for certain equipment repurchased by the Company pursuant to the Company's exercise of the Early Purchase Option provided for in the Equipment Lease Agreement. Incorporated by reference to Exhibit 10.5(b) to Form 10-Q for Quarter ended December 31, 1994, filed by the Registrant on February 14, 1995. 10.5 -- Letters dated May 4, 1995 and June 23, 1995 of the Company and NationsBanc Leasing Corporation ("NationsBanc" - successor in interest to NationsBanc Leasing Corporation of Georgia), respectively, relating to the exercise by the Company of an Early Purchase Option with regard to certain equipment at the Company's GLAD plastic wrap and bag facility in Amherst, Virginia. (This equipment was subject to the Equipment Lease Agreement dated as of June 25, 1992, between NationsBanc and the Company; the Equipment Lease Agreement was previously filed as and incorporated by reference to Exhibit 10.14 to Form 10-K filed by the Registrant on September 25, 1992.) Incorporated by reference to Form 10-K filed by the Registrant on September 26, 1995. 10.6 -- Purchase Agreement, dated as of June 25, 1993, between the Company and Nationsbanc Leasing Corporation, relating to the sale and leaseback of certain equipment at the Company's GLAD plastic wrap and bag facility in Amherst, Virginia. Incorporated by reference to Exhibit 10.16 to Form 10-K filed by the Registrant on September 28, 1993. -17-
10.7 -- Equipment Lease Agreement, dated as of June 25, 1993, between the Company and Nationsbanc Leasing Corporation, relating to the sale and leaseback of certain equipment at the Company's GLAD plastic wrap and bag facility in Amherst, Virginia. Incorporated by reference to Exhibit 10.17 to Form 10-K filed by the Registrant on September 29, 1993. 10.8 (a) -- Sales Agreement, dated as of January 1, 1989 between Union Carbide Chemicals & Plastics Company, Inc. (formerly Union Carbide Corporation) and the Company, (confidential treatment has been granted with respect to certain portions of the Sales Agreement; such portions were omitted and filed separately with the Securities and Exchange Commission). Incorporated by reference to Exhibit 10.22(b) to Form 10-K filed by the Registrant on September 19, 1989. (b) -- Sales Agreement, dated March 1, 1991, between Union Carbide Chemicals and Plastics Company Inc. and the Company, (confidential treatment has been granted with respect to certain portions of the Sales Agreement, such portions were omitted and filed separately with the Securities and Exchange Commission). Incorporated by reference to Post-Effective Amendment No. 1 to Form S-1 filed by the Registrant on June 12, 1991. 10.9 -- Agreement between the Company and Metropolitan dated December 29, 1994, for the purchase of the 13.25% Subordinated Note due 2001 (the "Note"), outstanding in the principle amount of $45,000,000, by the Company on January 4, 1995. (The Note was issued pursuant to the Note Purchase Agreement ("Purchase Agreement") dated as of July 1, 1986, between the Company and Metropolitan Life Insurance Company and the Subordinated Notes Registration Rights Agreement ("Rights Agreement") dated as of July 1, 1986; the Purchase Agreement was previously filed as and incorporated by reference to Exhibit 4(ii) to Form S-1 filed by the Registrant on July 15, 1986; the Rights Agreement was previously filed as and incorporated by reference to Exhibit 10(xii) to Form S-1 filed by the Registrant on July 15, 1986.) Incorporated by reference to Exhibit 10.11(b) to Form 10-Q for Quarter ended December 31, 1994, filed by the Registrant on February 14, 1995. 10.10 -- Underwriting Agreement among the Company, certain stockholders and The First Boston Corporation and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner and Smith Incorporated as representatives of the Several Underwriters, relating to 8,400,000 shares of Common Stock of the Company. Incorporated by reference to Exhibit 1.1 to Form S-1 filed by the Registrant on March 5, 1991. 10.11 -- Subscription Agreement among the Company, certain stockholders and Credit Suisse First Boston Limited and Merrill Lynch International Limited as Managers, relating to 2,110,000 shares of Common Stock of the Company. Incorporated by reference to Exhibit 1.2 to Form S-1 filed by the Registrant on March 5, 1991. 10.12 -- Underwriting Agreement, dated as of February 26, 1992, between the Company and The First Boston Corporation, relating to $100,000,000 in 9 1/8% Senior Subordinated Notes due 1999. Incorporated by reference to Exhibit 10.19 to form 10-K filed by the Registrant on September 25, 1992. 10.13 (a) -- Pooling and Servicing Agreement, dated as of May 21, 1992, between the Company, First Brands Funding Inc and Chemical Bank, as Trustee, relating to First Brands Funding Master Trust trade receivables-backed financing. Incorporated by reference to Exhibit 10.20(a) to form 10-K filed by the Registrant on September 25, 1992. (b) -- Variable Funding Supplement thereto, dated as of May 21, 1992. Incorporated by reference to Exhibit 10.20(b) to form 10-K filed by the Registrant on September 25, 1992. (c) -- Amendment No. 1 thereto, dated as of December 22, 1993. Incorporated by reference to Exhibit 10.18(c) to Form 10-Q for Quarter ended December 31, 1993, filed by the Registrant on February 14, 1994. 10.14 -- Asset Purchase and Sale Agreement, dated as of May 21, 1992, between the Company and First Brands Funding Inc, relating to First Brands Funding Master Trust trade receivables- backed financing. Incorporated by reference to Exhibit 10.21 to form 10-K filed by the Registrant on September 25, 1992. 10.15 -- Asset Purchase and Sale Agreement, dated as of May 21, 1992, between the Company and Himolene Incorporated, relating to First Brands Funding Master Trust trade receivables- backed financing. Incorporated by reference to Exhibit 10.22 to form 10-K filed by the Registrant on September 25, 1992.
