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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
XX QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
--
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 2003
--------------------
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
JARDEN CORPORATION
DELAWARE 0-21052 35-1828377
State of Incorporation Commission File Number IRS Identification Number
555 THEODORE FREMD AVENUE
RYE, NEW YORK 10580
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (914) 967-9400
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at October 28, 2003
----- -------------------------------
Common Stock,
par value $.01 per share 17,828,904 shares
JARDEN CORPORATION
Quarterly Report on Form 10-Q For the
three and nine month periods ended September 30, 2003
INDEX
Page Number
-----------
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Statements of Income for the three
and nine month periods ended September 30, 2003 and
September 30, 2002 3
Condensed Consolidated Statements of Comprehensive Income for
the three and nine month periods ended September 30, 2003
and September 30, 2002 4
Condensed Consolidated Balance Sheets at September 30, 2003
and December 31, 2002 5
Condensed Consolidated Statements of Cash Flows for the nine
month periods ended September 30, 2003 and September 30, 2002 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 15
Item 3. Quantitative and Qualitative Disclosures About Market Risk 21
Item 4. Controls and Procedures 21
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings 22
Item 5. Other Information 22
Item 6. Exhibits and Reports on Form 8-K 22
Signature
Certifications
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
JARDEN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in thousands, except per share amounts)
Three month Nine month
period ended period ended
---------------------------- ----------------------------
September 30, September 30, September 30, September 30,
2003 2002 2003 2002
------------- ------------- ------------- -------------
Net sales ..................................... $167,874 $110,015 $395,988 $262,192
Costs and expenses:
Cost of sales .............................. 101,990 61,714 242,254 159,234
Selling, general and administrative expenses 35,808 24,676 92,113 57,484
-------- -------- -------- --------
Operating earnings ............................ 30,076 23,625 61,621 45,474
Interest expense, net ......................... 5,083 3,817 13,302 8,803
-------- -------- -------- --------
Income before taxes ........................... 24,993 19,808 48,319 36,671
Provision for income taxes .................... 9,747 8,076 18,891 9,660
-------- -------- -------- --------
Net income .................................... $ 15,246 $ 11,732 $ 29,428 $ 27,011
======== ======== ======== ========
Basic earnings per share ...................... $ 1.07 $ 0.83 $ 2.07 $ 1.95
Diluted earnings per share .................... $ 1.03 $ 0.80 $ 2.00 $ 1.89
Weighted average shares outstanding:
Basic ..................................... 14,253 14,131 14,246 13,855
Diluted ................................... 14,738 14,695 14,746 14,271
See accompanying notes to condensed consolidated financial statements.
3
JARDEN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME
(Unaudited)
(in thousands)
Three month period ended Nine month period ended
------------------------------- -------------------------------
September 30, September 30, September 30, September 30,
2003 2002 2003 2002
--------------- -------------- --------------- --------------
Net income ................................. $ 15,246 $ 11,732 $ 29,428 $ 27,011
Foreign currency translation ............... 159 (914) 3,487 210
Unrealized gain (loss) on interest rate swap 28 -- (110) --
Maturity of interest rate swaps ............ -- -- -- 524
-------- -------- -------- --------
Comprehensive income ....................... $ 15,433 $ 10,818 $ 32,805 $ 27,745
======== ======== ======== ========
See accompanying notes to condensed consolidated financial statements.
4
JARDEN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
September 30, December 31,
2003 2002
-------------- ------------
(Unaudited) (Note 1)
ASSETS
Current assets:
Cash and cash equivalents .................................................. $ 128,615 $ 56,779
Accounts receivable, net ................................................... 95,144 40,470
Inventories, net ........................................................... 94,207 59,463
Other current assets ....................................................... 18,008 16,018
-------------- ------------
Total current assets ............................................... 335,974 172,730
-------------- ------------
Non-current assets:
Property, plant and equipment, at cost ..................................... 185,891 141,528
Accumulated depreciation ................................................... (106,341) (96,291)
-------------- ------------
79,550 45,237
Goodwill ................................................................... 205,526 75,750
Other intangible assets, net ............................................... 102,115 58,310
Other assets ............................................................... 17,849 14,738
-------------- ------------
Total assets ................................................................... $ 741,014 $ 366,765
============== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt and current portion of long-term debt ...................... $ 16,692 $ 16,117
Accounts payable ........................................................... 33,195 18,466
Accrued salaries, wages and employee benefits .............................. 17,092 13,559
Other current liabilities .................................................. 44,832 23,031
-------------- ------------
Total current liabilities .......................................... 111,811 71,173
-------------- ------------
Non-current liabilities:
Long-term debt ............................................................. 376,291 200,838
Other non-current liabilities .............................................. 28,122 17,990
-------------- ------------
Total non-current liabilities ...................................... 404,413 218,828
-------------- ------------
Commitments and contingencies .................................................. -- --
Stockholders' equity:
Common stock ($.01 par value, 19,147 and 15,926 shares issued and 17,829
and 14,371 shares outstanding at September 30, 2003 and
December 31, 2002, respectively) ...................................... 191 159
Additional paid-in capital ................................................. 144,770 34,076
Retained earnings .......................................................... 98,461 69,033
Notes receivable for stock purchases ....................................... -- (5,109)
Other stockholders' equity ................................................. (18,632) (21,395)
-------------- ------------
Total stockholders' equity ......................................... 224,790 76,764
-------------- ------------
Total liabilities and stockholders' equity ..................................... $ 741,014 $ 366,765
============== ============
See accompanying notes to condensed consolidated financial statements.
5
JARDEN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine month period ended
----------------------------
September 30, September 30,
2003 2002
------------- -------------
Net cash provided by operations (including tax refunds of $422
and $38,458 in 2003 and 2002, respectively) ................. $ 47,528 $ 68,276
Financing activities:
Proceeds from revolving credit borrowings ................... 78,000 25,200
Payments on revolving credit borrowings ..................... (78,000) (34,600)
Proceeds from issuance of long-term debt .................... 160,000 50,000
Payments on long-term debt .................................. (5,296) (76,725)
Proceeds from bond issuance ................................. 31,950 147,654
Payments on seller note ..................................... (10,000) --
Proceeds from issuance of common stock, net of underwriting
fees and related expenses ............................... 113,933 3,776
Debt issue and amendment costs .............................. (5,772) (7,374)
Other ....................................................... 2,231 4,399
--------- ---------
Net cash provided by financing activities ................ 287,046 112,330
--------- ---------
Investing activities:
Additions to property, plant and equipment ................... (9,460) (4,972)
Acquisition of businesses, net of cash acquired .............. (253,278) (121,085)
--------- ---------
Net cash used in investing activities ..................... (262,738) (126,057)
--------- ---------
Net increase in cash and cash equivalents ........................ 71,836 54,549
Cash and cash equivalents at beginning of period ................. 56,779 6,376
--------- ---------
Cash and cash equivalents at end of period ....................... $ 128,615 $ 60,925
========= =========
See accompanying notes to condensed consolidated financial statements.
6
JARDEN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles in
the United States for interim financial information and with the instructions
to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles in the United States for complete financial statements.
In the opinion of management, all adjustments considered necessary for a fair
presentation have been included. Results of operations for the periods shown
are not necessarily indicative of results for the year, particularly in view
of the varying seasonality of certain of our product line sales.
The balance sheet at December 31, 2002 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles in the
United States for complete financial statements.
For further information, refer to the consolidated financial statements and
footnotes thereto included in Jarden Corporation's (the "Company") annual
report on Form 10-K for the year ended December 31, 2002.
Certain reclassifications have been made in the Company's financial
statements of prior years to conform to the current year presentation. These
reclassifications have no impact on previously reported net income.
2. STOCK OPTIONS
The Company accounts for the issuance of stock options using the intrinsic
value method in accordance with Accounting Principles Board ("APB") No. 25,
Accounting for Stock Issued to Employees, and related interpretations.
Generally for the Company's stock option plans, no compensation cost is
recognized in the Consolidated Statements of Income because the exercise
price of the Company's stock options equals the market price of the
underlying stock on the date of grant.
Had compensation cost for the Company's stock option plans been determined
based on the fair value at the grant dates for awards under those plans, the
Company's net income and earnings per share would have been reduced to the
pro forma amounts indicated (in thousands of dollars, except per share data):
Three month period ended Nine month period ended
----------------------------- -----------------------------
September 30, September 30, September 30, September 30,
2003 2002 2003 2002
------------- ------------- ------------- -------------
Net income, as reported ............................... $ 15,246 $ 11,732 $ 29,428 $ 27,011
Deduct: Total stock-based employee compensation
expense determined under fair value based method
for all awards, net of related tax effects ..... (546) (330) (1,440) (584)
------------- ------------- ------------- -------------
Pro forma net income .................................. $ 14,700 $ 11,402 $ 27,988 $ 26,427
============= ============= ============= =============
Basic earnings per share:
As reported ..................................... $ 1.07 $ 0.83 $ 2.07 $ 1.95
Pro forma ....................................... $ 1.03 $ 0.81 $ 1.96 $ 1.91
Diluted earnings per share:
As reported ..................................... $ 1.03 $ 0.80 $ 2.00 $ 1.89
Pro forma ....................................... $ 1.00 $ 0.78 $ 1.90 $ 1.85
The fair value of each option granted is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in 2003 and 2002: no dividend yield in both
years, expected volatility of 39 percent and 44 percent, respectively,
risk-free interest rate of 1.6 percent and 2.0 percent, respectively, and
expected life of 7.2 and 7.5 years, respectively. There were 257,000 stock
options granted in the first nine months of 2003.
