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Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2004
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _____________ to _______________.
Commission file number 0-7024
The First Years Inc.
(Exact name of registrant as specified in its charter)
Massachusetts 04-2149581
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Kiddie Drive, Avon, Massachusetts 02322-1171
(Address of principal executive offices)
(Zip Code)
(508) 588-1220
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
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 Company is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes |X| No |_|
The number of shares of Registrant's common stock outstanding on May 7,
2004 was 8,346,052.
THE FIRST YEARS INC.
INDEX
Page
PART I - FINANCIAL INFORMATION:
Condensed Consolidated Balance Sheets.................................. 1
Condensed Consolidated Statements of Income............................ 2
Condensed Consolidated Statements of Cash Flows........................ 3
Notes to Condensed Consolidated Financial Statements................... 4-5
Management's Discussion and Analysis of Financial Condition
and Results of Operations........................................... 6-8
Quantitative and Qualitative Disclosure about Market Risk.............. 9
Controls and Procedures................................................ 9
PART II - OTHER INFORMATION:
Other Information...................................................... 10-11
SIGNATURES............................................................. 12
EXHIBIT INDEX.......................................................... 13
CERTIFICATIONS......................................................... 14-16
THE FIRST YEARS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2004 2003
------------ ------------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ............................... $ 25,742,856 $ 24,730,265
Accounts receivable, net ................................ 25,403,231 25,891,057
Inventories ............................................. 19,715,939 20,298,164
Prepaid expenses and other assets ....................... 2,164,470 801,566
Deferred tax assets ..................................... 2,157,200 2,157,200
------------ ------------
Total current assets .............................. 75,183,696 73,878,252
------------ ------------
PROPERTY, PLANT, AND EQUIPMENT:
Land .................................................... 167,266 167,266
Building and improvements ............................... 6,798,774 6,798,774
Machinery and molds ..................................... 10,476,308 10,075,203
Furniture and equipment ................................. 8,888,671 8,795,739
------------ ------------
Total ............................................. 26,331,019 25,836,982
Less accumulated depreciation ........................... 15,765,313 15,050,479
------------ ------------
Property, plant, and equipment - net .............. 10,565,706 10,786,503
------------ ------------
TOTAL ASSETS ............................................... $ 85,749,402 $ 84,664,755
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses ................... $ 15,874,978 $ 14,788,716
Accrued royalty expenses ................................ 1,195,132 1,431,051
Accrued selling expenses ................................ 1,250,924 3,107,430
------------ ------------
Total current liabilities ......................... 18,321,034 19,327,197
------------ ------------
DEFERRED TAX LIABILITY ..................................... 1,391,900 1,391,900
------------ ------------
STOCKHOLDERS' EQUITY:
Common stock ............................................ 1,095,314 1,094,497
Paid-in-capital ......................................... 11,193,764 11,073,595
Retained earnings ....................................... 84,159,981 82,091,793
Deferred Compensation ................................... (85,250) (96,875)
Less treasury stock at cost, 2,614,364 and 2,607,620 shares
as of March 31, 2004 and December 31, 2003, respectively (30,327,341) (30,217,352)
------------ ------------
Total stockholders' equity .............................. 66,036,468 63,945,658
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ................. $ 85,749,402 $ 84,664,755
============ ============
See accompanying notes to condensed consolidated financial statements.
-1-
THE FIRST YEARS INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 2004 AND 2003
(Unaudited)
2004 2003
----------- -----------
NET SALES ...................................... $37,133,250 $33,886,704
COST OF PRODUCTS SOLD .......................... 23,617,740 21,672,950
----------- -----------
GROSS PROFIT ................................... 13,515,510 12,213,754
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ... 9,389,651 8,381,837
----------- -----------
OPERATING INCOME ............................... 4,125,859 3,831,917
INTEREST INCOME ................................ 50,521 52,741
----------- -----------
INCOME BEFORE INCOME TAXES ..................... 4,176,380 3,884,658
PROVISION FOR INCOME TAXES ..................... 1,607,900 1,592,700
----------- -----------
NET INCOME ..................................... $ 2,568,480 $ 2,291,958
=========== ===========
BASIC EARNINGS PER SHARE ....................... $ 0.31 $ 0.28
=========== ===========
DILUTED EARNINGS PER SHARE ..................... $ 0.29 $ 0.28
=========== ===========
See accompanying notes to condensed consolidated financial statements.