-18- 10.16 -- Amended and Restated Letter of Credit Reimbursement Agreement, dated as of December 2, 1993, between the Company, First Brands Funding Inc, Westdeutsche Landesbank Girozentrale, The Long-Term Credit Bank of Japan, Limited, and First Brands Funding Master Trust, amending and restating the Letter of Credit Reimbrusement Agreement, dated as of May 21, 1992, relating to First Brands Funding Master Trust trade receivables-backed financing. Incorporated by reference to Exhibit 10.21 to Form 10-Q for Quarter ended December 31, 1993, filed by the Registrant on February 14, 1994. 10.17 -- Amended Long-Term Incentive Plan. Incorporated by reference to Exhibit 10.34 to Form 10-K filed by the Registrant on September 12, 1990. 10.18 -- First Brands Corporation 1994 Performance Stock Option and Incentive Plan. Incorporated by reference to Exhibit A to the Definitive Proxy Statement for Annual Meeting of Stockholders, filed by the Registrant on September 28, 1993. 10.19 (a) -- Purchase and Sale Agreement, dated as of June 30, 1994, between the Registrant and Vestar/Freeze Holdings Corporation and Vestar Equity Partners, L.P., relating to the sale by the Registrant of its businesses of developing, manufacturing, marketing, selling and/or distributing automotive antifreeze, cooling system tools, cooling system chemicals for cleaning and sealing leaks in automotive cooling systems, ice fighting products, PRESTONE brake fluid products, PRESTONE power steering fluid products, and PRESTONE transmission stop-leak fluid products, and antifreeze recycling business. Incorporated by reference to Exhibit 2.1 to Form 8-K filed by the Registrant on September 12, 1994. (b) -- Amendment No. 1 thereto, dated as of August 25, 1994. Incorporated by reference to Exhibit 2.2 to Form 8-K filed by the Registrant on September 12, 1994. 11* -- Computation of Net Income Per Common Share 15* -- Accountants' Acknowledgment 27* -- EDGAR Financial Data Schedule
- ------------ * Filed herewith B. Reports on Form 8-K None. -19- 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. FIRST BRANDS CORPORATION (Registrant) Date: February 5th, 1996 By:/s/ Donald A. DeSantis ------------------ ---------------------- Donald A. DeSantis Senior Vice President, Chief Financial Officer and Treasurer (Principal Accounting and Duly Authorized Officer) -20- EX-10 2 EXHIBIT 10.3(B) FIRST AMENDMENT TO EQUIPMENT LEASE AGREEMENT Dated as of October 15, 1995 By and Between PNC LEASING CORP as the Lessor and FIRST BRANDS CORPORATION as the Lessee FIRST AMENDMENT TO EQUIPMENT LEASE AGREEMENT THIS FIRST AMENDMENT TO EQUIPMENT LEASE AGREEMENT is made as of the 15th day of October, 1995 (the "First Amendment") to that certain Equipment Lease Agreement dated as of October 15, 1993 (the Equipment Lease Agreement together with all exhibits and schedules thereto, the "Original Agreement") (the Original Agreement, as amended by this First Amendment, together with all extensions, substitutions, replacements, restatements and other amendments or modifications thereof or thereto, the "Agreement") by and between PNC LEASING CORP, a corporation organized and existing under the laws of the Commonwealth of Pennsylvania (the "Lessor") and FIRST BRANDS CORPORATION, a corporation organized and existing under the laws of the State of Delaware ("FBC"). WITNESSETH: WHEREAS, the Lessor and FBC desire to amend the Original Agreement as set forth herein. NOW, THEREFORE, in consideration of the terms and conditions contained herein, and other good and valuable consideration, the parties hereto, intending to be legally bound, hereby agree as follows: ARTICLE I AMENDMENTS TO ORIGINAL AGREEMENT FIRST: Subsection 1.4(a) of the Original Agreement is hereby amended and restated in its entirety to read as follows: 1.4 Rent. (a) Base Rent. FBC hereby agrees to pay in arrears, on each Payment Date during the Base Term, Base Rent to Lessor for the Items. "Base Rent" shall mean, as to any Payment Date during the Base Term, the sum of (i) the product of (A) Lessor's Cost for each Item then subject to this Agreement, and (B) the percentage listed in Column 1 of Schedule 1.4(a) hereto with respect to such Payment Date, and (ii) the product of (A) Lessor's Cost for each Item then subject to this Agreement, (B) the percentage listed in Column 2 of Schedule 1.4(a) hereto with respect to such Payment Date, and (C) the fraction, the numerator of which is the Base Term Percentage Rental Factor plus the LIBO Rate, and the denominator of which is 4. "Base Term Percentage Rental Factor" shall mean with respect to any payment of Base Rent a percentage determined as follows:
- ------------------------------------------------------------------- S&P RATING THEN BASE TERM PERCENTAGE IN EFFECT RENTAL FACTOR - ------------------------------------------------------------------- BB+ or less .80% - ------------------------------------------------------------------- BBB- .75% - ------------------------------------------------------------------- BBB .65% - ------------------------------------------------------------------- BBB+ .60% - ------------------------------------------------------------------- A- or higher .55% - -------------------------------------------------------------------
For the purposes of this Subsection 1.4(a), the term "S&P Rating" shall mean an actual or implied senior debt rating obtained by FBC from Standard & Poor's, a division of McGraw-Hill, Inc. ("S&P"). In the event that, for any reason, an S&P rating is unavailable or cannot be determined for FBC, then, in Lessor's determination and discretion, either (i) the equivalent actual or implied senior debt rating obtained by FBC from Moody's Investor Service ("Moody's"), or a similar nationally-recognized rating service, shall be substituted for the "S&P Rating" to be used in determining the Base Term Percentage Rental Factor, or (ii) if no such equivalent rating is available or can be determined, then the Base Term Percentage Rental Factor shall be equal to the latest Base Term Percentage Rental Factor then in effect. FBC shall pay any Taxes which arise in connection with any Rent payment to the extent it would have an indemnity obligation under Section 2.2 for such Taxes and subject to any contest rights FBC has under Sections 2.2 and 2.6 hereof. SECOND: Section 4.6 of the Original Agreement is hereby amended and restated in its entirety to read as follows: 4.6 Option to Renew. (a) Option and Exercise; Term. Upon the scheduled expiration of any Term hereunder, so long as no Event of Default has occurred and is continuing, FBC shall have the option (each, a "Renewal Option") to extend for a period of one (1) year the term of this Agreement with respect to all (but not less than all) of the then remaining Items (each such period, an "Extended Term"); provided, however, that no more than three (3) Extended Terms may be elected by FBC hereunder. Each -2- Extended Term shall commence on October 16 of the year of such election and continue until October 15 of the following year. In the event FBC desires to extend the term of this Agreement, FBC shall provide written notice (the "Extension Notice") to Lessor not less than 90 days prior to the expiration of the Base Term or Extended Term then in effect; provided, in the event Lessor or the Participants existing on the Closing Date and remaining at such time (in their reasonable opinion) determine that FBC's financial condition has changed in a materially adverse manner from the date of this Agreement, Lessor or such Participants may, by written notice within 15 days after its receipt of the Extension Notice, prevent FBC's exercise of the Renewal Option; provided, FBC may, during the 30 day period commencing upon its receipt of such notice preventing its exercise of the Renewal Option, exercise one of the options set forth in Section 4.1. (b) Extended Term Rent. If FBC elects to exercise its option to extend the term of this Agreement pursuant to Section 4.6(a) above, FBC agrees to pay in arrears, on each Payment Date during the Extended Term, Extended Term Rent to Lessor for each Item. "Extended Term Rent" shall mean, as to any Payment Date during the Extended Term, the sum of (i) the product of (A) Lessor's Cost for each Item then subject to this Agreement, and (B) the percentage listed in Column 1 of the Extension Schedule hereto with respect to such Payment Date, and (ii) the product of (A) Lessor's Cost for each Item then subject to this Agreement, (B) the percentage listed in Column 2 of the Extension Schedule hereto with respect to such payment Date, and (C) the fraction, the numerator of which is the Base Term Percentage Rental Factor plus the LIBO Rate, and the denominator of which is 4. "Base Term Percentage Rental Factor" shall have the meaning ascribed to such term in Subsection 1.4(a) above. (c) Other Provisions. All other provisions of this Agreement shall be and remain in effect during the Extended Term. THIRD: Schedule 1.4a of the Original Agreement is hereby amended and restated in its entirety to read as shown on Schedule 1.4a attached hereto and made a part hereof. FOURTH: Schedule 11.1(o) of the Original Agreement is hereby amended and restated in its entirety to read as shown on Schedule 11.1(o) attached hereto and made a part hereof. -3- ARTICLE II CONDITIONS PRECEDENT This First Amendment shall become operative as of the date hereof when each of the following conditions precedent are satisfied in the judgment of the Lessor or have been waived in