-----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, f8K+5mY09kWFlW7QFO+Y/EC1t9u4S/MLAwx3vvs7gwVwD5jgTP46dfYPRxY2TMPJ ezZidnWtQWcxd+lA0jMIDA== 0000950117-95-000011.txt : 19950515 0000950117-95-000011.hdr.sgml : 19950515 ACCESSION NUMBER: 0000950117-95-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950214 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: 95510553 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, 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 December, 31 1994 ---------------------------- -------------------------------- Common Stock, $.01 par value 20,975,857 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, 1994 and 1993 ......................................... 3 Consolidated Condensed Statements of Income For the Six Month Periods Ended December 31, 1994 and 1993 ......................................... 4 Consolidated Condensed Balance Sheets - December 31, 1994 and June 30, 1994 ...................................... 5 Consolidated Condensed Statement of Stockholders' Equity - For the Six Month Period Ended December 31, 1994 .................................................. 6 Consolidated Condensed Statements of Cash Flows - For the Six Month Periods Ended December 31, 1994 and 1993 ......................................... 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 SIGNATURE ................................................................. 19
-2- FIRST BRANDS CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS THREE MONTHS ENDED ENDED DECEMBER 31, DECEMBER 31, 1994 1993 ----------- ------------ (in thousands - except per share amounts) Net sales .......................................... $ 233,008 $ 270,393 Cost of goods sold ............................... 143,781 166,722 Selling, general and administrative expenses ......................... 59,178 63,160 Amortization and other depreciation .............. 3,836 5,462 Interest expense and amortization of debt discount and expense .................................... 4,573 5,880 Discount on sale of receivables .................. 742 1,019 Other income (expense), net ...................... (591) (267) ---------- ---------- Income before provision for income taxes and extraordinary loss ........................... 20,307 27,883 Provision for income taxes ......................... 8,465 11,491 ---------- ---------- Income before extraordinary loss ................... 11,842 16,392 Extraordinary loss relating to the repurchase of subordinated note, net of taxes ............... (4,493) -- ---------- ---------- Net income ......................................... $ 7,349 $ 16,392 ========== ========== Net income per common share and common equivalent share (Note 6): Income before extraordinary loss......... $ 0.55 $ 0.74 Extraordinary loss............................. (0.21) -- -------- ------- Net income..................................... $ 0.34 $ 0.74 ======= ======= Weighted average common and common equivalent shares outstanding (Note 6) .......... 21,449 22,162 ====== ======
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, 1994 1993 ----------- ------------ (in thousands - except per share amounts) Net sales .......................................... $ 497,175 $ 550,206 Cost of goods sold ............................... 304,607 339,780 Selling, general and administrative expenses ......................... 126,339 128,452 Amortization and other depreciation .............. 8,118 10,612 Interest expense and amortization of debt discount and expense .................................... 9,540 11,770 Discount on sale of receivables .................. 1,936 2,024 Other income (expense), net ...................... (242) (288) ---------- ---------- Income before provision for income taxes and extraordinary loss ........................... 46,393 57,280 Provision for income taxes ......................... 19,477 24,516 ---------- ---------- Income before extraordinary loss ................... 26,916 32,764 Extraordinary loss relating to the repurchase of subordinated note, net of taxes ............... (4,493) -- ---------- ---------- Net income ......................................... $ 22,423 $ 32,764 ========== ========== Net income per common share and common equivalent share (Note 6): Income before extraordinary loss................ $ 1.24 $ 1.48 Extraordinary loss.............................. (.21) -- ------- ------ Net income...................................... $ 1.03 $ 1.48 ====== ====== Weighted average common and common equivalent shares outstanding (Note 6) ............. 21,751 22,097 ====== ======
SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS. -4- FIRST BRANDS CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS
DECEMBER 31, JUNE 30, (in thousands) 1994 1994 ------------------- -------- (UNAUDITED) ASSETS: Cash and cash equivalents .......................... $ 20,462 $ 13,384 Accounts and notes receivable - net ................ 103,173 89,769 Inventories ........................................ 145,397 155,737 Deferred tax assets ................................ 33,330 26,239 Prepaid expenses ................................... 4,995 5,756 ----------- ----------- Total current assets ............................. 307,357 290,885 Property, plant and equipment (net of accumulated depreciation of $81,966 and $87,584) ............. 266,683 266,357 Patents, trademarks, proprietary technology and other intangibles (net of accumulated amortization of $165,390 and $193,429) ........... 204,020 232,666 Deferred charges and other assets (net of accumulated amortization of $49,440 and $48,479) . 29,587 24,077 ----------- ----------- Total assets ............................. $ 807,647 $ 813,985 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY: Notes payable ...................................... $ 518 $ 156 Current maturities of long-term debt ............... 48 48 Accrued income and other taxes ..................... 29,225 35,640 Accounts payable ................................... 42,171 60,510 Accrued liabilities ................................ 138,193 141,753 ----------- ----------- Total current liabilities ..................... 210,155 238,107 Long-term debt ..................................... 182,673 153,430 Deferred taxes payable ............................. 55,423 44,177 Deferred gain on sale of assets .................... 3,341 5,393 Other long-term obligations ........................ 13,543 12,148 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 22,027,857 shares at December 31, 1994 and 22,005,656 shares at June 30, 1994 ........... 220 220 Capital in excess of par value ..................... 117,572 117,085 Cumulative foreign currency translation adjustment . (7,048) (4,542) Common stock in treasury, at cost; 1,052,000 shares (34,793) -- Retained earnings .................................. 266,561 247,967 ----------- ----------- Total stockholders' equity .................... 342,512 360,730 ----------- ----------- Total liabilities and stockholders' equity . $ 807,647 $ 813,985 =========== ===========
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, 1994 (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, 1994 ........ $ 220 $ 117,085 $ (4,542) -- $ 247,967 $ 360,730 Exercise of Stock Options ........ -- 487 -- -- -- 487 Common Stock Dividends ............ -- -- -- -- (3,829) (3,829) Purchase of Treasury Stock ....... -- -- -- (34,793) -- (34,793) Net Income ............ -- -- -- -- 22,423 22,423 Foreign Currency Translation Adjustment -- -- (2,506) -- -- (2,506) --------- --------- --------- --------- --------- --------- Balance as of December 31, 1994 .... $ 220 $ 117,572 $ (7,048) $ (34,793) $ 266,561 $ 342,512 ========= ========= ========= ========= ========= =========
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) 1994 1993 ------------- ------------- Cash flows from operating activities: Net income ..................................... $ 22,423 $ 32,764 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ................ 22,143 21,027 Deferred income taxes ........................ 4,215 9,240 Loss on repurchase of subordinated note ...... 7,463 -- Gain on sale of antifreeze and car care business (4,202) -- Change in certain non-cash current assets and liabilities, net of effect of businesses sold and acquired: (Increase) in accounts receivable ............ (23,177) (10,590) (Increase) Decrease in inventories ........... (26,086) 10,705 Decrease in prepaid expenses ................. 1,095 2,354 (Decrease) Increase in accrued income and other taxes ............................ (6,448) 3,063 (Decrease) in accounts payable ............... (7,887) (56,683) Increase (Decrease) in accrued liabilities ... 9,859 (10,297) Other changes .................................. (2,163) (513) ---------- ---------- Total adjustments .......................... (25,188) (31,694) ---------- ---------- Net cash provided (used) for operating activities (2,765) 1,070 ---------- ---------- Cash flows from investing activities: Capital expenditures .......................... (14,805) (12,298) Acquisition of leased assets .................. (13,240) -- Proceeds from sale of antifreeze/coolant and car care business, net of note received ......... 142,000 -- Acquisition of assets ......................... (45,195) -- Other ......................................... (4,900) -- ---------- ---------- Net cash provided (used) for investing activities 63,860 (12,298) ---------- ---------- Cash flows from financing activities: Increase in revolving credit borrowings, net . 29,300 5,500 Increase in other borrowings, net ............ 305 9,222 (Decrease) in accounts receivable securitization (45,000) -- Purchase of common stock for treasury ........ (34,793) -- Repayment of term loan ....................... -- (2,379) Dividends paid ............................... (3,829) (3,069) ---------- ---------- Net cash (used) provided by financing activities . (54,017) 9,274 ---------- ---------- Net Increase (Decrease) in cash and cash equivalents 7,078 (1,954) Cash and cash equivalents at beginning of period . 13,384 11,672 ---------- ---------- Cash and cash equivalents at end of period ....... $ 20,462 $ 9,718 ========== ==========
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 former product lines, primarily the PRESTONE antifreeze/coolant and car care business which was sold on August 26, 1994, the results of operations for the six month period ended December 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); 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 July 13, 1994, the Company purchased substantially all of the assets of Excel-Mineral Inc. and Excel International Inc., the manufacturer and marketer of the JONNY CAT brand of pet care products, for $45,000,000. On August 26, 1994, the Company sold the PRESTONE antifreeze/coolant and car care business for $155,000,000 and received $142,000,000 in cash and a $13,000,000 7 1/2% subordinated debenture maturing in 2003, which for financial statement purposes has been valued at $9,000,000. The net assets of that business have been removed from the balance sheet, and a payable representing the fractional interest of PRESTONE receivables previously sold under the securitization program (see note 3) was added, resulting in a pre-tax gain of $4,202,000 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 $66,294,000 and $127,245,000 for the quarter and six months ended December 31, 1993, respectively. INVENTORIES Inventories were comprised of:
December 31, June 30, 1994 1994 ------------ -------- (in thousands) Raw materials .......................... $ 28,088 $ 24,666 Work-in-process ........................ 6,435 5,844 Finished goods ......................... 110,874 125,227 --------- --------- Total .............................. $ 145,397 $ 155,737 ========= =========
During the six months ended December 31, 1994, the Company purchased with the Excel acquisition inventories valued at $2,804,000, and sold inventories totaling $36,490,000 with the divestiture of the PRESTONE business. -8- 2. LONG-TERM DEBT First Brands had long-term debt outstanding as of December 31, 1994 and June 30, 1994 as follows:
December 31, June 30, 1994 1994 ------------- ------ (in thousands) Senior Debt: $165,000,000 Revolving Credit Facility, 4 year term expiring December, 1995, interest at prime rate, LIBOR plus 3/4% or CD rate plus 7/8%; commitment fee of .35% on unused portion ............ $ 33,000 $ 3,700 Other .................................. 4,721 4,778 -------- -------- 37,721 8,478 Less: current maturities ............... (48) (48) -------- -------- Senior Debt ........................ 37,673 8,430 -------- -------- 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 ........... $182,673 $153,430 ======== ========
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. On December 22, 1994, the Company received commitments to finance a new five year $300,000,000 unsecured revolving credit facility. This new credit facility contains a .20% commitment fee, and charges interest at LIBOR plus .30%. It also contains certain covenants which are no more restrictive than the credit facility it will replace. The 9 1/8% 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. On December 29, 1994, the Company signed an agreement to repurchase, at a 15.8% premium, the $45,000,000 13 1/4% Subordinated Notes on January 4, 1995. The costs associated with this transaction were accrued as of December 31, 1994, and accordingly the premium and unamortized issuance costs, net of taxes, are reflected as an extraordinary loss in the Company's Consolidated Condensed Statement of Income. The 13 1/4% Subordinated Note and the outstanding portion of the current revolving credit facility are classified as long-term debt as of December 31, 1994, reflecting the Company's intent and ability to refinance these borrowings on a long term basis through the new five year credit facility. First Brands was in compliance with all the covenants of all debt agreements at December 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. During the first quarter of fiscal 1995, the Company reduced the amount sold to $40,000,000. Subsequently, the Company increased the amount sold by $15,000,000 during the second quarter, bringing the fractional interest sold as of December 31, 1994 to $55,000,000. The amounts sold are reflected as a reduction in accounts receivable on the accompanying balance sheet and costs associated with this program are recorded on the Consolidated Condensed Statement of Income as discount on sale of receivables. -9- 4. NOTES PAYABLE Notes payable at December 31, 1994 of $518,000 consisted of international subsidiaries' working capital borrowings with local lenders. The Company's international working capital credit facilities aggregated $19,468,000 at December 31, 1994 and are generally secured by the assets of the respective international subsidiary, with approximately $1,473,000 of the availability at one subsidiary being guaranteed by First Brands Corporation (U.S.). 5. TAXES The provision for income tax expense attributable to income before extraordinary loss for the three and six months ended December 31, 1994 and 1993 consists of the following:
Three Months Six Months Ended Ended December 31, December 31, --------------- ----------------- 1994 1993 1994 1993 ---- ---- ---- ---- (in thousands) Current: Federal .............. $ 3,076 $ 4,632 $ 11,029 $ 10,937 State ................ 623 1,067 2,548 2,477 Foreign .............. 732 718 1,685 1,862 --------- --------- --------- --------- Total current ...... 4,431 6,417 15,262 15,276 Deferred: Federal .............. 3,354 4,196 3,546 7,778 State ................ 733 963 763 1,632 Foreign .............. (53) (85) (94) (170) --------- --------- --------- --------- Total deferred ..... 4,034 5,074 4,215 9,240 --------- --------- --------- --------- Total Provision .. 8,465 $ 11,491 $ 19,477 $ 24,516 ========= ========= ========= =========
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 1995, the Company paid to it's shareholders cash dividends of $ 0.08 and $ 0.10 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, 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" "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 two time 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, 1994 and 1993.
