UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended April 2, 1995.
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________.
Commission File Number: 1-6832
BIC CORPORATION
(Exact name of registrant as specified in its charter)
Incorporated in State of New York I.R.S. Employer Number: 06-0735597
Principal Executive Offices: 500 BIC Drive, Milford, Connecticut 06460
Telephone number, including area code: (203) 783-2000
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 __________
At April 2, 1995, the close of the period covered by this report, registrant
had outstanding 23,559,244 common shares, $1.00 par value per share.
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PART 1. FINANCIAL INFORMATION
BIC CORPORATION AND SUBSIDIARIES
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
April 2, January 1,
1995 1995
---------- ----------
ASSETS (Thousands)
- ------
CURRENT ASSETS:
Cash and cash equivalents $ 63,687 $ 48,091
Accounts and notes receivable:
Trade - net of allowance for doubtful
accounts of $4,993,000 at April 2 and
$4,530,000 at January 1 55,708 54,648
Affiliates 3,914 4,358
Other 4,169 3,861
Inventories:
Finished goods 27,564 25,804
Work in process 21,568 18,335
Raw materials 8,546 7,860
Packaging materials 2,596 2,364
Other current assets 31,065 29,124
--------- ---------
Total current assets 218,817 194,445
--------- ---------
PROPERTY, PLANT AND EQUIPMENT - at cost less
accumulated depreciation of $153,037,000 at
April 2 and $151,365,000 at January 1 129,178 132,553
OTHER ASSETS 34,125 31,689
--------- ---------
TOTAL $382,120 $358,687
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Accounts payable:
Trade $ 14,672 $ 11,835
Affiliates 10,245 7,080
Accrued expenses 68,354 63,214
Other current liabilities 14,956 4,500
--------- ---------
Total current liabilities 108,227 86,629
--------- ---------
NONCURRENT LIABILITIES 24,907 24,141
--------- ---------
SHAREHOLDERS' EQUITY:
Preferred shares ($1 par value; authorized -
1,000,000; no shares issued or outstanding) 0 0
Common shares ($1 par value; authorized -
50,000,000; outstanding 23,559,244) 23,559 23,559
Retained earnings 243,832 238,076
Foreign currency translation adjustment (18,405) (13,718)
--------- ---------
Total shareholders' equity 248,986 247,917
--------- ---------
TOTAL $382,120 $358,687
========= =========
See Notes to Unaudited Condensed Consolidated Financial Statements.
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BIC CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE THREE MONTHS ENDED APRIL 2, 1995 AND APRIL 3, 1994
1995 1994
---- ----
(Thousands Except Share Data)
NET SALES $113,478 $102,777
COST OF GOODS SOLD 59,405 53,112
--------- ---------
GROSS PROFIT 54,073 49,665
ADVERTISING, SELLING, GENERAL AND ADMINISTRATIVE,
MARKETING AND RESEARCH & DEVELOPMENT EXPENSES 34,896 33,761
--------- ---------
INCOME FROM OPERATIONS 19,177 15,904
OTHER INCOME (EXPENSE) - NET (372) 27
--------- ---------
INCOME BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 18,805 15,931
PROVISION FOR INCOME TAXES 7,630 6,217
--------- ---------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE 11,175 9,714
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING FOR
POSTEMPLOYMENT BENEFITS, NET OF TAXES
OF $410,000 0 (623)
--------- ---------
NET INCOME 11,175 9,091
RETAINED EARNINGS - BEGINNING OF YEAR 238,076 205,902
DIVIDENDS PAID (PER COMMON SHARE: 1995 - $0.23,
1994 - $0.20) (5,419) (4,712)
--------- ---------
RETAINED EARNINGS - END OF PERIOD $243,832 $210,281
========= =========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 23,559,244 23,559,244
EARNINGS (LOSS) PER COMMON SHARE:
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE $ 0.47 $ 0.41
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE 0 (0.02)
--------- ---------
NET INCOME $ 0.47 $ 0.39
========= =========
See Notes to Unaudited Condensed Consolidated Financial Statements.
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BIC CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED APRIL 2, 1995 AND APRIL 3, 1994
1995 1994
---- ----
(Thousands)
NET CASH PROVIDED BY OPERATING ACTIVITIES* $ 19,076 $ 10,588
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (5,465) (6,904)
Proceeds from sale of property, plant and
equipment 337 439
Deferred charges, deposits and other (2,512) (105)
Purchases of trademarks and patents (200) (282)
--------- ---------
Net cash used in investing activities (7,840) (6,852)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in short-
term borrowings 10,456 (5,212)
Dividends paid (5,419) (4,712)
--------- ---------
Net cash provided by (used in)
financing activities 5,037 (9,924)
--------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (677) (76)
--------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 15,596 (6,264)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 48,091 24,094
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 63,687 $ 17,830
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest $ 166 $ 599
========= =========
Income taxes $ 4,281 $ 3,789
========= =========
*The 1994 Change in Employers' Accounting for Postemployment Benefits had no
effect on cash and cash equivalents.
See Notes to Unaudited Condensed Consolidated Financial Statements.
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BIC CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
---------------------
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with the instructions to Form 10-Q and do
not include all of the information and disclosures required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three-month period ended April 2, 1995 are not
necessarily indicative of the results that may be expected for the fiscal
year ending December 31, 1995. Certain items in the 1994 unaudited
condensed consolidated financial statements have been reclassified to
conform to the 1995 presentation.
