-----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, RyDPFWZqiHNMq8RxVAaMfaIJPYS0+XdkqTfkeUYPcZ1g9ZH5YIerqnYH6VBo+s9C pujcLjTdOrDISeVgrc4gig== 0000950117-94-000120.txt : 19940516 0000950117-94-000120.hdr.sgml : 19940516 ACCESSION NUMBER: 0000950117-94-000120 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940511 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST BRANDS CORP CENTRAL INDEX KEY: 0000797320 STANDARD INDUSTRIAL CLASSIFICATION: 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: 94527089 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 FBC 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 MARCH 31, 1994 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 1911 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 March 31, 1994 Common Stock, $.01 par value 21,997,353 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 March 31, 1994 and 1993 3 Consolidated Condensed Statements of Income For the Nine Month Periods Ended March 31, 1994 and 1993 4 Consolidated Condensed Balance Sheets - March 31, 1994 and June 30, 1993 5 Consolidated Condensed Statement of Stockholders' Equity - For the Nine Month Period Ended March 31, 1994 6 Consolidated Condensed Statements of Cash Flows - For the Nine Month Periods Ended March 31, 1994 and 1993 7 Notes to Consolidated Condensed Financial Statements 8-11 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 12-14 Independent Accountants' Report 15 PART II - OTHER INFORMATION Item 1. Legal Proceedings 16 Items 2 - 6 16 SIGNATURE 17
-2- FIRST BRANDS CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS THREE MONTHS ENDED ENDED MARCH 31, MARCH 31, 1994 1993 (in thousands - except per share amounts) Net sales $ 244,364 $ 219,496 Cost of goods sold 152,807 137,622 Selling, general and administrative expenses 60,311 54,961 Amortization and other depreciation 5,717 5,700 Interest expense 4,972 5,370 Discount on sale of receivables 1,035 948 Other income (expense), net (15) 239 Income before provision for income taxes 19,507 15,134 Provision for income taxes 8,120 6,202 Net income $ 11,387 $ 8,932 Net income per common share and common equivalent share (Note 6): $ 0.51 $ 0.41 Weighted average common and common equivalent shares outstanding (Note 6) 22,251 21,933
SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS. -3- FIRST BRANDS CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
NINE MONTHS NINE MONTHS ENDED ENDED MARCH 31, MARCH 31, 1994 1993 (in thousands - except per share amounts) Net sales $ 794,570 $ 756,511 Cost of goods sold 492,409 475,304 Selling, general and administrative expenses 188,763 179,720 Amortization and other depreciation 17,613 15,734 Interest expense 15,636 17,553 Discount on sale of receivables 3,059 3,133 Other income (expense), net (303) 443 Income before provision for income taxes 76,787 65,510 Provision for income taxes 32,636 26,688 Net income $ 44,151 $ 38,822 Net income per common share and common equivalent share (Note 6): $ 1.99 $ 1.78 Weighted average common and common equivalent shares outstanding (Note 6) 22,138 21,868
SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS. -4- FIRST BRANDS CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS
MARCH 31, JUNE 30, (in thousands) 1994 1993 (UNAUDITED) ASSETS: Cash and cash equivalents $ 11,587 $ 11,672 Accounts and notes receivable - net 67,221 85,257 Inventories 161,978 177,148 Prepaid expenses 4,812 5,674 Total current assets 245,598 279,751 Property, plant and equipment (net of accumulated depreciation of $84,717 and $69,570) 255,013 252,372 Patents, trademarks, proprietary technology and other intangibles (net of accumulated amortization of $189,594 and $177,621) 235,927 247,226 Deferred charges and other assets (net of accumulated amortization of $47,822 and $45,078) 22,992 27,455 Total assets $ 759,530 $ 806,804 LIABILITIES AND STOCKHOLDERS' EQUITY: Notes payable $ 8,231 $ 178 Current maturities of long-term debt 4,808 5,079 Accrued income and other taxes 25,675 26,035 Accounts payable 30,191 82,298 Accrued liabilities 118,982 130,535 Total current liabilities 187,887 244,125 Long-term debt 186,773 226,250 Deferred taxes payable 22,187 9,651 Deferred gain on sale of assets 5,819 7,107 Other long-term obligations 11,477 14,218 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 21,997,353 shares at March 31, 1994 and 21,827,878 shares at June 30, 1993 220 218 Capital in excess of par value 116,125 112,535 Cumulative foreign currency translation adjustment (4,671) (1,690) Retained earnings 233,713 194,390 Total stockholders' equity 345,387 305,453 Total liabilities and stockholders' equity $ 759,530 $ 806,804
SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS. -5- FIRST BRANDS CORPORATION CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE NINE MONTH PERIOD ENDED MARCH 31, 1994 (UNAUDITED)
Cumulative Capital Foreign Common in Excess Currency Stock of Par Translation Retained (in thousands) Par Value Value Adjustment Earnings Total Balance as of June 30, 1993 $218 $112,535 $(1,690) $194,390 $305,453 Exercise of Stock Options 2 3,590 - - 3,592 Common Stock Dividends - - - (4,828) (4,828) Net Income - - - 44,151 44,151 Foreign Currency Translation Adjustment - - (2,981) - (2,981) Balance as of March 31, 1994 $ 220 $ 116,125 $ (4,671) $ 233,713 $ 345,387
SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS. -6- FIRST BRANDS CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS NINE MONTHS ENDED ENDED MARCH 31, MARCH 31, (in thousands) 1994 1993 Cash flows from operating activities: Net income $ 44,151 $ 38,822 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 31,227 27,784 Deferred income taxes 12,833 7,675 Change in non-cash current assets and liabilities: Decrease in accounts receivable 19,099 17,209 Decrease (Increase) in inventories 15,412 (4,551) Decrease in prepaid expenses 1,280 2,574 (Decrease) in accrued income and other taxes (752) (8,324) (Decrease) in accounts payable (52,420) (49,003) (Decrease) in accrued liabilities (12,187) (27,828) Other changes (304) (2,171) Total adjustments 14,188 (36,635) Net cash provided by operating activities 58,339 2,187 Cash flows from investing activities: Capital expenditures (21,778) (28,045) Patents and other proprietary technology - (1,950) Net cash (used) for investing activities (21,778) (29,995) Cash flows from financing activities: (Decrease) Increase in revolving credit borrowings, net (15,500) 9,000 Increase in other borrowings, net 7,251 9,358 Repayment of term loan (23,569) (3,569) Sale of accounts receivable, net - 10,000 Dividends paid (4,828) (2,828) Net cash (used) provided by financing activities (36,646) 21,961 Net (Decrease) in cash and cash equivalents (85) (5,847) Cash and cash equivalents at beginning of period 11,672 12,516 Cash and cash equivalents at end of period $ 11,587 $ 6,669
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. Due to the seasonal nature of some of its product lines, primarily in the Company's antifreeze/coolant business, the sales of which are concentrated in the first half of the Company's fiscal year, the results of operations for the nine month period ended March 31, 1994 and the balance sheet at March 31, 1994 are not 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), PRESTONE (antifreeze/coolant and car care products), STP (oil and fuel treatment and other specialty automotive products); SIMONIZ (car waxes and polishes) and SCOOP AWAY and EVER CLEAN (clumping cat litter products). Accounting Changes The Company provides certain medical and life insurance benefits for retirees and their eligible dependents. Employees who have reached the age of 55, and have met the Company's minimum service requirements, become eligible for these benefits. The medical and life insurance benefits available are partially contributory in nature, and it is the Company's practice to fund these benefits as incurred. Effective July 1, 1993, the Company adopted Statement of Financial Accounting Standards No. 106 -Employers' Accounting for Postretirement Benefits Other than Pensions (SFAS No. 106). SFAS No. 106 requires that companies accrue the projected future cost of providing postretirement benefits during the period that employees render the services necessary to be eligible for such benefits. The Company has elected to recognize the cumulative effect of the change to SFAS No. 106 by amortizing the transition obligation of $16,767,000 over 20 years. While the adoption of this standard does have an impact on the Company's reported net income, it does not impact First Brand's cash flow because the Company intends to continue its current practice of paying the cost of postretirement benefits as incurred. The Company's accumulated postretirement benefit obligation (the transition obligation) at July 1, 1993 is comprised of the following components (in thousands): Accumulated postretirement benefit obligations: Retirees $ (8,656) Fully eligible active plan participants (2,506) Active plan participants not fully eligible (5,605) Total (16,767) Unrecognized transition obligation 16,767 Net amount recognized in balance sheet $ 0
The components of the Company's net periodic postretirement benefit cost for the three and nine months ended March 31, 1994 were as follows (in thousands):