writing by the Lessor: (a) First Amendment. Receipt by the Lessor of duly executed counterparts of this First Amendment from FBC. (b) Closing Certificate. Receipt by the Lessor of a certificate signed by an authorized officer of FBC dated as of even date herewith certifying (i) that the representations and warranties set forth in the Original Agreement are true and correct in all material respects on and as of the date of this First Amendment as though made on and as of such date, except to the extent that such representations and warranties relate solely to an earlier date (in which case, such representations and warranties shall have been true and correct on and as of such earlier date) and (ii) as to such other matters as Lessor may reasonably request. (c) Corporate Documents of FBC. Receipt by the Lessor of (i) an incumbency certificate of FBC dated as of the First Amendment closing date and (ii) duly certified copies of the articles of incorporation and bylaws of FBC. (d) Proceedings Satisfactory. Receipt by the Lessor of evidence that all proceedings taken in connection with this First Amendment and the consummation of the transactions contemplated hereby and all documents and papers relating hereto have been completed or duly executed, and receipt by the Lessor of such documents and papers, all in form and substance reasonably satisfactory to the Lessor and Lessor's special counsel, as the Lessor or its special counsel may reasonably request in connection therewith. ARTICLE III MISCELLANEOUS FIRST: Except as expressly amended by this First Amendment, the Original Agreement and each and every representation, warranty, covenant, term and condition contained therein is specifically ratified and confirmed. SECOND: FBC hereby specifically waives any prior notice requirement, whether pursuant to Subsection 5.3(c)(iii) of the Agreement or otherwise, applicable to the reassignment of the participation interest of IBJS Commercial Corporation to Lessor. -4- THIRD: The intended characterization and treatment of the transactions contemplated by Section 8.1 of the Original Agreement are hereby confirmed and shall be unaffected by the execution of this First Amendment. FOURTH: FBC and Lessor agree and acknowledge that each of the Operative Documents are each hereby ratified and confirmed in all respects and shall be and remain in full force and effect, and binding upon them. From and after the date hereof, all references in the Agreement or any Operative Document to the Agreement, shall be deemed to be references to the Original Agreement as amended by this First Amendment. FIFTH: Except for proper nouns and as otherwise defined or amended herein, capitalized terms used herein which are not defined herein, but which are defined in the Original Agreement, shall have the meaning given them in the Original Agreement. SIXTH: This First Amendment shall be binding upon and inure to the benefit of FBC, the Lessor and their respective successors and assigns. SEVENTH: Nothing in this First Amendment shall be deemed or construed to be a waiver, release or limitation upon the Lessor's exercise of any of its rights and remedies under the Original Agreement or any Operative Document, whether arising as a consequence of any Events of Default which may now exist, hereafter arise or otherwise, and all such rights and remedies are hereby expressly reserved. EIGHTH: This First Amendment may be executed in as many different counterparts as shall be convenient and by the different parties hereto on separate counterparts, each of which when executed by FBC and the Lessor shall be regarded as an original. All such counterparts shall constitute but one and the same instrument. Delivery of an executed signature page hereto by telecopier shall be effective as delivery of a manually- executed original. NINTH: This First Amendment shall be a contract made under and governed by the laws of the State of New York without regard to the principles thereof regarding conflict of laws. TENTH: FBC shall pay any costs and expenses of Lessor incurred in connection with this amendment and any other documents or agreements executed in connection therewith, including attorney's fees and costs. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] -5- This First Amendment to Equipment Lease Agreement is executed as of the day and year first above written. FIRST BRANDS CORPORATION By /s/ Richard J. Mosback Name: Richard J. Mosback Title: Assistant Treasurer PNC LEASING CORP By /s/ Douglas B. Bickmore Name: Douglas B. Bickmore Title: Vice President Agreed and consented: UNION TRUST COMPANY By /s/ Joseph F. Morrissey Name: Joseph F. Morrissey Title: Vice President -6- SCHEDULE 1.4(a)
