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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 December 28, 1997
-------------------------------------------------
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: 0-19912
--------------------------------------------------------
Signature Brands USA, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 36-3635286
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7005 Cochran Road, Glenwillow, Ohio 44139-4312
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(440) 542-4000
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
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
--- ---
As of January 31, 1998, the issuer had 9,174,261 shares of common stock
outstanding.
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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 December 28, 1997
-------------------------------------------------
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: 33-80000
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Signature Brands, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 36-3330781
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7005 Cochran Road, Glenwillow, Ohio 44139-4312
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(440) 542-4000
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
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
--- ---
The Registrant is a wholly-owned subsidiary of Signature Brands USA,
Inc. Accordingly, none of its equity securities are owned by non-affiliates.
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PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SIGNATURE BRANDS USA, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
December 28 September 28
1997 1997
--------------- ------------
(Unaudited)
ASSETS
Current assets
Cash $ 4,118 890
Trade accounts receivable, net 67,501 52,336
Inventories 37,851 39,607
Refundable income taxes 497 497
Deferred income taxes 6,329 6,329
Other current assets 1,378 1,333
-------- --------
Total current assets 117,674 100,992
Property, plant and equipment, net 16,820 17,598
Other assets
Excess of cost over fair value
of net assets acquired, net 134,921 135,893
Deferred financing costs, net 4,084 3,723
Other 1,579 1,504
-------- --------
Total other assets 140,584 141,120
-------- --------
Total assets $275,078 259,710
======== ========
(continued)
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SIGNATURE BRANDS USA, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
December 28 September 28
1997 1997
----------- ------------
(Unaudited)
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $ 5,000 8,750
Accounts payable 21,849 21,004
Accrued liabilities 29,645 22,217
--------- ---------
Total current liabilities 56,494 51,971
Long-term debt
Revolving Credit Facility 40,100 33,700
Term Note 55,000 51,508
Senior Subordinated Notes 68,960 68,904
--------- ---------
Total long-term debt 164,060 154,112
Product liability 2,813 3,212
Other 3,726 3,818
--------- ---------
Total liabilities 227,093 213,113
Stockholders' equity
Common stock, par value $.01 per share;
authorized 20,000 shares; issued
and outstanding 9,174 shares
at December 28, 1997 and 9,082 shares
at September 28, 1997 92 91
Paid-in capital 52,099 51,937
Warrants 1,773 1,773
Accumulated deficit (5,979) (7,204)
--------- ---------
Total stockholders' equity 47,985 46,597
--------- ---------
Total liabilities and stockholders' equity $ 275,078 259,710
========= =========
(See accompanying notes to unaudited consolidated financial statements.)
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SIGNATURE BRANDS USA, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
Thirteen weeks ended
-----------------------------
December 28 December 29
1997 1996
----------- -----------
Net sales $ 90,365 87,136
Operating costs and expenses
Cost of goods sold 63,388 61,077
Selling, general and
administrative expenses 18,219 19,055
Amortization of intangible assets 972 984
-------- --------
Total operating costs and expenses 82,579 81,116
-------- --------
Operating income 7,786 6,020
Interest expense 4,800 4,982
Other income (76) (189)
-------- --------
Income before income taxes 3,062 1,227
Income tax expense 1,837 736
-------- --------
Net income $ 1,225 491
======== ========
Basic and diluted net income per share $ 0.13 0.05
======== ========
(See accompanying notes to unaudited consolidated financial statements.)