7
3. INVENTORIES
Inventories at September 30, 2003 and December 31, 2002 were comprised of the
following (in thousands):
September 30, December 31,
2003 2002
------------ ------------
Raw materials and supplies $14,503 $ 6,562
Work in process .......... 6,994 7,300
Finished goods ........... 72,710 45,601
------------ ------------
Total inventories ... $94,207 $59,463
============ ============
4. ACQUISITIONS
On September 2, 2003, the Company acquired all of the issued and outstanding
stock of Lehigh Consumer Products Corporation and its subsidiary ("Lehigh"),
pursuant to a stock purchase agreement ("Lehigh Acquisition"). Lehigh is the
largest supplier of rope, cord and twine for the U.S. consumer marketplace and a
leader in innovative storage and organization products for the home and garage
as well as in the security door and fencing market. The purchase price of the
transaction was approximately $157.6 million, including transaction expenses,
and was principally funded by a draw down under the Company's amended and
restated senior credit facility ("Amended Credit Agreement") (see Note 5). In
addition, the Lehigh Acquisition includes an earn-out provision with a potential
payment in cash or Company common stock of up to $25 million payable in 2006,
provided that certain earnings performance targets are met. If paid, the Company
expects to capitalize the cost of the earn-out. Lehigh is included in the
branded consumables segment from September 2, 2003 (see Note 11).
On February 7, 2003, the Company completed its acquisition of the business of
Diamond Brands International, Inc. and its subsidiaries ("Diamond Brands"), a
manufacturer and distributor of niche household products, including kitchen
matches, toothpicks and retail plastic cutlery under the Diamond(R) and
Forster(R) trademarks, pursuant to an asset purchase agreement ("Diamond
Acquisition"). The purchase price of this transaction was approximately $92
million, including transaction expenses and a deferred payment in the amount of
$5.8 million paid in cash on August 7, 2003. The Company used cash on hand and
draw downs under its debt facilities to finance the transaction. The acquired
plastic manufacturing operation is included in the plastic consumables segment
in 2003 and the acquired wood manufacturing operation and branded product
distribution business is included in the branded consumables segment in 2003
(see Note 11).
In connection with the Lehigh Acquisition and the Diamond Acquisition, the
Company has preliminarily allocated $86.2 million and $39.5 million,
respectively, to goodwill and $28.8 million and $13.8 million, respectively, to
trademarks. The Company has obtained a third party valuation for the intangible
assets recorded in connection with the Diamond Acquisition and is currently in
the process of obtaining a third party valuation for the intangible assets
acquired in connection with the Lehigh Acquisition and for certain fixed assets
that were acquired in connection with both the Lehigh Acquisition and the
Diamond Acquisition. In addition, certain working capital allocations are
preliminary and will be finalized by the Company within one year of the
respective dates of acquisition. Amortization of the intangible assets recorded
is fully deductible for income tax purposes but these intangible assets are not
subject to book amortization.
On April 24, 2002, the Company completed its acquisition of the business of
Tilia International, Inc. and its subsidiaries (collectively "Tilia"), pursuant
to an asset purchase agreement (the "Tilia Acquisition"). Pursuant to the Tilia
Acquisition, the Company acquired Tilia for approximately $145 million in cash
and $15 million in seller debt financing. In addition, the Tilia Acquisition
includes an earn-out provision with a potential payment in cash or Company
common stock, at the Company's sole discretion, of up to $25 million payable in
2005, provided that certain earnings performance targets are met. If these
earnings performance targets are met, the Company will capitalize the cost of
the earn-out provision.
The Lehigh Acquisition, the Diamond Acquisition and the Tilia Acquisition were
all entered into as part of the Company's strategy of acquiring branded consumer
products businesses with leading market positions in niche markets for products
used in and around the home, attractive operating margins and strong management.
The results of Lehigh, Diamond Brands, and Tilia have been included in the
Company's results from September 2, 2003; February 1, 2003 and April 1, 2002,
respectively.
The following unaudited pro forma financial information gives pro forma effect
to the Lehigh Acquisition, the Diamond Acquisition and the Tilia Acquisition
with the related financings as if they had been consummated as of the beginning
of each period presented. The pro forma net income for the nine month period
ended September 30, 2003, includes $1.5 million of reorganization expenses
incurred by Diamond Brands prior to February 7, 2003. The pro forma net income
8
amounts for the nine month period ended September 30, 2002, includes the net
$4.9 million income tax valuation allowance released in this period (see Note 6)
(in thousands of dollars, except per share data):
Three month period ended Nine month period ended
--------------------------------- --------------------------------
September 30, September 30, September 30, September 30,
2003 2002 2003 2002
Pro Forma Pro Forma Pro Forma Pro Forma
--------------- --------------- --------------- ---------------
Net sales ................ $190,900 $168,553 $493,483 $475,316
Net income ............... 17,549 15,516 35,548 39,919
Diluted earnings per share 1.19 1.06 2.41 2.80
In the second quarter of 2003, the Company completed its acquisition of O.W.D.,
Incorporated and Tupper Lake Plastics, Incorporated (collectively "OWD"). The
acquired branded product distribution operation is included in the branded
consumables segment from April 1, 2003. The acquired plastic manufacturing
operation is included in the plastic consumables segment from April 1, 2003. The
results of OWD did not have a material effect on the Company's results for the
three month or nine month periods ended September 30, 2003 and are not included
in the pro forma financial information presented herein.
5. DEBT
In connection with the Lehigh Acquisition, the Company amended and restated its
existing senior credit facility. The Company's Amended Credit Agreement provides
for up to $280 million of senior secured loans, consisting of a $70 million
revolving credit facility, a $60 million term loan facility, and a newly issued
$150 million term loan facility. The new term loan facility bears interest at a
rate equal to (i) the Eurodollar Rate (as determined by the Administrative
Agent) pursuant to an agreed formula or (ii) a Base Rate equal to the higher of
(a) the Bank of America prime rate and (b) the federal funds rate plus 50%,
plus, in each case, an applicable margin of 2.75% per annum for Eurodollar loans
and 1.75% per annum for Base Rate loans. The pricing and principal of the
revolving credit facility and the previously existing term loan did not change.
The revolving credit facility continues to have a $15 million letter of credit
sub-limit and a $10 million swing line loans sub-limit. On September 2, 2003,
the Company drew down the full cash amount of the new $150 million term loan
facility, which funds were used principally to pay the majority of the cash
consideration for the Lehigh Acquisition.
On May 8, 2003, pursuant to an indenture dated January 29, 2003, as supplemented
by a supplemental indenture dated May 8, 2003, the Company issued $30 million of
9 3/4% senior subordinated notes due 2012 ("New Notes") under its shelf
registration statement. The net proceeds of the offering were primarily used to
reduce the outstanding revolver balances under the Company's senior credit
facility. The New Notes were issued at a price of 106.5% of face value such that
the Company received approximately $32.0 million in net proceeds.
The New Notes will mature on May 1, 2012, however, on or after May 1, 2007, the
Company may redeem all or part of the New Notes at any time at a redemption
price ranging from 100% to 104.875% of the principal amount, plus accrued and
unpaid interest and liquidated damages, if any. Prior to May 1, 2005, the
Company may redeem up to 35% of the aggregate principal amount of the New Notes
with the net cash proceeds from certain public equity offerings at a redemption
price of 109.75% of the principal amount, plus accrued and unpaid interest and
liquidated damages, if any. Interest on the New Notes accrues at the rate of
9.75% per annum and is payable semi-annually in arrears on May 1 and November 1,
commencing on November 1, 2003.
The Company repaid seller debt financing, incurred in connection with the Tilia
Acquisition, in the principal amount of $10 million on March 31, 2003.
As of September 30, 2003, the Company had $202.2 million outstanding under the
term loan facilities and no outstanding amounts under the revolving credit
facility of its Amended Credit Agreement. Net availability under the revolving
credit agreement was approximately $64.4 million as of September 30, 2003, after
deducting approximately $5.6 million of issued letters of credit. The Company is
required to pay commitment fees on the unused balance of the revolving credit
facility.
As of September 30, 2003, the Company's long-term debt included approximately
$5.6 million of non-debt balances arising from interest rate swap transactions
that the Company had entered into (see Note 12).
