-----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, FDdQ6U0u5j82vPrrtMHIf0wCshM07Gbdgm5aoIK2nMaT8ULwnMCLDYFUsXM/6itV +83/DhcSjKaqqegRfelJHA== 0000891554-00-001359.txt : 20000516 0000891554-00-001359.hdr.sgml : 20000516 ACCESSION NUMBER: 0000891554-00-001359 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: US HOME & GARDEN INC CENTRAL INDEX KEY: 0000879911 STANDARD INDUSTRIAL CLASSIFICATION: TEXTILE MILL PRODUCTS [2200] IRS NUMBER: 770262908 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-14015 FILM NUMBER: 634606 BUSINESS ADDRESS: STREET 1: 655 MONTGOMERY ST STE 500 CITY: SAN FRANCISCO STATE: CA ZIP: 94111 BUSINESS PHONE: 4156168111 MAIL ADDRESS: STREET 1: 655 MONTGOMERY ST STREET 2: SUITE 500 CITY: SAN FRANCISCO STATE: CA ZIP: 94111 FORMER COMPANY: FORMER CONFORMED NAME: NATURAL EARTH TECHNOLOGIES INC DATE OF NAME CHANGE: 19930328 10-Q 1 QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- FORM 10-Q [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 From the transition period from ________________to_________________ Commission File Number 0-19899 U.S. HOME & GARDEN INC. (Exact name of registrant as specified in its charter) Delaware 77-0262908 (State or other jurisdiction (IRS Employer of incorporation or organization) Identification Number) 655 Montgomery Street San Francisco, California 94111 (Address of Principal Executive Offices) (Zip Code) (415) 616-8111 (Registrant's Telephone Number, Including Area Code) Indicate by check 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 equity, as of the latest practicable date. As of May 5, 2000 there were 18,935,083 shares of the issuer's common stock, par value $.001 per share, outstanding. Part I. - Financial Information Item 1. - Consolidated Financial Statements Consolidated balance sheet as of June 30, 1999 and March 31, 2000 (Unaudited) 1-2 Consolidated statements of income for the three months and nine months Ended March 31, 1999 and 2000 (Unaudited) 3-4 Consolidated statements of cash flows for the three months and nine months Ended March 31, 1999 and 2000 (Unaudited) 5-6 Notes to consolidated financial statements 7-9 Item 2. - Management's Discussion and Analysis of Financial Condition and Results of Operations. 10-17 Item 3. - Quantitative and Qualitative Disclosures about Market Risk 17 Part II. - Other Information Item 1. - Legal Proceedings 18 Item 2. - Changes in Securities and Use of Proceeds 18 Item 6. - Exhibits and Reports on Form 8-K 18 Signatures 19 U.S. Home & Garden Inc. and Subsidiaries Consolidated Balance Sheet ================================================================================
June 30, 1999 March 31, 2000 ------------- -------------- (Unaudited) Assets Current Cash and cash equivalents $ 2,936,000 $ 6,237,000 Restricted cash 1,000,000 1,582,000 Accounts receivable, less allowance for doubtful accounts and sales returns of $991,000 and $1,595,000 20,242,000 33,014,000 Inventories 16,986,000 15,767,000 Prepaid expenses and other current assets 1,137,000 775,000 Deferred tax asset 500,000 300,000 - ----------------------------------------------------------------------------------------------------------------------- Total Current Assets 42,801,000 57,675,000 Property and Equipment, net 11,634,000 12,213,000 Intangible Assets Excess of cost over net assets acquired, net 75,573,000 73,709,000 Deferred financing costs, net of accumulated amortization of $167,000 and $329,000 3,524,000 3,205,000 Product rights, patents and trademarks, net of accumulated amortization of $271,000 and $39,000 571,000 563,000 Non-compete agreement, net of accumulated amortization of $77,000 and $99,000 1,433,000 1,411,000 Package design, net of accumulated amortization of $533,000 and $801,000 1,096,000 1,357,000 Officer Receivables 725,000 727,000 Other Assets 107,000 387,000 - ----------------------------------------------------------------------------------------------------------------------- $ 137,464,000 $151,247,000 =======================================================================================================================
See accompanying notes to consolidated financial statements. 1 U.S. Home & Garden Inc. and Subsidiaries Consolidated Balance Sheet ================================================================================
June 30, 1999 March 31, 2000 ------------- -------------- (Unaudited) Liabilities and Stockholders' Equity Current Working capital line of credit $ -- $ 11,000,000 Current portion of notes payable -- 2,000,000 Accounts payable 4,432,000 6,599,000 Accrued expenses 2,314,000 2,816,000 Accrued co-op advertising 1,499,000 1,248,000 Accrued commissions 1,682,000 1,590,000 - ----------------------------------------------------------------------------------------------------------------------- Total Current Liabilities 9,927,000 25,253,000 Deferred Tax Liability 1,600,000 2,000,000 Other Liabilities 703,000 552,000 Acquisition Line of Credit 15,500,000 16,000,000 Company Obligated Mandatorily Redeemable Preferred Securities of Subsidiary Trust Holding Solely Junior Subordinated Debentures 63,250,000 58,330,000 - ----------------------------------------------------------------------------------------------------------------------- Total Liabilities 90,980,000 102,135,000 - ----------------------------------------------------------------------------------------------------------------------- Minority Interest in Equity of Affiliates -- 4,510,000 - ----------------------------------------------------------------------------------------------------------------------- Stockholders' Equity Preferred stock, $.001 par value - shares authorized, 1,000,000; no shares outstanding -- -- Common stock, $0.001 par value-shares authorized, 75,000,000; 21,219,000 and 21,463,000 shares issued at June 30, 1999 and March 31, 2000 21,000 21,000 Additional paid-in capital 50,542,000 50,663,000 Retained earnings 4,703,000 4,493,000 - ----------------------------------------------------------------------------------------------------------------------- 55,266,000 55,177,000 Less: Treasury Stock, 1,805,000 and 2,533,000 shares at cost at June 30, 1999 and March 31, 2000 (8,782,000) (10,575,000) - ----------------------------------------------------------------------------------------------------------------------- Total Stockholders' Equity 46,484,000 44,602,000 - ----------------------------------------------------------------------------------------------------------------------- Total Liabilities & Stockholders' Equity $ 137,464,000 $ 151,247,000 =======================================================================================================================
See accompanying notes to consolidated financial statements. 2 U.S. Home & Garden Inc. and Subsidiaries Consolidated Statements of Income ================================================================================