2. New Accounting Standard
-----------------------
As of January 3, 1994, the Corporation adopted Statement of Financial
Accounting Standards No. 112 (SFAS 112), "Employers' Accounting for
Postemployment Benefits." This new standard requires that the cost of
benefits provided to former or inactive employees be recognized on the
accrual basis of accounting. Previously, the Corporation recognized
postemployment benefits on a cash basis or at the date the event gave rise
to the payment of these benefits. In accordance with the provisions of
the Collective Bargaining Agreement between BIC Corporation and Local 134
United Rubber, Cork, Linoleum and Plastic Workers of America, the
Corporation provides severance benefits to its unionized employees. The
Corporation also provides medical and life insurance benefits to salaried
employees receiving long-term disability benefits. The cumulative effect
of this change, net of deferred income tax benefit of $0.4 million,
reduced net income by $0.6 million or $0.02 per share, which was included
in the Corporation's condensed consolidated statement of income for the
three months ended April 3, 1994.
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BIC CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
- -------------------------------
The changes in the financial condition of the Corporation between January 1,
1995 and the end of the first fiscal quarter of 1995 reflect normal operations.
The Corporation's current ratio was 2.02 at April 2, 1995 and 2.24 at January
1, 1995.
Cash and cash equivalents were $63.7 million at April 2, 1995, as compared to
$48.1 million at January 1, 1995. The increase is largely due to the
Corporation's French franc loan described below.
Inventories were $60.3 million at April 2, 1995 and $54.4 million at January 1,
1995. The increase is primarily due to higher production levels to support
sales increases.
Accounts payable were $24.9 million at April 2, 1995 and $18.9 million at
January 1, 1995. The increase is primarily due to the timing of inventory
purchases.
Accrued expenses were $68.4 million at April 2, 1995, as compared to $63.2
million at January 1, 1995. The increase is primarily related to an increase
in accrued insurance associated with general liability and workers'
compensation and the timing of income tax payments, partially offset by a
decrease in accrued marketing and promotion costs.
Other current liabilities were $15.0 million at April 2, 1995, as compared with
$4.5 million at January 1, 1995. The increase is due to BIC Corporation having
borrowed 50 million French francs from the Corporation's majority shareholder,
Societe BIC, S.A., in accordance with a certain loan agreement. Under the
agreement, Societe BIC, S.A. will advance BIC Corporation French francs, as
requested by BIC, not to exceed 300 million French francs during 1995. The
principal portion of the loan is due in December 1995. Interest on the loan is
payable monthly at a rate equal to the Paris Interbank Offered Rate ("PIBOR")
in effect at the loan origination date plus 0.15%. At March 31, 1995 the PIBOR
was 7.55%.
The foreign currency translation adjustment included in shareholders' equity
was $(18.4) million at April 2, 1995 and $(13.7) million at January 1, 1995.
The fluctuation is primarily due to the translation effect associated with the
decline in value of the Mexican peso.
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BIC CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
- ---------------------
Net sales for the three months ended April 2, 1995 were $113.5 million, an
increase of 10.4% from $102.8 million, for the same period last year. Gross
profit was $54.1 million for the first quarter of 1995, as compared to $49.7
million in 1994, representing an 8.9% increase. Gross profit as a percentage
of net sales was 47.7% in 1995 and 48.3% in 1994. Income before the cumulative
effect of change in accounting principle for the first three months in 1995 was
$11.2 million, or $0.47 per share, compared with $9.7 million, or $0.41 per
share, in the same period last year. Net income for the first three months of
1995 was $11.2 million, or $0.47 per share, compared with $9.1 million, or
$0.39 per share, in the same period last year.
The improvement in net sales was primarily due to increases in the number of
units sold and higher average selling prices in stationery products and
lighters in the United States operations. These higher average selling prices
are attributable to a favorable mix of products sold and price increases.
Shavers also showed modest increases in unit and dollar sales. The
Corporation's Mexican operations experienced a decrease in unit sales due to
the adverse impact the decline in the value of the peso had on the Mexican
economy. The Corporation's other foreign operations contributed to the overall
net sales increase.
The lower gross profit percentage for the first quarter of 1995, as compared to
the same period last year was primarily due to higher raw material costs and a
deterioration in the relationship of the U.S. dollar to the French franc,
partially offset by the higher average selling prices discussed in the
preceding paragraph. In lighters, production disruptions and other costs
associated with the Corporation's changeover to child-resistant lighters also
contributed to the lower gross profit percentage.
In 1994, net income included a $0.6 million charge, representing the cumulative
effect of the change in accounting for postemployment benefits.
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PART II. OTHER INFORMATION
BIC CORPORATION AND SUBSIDIARIES
Item 1. Legal Proceedings -
In May 1994, BIC filed a petition with the United States
Department of Commerce ("DOC") and United States International Trade
Commission ("ITC") for the imposition of antidumping duties against
disposable lighters from Thailand and China. The petition charged
that disposable lighters from Thailand and China are being "dumped"
or sold in the United States at less than fair value. During October
and December of 1994, the DOC ruled favorably on BIC's petition in
preliminary decisions imposing antidumping duties on disposable
lighters imported from Thailand and China, respectively.
In March 1995, the DOC recommended a 25% antidumping duty in
addition to the standard rate. On April 13, 1995, the ITC voted 4-2
that there is no material injury, or immediate threat of injury to
the domestic lighter industry, as a result of Thailand lighters being
dumped in the United States. A 3-3 vote would have upheld the
imposition of antidumping duties of 25% recommended by the DOC
following their six month investigation of lighters imported from
Thailand. The ITC's final decision regarding lighters imported from
China is expected in the second quarter of 1995.
Item 2. Change in Securities - None.
Item 3. Defaults upon Senior Securities - Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders - None.
Item 5. Other Information - None.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits - None Required.
b) Reports on Form 8-K - None.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
BIC CORPORATION
-------------------------------------------------
(Registrant)
Date: May 11, 1995 Robert L. Macdonald
---------------------------------------------------
(Signature)
Robert L. Macdonald, Vice President - Finance
(Principal Accounting Officer)
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