9
6. INCOME TAXES
The Company's effective tax rate for the first nine months of 2003 was 39.1%
compared to an effective tax rate of 26.3% in the first nine months of 2002. At
December 31, 2001, the Company had federal net operating losses that were
recorded as a deferred tax asset with a valuation allowance of $5.4 million. Due
to the impact of the Job Creation Act and the tax refunds that the Company
received as a result, a net $4.9 million of the valuation allowance was released
in the first nine months of 2002, resulting in a reduction of the Company's
effective tax rate.
7. CONTINGENCIES
The Company is involved in various legal disputes in the ordinary course of
business. In addition, the Environmental Protection Agency has designated the
Company as a potentially responsible party, along with numerous other companies,
for the clean up of several hazardous waste sites. Based on currently available
information, the Company does not believe that the disposition of any of the
legal or environmental disputes the Company is currently involved in will have a
material adverse effect upon the financial condition, results of operations,
cash flows or competitive position of the Company. It is possible, that as
additional information becomes available, the impact on the Company of an
adverse determination could have a different effect.
8. EXECUTIVE LOAN PROGRAM
On January 24, 2002, Martin E. Franklin, Chairman and Chief Executive Officer,
and Ian G.H. Ashken, Vice Chairman, Chief Financial Officer and Secretary
exercised 600,000 and 300,000 non-qualified stock options, respectively, which
had been granted under the Company's 2001 Stock Option Plan. The Company issued
these shares out of its treasury stock account. The exercises were accomplished
via loans from the Company under its Executive Loan Program. The principal
amounts of the loans were $3.3 million and $1.6 million, respectively, and bore
interest at 4.125% per annum. The loans were due on January 23, 2007 and were
classified within the stockholders' equity section. The loans could be repaid in
cash, shares of the Company's common stock, or a combination thereof. In
February 2003, Mr. Ashken surrendered to the Company shares of the Company's
stock to repay $0.3 million of his loan. On April 29, 2003, Messrs. Franklin and
Ashken each surrendered to the Company shares of the Company's common stock to
repay in full all remaining principal amounts and accrued interest owed under
their respective loans. The Company will not make any additional loans under the
Executive Loan Program.
9. EQUITY
On September 30, 2003, the Company completed a public offering of 3,220,000
shares of common stock at $37 per share. Proceeds from the offering, net of
underwriting fees and related expenses, totaled approximately $112.3 million.
The Company expects to use the net proceeds for working capital and general
corporate purposes, including, but not limited to, potential future acquisitions
and debt repayment.
As disclosed in the Company's 2003 Proxy Statement, the board of directors of
the Company approved, on February 6, 2003, the granting of additional restricted
shares of common stock to Messrs. Franklin and Ashken. Accordingly, during the
second quarter of 2003, restricted shares of common stock in the aggregate
amounts of 150,000 shares and 50,000 shares were issued to Messrs. Franklin and
Ashken, respectively, under the Company's 2003 Stock Incentive Plan. The Company
issued these shares out of its treasury stock account.
During October 2003, the terms of all of the restricted shares of common stock
issued or scheduled to be issued to Messrs. Franklin and Ashken, in the
aggregate amount of 350,000 shares and 130,000 shares, respectively, were
amended to state that the restrictions shall lapse upon the earlier of (i) a
change in control of the Company; or (ii) the earlier of the Company's common
stock achieving a closing price of $42 (up from $35) or the Company achieving
annualized revenues of $800 million. However, if such restrictions were to lapse
during a period when Mr. Franklin or Mr. Ashken are subject to additional
contractual limitations on the sale of securities, the restrictions on such
shares would continue until the expiration or waiver of such additional
contractual limitations.
Also during the third quarter of 2003, 35,000 restricted shares of common stock
were issued to James E. Lillie, the new Chief Operating Officer, and 4,800
restricted shares of common stock were issued to certain key employees of the
Company under the Company's 2003 Stock Incentive Plan. The Company issued these
shares out of its treasury stock account. The restrictions on Mr. Lillie's
shares shall lapse upon the earlier of (i) a change in control of the Company;
or (ii) the earlier of the Company's common stock achieving a closing price of
$42 (up from $35) or the Company achieving annualized revenues of $800 million.
However, if such restrictions were to lapse during a period when Mr. Lillie is
subject to additional contractual limitations on the sale of securities, the
restrictions on such shares would continue until the
10
expiration or waiver of such additional contractual limitations. The
restrictions on the other 4,800 shares will lapse ratably over five years of
employment with the Company.
The Company records non-cash compensation expense for its issued and outstanding
restricted stock either when the restrictions lapse or ratably over time, when
the passage of time is the only restriction. It is anticipated that during the
quarter ending December 31, 2003, approximately $21 million of non-cash
compensation expense will be incurred related to the lapsing of restrictions
over restricted stock. The Company will receive a tax deduction for this
non-cash compensation charge.
On October 30, 2003, the Company announced its board of directors had approved a
3-for-2 split of its outstanding shares of common stock. Stockholders of record
at the close of business on November 12, 2003 will receive one additional share
of Jarden common stock for every two shares of Jarden common stock owned at this
date. The additional shares are expected to be distributed on or about November
26, 2003 by the Company's transfer agent. The stock split will increase the
total number of shares of common stock outstanding from approximately 17.8
million to approximately 26.7 million.
10. EARNINGS PER SHARE CALCULATION
Basic earnings per share are computed by dividing net income by the weighted
average number of common shares outstanding for the period. Diluted earnings per
share are calculated based on the weighted average number of outstanding common
shares plus the dilutive effect of stock options as if they were exercised and
restricted common stock. A computation of earnings per share is as follows (in
thousands, except per share data):
Three month period ended Nine month period ended
----------------------------- -----------------------------
September 30, September 30, September 30, September 30,
2003 2002 2003 2002
------------- ------------- ------------- -------------
Net income ............................. $15,246 $11,732 $29,428 $27,011
------- ------- ------- -------
Weighted average shares outstanding .... 14,253 14,131 14,246 13,855
Additional shares assuming conversion of
stock options and restricted stock . 485 564 500 416
------- ------- ------- -------
Weighted average shares outstanding
assuming conversion ................ 14,738 14,695 14,746 14,271
------- ------- ------- -------
Basic earnings per share ............... $ 1.07 $ 0.83 $ 2.07 $ 1.95
Diluted earnings per share ............. $ 1.03 $ 0.80 $ 2.00 $ 1.89
11. SEGMENT INFORMATION
The Company reports four business segments: branded consumables, consumer
solutions, plastic consumables and other.
In the branded consumables segment, the Company markets, distributes and in
certain cases manufactures a broad line of branded products that includes craft
items, food preparation kits, home canning jars, jar closures, kitchen matches,
plastic cutlery, rope, cord and twine, storage and workshop accessories,
toothpicks and other accessories marketed under the Ball(R), Bernardin(R),
Crawford(R), Diamond(R), Forster(R), Kerr(R), Lehigh(R) and Leslie-Locke(R)
brand names. As discussed in Note 4, the Diamond Brands wood manufacturing
operation and branded product distribution business and the Lehigh business have
been included in the branded consumables segment effective February 1, 2003 and
September 2, 2003, respectively. In the consumer solutions segment, which was
acquired in April 2002, the Company sources, markets and distributes an array of
home vacuum packaging machines under the market leading FoodSaver(R) brand name,
as well as other products that service the needs of the consumer in the kitchen.
The plastic consumables segment manufactures, markets and distributes a wide
variety of consumer and medical plastic products, including products used by the
Company's branded consumables segment (plastic cutlery) and consumer solutions
segment (containers). As discussed in Note 4, the Diamond Brands plastic
manufacturing operation is included in the plastic consumables segment effective
February 1, 2003. The other segment is primarily a producer of zinc strip.
11
Net sales, operating earnings, depreciation and amortization, and assets
employed in operations by segment are summarized as follows (in thousands of
dollars):
Three month period ended Nine month period ended
---------------------------- -----------------------------
September 30, September 30, September 30, September 30,
2003 2002 2003 2002
------------- ------------- ------------- -------------
Net sales:
Branded consumables (1) (2) ............. $ 81,593 $ 35,165 $ 181,974 $ 98,698
Consumer solutions (3) .................. 55,276 46,102 130,723 77,444
Plastic consumables (4) ................. 30,136 17,044 80,368 54,118
Other ................................... 11,841 11,988 29,713 32,718
Intercompany ............................ (10,972) (284) (26,790) (786)
--------- --------- --------- ---------
Total net sales ................... $ 167,874 $ 110,015 $ 395,988 $ 262,192
========= ========= ========= =========
Operating earnings:
Branded consumables (1) (2) ............. $ 16,263 $ 9,044 $ 29,390 $ 18,899
Consumer solutions (3) .................. 11,219 10,764 22,683 13,961
Plastic consumables (4) ................. 1,590 1,536 6,674 6,644
Other ................................... 1,199 2,280 4,115 5,965
Intercompany ............................ (195) 1 (1,241) 5
--------- --------- --------- ---------
Total operating earnings .......... 30,076 23,625 61,621 45,474
Interest expense, net ........................ 5,083 3,817 13,302 8,803
--------- --------- --------- ---------
Income before taxes .......................... $ 24,993 $ 19,808 $ 48,319 $ 36,671
========= ========= ========= =========
Depreciation and amortization:
Branded consumables (1) (2) ............. $ 1,228 $ 471 $ 3,096 $ 1,411
Consumer solutions (3) .................. 626 328 1,669 837
Plastic consumables (4) ................. 1,848 1,082 5,044 3,252
Other ................................... 534 557 1,609 1,684
Corporate ............................... 25 23 73 66
--------- --------- --------- ---------
Total depreciation and amortization $ 4,261 $ 2,461 $ 11,491 $ 7,250
========= ========= ========= =========
As of
-----------------------------
September 30, December 31,
2003 2002
------------- ------------
Assets employed in operations:
Branded consumables (1) (2) ............ $298,498 $ 61,093
Consumer solutions (3) ................. 192,416 184,180
Plastic consumables (4) ................ 82,727 39,551
Other .................................. 14,039 14,573
-------- --------
Total assets employed in operations 587,680 299,397
Corporate (5) ......................... 153,334 67,368
-------- --------
Total assets ...................... $741,014 $366,765
======== ========
(1) The Lehigh business is included in the branded consumables segment
effective September 2, 2003.