Three Months Ended Nine Months Ended March 31, March 31, ------------------- --------------------- 1999 2000 1999 2000 Unaudited Unaudited ------------------- --------------------- Net Sales $ 34,769,000 $ 36,494,000 $ 61,522,000 $ 63,624,000 Cost of Sales 16,565,000 19,218,000 29,628,000 33,814,000 Unusual Item -- 928,000 -- 928,000 - -------------------------------------------------------------------------------------------------------- Gross Profit 18,204,000 16,348,000 31,894,000 28,882,000 Operating Expenses Selling and shipping 5,862,000 7,305,000 12,807,000 14,677,000 General and administrative 1,410,000 1,196,000 6,564,000 7,370,000 Depreciation 411,000 427,000 1,002,000 1,210,000 Goodwill amortization 698,000 721,000 1,919,000 2,173,000 Other amortization 120,000 278,000 378,000 487,000 - -------------------------------------------------------------------------------------------------------- 8,501,000 9,927,000 22,670,000 25,917,000 - -------------------------------------------------------------------------------------------------------- Income from Operations 9,703,000 6,421,000 9,224,000 2,965,000 Other Income (Expense) Investment income 15,000 95,000 512,000 257,000 Interest expense (2,087,000) (1,875,000) (5,426,000) (5,726,000) - -------------------------------------------------------------------------------------------------------- Income (Loss) before Income Taxes, Minority 7,631,000 4,641,000 4,310,000 (2,504,000) Interest and Extraordinary Gain Income tax benefit (expense) (3,200,000) (2,108,000) (1,770,000) 1,092,000 Minority interest in loss of affiliates -- 259,000 -- 259,000 - -------------------------------------------------------------------------------------------------------- Income (Loss) before Extraordinary Gain 4,431,000 2,792,000 2,540,000 (1,153,000) Extraordinary gain from early extinguishment of debt net of income taxes -- 943,000 -- 943,000 - -------------------------------------------------------------------------------------------------------- Net Income (Loss) $ 4,431,000 $ 3,735,000 $ 2,540,000 $ (210,000) ========================================================================================================
See accompanying notes to consolidated financial statements. 3 U.S. Home & Garden Inc. and Subsidiaries Consolidated Statments of Income ================================================================================
Three Months Ended Nine Months Ended March 31, March 31, --------------------- ------------------ 1999 2000 1999 2000 - -------------------------------------------------------------------------------------------------------------------- Unaudited Unaudited --------------------- ------------------ - -------------------------------------------------------------------------------------------------------------------- Weighted average common shares outstanding - basic 19,347,000 19,157,000 19,751,000 19,033,000 Earnings (loss) per share - basic Income (loss) before extraordinary gain $.23 $.14 $.13 $(.06) Extraordinary gain -- $.05 -- $.05 - -------------------------------------------------------------------------------------------------------------------- Net income (loss) $.23 $.19 $.13 $(.01) ==================================================================================================================== Weighted average common shares outstanding - diluted 23,509,000 21,627,000 23,826,000 19,033,000 Earnings (loss) per share - diluted Income (loss) before extraordinary gain $.19 $.13 $.11 $(.06) Extraordinary gain -- $.04 -- $.05 - -------------------------------------------------------------------------------------------------------------------- Net income (loss) $.19 $.17 $.11 $(.01) ====================================================================================================================
See accompanying notes to consolidated financial statements. 4 U.S. Home & Garden Inc. and Subsidiaries Consolidated Statments of Cash Flows ================================================================================
Increase (Decrease) in Cash and Cash Equivalents - ------------------------------------------------------------------------------------------------------------ Nine months ended March 31, 1999 2000 (Unaudited) ----------------------------- Cash Flows from Operating Activities Net income (loss) $2,540,000 $(210,000) Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation and amortization 3,299,000 3,612,000 Minority interest in loss of affiliates -- (259,000) Deferred taxes - net 213,000 600,000 Loss on disposal of assets -- 9,000 Gain on repurchase of mandatorily redeemable preferred securities -- (943,000) Changes in operating assets and liabilities, net of assets acquired and liabilities assumed: Accounts receivable (18,040,000) (12,772,000) Inventories (6,162,000) 1,219,000 Prepaid expenses and other current assets 83,000 362,000 Accounts payable and accrued expenses 521,000 1,554,000 Other assets 16,000 (280,000) - ------------------------------------------------------------------------------------------------------------ Net Cash Used in Operating Activities (17,530,000) (7,108,000) - ------------------------------------------------------------------------------------------------------------ Cash Flows from Investing Activities Payment for purchase of business, net of cash acquired (26,772,000) (338,000) Increase in restricted cash -- (582,000) Purchase of noncompete agreement (1,000,000) -- Increase in officer receivables 99,000 2,000 Purchase of furniture, fixtures and equipment (1,404,000) (1,896,000) Proceeds from disposal of assets -- 23,000 Purchase of package design (592,000) (530,000) - ------------------------------------------------------------------------------------------------------------ Net Cash Used in Investing Activities (29,669,000) (3,321,000) ===========================================================================================================
See accompanying notes to consolidated financial statements. 5 U.S. Home & Garden Inc. and Subsidiaries Consolidated Statements of Cash Flows ================================================================================
Nine months ended March 31, 1999 2000 (Unaudited) ------------------------------ Cash Flows from Financing Activities Proceeds from issuances of stock $ 147,000 $ 121,000 Proceeds from sale of stock of subsidiary -- 4,769,000 Repurchase of common stock for treasury (7,268,000) (1,793,000) Repurchase of unit purchase options (79,000) -- Proceeds from acquisition line of credit 15,500,000 3,000,000 Repurchase of mandatorily redeemable preferred securities -- (2,947,000) Acquisition finance cost (455,000) 157,000 Proceeds from working capital line of credit 16,000,000 11,500,000 Payments on lines of credit (500,000) (1,000,000) Payments on capital leases -- (77,000) - ----------------------------------------------------------------------------------------------- Net Cash Provided by Financing Activities 23,345,000 13,730,000 - ----------------------------------------------------------------------------------------------- Net (decrease) increase in cash and cash equivalents (23,854,000) 3,301,000 Cash and Cash Equivalents, beginning of period 27,130,000 2,936,000 - ----------------------------------------------------------------------------------------------- Cash and Cash Equivalents, end of period $ 3,276,000 $ 6,237,000 =============================================================================================== Supplemental Disclosure of Cash Flow Information Cash paid for interest $ 5,609,000 $ 5,326,000 Cash paid for taxes / (refund of taxes) $ 69,000 $ (1,244,000) ===============================================================================================