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SIGNATURE BRANDS USA, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
Thirteen weeks ended
---------------------------
December 28 December 29
1997 1996
----------- -----------
Cash flows from operating activities
Net income $ 1,225 491
Adjustments to reconcile net income to
net cash used in operating activities
Depreciation and amortization of plant and equipment 1,598 1,730
Amortization of intangible assets 972 984
Amortization of deferred financing costs 214 214
Accretion of debt discount 56 56
Changes in
Accounts receivable (15,165) (8,163)
Inventories 1,756 (410)
Other assets (120) 271
Accounts payable 845 (140)
Accrued liabilities 7,428 4,202
Noncurrrent liabilities (491) 22
-------- --------
Net cash used in operating activities (1,682) (743)
-------- --------
Cash flows from investing activities
Capital expenditures (820) (728)
-------- --------
Net cash used in investing activities (820) (728)
-------- --------
Cash flows from financing activities
Proceeds from revolving credit facility 32,100 19,900
Repayments of revolving credit facility (25,700) (15,600)
Repayment of long-term debt (1,250) (1,250)
Proceeds from Term Note 992 -
Proceeds from stock issuances under option plans and awards 163 -
Payment of financing fees (575) -
-------- --------
Net cash provided by financing activities 5,730 3,050
-------- --------
Increase in cash 3,228 1,579
Cash at the beginning of the period 890 736
-------- --------
Cash at the end of the period $ 4,118 2,315
======== ========
Supplemental disclosures of cash flow information
Cash paid during the period for
Interest $ 2,251 2,375
Income taxes - 415
(See accompanying notes to unaudited consolidated financial statements.)
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SIGNATURE BRANDS USA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
(1) BASIS OF PRESENTATION
The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiary. All significant intercompany
accounts and transactions are eliminated in consolidation.
In the opinion of management, the information furnished herein includes
all adjustments of a normal recurring nature that are necessary for a
fair presentation of results for the interim periods shown in
accordance with generally accepted accounting principles. The unaudited
interim consolidated financial statements have been prepared using the
same accounting principles that were used in preparation of the
Company's annual report on Form 10-K for the year ended September 28,
1997, and should be read in conjunction with the consolidated financial
statements and notes thereto. Because of the seasonal nature of the
small appliance and consumer scale industries, the results of
operations for the interim period are not necessarily indicative of
results for the full fiscal year.
(2) INVENTORIES
The components of inventories are as follows:
December 28 September 28
1997 1997
----------- -------------
Raw materials and purchased parts $ 10,040 11,233
Finished goods 27,811 28,374
-------- ------
$ 37,851 39,607
======== ======
Work-in-process inventories are not significant and are included with
raw materials.
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SIGNATURE BRANDS USA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
(3) EARNINGS PER SHARE
The Company adopted Statement of Financial Accounting Standards No.
128, Earnings per Share ("SFAS No. 128"), in the quarter ended December
28, 1997. SFAS No. 128 requires the Company to disclose two earnings
per share amounts, basic and diluted. Basic earnings per share is based
on net income available to common stockholders and weighted average
common stock outstanding during the period. Diluted earnings per share
includes the effect of all dilutive securities which are convertible to
common stock of the Company such as stock options and warrants.
Below is a table which reconciles basic earnings per share with diluted
earnings per share for the thirteen weeks ended December 28, 1997 and
December 29, 1996.
Per Share
Net Income Shares Amounts
----------------------- --------------------- ---------------------
1997 1996 1997 1996 1997 1996
---------- ---------- --------- --------- --------- ---------
BASIC EARNINGS PER SHARE
Net income available to
common stockholders $ 1,225 $ 491 9,109 9,081 $ 0.13 $ 0.05
========= =========
EFFECT OF DILUTIVE SECURITIES (1)
Stock Options - - 298 268
---------- ---------- --------- ---------
DILUTED EARNINGS PER SHARE $ 1,225 $ 491 9,407 9,349 $ 0.13 $ 0.05
========== ========== ========= ========= ========= =========
(1) The Company's outstanding warrants and certain outstanding stock
options have not been included as they are currently
antidilutive.