(2) The Diamond Brands wood manufacturing operation and branded product
distribution business is included in the branded consumables segment
effective February 1, 2003.
(3) The consumer solutions segment was purchased effective April 1, 2002.
(4) The Diamond Brands plastic manufacturing operation is included in the
plastic consumables segment effective February 1, 2003.
(5) Corporate assets primarily include cash and cash equivalents, amounts
relating to benefit plans, deferred tax assets and corporate facilities and
equipment.
Within the branded consumables segment are three product lines: kitchen
products, home improvement products, and other specialty products. Kitchen
products include home canning and accessories, plastic cutlery, straws,
toothpicks, food
12
preparation kits and kitchen matches. Net sales of kitchen products were
$65.4 million and $34.7 million for the three month periods ended September
30, 2003 and 2002, respectively and $154.9 million and $97.3 million for the
nine month periods ended September 30, 2003 and 2002, respectively. Home
improvement products include rope, cord and twine, storage and
organizational products for the home and garage and security door and
fencing products. Net sales of home improvement products were $10.7 million
for both the three month and the nine month periods ended September 30,
2003. There were no home improvement product sales in either the three month
or nine month periods ended September 30, 2002. Other specialty products
include institutional plastic cutlery and sticks, book and advertising
matches, craft items, laundry care products, lighters and fire starters and
other commercial products. Net sales of other specialty products were $5.5
million and $0.5 million for the three month periods ended September 30,
2003 and 2002, respectively and $16.4 million and $1.4 million for the nine
month periods ended September 30, 2003 and 2002, respectively.
As of September 30, 2003, $171.4 million of the Company's total intangible
assets are included in the assets of the branded consumables segment, $119.6
million are included in assets of the consumer solutions segment and $16.6
million are included in the assets of the plastic consumables segment. Of
such amounts, $127.0 million of the Company's goodwill is included in the
assets of the branded consumables segment, $61.9 million is included in the
assets of the consumer solutions segment and $16.6 million is included in
the assets of the plastic consumables segment.
12. DERIVATIVE FINANCIAL INSTRUMENTS
The Company actively manages its fixed and floating rate debt mix using
interest rate swaps. The Company will enter into fixed and floating rate
swaps to alter its exposure to the impact of changing interest rates on its
consolidated results of operations and future cash outflows for interest.
Floating rate swaps are used to convert the fixed rates of long-term debt
into short-term variable rates to take advantage of current market
conditions. Fixed rate swaps are used to reduce the Company's risk of the
possibility of increased interest costs. Interest rate swap contracts are
therefore used by the Company to separate interest rate risk management from
the debt funding decision. At September 30, 2003, the interest rate on
approximately 30% of the Company's debt obligation, excluding the $5.6
million of non-debt balances discussed in Note 5, was fixed by either the
nature of the obligation or through interest rate contracts.
Fair Value Hedges
On May 6, 2003, the Company entered into a $30 million interest rate swap
("New Swap") to receive a fixed rate of interest and pay a variable rate of
interest based upon LIBOR. The New Swap is a swap against the Company's 9
3/4% senior subordinated notes issued under an indenture dated April 24,
2002 ("Notes").
In March 2003, the Company unwound a $75 million interest rate swap to
receive a fixed rate of interest and pay a variable rate of interest based
upon LIBOR and contemporaneously entered into a new $75 million interest
rate swap ("Replacement Swap"). Like the swap that it replaced, the
Replacement Swap is a swap against the Notes. In return for unwinding the
swap, the Company received $3.2 million of cash proceeds. Of this amount,
approximately $1 million of proceeds related to accrued interest that was
owed to the Company at such time. The remaining $2.2 million of proceeds is
being amortized over the remaining life of the Notes as a credit to interest
expense and the unamortized balances are included in the Company's Condensed
Consolidated Balance Sheet as an increase to the value of the long-term
debt.
Both the New Swap and Replacement Swap have maturity dates that are the same
as the Notes. Interest is payable on both the New Swap and Replacement Swap
semi-annually in arrears on May 1 and November 1.
Both of the contracts above are considered to be effective hedges against
changes in the fair value of the Company's fixed-rate debt obligation for
both tax and accounting purposes. Accordingly, the interest rate swap
contracts are reflected at fair value in the Company's Condensed
Consolidated Balance Sheet and the related portion of fixed-rate debt being
hedged is reflected at an amount equal to the sum of its carrying value plus
an adjustment representing the change in fair value of the debt obligations
attributable to the interest rate risk being hedged. The fair market value
of the interest rate swaps as of September 30, 2003 was against the Company
in an amount of approximately $0.5 million and is included as a liability in
the Condensed Consolidated Balance Sheet, with a corresponding offset to
long-term debt. In addition, changes during any accounting period in the
fair value of the interest rate swaps, as well as offsetting changes in the
adjusted carrying value of the related portion of fixed-rate debt being
hedged, will be recognized as adjustments to interest expense in the
Company's Condensed Consolidated Statements of Income. The net effect of
this accounting on the Company's operating results is that interest expense
on the portion of fixed-rate debt being hedged is generally recorded based
on variable interest rates. The Company is exposed to credit loss, in the
event of non-performance by the other party to its current existing swap, a
large financial institution. However, the Company does not anticipate
non-performance by the other party.
13
Cash Flow Hedge
Effective April 2, 2003, the Company entered into an interest rate swap such
that converted $37 million of floating rate interest payments under its term
loan facility for a fixed obligation that carries an interest rate, including
applicable margin, of 4.25% per annum. The swap has interest payment dates that
are the same as the term loan facility and it matures on September 30, 2004. The
swap is considered to be a cash flow hedge and is also considered to be an
effective hedge against changes in the fair value of the Company's floating-rate
debt obligation for both tax and accounting purposes. Gains and losses related
to the effective portion of the interest rate swap are reported as a component
of other comprehensive income and will be reclassified into earnings in the same
period that the hedged transaction affects earnings.
The Company's derivative activities do not create additional risk because gains
and losses on derivative contracts offset gains and losses on the assets,
liabilities and transactions being hedged. As derivative contracts are
initiated, the Company designates the instruments individually as either a fair
value hedge or a cash flow hedge. Management reviews the correlation and
effectiveness of its derivatives on a periodic basis.
14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Jarden is a leading provider of niche consumer products used in and around the
home, under well-known brand names including Ball(R), Bernardin(R), Crawford(R),
Diamond(R), FoodSaver(R), Forster(R), Kerr(R) , Lehigh(R) , and Leslie-
Locke(R). In North America, we are the market leader in several categories,
including branded retail plastic cutlery, home canning, home vacuum packaging,
kitchen matches, rope, cord and twine and toothpicks. We also manufacture zinc
strip and a wide array of plastic products for third party consumer product and
medical companies, as well as our own businesses.
We have grown by actively acquiring new brands and expanding sales of our
existing brands. Our strategy to achieve future growth is to acquire new brands,
sustain profitable internal growth and expand our international business.
On September 2, 2003, we acquired all of the issued and outstanding stock of
Lehigh Consumer Products Corporation and its subsidiary ("Lehigh"), pursuant to
a stock purchase agreement ("Lehigh Acquisition"). Lehigh is the largest
supplier of rope, cord and twine for the U.S. consumer marketplace and a leader
in innovative storage and organization products for the home and garage as well
as products in the security door and fencing market. The purchase price of the
transaction was approximately $157.6 million, including transaction expenses. In
addition, the Lehigh Acquisition includes an earn-out provision with a potential
payment in cash or our common stock of up to $25 million payable in 2006,
provided that certain earnings performance targets are met. If paid, we expect
to capitalize the cost of the earn-out. Lehigh is included in our branded
consumables segment from September 2, 2003.