- ----------------------------------------------------------------------------------------------------------------------------- COLUMN 1 COLUMN 2 COLUMN 3 MONTHLY UNAMORTIZED TERMINATION PAYMENT DATE AMORTIZATION BALANCE PERCENTAGE - ----------------------------------------------------------------------------------------------------------------------------- 01/15/94 2.37044674 100.00000000 97.62955326 - ----------------------------------------------------------------------------------------------------------------------------- 04/15/94 2.40229962 97.62955326 95.22725364 - ----------------------------------------------------------------------------------------------------------------------------- 07/15/94 2.43458052 95.22725364 92.79267313 - ----------------------------------------------------------------------------------------------------------------------------- 10/15/94 2.48349661 92.79267313 90.30917631 - ----------------------------------------------------------------------------------------------------------------------------- 01/15/94 2.51420439 90.30917631 87.79497192 - ----------------------------------------------------------------------------------------------------------------------------- 04/15/95 2.54529166 87.79497192 85.24968027 - ----------------------------------------------------------------------------------------------------------------------------- 07/15/95 2.57678330 85.24968027 82.67291696 - ----------------------------------------------------------------------------------------------------------------------------- 10/15/95 2.60862410 82.67291696 80.06429287 - ----------------------------------------------------------------------------------------------------------------------------- 01/15/96 2.64087882 80.06429287 77.42341406 - ----------------------------------------------------------------------------------------------------------------------------- 04/15/96 2.67353237 77.42341406 74.74988169 - ----------------------------------------------------------------------------------------------------------------------------- 07/15/96 2.70658967 74.74988169 72.04329202 - ----------------------------------------------------------------------------------------------------------------------------- 10/15/96 2.74005571 72.04329202 69.30323631 - ----------------------------------------------------------------------------------------------------------------------------- 01/15/97 2.77393555 69.30323631 66.52930076 - ----------------------------------------------------------------------------------------------------------------------------- 04/15/97 2.80823430 66.52930076 63.72106646 - ----------------------------------------------------------------------------------------------------------------------------- 07/15/97 2.84295714 63.72106646 60.87810932 - ----------------------------------------------------------------------------------------------------------------------------- 10/15/97 2.87810932 60.87810932 58.00000000 - ----------------------------------------------------------------------------------------------------------------------------- 01/15/98 2.64458291 58.00000000 55.35641709 - ----------------------------------------------------------------------------------------------------------------------------- 04/15/98 2.67797078 55.35541709 52.67744833 - ----------------------------------------------------------------------------------------------------------------------------- 07/15/98 2.71178015 52.67744833 49.965666156 - ----------------------------------------------------------------------------------------------------------------------------- 10/15/98 2.74601637 49.965666156 47.21964981 - ----------------------------------------------------------------------------------------------------------------------------- 01/15/99 2.78068483 47.21964981 44.43896498 - ----------------------------------------------------------------------------------------------------------------------------- 04/15/99 2.81579097 44.43896498 41.62317401 - ----------------------------------------------------------------------------------------------------------------------------- 07/15/99 2.85134033 41.62317401 38.77183368 - ----------------------------------------------------------------------------------------------------------------------------- 10/15/99 2.88733851 38.77183368 35.88449517 - ----------------------------------------------------------------------------------------------------------------------------- 01/15/00 2.92379115 35.88449517 32.96070402 - ----------------------------------------------------------------------------------------------------------------------------- 04/15/00 2.96070402 32.96070402 30.00000000 - ----------------------------------------------------------------------------------------------------------------------------- 