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SIGNATURE BRANDS USA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
(4) CONDENSED CONSOLIDATED FINANCIAL INFORMATION
Condensed consolidated financial information for Signature Brands, Inc.
at December 28, 1997 and September 28, 1997, and for the thirteen week
periods ended December 28, 1997 and December 29, 1996 is as follows:
December 28 September 28
1997 1997
----------- ------------
Current assets $ 117,674 100,992
Noncurrent assets 157,404 158,718
--------- ---------
Total assets $ 275,078 259,710
========= =========
Current liabilities $ 56,494 51,971
Noncurrent liabilities 170,599 161,142
Intercompany payables 47,986 47,823
--------- ---------
Total liabilities 275,079 260,936
Stockholder's equity
Common stock - $1.00 stated value;
authorized 850 shares; issued and
outstanding 100 shares - -
Paid-in capital 2,821 2,821
Accumulated deficit (2,822) (4,047)
--------- ---------
Total stockholder's equity (1) (1,226)
--------- ---------
Total liabilities and stockholder's equity $ 275,078 259,710
========= =========
Thirteen week period ended
------------------------------
December 28 December 29
1997 1996
----------- ------------
Net sales $ 90,365 87,136
Gross profit 26,977 26,059
Net income 1,225 491
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
COMPANY OVERVIEW
Signature Brands USA, Inc. (the "Company") is a holding
company which, through its wholly owned subsidiary, Signature Brands, Inc.
("Signature Brands"), designs, manufactures, markets, and distributes a
comprehensive line of consumer and professional products. The Company's consumer
products, marketed under the Mr. Coffee(R), Health o meter(R), Counselor(R) and
Borg(R) brand names include automatic drip coffeemakers, iced and hot teamakers,
coffee filters, water filtration products, accessories and other kitchen
countertop appliances as well as bath, kitchen, and gourmet scales and
therapeutic devices. Professional products include the Pelouze(R) and Health o
meter(R) brands of office, foodservice and medical scales.
In fiscal 1998, the Company changed the classification of
certain sales to consumer product sales which previously were classified as
professional product sales. The fiscal 1997 amounts discussed below have been
restated to conform to the current period's presentation.
RESULTS OF OPERATIONS
Thirteen Weeks ended December 28, 1997 and December 29, 1996
Overview. Net sales in the first quarter of fiscal 1998
increased approximately 3.7 percent to $90.4 million, compared with $87.1
million for the same period in fiscal 1997. The Company's gross profit in the
first quarter of fiscal 1998 was $27.0 million, or approximately 29.9 percent of
net sales, compared with $26.1 million, or approximately 29.9 percent of net
sales in the same period in fiscal 1997.
Net Sales and Gross Profit
Consumer Products. In the first quarter of 1998, net sales of
consumer products were $81.1 million compared with $77.9 million in 1997, an
increase of 4.2 percent. The increase in net sales was primarily attributable to
significant improvements in sales of the Company's core products of coffeemakers
and bath scales somewhat offset by lower sales in other product lines, primarily
iced and hot teamakers and water filtration products. The improvement in
coffeemakers was due to increased unit volumes and favorable sales mix somewhat
offset by unfavorable pricing. Increased unit volumes partially offset by an
unfavorable shift in sales mix resulted in higher sales of bath scales. The
declines in sales of iced and hot teamakers and water filtration products were
due primarily to lower unit volumes. Gross profit for consumer products
increased 2.8 percent in the first quarter of 1998 to $23.7 million from $23.0
million in 1997. As a percent of net sales gross profit margin was 29.2 percent
in 1998, compared with 29.6 percent in 1997. An overall shift in sales mix away
from higher margin product lines such as iced and hot teamakers and coffee
filters to lower margin product lines such as coffeemakers and bath scales along
with continued competitive pricing across all
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product lines resulted in a decline in gross profit as a percent of net sales.
Somewhat offsetting these items were reductions in product costs. Historically,
gross margins on individual product lines have been greatest near the point of
introduction, gradually decreasing as the product matures and becomes subject to
pricing pressure. There continues to be intense pressure on retail prices and
there can be no assurance as to the Company's ability to achieve price increases
or maintain current price levels in the future. For these reasons, the Company
continues its efforts to introduce new products and to reduce the cost of
existing products as a means of protecting margins.