On February 7, 2003, we completed our acquisition of the business of Diamond
Brands International, Inc. and its subsidiaries ("Diamond Brands"), a
manufacturer and distributor of kitchen matches, toothpicks and retail plastic
cutlery under the Diamond(R) and Forster(R) trademarks, pursuant to an asset
purchase agreement ("Diamond Acquisition"). The purchase price of this
transaction was approximately $92 million, including transaction costs and a
deferred payment in the amount of $5.8 million paid in cash on August 7, 2003.
We used cash on hand and draw downs under our debt facilities to finance the
transaction. The acquired plastic manufacturing operation is included in our
plastic consumables segment in 2003 and the acquired wood manufacturing
operation and branded product distribution business is included in our branded
consumables segment in 2003. In the second quarter of 2003, the Company
completed its acquisition of O.W.D., Incorporated and Tupper Lake Plastics,
Incorporated (collectively "OWD").
On April 24, 2002, we completed our acquisition of the business of Tilia
International, Inc. and its subsidiaries (collectively "Tilia"), pursuant to an
asset purchase agreement (the "Tilia Acquisition"). We acquired the business of
Tilia for approximately $145 million in cash and $15 million in seller debt
financing. In addition, the Tilia Acquisition includes an earn-out provision
with a potential payment in cash or our common stock, at our sole discretion, of
up to $25 million payable in 2005, provided that certain earnings performance
targets are met. If paid, we expect to capitalize the cost of the earn-out.
The Lehigh Acquisition, the Diamond Acquisition and the Tilia Acquisition were
all entered into as part of our strategy of acquiring branded consumer products
businesses with leading market positions in niche markets for products used in
and around the home, attractive operating margins and strong management. The
results of Lehigh, Diamond Brands and Tilia have been included in our results
from September 2, 2003, February 1, 2003 and April 1, 2002, respectively.
Pro forma financial information relating to the Lehigh Acquisition, the Diamond
Acquisition and the Tilia Acquisition has been included in Note 4 to our
Condensed Consolidated Financial Statements.
RESULTS OF OPERATIONS - COMPARISON OF THIRD QUARTER 2003 TO THIRD QUARTER 2002
We reported net sales of $167.9 million for the third quarter of 2003, a 52.6%
increase from net sales of $110.0 million in the third quarter of 2002.
In the third quarter of 2003, our branded consumables segment reported net sales
of $81.6 million compared to $35.2 million in the third quarter of 2002. This
increase of 132.0% was principally a result of the Diamond Acquisition,
effective February 1, 2003. Also, it was attributable to an increase in sales of
home canning and accessory products, reflecting both successful new promotional
activity in the current years quarter and also sales in the comparable period of
the prior year being negatively affected by drought conditions. In addition, the
acquisitions of Lehigh and OWD in the third and second quarters of 2003,
respectively, also contributed to this increase.
15
In the third quarter of 2003, our consumer solutions segment recorded net sales
of $55.3 million compared to $46.1 million in the third quarter of 2002. This
increase of 19.9% was principally due to increased U.S. retail sales and
international sales of our home vacuum packaging products.
In the third quarter of 2003, our plastic consumables segment reported net sales
of $30.1 million compared to $17.0 million in the third quarter of 2002. The
principal reason for this increase of 76.8% was intercompany sales generated by
the addition of the plastic manufacturing business acquired in February 2003
with the Diamond Acquisition. In addition, the intercompany sales resulting from
the OWD acquisition in the second quarter of 2003 also contributed to this
increase. Excluding intercompany sales, net sales for the plastic consumables
segment increased principally due to higher volumes with a large customer.
In the third quarter of 2003, our other segment reported net sales of $11.8
million compared to $12.0 million in the third quarter of 2002. The principal
reason for this decrease of 1.2% was a reduction in our low denomination
international coinage business as well as reduced demand for cathodic products,
partially offset by an increase in sales to a major customer as a result of a
contractual change whereby this segment took on the responsibility of purchasing
the raw material inventory for the customer.
We reported operating earnings of $30.1 million in the third quarter of 2003
compared to operating earnings of $23.6 million in the third quarter of 2002.
The principal reason for this increase of $6.5 million, or 27.3%, was a $7.2
million increase in the operating earnings of the branded consumables segment.
Such increase was principally due to the acquisition of the former Diamond
Brands product lines and the business of Lehigh, in addition to strength in the
home canning product lines, due to the factors discussed in net sales above and
also as a result of a favorable sales mix from increased sales of premium home
canning products. Furthermore, operating earnings of the consumer solutions
segment increased by $0.5 million as a result of its increased net sales,
partially offset by increased legal costs arising from action that we are taking
against certain competitors who we believe have infringed on our patents.
Partially offsetting the increases in operating earnings in the branded
consumables and consumer solutions segments, was a $1.1 million decrease in the
other business segment's operating earnings due to the effect of its lower net
sales and also due to the mix of sales as discussed above. Operating earnings in
the third quarter of 2003 for our plastic consumables segment were comparable
with the same period in the prior year for the same factors as discussed above
under the net sales explanation.
Gross margin percentages on a consolidated basis decreased to 39.2% in the third
quarter of 2003 from 43.9% in the third quarter of 2002. The principal reason
for this decrease is the inclusion of the relatively lower gross margin Diamond
Brands and Lehigh product lines. Partially offsetting these effects, the branded
consumables segment's gross margin percentages were benefited by the favorable
home canning sales trends.
Selling, general and administrative expenses increased to $35.8 million in the
third quarter of 2003 from $24.7 million in the third quarter of 2002, or, as a
percentage of net sales, decreased slightly to 21.3% in the third quarter of
2003 from 22.4% in the third quarter of 2002. The increase in dollar terms was
principally the result of the acquisitions completed during 2003. Also
accounting for the increased selling, general and administrative expenses are
increased marketing expenditures and legal costs.
Net interest expense increased to $5.1 million for the third quarter of 2003
compared to $3.8 million in the same period last year. This increase resulted
from higher levels of outstanding debt in 2003 compared to the same period in
2002, principally due to the respective financings for the Lehigh Acquisition
and the Diamond Acquisition and the issuance of $30 million of 9 3/4% senior
subordinated notes due 2012 ("New Notes"). Partially offsetting this effect, our
weighted average interest rate was lower in the third quarter of 2003 than in
the same quarter of 2002, due to lower interest rates and capitalization on
favorable market conditions through interest rate swap transactions.
Our effective tax rate for the third quarter of 2003 was 39.0% compared to an
effective tax rate of 40.8% in the third quarter of 2002.
RESULTS OF OPERATIONS - COMPARISON OF YEAR TO DATE 2003 TO YEAR TO DATE 2002
We reported net sales of $396.0 million in the first nine months of 2003, a
51.0% increase from net sales of $262.2 million in the first nine months of
2002.
In the first nine months of 2003, our branded consumables segment reported net
sales of $182.0 million compared to $98.7 million in the first nine months of
2002. This increase of 84.4% was principally a result of the Diamond
Acquisition, effective February 1, 2003. In addition, the acquisitions of Lehigh
and OWD in the third and second quarters of 2003, respectively, contributed to
this increase.
16
In the first nine months of 2003, our consumer solutions segment reported net
sales of $130.7 million compared to $77.4 million in net sales for the first
nine months of 2002. This increase of 68.8% was principally the result of this
segment being acquired in April 2002 and, therefore, net sales for the first
nine months of 2003 reflects sales for the full nine month period but net sales
for the first nine months of 2002 reflects sales for only a part of the nine
month period. Additionally, it is a result of increased U.S. retail sales and
international sales for this segment in the second and third quarters of 2003
compared to the same periods in 2002.
In the first nine months of 2003, our plastic consumables segment reported net
sales of $80.4 million compared to $54.1 million in the first nine months of
2002. The principal reason for this increase of 48.5% was intercompany sales
generated by the addition of the plastic manufacturing business acquired in the
Diamond Acquisition. In addition, the intercompany sales resulting from the OWD
acquisition in the second quarter of 2003 also contributed to this increase.
In the first nine months of 2003, our other segment reported net sales of $29.7
million compared to $32.7 million in the first nine months of 2002. The
principal reason for this decrease of 9.2% was a reduction in our low
denomination international coinage business, partially offset during the third
quarter of 2003, by increased sales to a major customer as a result of a
contractual change whereby this segment took on the responsibility of purchasing
the raw material inventory for the customer.
We reported operating earnings of $61.6 million in the first nine months of 2003
compared to operating earnings of $45.5 million in the first nine months of
2002. The principal reason for this increase of $16.1 million, or 35.5%, was
that the branded consumables segment's operating earnings increased by $10.5
million from the first nine months of 2002 to the first nine months of 2003, due
to the addition of the Diamond Brands and Lehigh product lines acquired, as well
as a favorable home canning sales mix due to increased sales of premium
products. Also, the operating earnings of the consumer solutions segment
increased by $8.7 million, principally due to the acquisition of this business
in April 2002 and also its increased net sales in the second and third quarter
of 2003 relative to the comparable prior year periods, partially offset by
increased litigation costs arising from the ITC action as discussed above.