Three Months Six Months Ended Ended December 31, December 31, --------------- ---------------- 1994 1993 1994 1993 ---- ---- ---- ---- Net sales ......................... 100.0% 100.0% 100.0% 100.0% Cost of goods sold ................ 61.7 61.7 61.3 61.8 ----- ----- ---- ---- Gross profit ...................... 38.3 38.3 38.7 38.2 Selling, general, and administrative expenses ......... 25.4 23.4 25.4 23.3 Amortization and other depreciation 1.6 1.9 1.6 1.9 Interest expense and amortization of debt discount and expense ..... 2.0 2.2 1.9 2.1 Discount on sale of receivables ... 0.3 0.4 0.4 0.4 Other income (expense), net ....... (0.3) (0.1) (0.1) (0.1) ----- ----- ---- ---- Income before provision for income taxes and extraordinary loss ..... 8.7 10.3 9.3 10.4 Provision for income taxes ........ 3.6 4.2 3.9 4.4 ----- ----- ---- ---- Income before extraordinary loss .. 5.1 6.1 5.4 6.0 Extraordinary loss relating to the repurchase of subordinated notes, net of taxes ..................... 1.9 . 0.9 . ----- ----- ---- ---- Net income ........................ 3.2% 6.1% 4.5% 6.0% ===== ===== ==== ====
-11- Quarter and Six Months ended December 31, 1994 Compared to the Quarter and Six Months ended December 31, 1993 First Brands' consolidated sales for the three month period ended December 31, 1994 were $233,008,000, 86% of last year's $270,393,000, bringing six month revenues to $497,175,000 versus last year's $550,206,000. The shortfall reflects only eight weeks of sales during the first quarter of fiscal 1995 for the PRESTONE antifreeze/coolant and car care business ("the divested business") which was sold on August 26, 1994, compared to sales from the divested business for the entire three and six month periods of fiscal 1994. On a proforma basis (excluding sales from the divested business) fiscal 1995 second quarter sales were $233,008,000 or 14% above the prior year's comparable sales of $204,099,000. Sales dollars, quantities and overall market share were up for each of the major product groups during the quarter. Plastic wrap and bag product sales increased 5%, automotive specialty and appearance products increased 12% and the pet product business sales were up 94%. Cat litter sales for the quarter were significantly ahead of the prior years level due to the new JONNY CAT business, which was acquired on July 13, 1994. However, even without the JONNY CAT sales, pet product revenues for the quarter increased 29%. Proforma sales for the six months were $465,491,000 versus $422,961,000 last year, an increase of 10%. Cost of goods sold for the quarter was $143,781,000, 86% of last year's $166,722,000. Excluding the divested business, cost of goods sold for the quarter was 19% above the prior year's $121,019,000. Year to date, cost of goods sold was $304,607,000, 90% of last year's $339,780,000. On a proforma basis (excluding the divested business) cost of goods sold for the six months was $283,439,000, 13% above the prior year's $250,452,000. Higher proforma costs for the three and six month periods were primarily due to increased volumes and higher resin costs. Gross profit for the quarter of $89,227,000 (38.3% of sales) was 86% of last year's $103,671,000 (38.3% of sales). Year to date, gross profit of $192,568,000 (38.7% of sales) was 92% of last year's $210,426,000 (38.2% of sales). Excluding the divested business, the gross profit for the quarter was 107% of the prior year's $83,080,000 (40.7% of sales); and the gross profit for six months was $182,052,000 (39.1% of sales), 106% of the prior year's $172,509,000 (40.8% of sales). The higher gross profit for the quarter and six months was due to increased sales volumes, while the lower gross margin resulted from increased resin costs and sales mix. Selling, general and administrative expenses were $59,178,000 (25.4% of sales) for the second quarter, 94% of last year's second quarter. Year to date, overhead expenses were $126,339,000 (25.4% of sales), 98% of the comparable period last year. Excluding the divested business, which includes allocations of corporate overhead to such business, these expenses for the quarter were, 107% of the prior year's $55,431,000 (27.2% of sales); and year to date expenses were $118,499,000 (25.5% of sales), 105% of the prior year's $113,311,000 (26.8% of sales). The major reason for the increase is higher selling expense for the cat litter business (for both the quarter and six months) because of the recently acquired JONNY CAT business, and increased marketing expenditures to support the continued growth of the SCOOP AWAY and EVER CLEAN business. This was partially offset by lower spending in the plastic wrap and bag business to counter the lower gross margin caused by resin price increases. Amortization and other depreciation expense of $3,836,000, was 70% of last year's three month period, and $8,118,000, 77% of last year's six month period. This reduction reflects lower amortization expense for fiscal 1995, as certain intangible assets were either sold to the divested business or were fully amortized during fiscal 1994, partially offset by slightly higher depreciation expense during fiscal 1994 due to the write-down of certain fixed assets. Interest expense of $4,573,000 and $9,540,000 for the three and six month periods, respectively, was 78% and 81% of prior year levels due to lower debt levels. 