See accompanying notes to consolidated financial statements. 6 U.S. Home & Garden Inc. and Subsidiaries Notes to Consolidated Financial Statements ================================================================================ 1. The accompanying consolidated financial statements at March 31, 2000 and for the three and nine months ended March 31, 1999 and 2000 are unaudited, but, in the opinion of management, include all adjustments necessary for a fair presentation of consolidated financial position and results of operations for the periods presented. The results for the three and nine months ended March 31, 2000 are not necessarily indicative of the results of operations for a full year. 2. Refer to the audited consolidated financial statements for the year ended June 30, 1999, for details of accounting policies and detailed notes to the consolidated financial statements. 3. Inventories consist of: June 30, 1999 March 31, 2000 --------------------------------------------------------------------------- (000) (000) Raw materials 10,103 8,859 Finished goods 6,883 6,908 - -------------------------------------------------------------------------------- 16,986 15,767 ================================================================================ 4. The Company completed a financing agreement with Bank of America N.A. (the "Bank") on October 13, 1998 (the "Credit Agreement"). The Credit Agreement provides for a $25 million revolving acquisition line of credit ("the Acquisition Facility") to finance acquisitions and a $20 million working capital revolving line of credit ("the Working Capital Facility"). Borrowings under such credit facilities bear interest at variable annual rates chosen by the Company based on either (i) the London Interbank Offered Rate ("LIBOR") plus an applicable marginal rate, or (ii) the higher of 0.5% above the then current Federal Funds Rate or the Prime Rate of Bank of America, in each case, plus an applicable marginal rate. The Acquisition Facility terminates at September 30, 2001 and the outstanding balance is payable in quarterly payments starting with September 30, 2001 and ending with June 30, 2004. The Working Capital Facility terminates with the balance due on September 30, 2001. The Company is required to maintain a zero balance, under the Working Capital Facility, for at least 30 consecutive days during the period from July 1 to December 1 of each year. Moreover, if the Company elects to terminate the Credit Agreement prior to the expiration date, the outstanding balance must be prepaid together with a premium of 0.5% of the terminated commitment. The Company's obligations under the Credit Agreement are guaranteed by its subsidiaries and secured by a security interest in favor of the Bank in substantially all of the assets of the Company and substantially all of its subsidiaries. Upon the occurrence of an event of default specified in the Credit Agreement, the maturity of loans 7 U.S. Home & Garden Inc. and Subsidiaries Notes to Consolidated Financial Statments ================================================================================ outstanding under the Credit Agreement may be accelerated by the Bank, which may also foreclose its security interest on the assets of the Company and its subsidiaries. Under the Credit Agreement, the Company and its subsidiaries are required, among other things, to comply with (a) certain limitations on incurring additional indebtedness, liens and guaranties, on dispositions of assets, payment of cash dividends and cash redemption and repurchases of securities, and (b) certain limitations on merger, liquidations, changes in business, investments, loans and advances, affiliate transactions and certain acquisitions. In addition, the Company must comply with certain financial tests and ratios. A violation of any of these covenants constitutes an event of default under the Credit Agreement. At March 31, 2000, the Company was in compliance with these financial covenants. Effective March 31, 2000, the Credit Agreement was amended. The principal feature of this Amendment was to require the Company to repay the $3 million borrowed on the Acquisition Facility to finance the Company's purchase of certain Trust Preferred Securities issued by its subsidiary, U.S. Home & Garden Trust I (see Note 5). The Company is required to repay this borrowing in $1 million installments due September 30, 2000, December 31, 2000, and June 30, 2001. 5. In December 1999, the Company commenced a tender offer to purchase up to 700,000 of the outstanding 9.4% Cumulative Trust Preferred Securities issued by its subsidiary, U.S. Home & Garden Trust I, at $15.00 per Trust Preferred Security. The tender offer expired on January 14, 2000. A total of 183,281 Trust Preferred Securities were purchased by the Company. As of March 31, 2000, approximately 2,333,219 Trust Preferred Securities were outstanding. The repurchase of these Trust Preferred Securities resulted in a $943,000 extraordinary gain (after provision for income taxes of $772,000). The Company purchased 8,900 Trust Preferred Securities from officers and directors under the same terms and conditions described above. 6. Unusual Item. During the third quarter of 2000, the Company discontinued production, sale and distribution of one of the products in its Weed Wizard product line. Additionally, the Company, in voluntary compliance with the recommendations of the Consumer Product Safety Commission ("CPSC"), instituted a recall of the product. Accordingly, the Company recorded a pretax charge of $928,000 ($510,000 after tax or $.03 per basic and diluted share) to provide for recall costs and inventory write-offs. 7. In January 2000, a private placement of 1,062,000 common shares and warrants of EGarden.com Inc. was completed. Net proceeds from this private placement totaled approximately $4.7 million and will be used to fund the start-up and development expenditures of egarden.com. After the completion of this private placement, the Company now owns approximately 75% of the common stock of EGarden.com Inc. 8. Segment Reporting. During the third quarter of 2000, the Company became subject to the provisions of Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information (SFAS 131). SFAS 131 8 U.S. Home & Garden Inc. and Subsidiaries Notes to Consolidated Financial Statments ================================================================================ established standards for the reporting of operating segment information. The Company operates in two distinctive operating segments: (1) the lawn and garden industry and, (2) the business-to-business electronic commerce (E-Commerce) industry. The revenues, operating income and identifiable assets of these operating segments are as follows: Three Months Nine Months (000) Ended March 31, 2000 Ended March 31, 2000 -------------------- -------------------- Revenues Lawn and Garden $ 36,494 $ 63,624 E-Commerce -- -- --------- --------- Total Revenue $ 36,494 $ 63,624 ========= ========= Operating Income (Loss) Lawn and Garden $ 8,342 $ 5,438 E-Commerce (1,921) (2,473) --------- --------- Total Operating Income $ 6,421 $ 2,965 ========= ========= March 31, 2000 -------------- Identifiable Assets Lawn and Garden $ 148,057 E-Commerce 5,538 Intercompany Eliminations (2,348) --------- Total Assets $ 151,247 ========= The Company does not have material revenue, operating income or assets outside the United States. 