Operating earnings in the first nine months of 2003 for our plastic consumables
segment were slightly ahead of the same period in the prior year for the same
factors as discussed above under the net sales explanation. Operating earnings
in the first nine months of 2003 for our other segment were $1.9 million lower
compared to the same period in the prior year due primarily to the effect of the
segment's lower net sales.
Gross margin percentages on a consolidated basis decreased to 38.8% in the first
nine months of 2003 from 39.3% in the first nine months of 2002. The primary
reason for these lower gross margins is the addition of the lower gross margin
Diamond Brands product lines and Lehigh business. This effect is partially
offset by the benefit of including the higher gross margins of the acquired
consumer solutions business for the full nine month period in 2003 but only part
of the nine month period in 2002.
Selling, general and administrative expenses increased to $92.1 million in the
first nine months of 2003 from $57.5 million in the first nine months of 2002,
or, as a percentage of net sales, increased to 23.3% in the first nine months of
2003 from 21.9% in the first nine months of 2002. The increase in dollar terms
was principally the result of the acquisitions completed during 2003 and 2002.
Also accounting for the increased selling, general and administrative expenses
are increased marketing expenditures and legal costs.
Net interest expense increased to $13.3 million for the first nine months of
2003 compared to $8.8 million in the same period last year. This increase
resulted from higher levels of outstanding debt in 2003 compared to the same
period in 2002, principally due to the respective financings of the Tilia
Acquisition, the Diamond Acquisition and the Lehigh Acquisition and the issuance
of the New Notes. Our weighted average interest rate in the first nine months of
2003 was lower than the first nine months of 2002.
Our effective tax rate for the first nine months of 2003 was 39.1% compared to
an effective tax rate of 26.3% in the first nine months of 2002. At December 31,
2001, we had federal net operating losses that were recorded as a deferred tax
asset with a valuation allowance of $5.4 million. Due to the impact of the Job
Creation Act and the tax refunds that we received as a result, a net $4.9
million of this valuation allowance was released in the first nine months of
2002 resulting in an income tax provision of $9.7 million. Excluding the release
of this valuation allowance our effective tax rate was approximately 39.7% in
the first nine months of 2002. Our net income for the first nine months of 2002
would have been $14.6 million or $1.55 per diluted share if this valuation
allowance release was excluded (in thousands, except per share amounts):
17
Nine month
period ended
----------------
September 30,
2002
----------------
Income before taxes............................................................... $ 36,671
Income tax provision, excluding net release of tax valuation allowance............ 14,555
--------
Net income, excluding net release of tax valuation allowance...................... $ 22,116
========
Diluted earnings per share, excluding net release of tax valuation allowance...... $ 1.55
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
During the first nine months of 2003, the following changes were made to our
capital structure:
o We completed a public offering of 3,220,000 shares of common stock at
$37 per share. Proceeds from the offering, net of underwriting fees
and related expenses, totaled approximately $112.3 million;
o we amended and restated our existing senior credit facility. Our
amended and restated senior credit facility ("Amended Credit
Agreement") provides for a senior credit facility of up to $280
million of senior secured loans, consisting of a $70 million five-year
revolving credit facility, a $60 million five-year term loan facility,
and a new $150 million five-year term loan facility.
o we issued $30 million of New Notes at a price of 106.5% of face value.
Gross proceeds were approximately $32.0 million;
o in conjunction with the timing of the issuance of the New Notes, we
entered into a $30 million interest rate swap to receive a fixed rate
of interest and pay a variable rate of interest based upon London
Interbank Offered Rate ("LIBOR");
o we issued an aggregate of 239,800 restricted shares of common stock
under our 2003 Stock Incentive Plan;
o approximately $4.9 million in loans to certain officers were repaid in
full;
o we entered into a $37 million interest rate swap to receive a floating
rate of interest and pay a fixed rate of interest;
o we received $3.2 million of cash proceeds, including $1 million of
accrued interest, for unwinding our $75 million interest rate swap and
contemporaneously replacing it with a new $75 million interest rate
swap; and
o we repaid $10 million of seller debt financing.
Specifically, on September 30, 2003, we completed a public offering of 3,220,000
shares of common stock at $37 per share. Proceeds from the offering, net of
underwriting fees and related expenses, totaled approximately $112.3 million. We
expect to use the net proceeds for general corporate purposes, including, but
not limited to, potential future acquisitions and debt repayment.
Our Amended Credit Agreement provides for up to $280 million of senior secured
loans, consisting of a $70 million revolving credit facility, a $60 million term
loan facility, and a newly issued $150 million term loan facility. The new term
loan facility bears interest at a rate equal to (i) the Eurodollar Rate (as
determined by the Administrative Agent) pursuant to an agreed formula or (ii) a
Base Rate equal to the higher of (a) the Bank of America prime rate and (b) the
federal funds rate plus 50%, plus, in each case, an applicable margin of 2.75%
per annum for Eurodollar loans and 1.75% per annum for Base Rate loans. The
pricing and principal of the revolving credit facility and the previously
existing term loan did not change. The revolving credit facility continues to
have a $15 million letters of credit sublimit and a $10 million swing line loans
sublimit. On September 2, 2003, we drew down the full amount of the new $150
million term loan facility, which funds were used principally to pay the
majority of the cash consideration for the Lehigh Acquisition.
On May 8, 2003, pursuant to an indenture dated January 29, 2003, as supplemented
by a supplemental indenture, dated May 8, 2003, we issued $30 million of New
Notes under our shelf registration statement. The net proceeds of the offering
were used to reduce the outstanding revolver balances under our senior credit
facility. The New Notes were issued at a price of 106.5% of face value.
The New Notes will mature on May 1, 2012, however, on or after May 1, 2007, we
may redeem all or part of the New Notes at any time at a redemption price
ranging from 100% to 104.875% of the principal amount, plus accrued and unpaid
interest and liquidated damages, if any. Prior to May 1, 2005, we may redeem up
to 35% of the aggregate principal amount of the New Notes with the net cash
proceeds from certain public equity offerings at a redemption price of 109.75%
of the principal amount, plus accrued and unpaid interest and liquidated
damages, if any. Interest on the New Notes accrues at the
18
rate of 9.75% per annum and is payable semi-annually in arrears on May 1 and
November 1, commencing on November 1, 2003.
On May 6, 2003, we entered into a $30 million interest rate swap ("New Swap") to
receive a fixed rate of interest and pay a variable rate of interest based upon
LIBOR. The New Swap is a swap against our 9 3/4% senior subordinated notes
issued under an indenture dated April 24, 2002 ("Notes").
As disclosed in our 2003 Proxy Statement, our board of directors approved, on
February 6, 2003, the granting of additional restricted shares of common stock
to Messrs. Franklin and Ashken. Accordingly, during the second quarter of 2003,
restricted shares of common stock in the aggregate amounts of 150,000 shares and
50,000 shares were issued to Martin E. Franklin, our Chairman and Chief
Executive Officer, and Ian G.H. Ashken, our Vice Chairman, Chief Financial
Officer and Secretary, respectively, under our 2003 Stock Incentive Plan. These
shares were issued out of our treasury stock account.
During October 2003, the terms of all of the restricted shares of common stock
issued or scheduled to be issued to Messrs. Franklin and Ashken, in the
aggregate amount of 350,000 shares and 130,000 shares, respectively, were
amended to state that the restrictions shall lapse upon the earlier of (i) a
change in control of the Company; or (ii) the earlier of the Company's common
stock achieving a closing price of $42 (up from $35) or the Company achieving
annualized revenues of $800 million. However, if such restrictions were to lapse
during a period when Mr. Franklin or Mr. Ashken are subject to additional
contractual limitations on the sale of securities, the restrictions on such
shares would continue until the expiration or waiver of such additional
contractual limitations.
Also during the third quarter of 2003, 35,000 restricted shares of common stock
were issued to James E. Lillie, the new Chief Operating Officer, and 4,800
restricted shares of common stock were issued to certain key employees of the
Company under the Company's 2003 Stock Incentive Plan. The Company issued these
shares out of its treasury stock account. The restrictions on Mr. Lillie's
shares shall lapse upon the earlier of (i) a change in control of the Company;
or (ii) the earlier of the Company's common stock achieving a closing price of
$42 (up from $35) or the Company achieving annualized revenues of $800 million.
However, if such restrictions were to lapse during a period when Mr. Lillie is
subject to additional contractual limitations on the sale of securities, the
restrictions on such shares would continue until the expiration or waiver of
such additional contractual limitations. The restrictions on the other 4,800
shares will lapse ratably over five years of employment with the Company.
The Company records non-cash compensation expense for its issued and outstanding
restricted stock either when the restrictions lapse or ratably over time, when
the passage of time is the only restriction. It is anticipated that during the
quarter ending December 31, 2003, approximately $21 million of non-cash
compensation expense will be incurred related to the lapsing of restrictions
over restricted stock. The Company will receive a tax deduction for this
non-cash compensation charge.
During 2002, Messrs. Franklin and Ashken exercised 600,000 and 300,000
non-qualified stock options, respectively, which had been granted under our 2001
Stock Option Plan. These shares were issued out of our treasury stock account.