Professional Products. In the first quarter of 1998, net sales
of professional products were $9.3 million, comparable with the same period in
1997. Increased unit volumes and favorable sales mix in medical and office
products and higher unit volumes in commercial products were offset by decreased
international unit volumes and unfavorable pricing in the office and
international sales channels. Gross profit for professional products was $3.3
million, or 35.6 percent of net sales, in the first quarter of 1998, compared
with $3.0 million, or 32.7 percent of net sales, in 1997. The shift in sales mix
to higher margin medical and office products from lower margin international
sales resulted in improved gross profit as a percent of net sales. In addition,
improved product quality favorably impacted gross profit as a percent of net
sales as defective product costs were reduced. Somewhat offsetting these
favorable items were lower average selling prices.
Selling, General and Administrative Expenses. Selling,
general, and administrative expenses ("SG&A") for the first quarter of fiscal
1998 totalled $18.2 million, or approximately 20.2 percent of net sales,
compared with $19.1 million, or approximately 21.9 percent of net sales, for the
first quarter of fiscal 1997. The decrease in SG&A as a percentage of net sales
is primarily attributable to lower national advertising expenditures relating to
the hot teamaker and water filtration product lines somewhat offset by increased
bad debt expense due to retail customer bankruptcies and higher compensation
expenses.
Amortization of Intangible Assets. The amortization of
intangible assets relates primarily to intangible assets associated with the
acquisition by the Company of Mr. Coffee, inc. on August 17, 1994 ("the
Acquisition").
Interest Expense. Net interest expense for the first quarter
of fiscal 1998 was approximately $4.8 million, compared with $5.0 million for
the same period in the prior year.
Income Taxes. The effective tax rate was 60.0 percent for the
first quarter of fiscal 1998 and 1997. Expenses not deductible for tax purposes,
primarily the amortization of intangible assets associated with the acquisition,
resulted in an effective tax rate significantly higher than the statutory tax
rate in both periods.
Net Income. Based on the foregoing, the Company achieved net
income of approximately $1.2 million in the first quarter of fiscal 1998,
compared with approximately $0.5 million in the same period last year.
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LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of liquidity are internally
generated cash and borrowings under a Credit Agreement among Signature Brands
and a group of Banks represented by Banque Nationale de Paris ("BNP") as agent
and NBD Bank as documentation agent ("the Bank Credit Agreement") entered into
in connection with the Acquisition.
Cash flow activity for the first quarters of fiscal 1998 and
1997 is presented in the Consolidated Statements of Cash Flows. During the first
quarter of fiscal 1998, the Company required approximately $1.7 million in cash
flow to sustain its operating activities. Net income plus non-cash charges
generated approximately $4.1 million, while changes in working capital
components required approximately $5.8 million. The increase in accounts
receivable, which required approximately $15.2 million, is attributable to
seasonally higher sales activity. The decrease in inventories generated $1.8
million and is also attributable to seasonal factors. Accrued liabilities
increased due to higher seasonal accruals for advertising and promotional costs
and higher accrued interest generating $7.4 million.
The Company's business is somewhat seasonal, with a large
portion of its sales and earnings generated in the first fiscal quarter of the
year. During fiscal 1997, the Company generated approximately 32 percent of its
annual net sales in this quarter compared with 34 percent in fiscal 1996.
The Company's aggregate capital expenditures during the first
quarter of fiscal 1998 were approximately $0.8 million. The Company anticipates
making $6.2 million of capital expenditures for the remainder of fiscal 1998.
These capital expenditures relate primarily to new product tooling, information
systems and production equipment. Management plans to fund these capital
expenditures with available cash, cash flow from operations and, if necessary,
borrowings under the revolving credit facility provided under the Bank Credit
Agreement.