-2-
THE FIRST YEARS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE
THREE MONTHS ENDED MARCH 31, 2004 AND 2003
(Unaudited)
2004 2003
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .............................................. $ 2,568,480 $ 2,291,958
Adjustments to reconcile net income to net cash provided
by (used for) operating activities:
Depreciation ......................................... 714,771 698,083
Stock compensation expense ........................... 11,625 0
Provision for doubtful accounts ...................... (65,947) 7,477
Increase (decrease) arising from working capital items:
Accounts receivable .................................. 553,773 (987,958)
Inventories .......................................... 582,225 450,124
Prepaid expenses and other assets .................... (1,361,204) 770,180
Accounts payable and accrued expenses ................ 1,086,262 (2,272,557)
Accrued royalties .................................... (235,919) (956,277)
Accrued selling expense .............................. (1,856,506) (1,786,904)
------------ ------------
Net cash provided by (used for) operating activities ...... 1,997,560 (1,785,874)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property, plant, and equipment ...... (493,973) (392,677)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividend ........................................ (500,293) 0
Common stock issued under stock option plans ......... 9,297 121,831
Purchase of treasury stock ........................... 0 (93,234)
------------ ------------
Net cash (used for) provided by financing activities ...... (490,996) 28,597
------------ ------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS .......... 1,012,591 (2,149,954)
------------ ------------
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD ............ 24,730,265 21,989,782
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD .................. $ 25,742,856 $ 19,839,828
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Income taxes ...................................... $ 1,439,379 $ 2,059,627
============ ============
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITIES:
Exercise of stock options through delivery of
previously owned shares ........................ $ 109,989 $ 0
============ ============
See accompanying notes to condensed consolidated financial statements.
-3-
THE FIRST YEARS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation -- Amounts in the accompanying balance sheet as
of December 31, 2003 are condensed from the Company's audited balance sheet as
of that date. All other condensed financial statements are unaudited but, in the
opinion of the Company, contain all normal recurring adjustments necessary to
present fairly the financial position as of March 31, 2004 and the results of
operations and cash flows for the periods ended March 31, 2004 and 2003. Certain
reclassifications were made to prior year amounts in order to conform to the
current year presentation. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
The results of operations for the three-month period ended March 31, 2004 are
not necessarily indicative of the results to be expected for the full year.
Stock-Based Compensation -- Pursuant to Statement of Financial Accounting
Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation," the Company
applies the recognition and measurement principles of Accounting Principles
Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees," to its
stock options and other stock-based compensation plans.
In accordance with APB No. 25, compensation cost for stock options is
recognized in income based on the excess, if any, of the quoted market price of
the stock at the grant date of the award or other measurement date over the
amount an employee must pay to acquire the stock. Generally, the exercise price
for stock options granted to employees equals or exceeds the fair market value
of the Company's common stock at the date of grant, thereby resulting in no
recognition of compensation expense by the Company.
The following table illustrates the effect on net income and earnings per
share if the Company had applied the fair value recognition provisions of SFAS
No. 123 to stock-based employee compensation. The estimated fair value of each
of the Company's options is calculated using the Binomial option-pricing model.
2004 2003
---------- ----------
Net Income - as reported ............................. $2,568,480 $2,291,958
Add: Stock-based compensation expense included
in reported net income, net of tax ................ 7,149 0
Less: Stock-based employee compensation expense
determined under fair value based method,
net of tax ........................................ (240,865) (279,786)
---------- ----------
Net income - pro forma ............................... $2,334,764 $2,012,172
========== ==========
Earnings per share
Basic - as reported .................................. $ 0.31 $ 0.28
Basic - pro forma .................................... $ 0.28 $ 0.24
Diluted - as reported ................................ $ 0.29 $ 0.28
Diluted - pro forma .................................. $ 0.27 $ 0.24
2. Common Stock - The Company has 50,000,000 authorized shares of $.10 par
value common stock with 10,953,142 and 10,944,970 shares issued and 8,338,778
and 8,337,350 shares outstanding as of March 31, 2004 and December 31, 2003,
respectively.