9 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS "Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Certain information included in this item 2 and elsewhere in the Form 10-Q that are not historical facts contain forward looking statements that involve a number of known and unknown risks, uncertainties and other factors that could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievement expressed or implied by such forward looking statements. These risks and uncertainties include, but are not limited to, the Company's growth strategy, the effect of recent acquisitions, customer concentration, outstanding indebtedness, dependence on weather conditions, seasonality, expansion and other activities of competitors, changes in federal or state environmental laws and the administration of such laws, protection of trademarks and other proprietary rights, the general condition of the economy and other risks detailed in the Company's Securities and Exchange Commission filings. Readers are cautioned not to place undue reliance on these forward looking statements which speak only as of the date the statement was made." General U.S. Home & Garden Inc., ("the Company"), manufactures and markets a broad range of brand-name consumer lawn and garden products through its wholly owned subsidiaries, EGarden.com Inc., Ampro Industries, Inc. ("Ampro"), Easy Gardener, Inc. ("Easy Gardener"), and Golden West Agri-Products, Inc., and Easy Gardener's wholly owned subsidiaries, Weatherly Consumer Products Group, Inc. and Weed Wizard Acquisition Corp. Since 1992, the Company consummated ten acquisitions of complementary lawn and garden companies and product lines for an aggregate consideration of over $107 million in cash, notes and equity securities. The most recent acquisition, EGarden.com Inc., has undergone significant development and is now a business-to-business internet e-commerce business, egarden.com. As a result of such acquisitions, the Company recognized a significant amount of goodwill, which, in the aggregate, was approximately $83.1 million at March 31, 2000. The Company is currently amortizing such goodwill using the straight-line method over various time periods ranging from 20 to 30 years. 10 Results of Operations The following table sets forth, for the periods indicated, certain selected financial data as a percentage of net sales: Three Months Ended Nine Months Ended March 31, March 31, 1999 2000 1999 2000 ------------------ ---------------- Net Sales 100.0% 100.0% 100.0% 100.0% Cost of sales 47.6 52.7 48.2 53.1 Unusual item -- 2.5 -- 1.5 ----- ----- ----- ----- Gross profit 52.4 44.8 51.8 45.4 Selling and shipping expenses 16.9 20.0 20.8 23.1 General and administrative expenses 4.1 3.3 10.7 11.5 Depreciation and amortization 3.5 3.9 5.3 6.1 ----- ----- ----- ----- Income from operations 27.9 17.6 15.0 4.7 Interest expense, net (6.0) (4.9) (8.0) (8.6) Income tax benefit (expense) (9.2) (5.8) (2.9) 1.7 Minority interest -- .7 -- .4 Extraordinary gain -- 2.6 -- 1.5 ------------------ ----------------- Net Income (Loss) 12.7% 10.2% 4.1% (.3)% ------------------ ----------------- Three Months Ended March 31, 2000 Compared to Three Months Ended March 31, 1999 Net sales. Net sales increased by $1.7 million, or 5.0%, to $36.5 million during the three months ended March 31, 2000 from $34.8 million during the comparable period in 1999. The increase in net sales was primarily due to internal growth of the Company's pre-existing product lines. Gross profit. Gross profit decreased by $1.9 million, or 10.2%, to $16.3 million for the three months ended March 31, 2000 from $18.2 million during the comparable period in 1999. This decrease was due primarily to the discontinued production of a product in the Weed Wizard product line. Gross profit as a percentage of net sales decreased to 44.8% during the three months ended March 31, 2000 from 52.4% during the comparable period in 1999. The decrease in gross profit as a percentage of net sales was primarily attributable to the discontinued Weed Wizard product and reduced pricing on certain products sold to major retailers when compared to the March 31, 1999 period. Selling and shipping expenses. Selling and shipping expenses increased $1.4 million, or 24.6% to $7.3 million during the three months ended March 31, 2000 from $5.9 million during the comparable period in 1999. Selling and shipping expenses as a percentage of net sales increased to 20.0% during the three months ended March 31, 2000 from 16.9% during the comparable period in 1999. This increase was primarily a result of start-up selling and 11 development costs for the Company's business-to-business e-commerce initiative, egarden.com, included in this period. General and administrative expenses. General and administrative expenses decreased $214,000 or 15.2%, to $1.2 million during the three months ended March 31, 2000 from $1.4 million during the comparable period in 1999. This decrease is primarily due to consolidation of the general and administrative functions for Weed Wizard, previously located in Georgia, into Ampro. As a percentage of net sales, general and administrative expenses decreased to 3.3% during the three months ended March 31, 2000 from 4.1% during the comparable period in 1999. Depreciation and amortization. Depreciation and amortization expenses increased by $197,000 or 16.0% to $1.4 million during the three months ended March 31, 2000 from $1.2 million during the comparable period in 1999. This increase is primarily as a result of the acquisition of Ampro Industries, Inc. As a percentage of net sales, depreciation and amortization expenses increased to 3.9% during the three months ended March 31, 2000 from 3.5% during the comparable period in 1999. Income from operations. Income from operations decreased by $3.3 million, or 33.8%, to $6.4 million. The decrease in income from operations for the 2000 period is primarily attributable to the start-up costs for egarden.com, the discontinued Weed Wizard product and the increase in net sales of lower margin products. As a percentage of net sales, income from operations decreased to 17.6% for the three months ended March 31, 2000 from 27.9% during the comparable period in 1999. Interest expense. Net interest expense decreased $292,000, or 14.1% to $1.8 million during the three months ended March 31, 2000, from $2.1 million during the comparable period in 1999. The decrease in interest expense is primarily related to the decreased interest associated with the line of credit in conjunction with the decrease in inventories and the repurchase of $4.9 million of the mandatorily redeemable trust preferred securities of U.S. Home & Garden Trust I. Income taxes. Income tax expense decreased to $2.1 million during the three months ended March 31, 2000 from $3.2 million during the comparable period in 1999, primarily due to the decrease in