Indebtedness incurred in connection with the Acquisition has
significantly increased the Company's cash requirements and imposes various
restrictions on its operations. The Acquisition and related transactions were
financed with approximately $98 million in borrowings under the Bank Credit
Agreement, approximately $70 million in proceeds from a unit offering of 13
percent senior subordinated notes due 2002, (the "Notes") and warrants to
purchase shares of Common Stock at a price of $6.25 per share, and approximately
$17.2 million in net proceeds received from the exercise of certain transferable
rights to purchase 3,543,433 shares of Common Stock issued to the stockholders
of the Company. The Notes are generally not redeemable at the option of the
Company until August 15, 1999. For more detailed information, see the Company's
Annual Report on Form 10-K for the year ended September 28, 1997.
The Bank Credit Agreement includes a $55.0 million revolving
credit facility and a term loan facility, which is subject to amortization on a
quarterly basis in aggregate annual amounts of $5.0 million, $8.75 million,
$14.5 million and $33.0 million during fiscal 1998 through fiscal 2001,
respectively. A portion of the annual payment for fiscal 2001 may be accelerated
into fiscal 2000 if certain EBITDA levels are not achieved in fiscal 1999.
Signature
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Brands is required to make prepayments on the term loan and revolving credit
facility with a percentage of Excess Cash Flow (as defined) and 100 percent of
the proceeds from certain asset sales, issuances of debt and equity securities
and extraordinary items outside the ordinary course of business. There is no
required term loan prepayment for fiscal 1998. Signature Brands may also make
optional prepayments, in full or in part, on the term loan.
The Bank Credit Agreement and the indenture governing the
Notes contain various customary covenants which the Company was in compliance
with at December 28, 1997. Borrowing availability under the revolving credit
facility at December 28, 1997 was $14.2 million after considering outstanding
letters of credit of $0.7 million, actual borrowings of $40.1 million, and
sufficiency of collateral. Signature Brands' obligations under the Bank Credit
Agreement are secured by substantially all of Signature Brands' assets and a
pledge of all of its issued and outstanding common stock. Signature Brands'
obligations under the Bank Credit Agreement and the Notes are also guaranteed by
the Company.
Based upon current levels of operations, anticipated sales
growth and plans for expansion, management believes that the Company's cash flow
from operations (including favorable cost savings estimated to be achieved in
the future), combined with borrowings available under the Bank Credit Agreement,
will be sufficient to enable the Company to meet all of its cash operating
requirements over both the short term and the longer term, including scheduled
interest and principal payments, capital expenditures and working capital needs.
This expectation is predicated upon continued growth in revenues in the
Company's core businesses of coffeemakers and consumer scales consistent with
historical experience, achievement of operating cash flow margins consistent
with historical experience, and the absence of significant increases in interest
rates.
INFLATION
Increases in interest rates, the costs of materials and labor,
and federal, state and local tax rates can significantly affect the Company's
operations. Management believes that the current practices of maintaining
adequate operating margins through a combination of new product introductions,
product differentiation, cost reduction, outsourcing, manufacturing and overhead
expense control and careful management of working capital are its most effective
tools for coping with inflation.
NEW ACCOUNTING PRONOUNCEMENTS
During 1997, the FASB issued SFAS No. 129, Disclosure of
Information about Capital Structure, with an effective date for periods ending
after December 15, 1997 and, accordingly, will be effective for the financial
statements of the Company for the fiscal year ending in September 1998. The
disclosure requirements under SFAS No. 129 will not impact the Company.
Also during 1997, the FASB issued SFAS No. 130, Reporting
Comprehensive Income, and SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information, which are effective for periods beginning
after December 15, 1997. The disclosure
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requirements of these standards will, accordingly, be included in the financial
statements of the Company for the fiscal year ending September 1999.