-4-
3. Earnings Per Share - Computation of earnings per share ("EPS") is as
follows:
Three Months Ended
March 31,
-----------------------
2004 2003
---------- ----------
Weighted Average Shares Outstanding ............ 8,337,909 8,219,370
Effect of Dilutive Shares ...................... 383,012 97,672
---------- ----------
Weighted Average Diluted Shares Outstanding .... 8,720,921 8,317,042
========== ==========
Net Income ..................................... $2,568,480 $2,291,958
========== ==========
Basic Earnings Per Share ....................... $ 0.31 $ 0.28
========== ==========
Diluted Earnings Per Share ..................... $ 0.29 $ 0.28
========== ==========
Options to purchase 6,000 shares of common stock for the three months ended
March 31, 2004 were not included in the computation of diluted EPS for that
period because the exercise prices of those options were greater than the
average market price of the Company's common stock. Options to purchase 821,493
shares of common stock for the three months ended March 31, 2003 were not
included in the computation of diluted EPS for that period because the exercise
prices of those options were greater than the average market price of the
Company's common stock.
4. Derivative Instruments -- From time to time, the Company uses
derivative financial instruments in the form of foreign currency forward
exchange contracts to manage foreign currency risks on future cash flows
emanating from sales denominated in foreign currencies and the receipt of cash
from such transactions. It is the Company's policy to execute such instruments
with creditworthy banks and not to enter into derivative financial instruments
for speculative purposes.
Currency contracts are designated as, and are highly effective as, hedges of
anticipated sales in specific currencies. Prior to an anticipated transaction
closing, the gain or loss on the forward exchange contract is accumulated in
other comprehensive income, and reclassified against revenue when the hedged
transaction is recorded. Subsequent changes in the value of the contract are
recorded in the income statement, generally as an offset to gains or losses on
the receivables generated by the sales transactions.
During the three months ended March 31, 2004, the Company did not enter into any
currency contracts and therefore did not reclassify any amount into results of
operations. During the three months ended March 31, 2003, the Company
reclassified $39,034, net of tax into results of operations.
5. Comprehensive Income -- Comprehensive income for the three months ended
March 31, 2004 and 2003 is as follows:
2004 2003
---------- ----------
Net Income ........................................... $2,568,480 $2,291,958
Other comprehensive loss, net of tax:
Net change in fair value of cash flow hedges ...... 0 (118,696)
Amounts reclassified into results of operations ... 0 39,034
---------- ----------
Comprehensive Income ................................. $2,568,480 $2,212,296
========== ==========
6. Borrowings & Line of Credit -- During the first three months of 2004
and 2003, the Company did not borrow against its $10,000,000 unsecured line of
credit established with a bank.
7. Concentrations & Export Sales -- The Company derives sales from
products carrying The First Years brand as well as products sold under licensing
agreements. During the first three months of 2004 and 2003, net sales of The
First Years brand products were approximately $26,772,473 and $22,578,000,
respectively, while net sales derived from license and specialty products
amounted to approximately $10,329,000 and $11,309,000 in the first three months
of 2004 and 2003, respectively. Net export sales, primarily to Europe, Canada,
South America, and the Pacific Rim, were approximately $4,978,000 and $4,660,000
during the first three months of 2004 and 2003, respectively.
-5-
THE FIRST YEARS INC.
Part I, Item 2.
Management's Discussion and Analysis of Financial Condition and
Results of Operations
Statements in this Quarterly Report on Form 10-Q that are not strictly
historical are "forward looking" statements, as defined in the Private
Securities Litigation Reform Act of 1995. Forward-looking statements are
typically identified by the words: believe, expect, anticipate, intend, are
confident, estimate and similar expressions, which by their nature refer to
future events. Actual future results may differ materially from those
anticipated depending on a variety of factors which include, but are not limited
to, trends in sales of The First Years Brand(R) and licensed products including
the effect of reduced economic activity, continued success of new Disney
character refreshed graphics, continued maintenance of favorable license
arrangements, continued success of market research identifying new product
opportunities, successful introduction of new products, continued product
innovation, the success of new enhancements to the Company's brand image, growth
in domestic and international sales, ability to attract and retain key
personnel, sales and earnings results, and general economic conditions affecting
consumer spending, including uncertainties relating to global political
conditions, such as terrorism and the conflict in Iraq. Information with respect
to risk factors is contained in the Company's most recent Annual Report on Form
10-K as filed with the Securities and Exchange Commission. Readers are cautioned
not to place undue reliance on these forward-looking statements, which speak
only as of the date hereof. The Company does not intend to update any of the
forward looking statements after the date of this Report to conform these
statements to actual results or changes in our expectations, except as required
by law.
Critical Accounting Policies and Estimates
This discussion and analysis of our financial condition and results of
operations are based upon our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements requires management
to make estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues, expenses and related notes. Some of these estimates
require difficult, subjective and/or complex judgments about matters that are
inherently uncertain, and, as a result, actual results may differ from those
estimates. Due to the judgment and estimation involved, the following summarized
accounting policies and their application are considered to be critical to
understanding the business operations, financial condition, and results of
operations of The First Years Inc.