income from operations. The income tax benefit or expense for each interim period is based upon the Company's estimated effective income tax rate for the year. Minority interest in loss of affiliates. Minority interest increased $259,000, net of tax expense of $204,000, during the three months ended March 31, 2000 from the comparable period in 1999. Minority interest primarily relates to the Company's partial ownership of EGarden.com Inc. EGarden.com's results are fully consolidated in the Company's financial statements. Extraordinary gain from early extinguishment of debt. Extraordinary gain from early extinguishment of debt net of income taxes increased $943,000, net of tax expense of $772,000, during the three months ended March 31, 2000 from the comparable period in 1999. The Company repurchased $4.9 million of the mandatorily redeemable trust preferred securities of U.S. Home & Garden Trust I. 12 Net income. Net income decreased by $696,000 or 15.7%, to $3.7 million during the three months ended March 31, 2000 from $4.4 million during the comparable period in 1999. Diluted net income per common share decreased $0.02 to $0.17 per share for the three months ended March 31, 2000 from $0.19 per share during the comparable period in 1999. The decrease in diluted net income per common share is primarily attributable to the start-up costs for egarden.com and the discontinued Weed Wizard product in the three months ended March 31, 2000 compared to the comparable period in the prior year. Nine Months Ended March 31, 2000 Compared to Nine Months Ended March 31, 1999 Net sales. Net sales increased by $2.1 million, or 3.4%, to $63.6 million during the nine months ended March 31, 2000 from $61.5 million during the comparable period in 1999. The increase in net sales was primarily a result of internal growth of the Company's pre-existing product lines. Gross profit. Gross profit decreased by $3.0 million, or 9.4%, to $28.9 million for the nine months ended March 31, 2000 from $31.9 million during the comparable period in 1999. This decrease was due primarily to the increase in sales of lower-margin products and the discontinued Weed Wizard product. Gross profit as a percentage of net sales decreased to 45.4% during the nine months ended March 31, 2000 from 51.8% during the comparable period in 1999. The decrease in gross profit as a percentage of net sales was primarily attributable to the discontinued product and reduced pricing on certain products sold to major retailers when compared to the March 31, 1999 period. Selling and shipping expenses. Selling and shipping expenses increased $1.9 million, or 14.6%, to $14.7 million during the nine months ended March 31, 2000 from $12.8 million during the comparable period in 1999. Selling and shipping expenses as a percentage of net sales increased to 23.1% during the nine months ended March 31, 2000 from 20.8% during the comparable period in 1999. This increase was primarily as a result of start-up costs for egarden.com during the nine months ended March 31, 2000. General and administrative expenses. General and administrative expenses increased $806,000 or 12.3%, to $7.4 million during the nine months ended March 31, 2000 from $6.6 million during the comparable period in 1999. The increase is due to start-up and administrative costs for egarden.com, included in this the nine months ended March 31, 2000. As a percentage of net sales, general and administrative expenses increased to 11.5% during the nine months ended March 31, 2000 from 10.7% during the comparable period in 1999. Depreciation and amortization. Depreciation and amortization expenses increased by $571,000 or 17.3% to $3.9 million during the nine months ended March 31, 2000 from $3.3 million during the comparable period in 1999. This increase is primarily due to the acquisition of Ampro Industries, Inc. and capital equipment additions. As a percentage of net sales, depreciation and amortization expenses increased to 6.1% during the nine months ended March 31, 2000 from 5.3% during the comparable period in 1999. Income from operations. Income from operations decreased by $6.3 million, or 67.9%, to $3.0 13 million during the nine months ended March 31, 2000 from $9.2 million during the comparable period in 1999. The decrease in income for the 2000 period was primarily attributable to the start-up costs for egarden.com, the discontinued Weed Wizard product and the increase in net sales of lower margin products. As a percentage of net sales, income from operations decreased to 4.7% for the nine months ended March 31, 2000 from 15.0% during the comparable period in 1999. Interest expense. Net interest expense increased by $555,000, or 11.3%, to $5.5 million during the nine months ended March 31, 2000, from $4.9 million during the comparable period in 1999. The increase in interest expense is primarily related to the interest associated with the increase in borrowings under the Company's credit facility to finance the acquisition of Ampro Industries, Inc. Income taxes. Income tax benefit was $1.1 million during the nine months ended March 31, 2000 from income taxes of $1.8 million during the comparable period in 1999, primarily due to the net loss before taxes. The income tax benefit or expense for each interim period is based upon the Company's estimated effective income tax rate for the year. Minority interest in loss of affiliates. Minority interest increased $259,000, net of tax expense of $204,000, during the nine months ended March 31, 2000 from the comparable period in 1999. Minority interest primarily relates to the Company's partial ownership of EGarden.com Inc. EGarden.com's results are fully consolidated in the Company's financial statements. Extraordinary gain from early extinguishment of debt. Extraordinary gain from early extinguishment of debt net of income taxes increased $943,000, net of tax expense of $772,000, during the nine months ended March 31, 2000 from the comparable period in 1999. The Company repurchased $4.9 million of the mandatorily redeemable trust preferred securities of U.S. Home & Garden Trust I. Net loss. Net loss was $210,000 as compared to net income of $2.5 million during the nine months ended March 31, 1999. Diluted net loss per common share was $.01 compared to income of $.11 per share for the nine months ended March 31, 1999. The increase in diluted loss per share is primarily attributable to the start-up costs for egarden.com, the discontinued Weed Wizard product and the increase in net sales of lower margin products. Seasonality The Company's sales are seasonal due to the nature of the lawn and garden business, in parallel with the annual growing season. The Company's sales and shipping are most active from late December through May when home lawn and garden customers are purchasing supplies for spring planting and retail stores are increasing their inventory of lawn and garden products. Sales typically decline by early to mid-summer. Sales of the Company's agricultural products, which were not material during the nine months ended March 31, 2000, are also seasonal. Most shipments occur during the agricultural cultivation period from March through October. 