YEAR 2000 BUSINESS MATTERS
The Company does not expect year 2000 issues to have any
material effect on its costs or to cause any significant disruptions to its
operations. The Company is currently implementing new information systems on a
company-wide basis which are fully year 2000 compliant. These new systems are
being installed to replace the Company's current systems, and are expected to be
fully operational before year 2000 issues will impact the Company. The cost of
these new systems will be capitalized and depreciated over their estimated
useful lives for financial statement purposes.
FORWARD LOOKING STATEMENTS
The Company is making this statement in order to satisfy the
"safe harbor" provisions contained in the Private Securities Litigation Reform
Act of 1995. This Quarterly Report on Form 10-Q includes forward-looking
statements relating to the business of the Company. Forward-looking statements
contained herein or in other statements made by the Company are made based on
management's expectations and beliefs concerning future events impacting the
Company and are subject to uncertainties and factors relating to the Company's
operations and business environment, all of which are difficult to predict and
many of which are beyond the control of the Company, that could cause actual
results of the Company to differ materially from those matters expressed in or
implied by forward-looking statements. The Company believes that the following
factors, among others, could affect its future performance and cause actual
results of the Company to differ materially from those expressed in or implied
by forward-looking statements made by or on behalf of the Company; (a) general
economic, business and market conditions; (b) competition; (c) the success of
advertising and promotional efforts; (d) the costs associated with new product
development and the acceptance of new product offerings; (e) the existence or
absence of adverse publicity; (f) changes in relationships with the Company's
major customers or in the financial condition of those customers; (g) the
maintenance of supply arrangements with key suppliers; (h) fluctuations in raw
materials costs or in the availability of materials; and (i) the adequacy of the
Company's financial resources and the availability and terms of any additional
capital.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Not applicable.
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PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
(c) Recent Sales of Unregistered Securities.
No securities of the Company that were not registered under
the Securities Act of 1933 have been issued or sold by the
Company during the period covered by this Quarterly Report on
Form 10-Q other than the following:
(i) On November 1, 1997, Meeta Vyas exercised an option, in
the form of a stock subscription, to purchase 91,727 shares
of Common Stock. These shares were issued effective as of
December 2, 1997. This option had an exercise price equal to
$1.75 per share, for aggregate consideration of $160,522. The
Company extended a loan to Ms. Vyas in the amount of $160,522
to facilitate her purchase of the shares. Such loan was
extended at a rate of interest equal to the market rate of
interest paid by Signature Brands under its revolving credit
facility. Ms. Vyas repaid the loan and interest charges in
full in January 1998. Registration under the Securities Act of
1933 was not affected with respect to the transaction
described above in reliance upon the exemption from
registration contained in Section 4(2) of the Securities Act
of 1933.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) See the Exhibit Index at page 17 of this Form 10-Q.
(b) No reports on Form 8-K were filed during the quarter
for which this report is being filed.
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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.
SIGNATURE BRANDS USA, INC.
SIGNATURE BRANDS, INC.
Date: February 10, 1998 /s/ Steven M. Billick
--------------------------------
Steven M. Billick
Senior Vice President, Treasurer
and Chief Financial Officer
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Exhibit Index
-------------
Exhibit Number Description of Document
- -------------- -----------------------
10.10 Credit Agreement dated August 17, 1994, as amended,
among Signature Brands', Banque Nationale de Paris,
New York Branch, NBD Bank and the banks and other
financial institutions named therein
10.25 Form of Indemnity Agreement entered into by and
between the Company and each of its Directors and
Officers *
10.26 Form of Promissory Note, due December 31, 1997,
between the Company and Meeta Vyas dated November 1,
1997 *
10.27 Stock Subscription Agreement between the Company and
Meeta Vyas dated November 1, 1997 *
27.1 Financial Data Schedule for Signature Brands USA,
Inc.
27.2 Financial Data Schedule for Signature Brands, Inc.
* Management contract or compensatory plan or arrangement.
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