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. -12- The extraordinary loss of $4,493,000 or $0.21 per share for the quarter and six month period resulted from the premium paid and the write-off of unamortized debt issuance costs related to the December 29, 1994 agreement to repurchase $45,000,000 of the Company's Subordinated Notes. The Company's provision for income taxes for the three and six months was $8,465,000, 74% of last year, and $19,477,000, 79% of last year, respectively. The lower tax expense reflects the reduced pre-tax income, and a marginally higher effective tax rate during the first quarter of fiscal 1994, which reflected the inclusion of the retroactive U.S. Federal tax increase and its effect on deferred taxes. FINANCIAL CONDITION Worldwide credit facilities in place at December 31, 1994 aggregated $195,522,000 of which $160,950,000 was available, but unused. The Company expects to borrow and repay up to $10,000,000 from these credit facilities over the next twelve months, primarily for working capital purposes. On December 22, 1994, the Company received commitments to finance a new five year $300,000,000 unsecured revolving credit facility. This new credit facility contains lower costs and certain covenants which are no more restrictive than the current credit facility which it will replace. During the second quarter the Company also increased the amount of accounts receivable sold under its securitization program from $40,000,000 to $55,000,000 (see Note 3). The Company's current forecast for the 1995 fiscal year reflects capital expenditures of approximately $35,000,000 and fixed payments (interest, principal, discount on sale of receivables and lease payments) of approximately $45,000,000. 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 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, 1994, and the related consolidated condensed statements of income for the three and six month periods ended December 31, 1994 and 1993 and the consolidated condensed statements of cash flows for the six month periods ended December 31, 1994 and 1993, and the consolidated condensed statement of stockholders' equity for the six month period ended December 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, 1994, 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 9, 1994 (except as to Note 19, which is as of August 26, 1994), we express 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, 1994, 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 February 2, 1995 -14- PART II -- OTHER INFORMATION Item 1. Legal Proceedings The Federal Trade Commission (FTC) staff is conducting an investigation that alleges that certain advertising claims for STP Engine Treatment violate a 1976 cease and desist order regarding STP advertising. The Company does not believe that it is subject to that order or that it made the alleged claims. However, the FTC staff has proposed a settlement which would involve a penalty payment, an injunction against further allegedly false claims and corrective advertising. The Company does not believe that any such settlement would have a material effect upon the Corporation. 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 28, 1994: 1. Election of four Directors, each to serve for a three-year term expiring on the date of the Annual Meeting of Stockholders in 1997 and until his successor is elected and qualified:
Abstentions and Name For Withheld Broker Non-Votes ---- --- -------- ---------------- James R. Maher ............. 18,114,378 100,063 0 Dwight C. Minton ........... 18,114,747 99,694 0 William V. Stephenson ...... 18,114,736 99,705 0 Robert G. Tobin ............ 18,114,747 99,694 0
2. Ratification of selection by the Board of Directors of KPMG Peat Marwick LLP as independent auditors:
Abstentions and For Withheld Broker Non-Votes --- -------- ---------------- 18,113,758 17,942 82,741
Item 5. Other Information None. -15- Item 6. Exhibits and Reports on Form 8-K A. Exhibit Index: Exhibit Number Description of Exhibit - ------ ---------------------- 10.1 (a) --Amended and Restated Credit Agreement, dated as of September 20, 1991, among the Company, Manufacturers Hanover Trust Company, as Agent, and Several Lenders parties thereto. Incorporated by reference to Exhibit 10.1 to Form S-1 filed by the Registrant on February 7, 1992. (b) --Commitment Transfer Supplement thereto, dated as of October 28, 1991. Incorporated by reference to Exhibit 10.1(b) to Form 10-K filed by the Registrant on September 25, 1992. (c) --Amendment and Consent thereto, dated as of February 25, 1992. Incorporated by reference to Exhibit 10.1(c) to Form 10-K filed by the Registrant on September 25, 1992. (d) --Second Amendment and Consent thereto, dated as of May 18, 1992. Incorporated by reference to Exhibit 10.1(d) to Form 10-K filed by the Registrant on September 25, 1992. (e) --Third Amendment thereto, dated as of November 5, 1992. Incorporated by reference to Exhibit 10.1(e) to Form 10-K filed by the Registrant on September 28, 1993. (f) --Commitment Transfer Supplement thereto, dated as of May 26, 1993. Incorporated by reference to Exhibit 10.1(f) to Form 10-K filed by the Registrant on September 28, 1993. (g) --Fourth Amendment thereto, dated as of June 2, 1994. 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. (c) --Rider No. 2 thereto, dated as of May 11, 1994. 10.3 --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. 10.4 --Purchase Agreement, dated as of December 23, 1991, between the Company and Pitney Bowes Credit Corporation, relating to the sale and leaseback of equipment at the Company's GLAD Plastic Wrap and Bag facility in Rogers, Arkansas. Incorporated by reference to Exhibit 10.8 to Form S-1 filed by the Registrant on February 7, 1992. 