14 Liquidity and Capital Resources Since inception, the Company has financed its operations primarily through cash generated by operations, net proceeds from the Company's private placements, public sales of securities and borrowings from lending institutions. At March 31, 2000, the Company had consolidated cash and short-term investments totaling $6.2 million and working capital of $30.8 million. At June 30, 1999, the Company had consolidated cash and short-term investments totaling $2.9 million and working capital of $31.9 million. The decrease in working capital is in line with the seasonal nature of the Company's business. Net cash used in operating activities during the nine months ended March 31, 2000 was $7.1 million consisting primarily of a $12.8 million increase in accounts receivable due to the seasonal increase in sales, partially offset by a $1.6 million increase in accounts payable and a $1.2 million decrease in inventories. Net cash used in investing activities during the nine months ended March 31, 2000 was $3.3 million, consisting primarily of cash used for the purchase of property and equipment and package design. Net cash provided by financing activities of $13.7 million during the nine months ended March 31, 2000 was primarily due to borrowings on the Company's working capital line of credit to finance the seasonal increase in working capital requirements. On October 13, 1998, the Company entered into a credit agreement (the "Credit Agreement") with Bank of America N.A. (the "Bank"). The Credit Agreement provides for a revolving credit facility of up to $25 million to finance the cost of acquisitions by the Company (the "Acquisition Facility") and a revolving credit facility of up to $20 million to finance the Company's working capital requirements (the "Working Capital Facility"). Both of such credit facilities expire on September 30, 2001, at which time borrowings under the Acquisition Facility are payable on a term loan basis in quarterly installments commencing September 30, 2001, with the final installment maturing on June 30, 2004 and, unless refinanced, borrowings under the Working Capital Facility mature on such expiration date. In addition, borrowings under the Acquisition Facility are subject to mandatory prepayment from the net proceeds of certain dispositions of assets, and certain losses or condemnation of property, from excess cash (as defined in the Credit Agreement) generated by the Company and its subsidiaries and 50% of the net proceeds of any new issuance's of the Company's capital stock after such expiration date. Mandatory prepayments by the Company prior to such expiration have the effect of reducing the Acquisition Facility by the prepayment amount. In addition, during a period of 30 consecutive days during the period July 1 to December 1 in each year, no borrowings can be outstanding under the Working Capital Facility. The Company has the right under the Credit Agreement to terminate or permanently reduce the Bank's commitments under such credit facilities in the minimum amount of $1.0 million and multiples thereof subject to the payment to the Bank of "reduction fees" of 0.5% of the amounts terminated or reduced thereafter. Borrowings under 15 such credit facilities bear interest at variable annual rates selected by the Company based on LIBOR ("London Interbank Offered Rate"), or the higher of 0.5% above the then current Federal Funds Rate or the Bank's prime rate plus, in each case, an applicable marginal rate of interest. At March 31, 2000, the interest rate on new borrowings for the Working Capital Facility was 7.52%. The interest rate on $15 million of the $18 million outstanding on the Acquisition Facility is fixed via an interest rate swap at 7.78%. The Company's obligations under the Credit Agreement are guaranteed by its subsidiaries and secured by a security interest in favor of the Bank in substantially all of the assets of the Company and substantially all of its subsidiaries. Upon the occurrence of an event of default specified in the Credit Agreement, the maturity of loans outstanding under the Credit Agreement may be accelerated by the Bank, which may also foreclose its security interest on the assets of the Company and its subsidiaries. Under the Credit Agreement, the Company and its subsidiaries are required, among other things, to comply with (a) certain limitations on incurring additional indebtedness, liens and guaranties, on dispositions of assets, payment of cash dividends and cash redemption and repurchases of securities, and (b) certain limitations on merger, liquidations, changes in business, investments, loans and advances, affiliate transactions and certain acquisitions. In addition, the Company must comply with certain financial tests and ratios. A violation of any of these covenants constitutes an event of default under the Credit Agreement. At March 31, 2000, the Company was in compliance with these financial covenants. Effective March 31, 2000, the Credit Agreement was amended. The principal feature of this Amendment was to require the Company to repay the $3 million borrowed on the Acquisition Facility to finance the Company's purchase of certain Trust Preferred Securities issued by its subsidiary, U.S. Home & Garden Trust I. The Company is required to repay this borrowing in $1 million installments due September 30, 2000, December 31, 2000, and June 30, 2001. The Company believes that its operations will generate sufficient cash flow to service the outstanding debt incurred. However, if such cash flow is not sufficient to service such debt, the Company will be required to seek additional financing which may not be available on commercially acceptable terms or at all. As of March 31, 2000, the Company has a net deferred tax liability of $2.0 million primarily relating to tax depreciation and amortization in excess of the book amount. The deferred tax asset of $300,000 relates to the net operating loss carryforwards, the allowance for accounts receivable, vacation accrual and certain other balance sheet reserves. In December 1999, the Company commenced a tender offer to purchase up to 700,000 of the outstanding 9.4% Cumulative Trust Preferred Securities issued by its subsidiary, U.S. Home & Garden Trust I, at $15.00 per Trust Preferred Security. The tender offer expired on January 14, 2000. A total of 183,281 Trust Preferred Securities were purchased by the Company. As of March 31, 2000, 2,333,219 Trust Preferred Securities were outstanding. The repurchase of these Trust Preferred Securities resulted in a $943,000 extraordinary gain (after provision for income taxes). In January 2000, a private placement of 1,062,000 common shares and warrants of 16 EGarden.com Inc. was completed. Net proceeds from this private placement totaled approximately $4.7 million and will be used to fund the start-up and development expenditures of egarden.com. After the completion of this private placement, the Company now owns approximately 75% of the common stock of EGarden.com Inc. New Accounting Pronouncement In June 1998, the Financial Accounting Standards Board issued SFAS 133 "Accounting for Derivative Instruments and Hedging Activities". SFAS 133 requires companies to recognize all derivatives contracts as either assets