Three Months Nine Months Ended Ended March 31, 1994 March 31, 1994 Service cost - benefits earned $ 95 $ 285 Interest cost on accumulated postretirement benefit obligation 327 981 Amortization of transition obligation 210 630 Net periodic postretirement benefit cost $ 632 $ 1,896
The discount rate used in determining the accumulated postretirement benefit obligation was 8%. The assumed health care cost trend rate used to measure the accumulated postretirement benefit obligation was 13%, trending down 1% per year after fiscal year 1995 to an ultimate rate of 7% in fiscal year 2001. A one-percentage-point increase in the assumed health care cost trend rate for each year would increase the accumulated postretirement benefit obligation as of July 1, 1993 by approximately $750,000 and would have increased the postretirement benefit expense for the nine month period ended March 31, 1994 by approximately $90,000. Change in Accounting Estimate As a result of the trend of declining long-term interest rates, the Company remeasured its pension obligation during October of 1993. The requirement of Financial Accounting Standards Board Statement No. 87 - Employers' Accounting for Pensions (SFAS No. 87) to adjust the discount rate in line with current and expected to be available interest rates on high quality fixed-income bonds has resulted in a decision by the Company to reduce its assumed discount rate from 9.0%, which was used at June 30, 1993, to a rate of 8.0%. In addition, the Company has also reduced its expected long-term rate of return on plan assets from 10.0% to 9.5% and its expected rate of increase in future compensation levels from 4.75% to 4.5%. Based upon these revised assumptions, the Company's projected benefit obligation increased by $8,400,000, and the Company's annual pension cost increased by $800,000. Inventories Inventories were comprised of:
March 31, June 30, 1994 1993 (in thousands) Raw materials . . . . . . . . . . $ 24,219 $ 28,344 Work-in-process . . . . . . . . . 6,318 5,272 Finished goods. . . . . . . . . . 131,441 143,532 Total . . . . . . . . . . . . $ 161,978 $ 177,148
2. Long-term Debt First Brands had long-term debt outstanding as of March 31, 1994 and June 30, 1993 as follows:
March 31, June 30, 1994 1993 (in thousands) Senior Debt: $165,000,000 Revolving Credit Facility, 4 year term expiring June, 1995, interest at prime rate, LIBOR plus 3/4% or CD rate plus 7/8%; commitment fee of .35% on unused portion $ 30,000 $ 45,500 10 year Term Loan, expiring November, 2001, interest at 90 day LIBOR plus 2% 12,123 35,692 Other 4,458 5,137 46,581 86,329 Less: current maturities (4,808) (5,079) Senior Debt 41,773 81,250 Subordinated Debt: 9 1/8% Senior Subordinated Notes Due 1999 100,000 100,000 13 1/4% Subordinated Notes Due 2001 45,000 45,000 Subordinated Debt 145,000 145,000 Total Long Term Debt $ 186,773 $ 226,250
The Revolving Credit Facility has no compensating balance requirements, however it does have restrictive covenants, the most significant of which include the maintenance of certain minimum levels for the ratio of current assets to current liabilities, interest coverage and the ratio of total liabilities to equity. In accordance with provisions set forth in the Term Loan agreement, the Company exercised it's right to prepay a portion of the outstanding balance. On March 1, 1994, the Company prepaid $20,000,000 of the Term Loan principal. The 13 1/4% Subordinated Note Purchase Agreement (the "Note Purchase Agreement") requires the principal amount to be paid in annual installments, subject to reduction for prior repurchases, of $9,000,000 on July 1, 1997 and on each July 1 thereafter through the year 2001. The 9 1/8% Notes contain limitations on the Company's right to incur additional debt. Both the 9 1/8% Notes Indenture and the Note Purchase Agreement have 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 March 31, 1994. 3. Accounts Receivable In May 1992, the Company entered into a $100,000,000 extendable three year agreement to sell fractional ownership interest, without recourse, in a defined pool of eligible trade accounts receivable. As of March 31, 1994 the entire $100,000,000 had been sold. The amounts sold are reflected as a reduction in accounts receivable on the accompanying balance sheet. The costs associated with this program are recorded on the Consolidated Condensed Statement of Income as "Discount on sale of receivables". 4. Notes Payable Notes payable at March 31, 1994 of $8,231,000 consisted of a $7,900,000 unsecured domestic line of credit and international subsidiaries' working capital borrowings with local lenders. The Company's international working capital credit facilities aggregated $19,529,000 at March 31, 1994 and are generally secured by the assets of the respective international subsidiary, with approximately $1,475,000 of the availability at one subsidiary being guaranteed by First Brands Corporation (U.S.). 5. Taxes The provision for income taxes for the three and nine months ended March 31, 1994 and 1993 consists of the following:
Three Months Nine Months Ended Ended March 31, March 31, 1994 1993 1994 1993 (in thousands) Current: Federal . . . . . . . . $ 3,019 $ 1,305 $ 13,956 $ 13,127 State . . . . . . . . . 714 257 3,191 3,070 Foreign . . . . . . . . 794 754 2,656 2,816 Total current . . . 4,527 2,316 19,803 19,013 Deferred: Federal . . . . . . . . 2,998 3,787 10,776 6,958 State . . . . . . . . . 685 210 2,317 966 Foreign . . . . . . . . (90) (111) (260) (249) Total deferred. . . 3,593 3,886 12,833 7,675 Total Provision $ 8,120 $ 6,202 $ 32,636 $ 26,688
In August 1993, the U.S. Congress enacted legislation which increased the corporate federal income tax rate from 34% to 35%, retroactive to January 1, 1993. As a result of the increased rate, tax expense for the first quarter was increased by $980,000 reflecting the net impact of remeasuring the Company's June 30, 1993 deferred tax assets and liabilities, and current taxes payable. 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. 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 nine month periods ended March 31, 1994 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" "PRESTONE", "STP", "SIMONIZ", "SCOOP AWAY" and "EVER CLEAN" 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. Because of the seasonality in some of its product lines, primarily in the Company's antifreeze/coolant business, the sales of which are concentrated in the first half of the Company's fiscal year, the results of operations for any interim period and the balance sheet as of the end of any interim period are not indicative of a full year's operations nor the financial condition of First Brands at the end of any subsequent period. 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 nine month periods ended March 31, 1994 and 1993.
Three Months Nine Months Ended Ended March 31, March 31, 1994 1993 1994 1993 Net sales . . . . . . . . . . 100.0% 100.0% 100.0% 100.0% Cost of goods sold. . . . . . 62.5 62.7 62.0 62.8 Gross profit. . . . . . . . . 37.5 37.3 38.0 37.2 Selling, general, and administrative expenses . . 24.7 25.0 23.8 23.8 Amortization and other depreciation......... 2.4 2.6 2.2 2.2 Interest expense. . . . . . . 2.0 2.5 1.9 2.3 Discount on sale of receivables 0.4 0.4 0.4 0.4 Other income (expense), net . (0.0) 0.1 (0.0) 0.1 Income before provision for income taxes 8.0 6.9 9.7 8.6 Provision for income taxes. . 3.3 2.8 4.1 3.5 Net income. . . . . . . . . . 4.7% 4.1% 5.6% 5.1%
Quarter and Nine Months ended March 31, 1994 Compared to the Quarter and Nine Months ended March 31, 1993 First Brands' consolidated sales for the three month period ended March 31, 1994 were $244,364,000, 111% of last year's $219,496,000, bringing nine month revenues to $794,570,000, 105% of last year's $756,511,000. Total sales for the quarter and nine months were above last year in all major categories. For the quarter, increased sales dollars and quantities were reported for all major categories of plastic wrap and bags, antifreeze/coolants and cat litter. Due to the unusually cold weather during the third quarter, antifreeze sales were up significantly over the prior year. Sales of other automotive products, including STP products, on a dollar basis, were above the prior year's level due to increasing demand and the favorable effect of winter weather on certain products. Year to date, strong sales of GLAD-LOCK zipper bags offset slightly lower sales of non-zipper plastic wrap and bag products. For the three and nine months ended March 31, higher antifreeze/coolant volumes were partially offset by reduced selling prices reflecting the Company's previously announced low price marketing program. Cost of goods sold for the three and nine month periods, respectively, were $152,807,000, 111% of last year's and $492,409,000, 104% of last year. Higher sales volumes for the third quarter resulted in an increase in the cost of goods sold. The higher costs were partially offset by lower raw material costs, a more favorable product mix and lower manufacturing costs. Year to date, the increased costs resulted from the increased sales volumes, which were offset by lower manufacturing and raw material costs and a reduction in the Company's rent expense, due to renegotiated rental agreements. Gross profit for the quarter of $91,557,000 (37.5% of