07/15/00 2.99808290 30.00000000 27.00191710 - ----------------------------------------------------------------------------------------------------------------------------- 10/15/00 3.35933700 27.0019171 23.96598340 - -----------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------- EXTENDED TERM ENDING: ADJUSTMENT PERCENTAGE: PURCHASE PRICE PERCENTAGE - -------------------------------------------------------------------------------------------------------------------------- October 15, 1998 40.969 47.220 - -------------------------------------------------------------------------------------------------------------------------- October 15, 1999 30.795 35.885 - -------------------------------------------------------------------------------------------------------------------------- October 15, 2000 20.099 23.970 - --------------------------------------------------------------------------------------------------------------------------
-8- SCHEDULE 11.1(o) PARTICIPANTS First Fidelity Bank, formerly Union Trust Company EX-11 3 EXHIBIT 11 Exhibit 11 (Page 1 of 2) COMPUTATION OF NET INCOME PER COMMON SHARE (in thousands - except per share amounts)
Three months Six months ended December 31, ended December 31, 1995 1994 1995 1994 ---- ---- ---- ---- COMPONENTS OF PRIMARY NET INCOME PER COMMON SHARE: Income before extraordinary loss........... $ 14,637 $ 11,842 $ 30,170 $ 26,916 Extraordinary loss......................... -- (4,493) -- (4,493) ---------- -------- ----------- --------- Net income................................. $ 14,637 $ 7,349 $ 30,170 $ 22,423 ======== ======= ======== ======== Average common shares outstanding during the period........................ 22,199 22,021 22,178 22,016 Average treasury shares held during the period........................ (1,376) (801) (1,325) (500) Common shares issuable with respect to common equivalents for stock options........................ 458 229 433 235 ------ ------- ------- ------- Average common and common equivalent shares outstanding............ 21,281 21,449 21,286 21,751 ====== ====== ====== ====== Primary earnings per share: Income before extraordinary loss......... $ 0.69 $ 0.55 $ 1.42 $ 1.24 Extraordinary loss....................... -- (0.21) -- (0.21) -------- ------ -------- ------ Net income............................... $ 0.69 $ 0.34 $ 1.42 $ 1.03 ====== ====== ====== ======
Exhibit 11 (Page 2 of 2) COMPUTATION OF NET INCOME PER COMMON SHARE (in thousands - except per share amounts)
Three months Six months ended December 31, ended December 31, 1995 1994 1995 1994 ---- ---- ---- ---- COMPONENTS OF FULLY DILUTED NET INCOME PER COMMON SHARE: Income before extraordinary loss........... $ 14,637 $ 11,842 $ 30,170 $ 26,916 Extraordinary loss......................... -- (4,493) -- (4,493) ---------- -------- ----------- --------- Net income................................. $ 14,637 $ 7,349 $ 30,170 $ 22,423 ======== ======= ======== ======== Average common shares outstanding during the period........................ 22,199 22,021 22,178 22,016 Average treasury shares held during the period........................ (1,376) (801) (1,325) (500) Common shares issuable with respect to common equivalents for stock options........................ 491 268 490 267 ------ ------- ------- ------- Average common and common equivalent shares outstanding............ 21,314 21,488 21,343 21,783 ====== ====== ====== ====== Fully diluted earnings per share: Income before extraordinary loss......... $ 0.69 $ 0.55 $ 1.41 $ 1.24 Extraordinary loss....................... -- (0.21) -- (0.21) -------- ------ -------- ------ Net income............................... $ 0.69 $ 0.34 $ 1.41 $ 1.03 ====== ====== ====== ======
EX-15 4 EXHIBIT 15 Exhibit 15 Accountants' Acknowledgement First Brands Corporation 83 Wooster Heights Road Danbury, CT 06813-1911 Ladies and Gentlemen: RE: FORM S-8 REGISTRATION STATEMENTS NO. 33-35770 AND NO. 33-56992 With respect to the subject registration statements, we acknowledge our awareness of the use therein of our reports dated November 1, 1995 and January 30, 1996 related to our reviews of interim financial information. Pursuant to Rule 436 (c) under the Securities Act of 1933, such reports are not considered part of a registration statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of sections 7 and 11 of the Act. Very truly yours, /s/ KPMG Peat Marwick LLP KPMG Peat Marwick LLP New York, New York January 30, 1996 EX-27 5 EXHIBIT 27
5 1000 3-MOS JUN-30-1996 OCT-1-1995 DEC-31-1995 10,744 0 108,058 1,587 143,565 299,491 405,776 101,459 809,442 147,073 207,825 223 0 0 370,724 809,442 263,084 263,084 172,956 172,956 0 0 5,590 25,171 10,534 14,637 0 0 0 14,637 0.69 0.69
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