or liabilities in the balance sheet and to measure them at fair value. If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings' effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change. SFAS 133 is effective for all fiscal quarters of fiscal years beginning after June 15, 2000. In October 1999, the Company entered into a derivatives contract to hedge interest rate risk on the Acquisition Facility. Details of this derivative instrument are described in Item 3, "Quantitative and Qualitative Disclosures about Market Risk". Inflation Inflation has historically not had a material effect on the Company's operations. Item 3. Quantitative and Qualitative Disclosures about Market Risk As a result of its variable rate revolving credit line, the Company is exposed to the risk of rising interest rates. To minimize this risk, the Company holds a derivative instrument in the form of an interest rate swap, which is viewed as a risk management tool and is not used for trading or speculative purposes. The intent of the interest rate swap is to effectively fix the interest rate on part of the borrowings on the Company's variable rate revolving credit agreement. The following table provides information on the Company's fixed maturity investments as of March 31, 2000 that are sensitive to changes in interest rates. The table also presents the corresponding interest rate swap on this debt. Since the interest rate swap effectively fixes the interest rate on the notional amount of debt, changes in interest rates have no current effect on the interest expense recorded by the Company on the portion of the debt covered by the interest rate swap. The Acquisition Line of Credit had an $25 million interest rate ranging from 6.58% to 8.25% for the nine months ended March 31, 2000 Interest Rate Swaps Notional amount $15 million Pay fixed/Receive variable - 6.03% Pay fixed interest rate - 6.15% This swap agreement expires November 1, 2000, and reverts to a variable interest rate loan. 17 PART II - OTHER INFORMATION Item 1. Legal Proceedings Reference is made to Part I- Item 3 of the Company's Form 10K for the fiscal year ended June 30, 1999 concerning an action commenced in the State of Michigan Circuit Court against the Company by the former stockholders of Ampro Industries, Inc. Item 2. Changes in Securities and Use of Proceeds During the quarter ended March 31, 2000 the Company granted five-year options to purchase an aggregate of 200,000 shares of its common stock at $2.5625 per share to certain employees. The options were granted in private transactions pursuant to the exemptions from registration provided by Sections 2(a)(3) or 4(2) of the Securities Act of 1933. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: 10.1 Fourth Amendment dated March 31, 2000 to the Credit Agreement dated October 13, 1998 between the Company and Bank of America, N.A. 27.1 Financial Data Schedule (For SEC use only) (b) No reports on Form 8-K were filed during the quarter ended March 31, 2000. 18 SIGNATURES Pursuant to the requirement 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. May 12, 2000 U.S. Home & Garden Inc. (Registrant) /s/ Robert Kassel ---------------------------------- President, Chief Executive Officer /s/ Donald Rutishauser ---------------------------------- Chief Financial Officer 19 EX-10.1 2 FOURTH AMENDMENT FOURTH AMENDMENT TO CREDIT AGREEMENT AND CONSENT This Amendment and Consent (the "Amendment and Consent") dated as of March 31, 2000, is between Bank of America, N.A. (the "Bank"), formerly known as Bank of America National Trust and Savings Association, and U.S. Home & Garden Inc. (the "Borrower"). RECITALS A. The Bank and the Borrower entered into a certain Credit Agreement dated as of October 13, 1998, as previously amended (the "Agreement"). B. The Borrower desires to acquire findplants.com, a California corporation, for a total consideration of $400,000. Immediately thereafter, the Borrower desires to merge the acquired company into the Subsidiary, E-Garden. The Borrower has requested the Bank to grant its prior written approval of the Acquisition as required under Section 7.4(d)(ii) of the Agreement and to agree that the Acquisition is not required to comply with the conditions set forth in Sections 7.4(d)(iv), 7.4(d)(vii), and 7.4(d)(viii) of the Agreement. C. The Bank and the Borrower also desire to further amend the Agreement. AGREEMENT 1. Definitions. Capitalized terms used but not defined in this Amendment and Consent shall have the meaning given to them in the Agreement. 2. Amendment. The Agreement is hereby amended as follows: 2.1 In Section 1.1, the definition of Revolving Termination Date is amended by substituting the date "September 30, 2001" for the date "October 15, 2001." 2.2 A new Section 2.7(bb) is inserted between Sections 2.7(b) and 2.7(c), and it reads in its entirety as follows: (bb) $1,000,000 Prepayments. The Borrower shall prepay the Facility 1 Loans in three equal principal installments of $1,000,000 on September 30, 2000, December 31, 2000, and June 30, 2001. 2.3 Section 2.8(a) is amended to read in its entirety as follows: (a) Facility 1 Loans. The Borrower shall repay the following percentages of the total of the Facility 1 Loans outstanding on the Revolving Termination Date on the following dates (each a "Principal Payment Date"): Year March 31 June 30 September 30 December 31 2001 7.50% 7.50% 2002 7.50% 7.50% 7.50% 7.50% 2003 7.50% 7.50% 10.00% 10.00% 2004 10.00% 10.00% 1 And on June 30, 2004, the entire remaining balance of the Facility 1 Loans and all accrued interest thereon shall be immediately due and payable. 2.4 In Section 7.4(d), clause (v) is amended to read in its entirety as follows: (v) after giving effect to the Acquisition (and any financing related thereto), the pro forma Leverage Ratio is less than 4.50 to 1.00 and the Borrower and its Subsidiaries are otherwise in pro forma covenant compliance with Section 7.18, 2.5 In Section 7.4(h), the amount "$2,947,235" is substituted for the amount "$10,000,000." 2.6 Section 7.11(d) is amended to read in its entirety as follows: (d) purchase, redeem or otherwise acquire Trust Preferred Securities, shares of its capital stock or warrants, rights or options to acquire any shares of its capital stock for cash (i) in an aggregate amount for all such payments after the Closing Date (excluding payments for Trust Preferred Securities) not exceeding $6,074,000 and (ii) with respect to Trust Preferred Securities, in an aggregate amount not exceeding $1,000,000 for all such payments after the Closing Date; provided that immediately after giving effect to such proposed action, no Default would exist, and provided further that payments for Trust Preferred Securities must be made with the Borrower's own cash and not with the proceeds of Facility 1 Loans. 