10.5 (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 (the "Lease") dated as of December 23, 1991 between Pitney Bowes and the Company; the Lease was previously filed as and incorporated by reference to Exhibit 10.9 to Form S-1 filed by Registrant on February 7, 1992. (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 Lease. -16- 10.6 --Purchase Agreement, dated as of June 25, 1992, between the Company and Nationsbanc Leasing Corporation of Georgia, 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 10.13 to form 10-K filed by the Registrant on September 25, 1992. 10.7 (a) --Equipment Lease Agreement, dated as of June 25, 1992, between the Company and Nationsbanc Leasing Corporation of Georgia, 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 10.14 to form 10-K filed by the Registrant on September 25, 1992. (b) --First Amendment thereto, dated as of March 30, 1993. Incorporated by reference to Exhibit 10.15(b) to Form 10-K filed by the Registrant on September 28, 1993. 10.8 --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. 10.9 --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. 10.10 (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. 10.11 (a) --Subordinated Notes Registration Rights Agreement, dated as of July 1, 1986, between the Company and Metropolitan Life Insurance Company, the current Note holder ("Metropolitan"), relating to the 13.25% Subordinated Note due 2001 (the "Note"). Incorporated by reference to Exhibit 10(xii) to form S-1 filed by the Registrant on July 15, 1986. (b)*--Agreement between the Company and Metropolitan dated December 29, 1994, for the purchase of the Note, outstanding in the principle amount of $45,000,000, by the Company on January 4, 1995. 10.12 --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. 10.13 --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. 10.14 --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. -17- 10.15 (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. 10.16 --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. 10.17 --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. 10.18 --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. 10.19 --Amended Long-Term Incentive Plan. Incorporated by reference to Exhibit 10.34 to Form 10-K filed by the Registrant on September 12, 1990. 10.20 --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. 10.21 (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 Comman Share 15* --Accountants' Acknowledgment 27* --Financial Data Schedule - ------------ * Filed herewith B. Reports on Form 8-K None. -18- 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 9th, 1995 By: /s/ DONALD A. DESANTIS ------------------ Donald A. DeSantis Senior Vice President, Chief Financial Officer and Treasurer (Principal Accounting and Duly Authorized Officer) -19- EX-10 2 EXHIBIT 10.5(A) EXHIBIT 10.5(a) December 15, 1994 First Brands Corporation 83 Wooster Heights Road Buildings 301 Danbury, CT 06813-1911 ATTN: R. J. Mosback RE: Equipment Lease Agreement dated December 23, 1991 between Pitney Bowes Credit Corporation as Lessor and First Brands Corporation as Lessee (the "Lease"). Lessor Reference Number: 0056671-801 Dear Mr. Mosback: Pursuant to your request, Pitney Bowes Credit Corporation has calculated an early purchase option according to Article 4.1 of the Lease Agreement effective December 23, 1994. THIS EARLY PURCHASE OPTION IS SUBJECT TO YOUR COMPLETION OF ALL OBLIGATIONS SET FORTH IN THE LEASE INCLUDING BUT NOT LIMITED TO ALL RENTAL PAYMENTS DUE THEREUNDER THROUGH AND INCLUDING THE EARLY PURCHASE EFFECTIVE DATE SET FORTH BELOW. EFFECTIVE DATE: December 23, 1994 TERMINATION AMOUNT: $12,946,068.48 INTEREST 10-1-94 TO 12-23-94: $ 294,001.62 -------------- TOTAL AMOUNT DUE: $13,240,070.10 Should you elect to exercise the Early Purchase Option, please sign this letter in the space provided below, and return this letter to me at the address listed below no later than December 20, 1994. Please contact me at (203) 845-5519 should you have any questions. Sincerely, /s/ Kim Ehlers Kim Ehlers C&I Accounts Specialist I agree and accept the following option: 12/23/94 effective date - ------------- By: /s/ Donald A. DeSantis ----------------------------------- Title: Senior V.P. and Chief Financial Officer Date: 12/19/94 -------------- EX-10 3 EXHIBIT 10.5(B) EXHIBIT 10.5(b) BILL OF SALE KNOW ALL MEN BY THESE PRESENTS, that Pitney Bowes Credit Corporation, a Delaware Corporation with a place of business at 201 Merritt Seven, Norwalk, Connecticut 06856-5151 (hereinafter called the Seller), in consideration of the sum of $13,240,070.10 paid by First Brands Corporation, 83 Wooster Heights Road, Danbury, CT 06813 (hereinafter called the Buyer), the receipt whereof is hereby acknowledged, does hereby grant, sell, transfer and deliver unto said Buyer the equipment described immediately below, upon the terms and conditions set forth below: See Schedule "A" attached hereto and made a part hereof Equipment located at: North 13th Street Rogers, AR Buyer is purchasing the equipment herein described in reliance upon his personal inspection and knowledge of the above equipment on an "AS IS WHERE IS" basis. SELLER MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, OF ANY KIND OR NATURE EXCEPT THAT (1) BUYER WILL ACQUIRE BY THE TERMS OF THIS BILL OF SALE GOOD TITLE TO THE EQUIPMENT, EXCEPT AS TO ANY SOFTWARE LICENSE LISTED ABOVE TO WHICH SELLER MAKES NO WARRANTY, FREE FROM ALL ENCUMBRANCES (EXCLUDING ANY CREATED BY BUYER) AND THAT (2) SELLER HAS THE RIGHT TO SELL THE EQUIPMENT, EXCEPT TO ANY SOFTWARE OR SOFTWARE LICENSE. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, SELLER MAKES NO WARRANTIES WITH RESPECT TO THE QUANTITY, QUALITY, CONTENTS, CONDITION, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE EQUIPMENT AND NO WARRANTIES OF ANY KIND WHATSOEVER INCLUDING PATENT. Buyer is liable for any taxes payable as a result of this sale. To have and to hold all and singular the said goods and chattels to the said Buyer, his successors, and assigns to their own use and behoof forever. IN WITNESS WHEREOF, SELLER, THE SAID PITNEY BOWES CREDIT CORPORATION has caused these presents to be signed, executed, and delivered in its name and behalf by its duly authorized representative as of the 23rd day of December, 1994. PITNEY BOWES CREDIT CORPORATION By: /s/ Kim Ehlers --------------------------- Kim Ehlers C&I Accountants Specialist SCHEDULE A TO EQUIPMENT LEASE AGREEMENT Equipment Listing PBCC's Cost ----------------------------- The following is an "Item": FMC Rotary Bag Machines w/32" dual Unwind Stands RBM #11, S/N #0340-02- RA100L/000-688 $ 750,000 The following is an "Item": FMC Rotary Bag Machines w/32" Dual Unwind Stands RBM #12, S/N #0339-02- RA100R/000-688 750,000 The following is an "Item": FMC Rotary Bag Machines w/32" Dual Unwind Stands RBM #13, S/N #0339-01- RA100L/000-688 750,000 The following is an "Item": FMC Rotary Bag Machines w/32" Dual Unwind Stands RBM #14, S/N #0339-05- RA100R/000-688 750,000 The following is an "Item": FMC Rotary Bag Machines w/32" Dual Unwind Stands RBM #15, S/N #0339-06- RA100L/000-688 750,000 The following is an "Item": FMC Rotary Bag Machines w/32" Dual Unwind Stands RBM #16, S/N #0339-07- RA100R/000-688 750,000 The following is an "Item": FMC Rotary Bag Machines w/32" Dual Unwind Stands RBM #17, S/N #0339-04- RA100L/000-688 750,000 The following is an "Item": FMC Rotary Bag Machines w/32" Dual Unwind Stands RBM #18, S/N #0339-03- RA100R/000-688 750,000 Equipment Listing PBCC's Cost ----------------------------- The following is an "Item": One (1) Packaging System 4,000,000 Such Item is comprised of the following material items of equipment: Autoloaders Tag #01171 Autoloaders Tag #01172 Autoloaders Tag #01173 Autoloaders Tag #01174 Autoloaders Tag #01175 Autoloaders Tag #01176 Autoloaders Tag #01177 Autoloaders Tag #01178 Delcor Model 752 Dual Head Carton Formers S/N #1132 Delcor Model 752 Dual Head Carton Formers S/N #1133 Delcor Model 752 Dual Head Carton Formers S/N #1134 Frontier Wraparound Carton Loader, TAG #01179 Jetstream Empty Conveyor, Tag #01180 Arrowhead Full Conveyer, Tag #01181 Delcor Model 825S Carton Sealers S/N #1135 Delcor Model 825S Carton Sealers S/N #1136 Peters Model CYG Sealer, Tag #01182 ABC Model SP26 Pumpup Carton Loaders S/N #21423 Equipment Listing PBCC's Cost ----------------------------- ABC Model SP26 Pumpup Carton Loaders S/N #21421 ABC Model SP26 Pumpup Carton Loaders S/N #21420 Random Model GG350 Case Sealer, S/N #26-047 The following is an "Item": FMC Rotary Bag Machines w/26" Unwind Stands RBM #21, S/N #0340-03- RA100R/000- 688 370,000 The following is an "Item": FMC Rotary Bag Machines w/26" Unwind Stands RBM #22, S/N #0340-04- RA100L/000- 688 370,000 The following is an "Item": FMC Rotary Bag Machines w/26" Unwind Stands RBM #23, S/N #0340-05- RA100R/000- 688 370,000 The following is an Item: One (1) Packaging System $2,000,000 Such Item is comprised of the following material items of equipment: Autoload Corrugator/Collators Tag #01182 Autoload Corrugator/Collators Tag #01183 Autoload Corrugator/Collators Tag #01184 Autoload Corrugator/Collators Tag #01185 Autoload Corrugator/Collators Tag #01186 Frontier Wraparound Carton Loaders S/N #8099 Equipment Listing PBCC's Cost ----------------------------- Frontier Wraparound Carton Loaders S/N #8093 Frontier Wraparound Carton Loaders S/N #8098 Frontier Wraparound Carton Loaders S/N #9112 Frontier Wraparound Carton Loaders S/N #9113 Arrowhead Full Conveyor System, TAG #01187 ABC Semi-Auto Case Packer MDL SP-26 S/N #21422 ABC Semi-Auto Case Packer MDL SP-26 S/N #21424 Random Model GG350 Case Sealer, S/N #26048 The following is an "Item": Caterpillar Electric Fork Trucks MDL M400 w/4 Batteries & 2 Battery Chargers S/N #6GC00884 20,000 The following is an "Item": Caterpillar Electric Fork Trucks MDL M400 w/4 Batteries & 2 Battery Chargers S/N #6GC00535 20,000 The following is an "Item": Caterpillar Electric Fork Trucks MDL M400 w/4 Batteries & 2 Battery Chargers S/N #4WC00850 20,000 The following is an "Item": Caterpillar Electric Fork Trucks MDL M400 w/4 Batteries & 2 Battery Chargers S/N #4WC00849 20,000 The following is an "Item": Air Compressors Ingersol Rand MDL XLE w/2 Air Dryers, Air Receiver Tank S/N #JH8168 0315A-6-8911-8 400,000 Equipment Listing PBCC's Cost ----------------------------- The following is an "Item": Air Compressors Ingersol Rand MDL XLE w/2 Air Dryers, Air Receiver Tank S/N #JH8292 0315A-6-8809-3 400,000 The following is an "Item": HVAC Units w/Rapid Makeup Air Units S/N #21578-02-01 165,000 The following is an "Item": HVAC Units w/Rapid Makeup Air Units S/N #21578-01-01 165,000 The following is an "Item": HVAC Units w/Rapid Makeup Air Units S/N #21578-01-02 165,000 The following is an "Item": HVAC Units w/Rapid Makeup Air Units S/N #21578-02-02 165,000 The following it an "Item": Tape Slitters & Reclaim Unit: 