The exercises were accomplished via loans from us under our Executive Loan
Program. The principal amounts of the loans were $3.3 million and $1.6 million,
respectively, and bore interest at 4.125% per annum. The loans were due on
January 23, 2007 and were classified within the stockholders' equity section.
The loans could be repaid in cash, shares of our common stock, or a combination
thereof. In February 2003, Mr. Ashken surrendered to us shares of our common
stock to repay $0.3 million of his loan. On April 29, 2003, Messrs. Franklin and
Ashken each surrendered to us shares of our common stock to repay in full all
remaining principal amounts and accrued interest owed under their respective
loans. We will not make any additional loans under the Executive Loan Program.
Effective April 2, 2003, we entered into an interest rate swap that converted
$37 million of floating rate interest payments under our term loan facility for
a fixed obligation that carries an interest rate, including applicable margin,
of 4.25% per annum. The swap has interest payment dates that are the same as the
term loan facility and it matures on September 30, 2004. The swap is considered
to be a cash flow hedge and is also considered to be an effective hedge against
changes in the fair value of our floating-rate debt obligation for both tax and
accounting purposes. Gains and losses related to the effective portion of the
interest rate swap are reported as a component of other comprehensive income and
will be reclassified into earnings in the same period that the hedged
transaction affects earnings.
In March 2003, we unwound a $75 million interest rate swap to receive a fixed
rate of interest and pay a variable rate of interest based upon LIBOR and
contemporaneously entered into a new $75 million interest rate swap
("Replacement Swap"). Like the swap that it replaced, the Replacement Swap is a
swap against our Notes. The Replacement Swap has a maturity date that is the
same as the Notes. Interest is payable semi-annually in arrears on May 1 and
November 1. We have accrued interest on the swap at an effective rate of 6.38%.
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In return for unwinding the swap, we received $3.2 million of cash proceeds. Of
this amount, approximately $1 million of such proceeds related to accrued
interest that was owed to us at such time. The remaining $2.2 million of
proceeds is being amortized over the remaining life of the Notes as a credit to
interest expense and the unamortized balances are included in our Consolidated
Balance Sheet as an increase to the value of the long-term debt.
We repaid seller debt financing, incurred in connection with the Tilia
Acquisition, in the principal amount of $10 million on March 31, 2003.
In January 2003, we filed a shelf registration statement, which was declared
effective by the Securities and Exchange Commission on January 31, 2003. This
shelf registration statement was intended to facilitate our access to growth
capital for future acquisitions and allowed us to sell over time up to $150
million of common stock, preferred stock, warrants, debt securities, or any
combination of these securities in one or more separate offerings in amounts, at
prices and on terms to be determined at the time of the sale. The equity
offering completed in September 2003 and the $30 million of New Notes issued in
May 2003, were issued under our shelf registration statement and, as such, no
further issuances will be made under this registration statement.
As of September 30, 2003, we had $202.2 million outstanding under the term loan
facilities and no amounts outstanding under the revolving credit facility of our
Amended Credit Agreement. Net availability under the revolving credit agreement
was approximately $64.4 million as of September 30, 2003, after deducting $5.6
million of issued letters of credit. We are required to pay commitment fees on
the unused balance of the revolving credit facility.
As of September 30, 2003, our long-term debt included approximately $5.6 million
of non-debt balances arising from interest rate swap transactions that we had
entered into.
Working capital increased to approximately $224.2 million at September 30, 2003
from approximately $101.6 million at December 31, 2002 due primarily to the
proceeds from the equity offering completed on September 30, 2003.
Cash flow from operations in the first nine months of 2002 included $38.5
million of tax refunds. Excluding the effect of tax refunds, the Company
generated cash flow from operations of $47.1 million in the first nine months of
2003, compared to $29.8 million in the first nine months of 2002.
Capital expenditures were $9.5 million in the first nine months of 2003 compared
to $5.0 million for the first nine months of 2002 and are largely related to
maintaining facilities, tooling projects, improving manufacturing efficiencies,
new information systems and a portion of the costs of the installation of new
packaging lines for the branded consumables segment. As of September 30, 2003,
we have capital expenditure commitments in the aggregate for all of our segments
of approximately $4.1 million, of which $1.9 million relates to the installation
of a new management information system for the consumer solutions segment.
Additionally, as of September 30, 2003, our other segment had forward buy
contracts for the remainder of 2003 to purchase zinc ingots in the aggregate
amount of approximately $1.2 million, the majority of which are expected to be
used in operations within one year.
We believe that our cash on hand, cash generated from our operations and
availability under our Amended Credit Agreement are adequate to satisfy our
working capital and capital expenditure requirements for the foreseeable future.
However, we may raise additional capital from time to time to take advantage of
favorable conditions in the capital markets or in connection with our corporate
development activities.
CONTINGENCIES
We are involved in various legal disputes in the ordinary course of business. In
addition, the Environmental Protection Agency has designated our Company as a
potentially responsible party, along with numerous other companies, for the
clean up of several hazardous waste sites. Based on currently available
information, we do not believe that the disposition of any of the legal or
environmental disputes our Company is currently involved in will require
material capital or operating expenses or will otherwise have a material adverse
effect upon the financial condition, results of operations, cash flows or
competitive position of our Company. It is possible, that as additional
information becomes available, the impact on our Company of an adverse
determination could have a different effect.
FORWARD-LOOKING INFORMATION
From time to time, we may make or publish forward-looking statements relating to
such matters as anticipated financial performance, business prospects,
technological developments, new products and similar matters. Such statements
are
20
necessarily estimates reflecting management's best judgment based on current
information. The Private Securities Litigation Reform Act of 1995 provides a
safe harbor for forward-looking statements. Such statements are usually
identified by the use of words or phrases such as "believes", "anticipates",
"expects", "estimates", "planned", "outlook", and "goal". Because
forward-looking statements involve risks and uncertainties, our actual results
could differ materially. Please see the Company's Annual Report on Form 10-K for
2002 for a list of factors which could cause the Company's actual results to
differ materially from those projected in the Company's forward-looking
statements and certain risks and uncertainties that may affect the operations,
performance and results of our business.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
In general, business enterprises can be exposed to market risks including
fluctuations in commodity prices, foreign currency values, and interest rates
that can affect the cost of operating, investing, and financing. The Company's
exposures to these risks are low. The Company's zinc business has sales
arrangements with a majority of its customers such that sales are priced either
based upon supply contracts that provide for fluctuations in the price of zinc
to be passed on to the customer or are conducted on a tolling basis whereby
customers supply zinc to the Company for processing. Such arrangements as well
as the zinc business utilizing forward buy contracts reduce the exposure of this
business to changes in the price of zinc. The Company's plastic consumables
business purchases resin from regular commercial sources of supply and, in most
cases, multiple sources. The supply and demand for plastic resins is subject to
cyclical and other market factors. With many of our customers, we have the
ability to pass through price increases with an increase in our selling price
and certain of our customers purchase the resin used in products we manufacture
for them.
The Company, from time to time, invests in short-term financial instruments with
original maturities usually less than fifty days.
The Company is exposed to short-term interest rate variations with respect to
Eurodollar or Base Rate on certain of its term and revolving debt obligations
and six month LIBOR in arrears on certain of its interest rate swaps. The
spreads on the interest rate swaps range from 523 to 528 basis points.
Settlements on the interest rate swaps are made on May 1 and November 1. The
Company is exposed to credit loss in the event of non-performance by the other
party to its current existing swaps, a large financial institution. However, the
Company does not anticipate non-performance by the other party.
Changes in Eurodollar or LIBOR interest rates would affect the earnings of the
Company either positively or negatively depending on the changes in short-term
interest rates. Assuming that Eurodollar and LIBOR rates each increased 100
basis points over period end rates on the outstanding term debt and interest
rate swaps, the Company's interest expense would have increased by approximately
$1.2 million for the nine month period ended September 30, 2003 and $0.4 million
for the nine month period ended September 30, 2002. The amount was determined by
considering the impact of the hypothetical interest rates on the Company's
borrowing cost, short-term investment rates, interest rate swaps and estimated
cash flow. Actual changes in rates may differ from the assumptions used in
computing this exposure.
The Company does not invest or trade in any derivative financial or commodity
instruments, nor does it invest in any foreign financial instruments.
ITEM 4. CONTROLS AND PROCEDURES
An evaluation was performed under the supervision and with the participation of
the Company's management, including the Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures as of the end of the period covered
by this report. Based on that evaluation, the Company's management, including
the Chief Executive Officer and Chief Financial Officer, concluded that the
Company's disclosure controls and procedures were effective.
There have been no significant changes in the Company's internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of their evaluation.
21
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On July 8, 2003, our Tilia subsidiaries, Tilia, Inc. and Tilia International,
Inc., filed a complaint with the International Trade Commission against Applica
Consumer Products, Inc., Applica, Inc., The Rival Company, The Holmes Group,
Inc. and ZeroPack Co., Ltd., to enjoin the importation into the United States of
certain competitive home vacuum packaging products that we believe infringe on
Tilia's patented technology. Tilia has requested interim relief from the
International Trade Commission in the form of a Temporary Cease and Desist
Order.