sales) was 112% of last year's $81,874,000 (37.3% of sales). For the nine month period, gross profit of $302,161,000 (38.0% of sales) was 107% of last year's $281,207,000 (37.2% of sales). The higher gross profit dollars and margin, for the quarter and nine months, are due to the increase in sales, enhanced production efficiencies, a favorable sales mix of STP and plastic wrap and bag products, the benefit from the aforementioned reduction in raw material costs and the renegotiated rental agreements. Selling, general and administrative expenses were $60,311,000 and $188,763,000 for the three and nine months, respectively, 110% and 105% of the comparable periods last year. The higher expenditures in both periods primarily reflects increased consumer promotion spending in the plastic wrap and bag, STP and cat litter business. The Company's antifreeze/coolant marketing program has partially offset these higher selling expenditures due to the elimination of certain consumer rebate programs in exchange for lower selling prices. Amortization and other depreciation expense of $5,717,000, was 100% of last year's three month period, and $17,613,000, 112% of last year's nine month period. The increase year to date, principally reflects the write-down of certain fixed assets expected to be sold this year. Interest expense of $4,972,000 and $15,636,000 for the three and nine month periods, respectively, was 93% and 89% of prior year levels due to lower debt levels and reduced rates. 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. In August 1993, the U.S. Congress enacted legislation which increased the corporate federal income tax rate from 34% to 35%, retroactive to January 1, 1993. The Company's provision for income taxes for the third quarter was $8,120,000, 131% of last year's $6,202,000. Year-to-date, the provision for income taxes was $32,636,000, 122% of last year's $26,688,000. The increased tax expense reflects higher pre-tax income, along with the higher effective tax rate. Year-to-date, tax expense reflects the net impact that the new tax rate had on the Company's June 30, 1993 deferred tax assets and liabilities, and current taxes payable. Financial Condition Worldwide credit facilities in place at March 31, 1994 aggregated $195,122,000 of which $156,298,000 was available, but unused. The Company does not expect to borrow significantly beyond its current debt level over the next twelve months. The Company's current forecast for the 1994 fiscal year reflects capital expenditures of approximately $40,000,000 and fixed payments (interest, principal, discount on sale of receivables and lease payments) of approximately $75,000,000. 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 made 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 15 of this report. 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 March 31, 1994, and the related consolidated condensed statements of income for the three and nine-month periods ended March 31, 1994 and 1993 and the consolidated condensed statements of cash flows for the nine-month periods ended March 31, 1994 and 1993, and the consolidated condensed statement of stockholders' equity for the nine month period ended March 31, 1994. These 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, 1993, 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 August 11, 1993, 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, 1993, is fairly presented, in all material respects, in relation to the consolidated balance sheet from which it has been derived. /s/ KPMG PEAT MARWICK KPMG Peat Marwick New York, New York May 3, 1994 PART II - OTHER INFORMATION Item 1. Legal Proceedings None Item 2. Changes in Securities None. Item 3. Defaults Upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security Holders None. Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K A. Exhibit Index: Exhibit 15 - Accountants' Acknowledgement B. Reports on Form 8-K None.
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: May 9th, 1994 By: /s/ DONALD A. DESANTIS Donald A. DeSantis Chief Financial Officer (Principal Accounting and Duly Authorized Officer) EX-15 2 EXHIBIT 15 Exhibit 15 Accountants' Acknowledgement First Brands Corporation 83 Wooster Heights Road Danbury, CT 06813-1911 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 8, 1993, February 1, 1994 and May 3, 1994 related to our review of interim financial information. Pursuant to Rule 436 (c) under the Securities Act of 1933, such reports are not considered a 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 KPMG Peat Marwick New York, New York May 3, 1994 -----END PRIVACY-ENHANCED MESSAGE-----