2.7 Section 7.18 is amended to read in its entirety as follows: 7.18 Financial Covenants. (a) Interest Coverage Ratio. The Borrower shall not permit the Interest Coverage Ratio for any four fiscal quarter period (on a rolling four quarter basis) to be less than (i) 1.50 to 1.00 for the four fiscal quarter period ending on March 31, 2000, (ii) 1.75 to 1.00 for the four fiscal quarter periods ending on June 30, 2000, September 30, 2000, and December 31, 2000, and (iii) 2.00 to 1.00 for any four fiscal quarter period ending after December 31, 2000. (b) Leverage Ratio. The Borrower shall not permit the Leverage Ratio for any four fiscal quarter period (on a rolling four quarter basis) to exceed (i) 7.75 to 1.00 for the four fiscal quarter period ending on March 31, 2000, (ii) 5.25 to 1.00 for the four fiscal quarter period ending on June 30, 2000, (iii) 5.00 to 1.00 for the four fiscal quarter periods ending on September 30, 2000, December 31, 2000, and March 31, 2001, (iv) 4.50 to 1.00 for the four fiscal quarter periods ending on June 30, 2001, September 30, 2001, and December 31, 2001, (v) 4.75 to 1.00 for the four fiscal quarter period ending on March 31, 2002, and (vi) 4.00 to 1.00 for any four fiscal quarter period ending after March 31, 2002, except for the four fiscal quarter periods ending on March 31, 2003, and March 31, 2004, respectively, for which the Leverage Ratio may not exceed 4.25 to 1.00. (c) Fixed Charge Coverage Ratio. The Borrower shall not permit the Fixed Charge Coverage Ratio to be less than (i) 1.10 to 1.00 for the four 2 fiscal quarter period ending on March 31, 2000, (ii) 1.50 to 1.00 for the four fiscal quarter periods (on a rolling four quarter basis) ending on or after June 30, 2000, and on or before March 31, 2002, except for the four fiscal quarter period ending on December 31, 2000, for which the Fixed Charge Coverage Ratio may not be less than 1.35 to 1.00, and (iii) 1.25 to 1.00 for any four fiscal quarter period (on a rolling four quarter basis) ending after March 31, 2002. (d) Consolidated EBITDA. The Borrower shall not permit Consolidated EBITDA (Ampro Adjusted) to be less than the following amounts for the four fiscal quarter periods (on a rolling four quarter basis) ending on the following dates: Amount Date ------ ---- $12,000,000 March 31, 2000 $15,000,000 June 30, 2000 $15,000,000 September 30, 2000 $15,000,000 December 31, 2000 $16,000,000 March 31, 2001 $16,000,000 June 30, 2001 $16,000,000 September 30, 2001 $16,000,000 December 31, 2001 $17,000,000 March 31, 2002 $17,000,000 June 30, 2002 $17,000,000 September 30, 2002 $17,000,000 December 31, 2002 $17,500,000 March 31, 2003 $17,500,000 June 30, 2003 $17,500,000 September 30, 2003 $17,500,000 December 31, 2003 $18,000,000 March 31, 2004 $18,000,000 June 30, 2004 $18,000,000 September 30, 2004 3. Consent. The Bank hereby consents to the Acquisition described in Recital B of this Amendment and Consent and hereby agrees that the Acquisition is not required to comply with the conditions referred to in Recital B of this Amendment and Consent. 4. Representations and Warranties. When the Borrower signs this Amendment and Consent, the Borrower represents and warrants to the Bank that: 4.1 No Default or Event of Default has occurred or is continuing under the Agreement except those Defaults or Events of Default, if any, that have been disclosed in writing to the Bank or waived in writing by the Bank. 3 4.2 The representations and warranties in the Agreement are true as of the date of this Amendment and Consent as if made on the date of this Amendment and Consent except to the extent such representations and warranties expressly refer to an earlier date, in which case they are true and correct as of such earlier date. 4.3 The execution, delivery and performance by the Borrower of this Amendment and Consent have been duly authorized by all necessary corporate and other action and do not and will not require any registration with, consent or approval of, notice to or action by, any Person (including any Governmental Authority) in order to be effective and enforceable. The Agreement as amended by this Amendment and Consent constitutes the legal, valid and binding obligations of the Borrower, enforceable against it in accordance with its respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors' rights generally or by equitable principles relating to enforceability. 5. Effective Date. Provided that the Bank has received from the Borrower a duly executed original of this Amendment and Consent, this Amendment and Consent will be deemed effective as of March 31, 2000. 6. Reservation of Rights. The Borrower acknowledges and agrees that the execution by the Bank of this Amendment and Consent shall not be deemed to create a course of dealing or otherwise obligate the Bank to execute similar consents under the same or similar circumstances in the future. 7. Miscellaneous. 7.1 Except as herein expressly amended, all terms, covenants and provisions of the Agreement are and shall remain in full force and effect and all references therein and in the other Loan Documents to the Agreement shall henceforth refer to the Agreement as amended by this Amendment and Consent. This Amendment and Consent shall be deemed incorporated into, and a part of, the Agreement. This Amendment and Consent is a Loan Document. 7.2 This Amendment and Consent shall be binding upon and inure to the benefit of the parties hereto and to the Agreement and their respective successors and assigns. No third party beneficiaries are intended in connection with this Amendment and Consent. 7.3 This Amendment and Consent shall be governed by and construed in accordance with the law of the State of California. 7.4 This Amendment and Consent may be executed in any number of counterparts, each of which shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. Each of the parties hereto understands and agrees that this document (and any other document required herein) may be delivered by any party thereto either in the form of an executed original or an executed original sent by facsimile transmission to be followed promptly by mailing of a hard copy original, and that receipt by the Bank of a facsimile transmitted document purportedly bearing the signature of the Borrower shall bind the Borrower with the same force and effect as the delivery of a hard copy original. Any failure by the Bank to 4 receive the hard copy executed original of such document shall not diminish the binding effect of receipt of the facsimile transmitted executed original of such document. This Amendment and Consent is executed as of the date stated at the beginning of this Amendment and Consent. Bank of America, N.A. By /s/ Michelle Mojabi --------------------------------------- Title Vice President --------------------------------------- By --------------------------------------- Title --------------------------------------- U.S. Home & Garden Inc. By /s/ Lynda Gustafson --------------------------------------- Title V.P. Finance --------------------------------------- By --------------------------------------- Title --------------------------------------- EX-27 3 FDS --
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q AT MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL INFORMATION 9-MOS JUN-30-2000 MAR-31-2000 6,237,000 0 34,609,000 1,595,000 15,767,000 57,675,000 12,213,000 0 151,247,000 25,253,000 74,330,000 0 0 21,000 44,581,000 151,247,000 63,624,000 63,624,000 34,742,000 34,742,000 0 0 5,726,000 (2,504,000) (1,092,000) (1,153,000) 0 943,000 0 (210,000) (.01) (.01)
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