ITEM 5. OTHER INFORMATION
On September 30, 2003, we announced that we closed a public offering of
3,220,000 shares of our common stock at $37 per share, including a 420,000 share
over-allotment option, which the underwriters exercised on September 29, 2003.
Including proceeds from the over-allotment, net proceeds from the offering
totaled approximately $112.3 million. The net proceeds are expected to be used
for working capital and general corporate purposes, including, but not limited
to, potential future acquisitions and debt repayment. CIBC World Markets and
Banc of America Securities LLC acted as joint book running managers of the
offering. SunTrust Robinson Humphrey and William Blair & Company acted as
co-managers of the offering.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS
Exhibit Description
------- -----------
1.1 Underwriting Agreement, dated as of September 25, 2003, among
Jarden Corporation, CIBC World Markets Corp., and Banc of America
Securities LLC (filed as Exhibit 1.1 to our Current Report on Form
8-K, filed with the Commission on September 26, 2003 and
incorporated herein by reference).
10.1 Stock Purchase Agreement, dated as of August 15, 2003, by and among
Jarden Corporation, American Manufacturing Company, Inc., and
Lehigh Consumer Products Corporation (filed as Exhibit 10.1 to our
Current Report on Form 8-K, filed with the Commission on September
5, 2003 and incorporated herein by reference).
10.2 Amended and Restated Credit Agreement, dated as of September 2,
2003, among Jarden Corporation, Bank of America, N.A., as
Administrative Agent, Swing Line Lender, and L/C Issuer, Canadian
Imperial Bank of Commerce, as Syndication Agent, National City Bank
of Indiana and Fleet National Bank, as Co-Documentation Agents
(filed as Exhibit 10.3 to our Current Report on Form 8-K, filed
with the Commission on September 5, 2003 and incorporated herein by
reference).
10.3 Consolidated Amendment to Guaranty and Security Instruments, dated
as of September 2, 2003, among Jarden Corporation, the Guarantors,
and Bank of America, N.A., as Administrative Agent (filed as
Exhibit 10.4 to our Current Report on Form 8-K, filed with the
Commission on September 5, 2003 and incorporated herein by
reference).
+ 10.4 Employment Agreement, dated as of August 4, 2003, between Jarden
Corporation and James E. Lillie (filed as Exhibit 10.9 to our
Current Report on Form 8-K, filed with the Commission on September
5, 2003 and incorporated herein by reference).
10.5 Amendment No. 1, dated as of September 25, 2003, to the Amended and
Restated Credit Agreement, by and among Jarden Corporation, Bank of
America, N.A., as Administrative Agent, the Lenders signatory
thereto and each of the Subsidiary Guarantors (filed as Exhibit
10.9 to our Current Report on Form 8-K, filed with the Commission
on September 26, 2003 and incorporated herein by reference).
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Exhibit Description
------- -----------
+ 10.6 Amended and Restated Employment Agreement, dated as of October 1,
2003, between Jarden Corporation and Martin E. Franklin (filed as
Exhibit 10.1 to our Current Report on Form 8-K, filed with the
Commission on October 27, 2003 and incorporated herein by
reference).
+ 10.7 Amended and Restated Employment Agreement, dated as of October 1,
2003, between Jarden Corporation and Ian G.H. Ashken (filed as
Exhibit 10.2 to our Current Report on Form 8-K, filed with the
Commission on October 27, 2003 and incorporated herein by
reference).
+ 10.8 Amendment No. 5, dated as of October 2, 2003, to the Restricted
Stock Award Agreement, dated January 2, 2003, between Jarden
Corporation and Martin E. Franklin (filed as Exhibit 10.3 to our
Current Report on Form 8-K, filed with the Commission on October
27, 2003 and incorporated herein by reference).
+ 10.9 Amendment No. 5, dated as of October 2, 2003, to the Restricted
Stock Award Agreement, dated January 2, 2003, between Jarden
Corporation and Ian G.H. Ashken (filed as Exhibit 10.4 to our
Current Report on Form 8-K, filed with the Commission on October
27, 2003 and incorporated herein by reference).
+ 10.10 Amendment No. 2, dated as of October 2, 2003, to the Restricted
Stock Award Agreement, dated May 8, 2003, between Jarden
Corporation and Martin E. Franklin (filed as Exhibit 10.5 to our
Current Report on Form 8-K, filed with the Commission on October
27, 2003 and incorporated herein by reference).
+ 10.11 Amendment No. 2, dated as of October 2, 2003, to the Restricted
Stock Award Agreement, dated May 8, 2003, between Jarden
Corporation and Ian G.H. Ashken (filed as Exhibit 10.6 to our
Current Report on Form 8-K, filed with the Commission on October
27, 2003 and incorporated herein by reference).
+ 10.12 Amendment No. 2, dated as of October 2, 2003, to the Restricted
Stock Award Agreement, dated August 4, 2003, between Jarden
Corporation and James E. Lillie (filed as Exhibit 10.7 to our
Current Report on Form 8-K, filed with the Commission on October
27, 2003 and incorporated herein by reference).
*+ 10.13 Amendment No. 6, dated as of October 31, 2003, to the Restricted
Stock Award Agreement, dated January 2, 2003, between Jarden
Corporation and Martin E. Franklin.
*+ 10.14 Amendment No. 6, dated as of October 31, 2003, to the Restricted
Stock Award Agreement, dated January 2, 2003, between Jarden
Corporation and Ian G.H. Ashken.
*+ 10.15 Amendment No. 3, dated as of October 31, 2003, to the Restricted
Stock Award Agreement, dated May 8, 2003, between Jarden
Corporation and Martin E. Franklin.
*+ 10.16 Amendment No. 3, dated as of October 31, 2003, to the Restricted
Stock Award Agreement, dated May 8, 2003, between Jarden
Corporation and Ian G.H. Ashken.
*+ 10.17 Amendment No. 3, dated as of October 31, 2003, to the Restricted
Stock Award Agreement, dated August 4, 2003, between Jarden
Corporation and James E. Lillie.
* 31.1 Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)
as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
* 31.2 Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)
as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
* 32.1 Certifications Pursuant to 18 U.S.C. Section 1350 as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
* Filed herewith.
+ This Exhibit represents a management contract or a compensatory plan.
23
B. REPORTS ON FORM 8-K
We filed a Form 8-K on July 10, 2003, with respect to Item 9, relating to
certain disclosure made during an investor presentation on July 9, 2003
concerning: 1) a complaint filed on July 8, 2003 by our Tilia, Inc. and Tilia
International, Inc. subsidiaries with the U.S. International Trade Commission;
and 2) our sales expectations for the quarter ended June 30, 2003.
We filed a Form 8-K on July 28, 2003, with respect to Items 7 and 9, relating to
a press release, dated July 28, 2003, announcing our earnings for the three and
six month periods ended June 30, 2003.
We filed a Form 8-K on September 5, 2003, with respect to Items 2, 5, and 7,
disclosing that we acquired all of the issued and outstanding stock of Lehigh
Consumer Products Corporation ("Lehigh") and closed on an amendment to our
senior credit facility, both on September 2, 2003. The report also filed several
documents relating to the foregoing as well as (a) audited consolidated balance
sheet of Lehigh as of December 31, 2002 and related consolidated statements of
income, stockholders' equity and cash flows for the year ended December 31,
2002, (b) unaudited consolidated balance sheets of Lehigh as of June 30, 2002
and 2003 and related consolidated statements of income and cash flows for each
of the six-month periods ended June 30, 2002 and 2003 and (c) our pro forma
condensed consolidated balance sheet as of June 30, 2003 and related condensed
consolidated statement of operations for the year ended December 31, 2002 which
gave effect to the acquisition of Lehigh as if it had occurred on January 1,
2002.
We filed a Form 8-K on September 9, 2003, with respect to Items 5 and 7, to
incorporate the contents of our Preliminary Prospectus Supplement dated
September 9, 2003 to our shelf registration statement on Form S-3 (Registration
No. 333-102387) (the "Registration Statement") in the Registration Statement.
We filed a Form 8-K on September 26, 2003, with respect to Items 5 and 7: (a)
disclosing that on September 25, 2003, we entered into an Underwriting Agreement
with CIBC World Markets Corp. and Banc of America Securities LLC relating to the
issuance of 2,800,000 shares (excluding underwriters' overallotment option) of
our common stock, par value $0.01 per share (the "Shares") under the
Registration Statement and that we intend to consummate the sale of the Shares
on September 30, 2003; (b) incorporating the contents of our Final Prospectus
Supplement dated September 26, 2003 to the Registration Statement in the
Registration Statement; and (c) disclosing that on September 25, 2003, we
amended our senior credit facility to amend its prepayment section.
24
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.
JARDEN CORPORATION
Date: November 13, 2003 By: /s/ Ian G.H. Ashken
-------------------
Ian G.H. Ashken
Vice Chairman,
Chief Financial Officer
and Secretary
25