250,000 Such Item is comprised of the following material items of equipment: Independent Machine MDL 18 Slitter Systems (12 Pos.) S/N #6323-1288 Independent Machine MDL 18 Slitter Systems (12 Pos.) S/N #6157-1087 Independent Machine MDL 391 Traverse Winders (4 Pos.) S/N #6323-1288-1 Independent Machine MDL 391 Traverse Winders (4 Pos.) S/N #6323-1288-2 Independent Machine MDL 391 Traverse Winders (4 Pos.) S/N #6323-1288-3 Equipment Listing PBCC's Cost ----------------------------- Independent Machine MDL 391 Traverse Winders (4 Pos.) S/N #6157-1087-1 Independent Machine MDL 391 Traverse Winders (4 Pos.) S/N #6157-1087-2 Independent Machine MDL 391 Traverse Winders(4 Pos.) S/N #6157-1087-3 The following is an "Item": Reclaim Recycling System Alpine MDL RE150/80 Reclaim Unit, S/N #079682 100,000 The following is an "Item": Automatic Guided Vehicle (AGV) System 360,000 Such Item is comprised of the following material items of equipment: Prontow Tugger Tractors MDL 1001 S/N #6728-251 Prontow Tugger Tractors MDL 1001 S/N #6728-252 6 Model ZSS-022 Trailers 4 Batteries 2 Battery Chargers ------------------- Total $15,360,000 ------------ EX-10 4 EXHIBIT 10.11(B) EXHIBIT 10.11(b) December 29, 1994 First Brands Corporation 39 Old Ridgebury Road Danbury, CT 06817 Attention: Mr. Donald A. DeSantis, Senior Vice President, Chief Financial Officer & Treasurer Dear Gentlemen: We are the holder of your 13.25% Subordinated Note due 2001 (the "Note"), presently outstanding in the principal amount of $45,000,000. This letter will confirm our agreement to sell, and your agreement to purchase, the Note on January 4, 1995 (the "Closing Date"). The purchase price for the Note shall be $52,114,834, plus accrued but unpaid interest (in the amount of $49,688 if paid on 1/04/95). On the Closing Date, we shall deliver the Note to you against payment of the purchase price therefore, together with accrued interest thereon, by wire transfer of immediately available funds to our account, no. 002-2-410591, at The Chase Manhattan Bank, N.A., ABA no. 021000021. By your execution at the foot hereof, you shall be deemed to represent and warrant that the purchase of the Note will not violate the terms of any of your indebtedness or of any agreement or instrument related thereto. Very truly yours, METROPOLITAN LIFE INSURANCE COMPANY By /s/ Paul R. Crotty --------------------------- The foregoing is hereby accepted and agreed to. FIRST BRANDS CORPORATION By /s/ Donald A. DeSantis ------------------------- EX-11 5 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, ----------------- ------------------ 1994 1993 1994 1993 ---- ---- ---- ---- COMPONENTS OF PRIMARY NET INCOME PER COMMON SHARE: Income before extraordinary loss $ 11,842 $ 16,392 $ 26,916 $ 32,764 Extraordinary loss ............. (4,493) -- (4,493) -- --------- --------- --------- --------- Net income ..................... $ 7,349 $ 16,392 $ 22,423 $ 32,764 ========= ========= ========= ========= Average common shares outstanding during the period ............ 22,021 21,905 22,016 21,872 Average treasury shares held during the period ............ (801) -- (500) -- Common shares issuable with respect to common equivalents for stock options ............ 229 257 235 225 --------- --------- --------- --------- Average common and common equivalent shares outstanding 21,449 22,162 21,751 22,097 ========= ========= ========= ========= Primary earnings per share: Income before extraordinary loss $ 0.55 $ 0.74 $ 1.24 $ 1.48 Extraordinary loss ............ (0.21) -- (0.21) -- ------ ----- ------ ----- Net income .................... $ 0.34 $ 0.74 $ 1.03 $ 1.48 ====== ===== ====== =====
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, ----------------- ------------------ 1994 1993 1994 1993 ---- ---- ---- ---- COMPONENTS OF FULLY DILUTED NET INCOME PER COMMON SHARE: Income before extraordinary loss . $ 11,842 $ 16,392 $ 26,916 $ 32,764 Extraordinary loss ............... (4,493) -- (4,493) -- --------- --------- --------- Net income ....................... $ 7,349 $ 16,392 $ 22,423 $ 32,764 ========= ========= ========= ========= Average common shares outstanding during the period .............. 22,021 21,905 22,016 21,872 Average treasury shares held during the period .............. (801) -- (500) -- Common shares issuable with respect to common equivalents for stock options .............. 268 289 267 290 --------- --------- --------- --------- Average common and common equivalent shares outstanding .. 21,488 22,194 21,783 22,162 ========= ========= ========= ========= Fully diluted earnings per share: Income before extraordinary loss $ 0.55 $ 0.74 $ 1.24 $ 1.48 Extraordinary loss ............. (0.21) -- (0.21) -- --------- --------- --------- --------- Net income ..................... $ 0.34 $ 0.74 $ 1.03 $ 1.48 ========= ========= ========= =========
EX-15 6 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 1, 1994 and February 2, 1995 related to our review of interim financial information. Pursuant to Rule 436 (c) under the Securities Act of 1933, such report is 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 LLP KPMG Peat Marwick LLP New York, New York February 2, 1995 EX-27 7 EXHIBIT 27
5 1,000 3-MOS JUN-30-1995 OCT-01-1994 DEC-31-1994 20,462 0 106,601 1,449 145,397 307,357 348,649 81,966 807,647 210,155 182,673 220 0 0 342,512 807,647 233,008 233,008 143,781 143,781 0 420 5,315 20,307 8,465 11,842 0 4,493 0 7,349 0.55 0.55
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