Revenue Recognition -- In accordance with Staff Accounting Bulletin No.
104, we recognize revenue when products are shipped or delivered and substantial
risks of ownership transfer to the customer, a firm sales agreement is in place,
and collectibility of the fixed or determinable sales price is reasonably
assured. Common to our industry, customers may be authorized to return selected
products and we reduce sales and accounts receivable for actual returns and
estimate future returns based on historical trends and information available to
us, including the pattern of returns immediately following the reporting period.
We also maintain allowances for doubtful accounts for estimated losses resulting
from the inability of our customers to make required payments. If the financial
condition of our customers deteriorates, resulting in an impairment of their
ability to make payments, additional allowances may be required.
Inventories -- Inventories, consisting of finished goods, unpackaged
components, and supplies, are stated at the lower of cost or market with cost
determined using the first-in, first-out method. We make certain obsolescence
and other assumptions to adjust inventory based on historical experience and
current information. We write down inventory for estimated obsolete or
unmarketable inventory equal to the difference between the costs of inventory
and estimated market value, based upon assumptions about future demand and
market conditions. In the event of a write down of inventory, we also review
molds associated with those products to determine whether there has been a
significant impairment to the carrying value of the asset. If the carrying value
of these assets is considered not to be recoverable, such assets are written
down as appropriate. These assumptions, although consistently applied, can have
a significant impact on current and future operating results and financial
position.
Sales Incentives -- Sales incentives offered to customers to promote the
sales of our products include costs related to cooperative advertising programs,
promotions, slotting fees or buydowns, and certain rebates. In determining these
costs, we reflect activity and make estimates of certain costs of promotional
activity based on historical arrangements and information available to us. Costs
associated with sales incentives are reflected as a reduction of revenue when
recognized.
-6-
A. Results of Operations - First Quarter of 2004 Compared with First Quarter of
2003
Net Sales
Consolidated net sales for the first quarter of 2004 was $37.1 million, an
increase of $3.2 million or 10%, as compared to net sales of $33.9 million in
the first quarter of 2003. Domestic sales increased 10% and international sales
increased 7% compared to the same period in 2003. This increase is due to our
continued focus on key customers in principal markets. In the first quarter of
2004, net sales of The First Years brand products increased 19% primarily due to
the introduction and expansion of key product programs. Net sales of licensed
and specialty products decreased by 9% primarily due to the timing of
promotional activities and product distribution.
Net sales of The First Years brand products increased to 72% in the first
quarter of 2004 from approximately 67% in the first quarter of 2003, due
principally to key product program successes. As a percentage of net sales,
sales of licensed and specialty products decreased to 28% in the first quarter
of 2004 from approximately 33% in the comparable period of 2003. International
net sales as a percentage of total net sales decreased slightly at 13% in the
first quarter of 2004 compared to 14% in the same period of 2003.
Cost of Sales and Gross Profit
Cost of products sold in the first quarter of 2004 was $23.6 million, an
increase of $1.9 million or 9%, as compared to $21.7 million in the comparable
period of 2003. As a percentage of net sales, cost of products sold and gross
profit in the first quarter of 2004 remained consistent at 64% and 36%,
respectively, compared to the first quarter of 2003.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses in the first quarter of 2004
were $9.4 million, an increase of $1.0 million or 12%, as compared to $8.4
million in the first quarter of 2003. As a percentage of net sales, selling,
general, and administrative costs remained consistent at approximately 25%. The
dollar increase in selling, general, and administrative expenses was primarily
due to increased legal costs associated with patent and strategic alternative
activities and increased marketing and product development costs.
Net Income
Net income for the first quarter of 2004 increased 12% to $2.6 million or
$0.29 per diluted share, compared with $2.3 million or $0.28 per diluted share
in the comparable period of 2003. As a percentage of net sales, net income
increased slightly from 6.8% to 6.9% in the first quarter of 2004. The increase
in net income is a result of improved net sales partially offset by increased
cost of goods sold, selling, general, and administrative expenses and income tax
costs. Income tax expense as a percentage of pretax income was 38.5% in the
first quarter of 2004 compared to 41.0% in the comparable period of 2003. This
decrease reflects the impact of the Company's 2003 state tax rate planning
initiatives.
B. Financial Condition
Consolidated assets of $ 85.7 million at March 31, 2004 were $1.0 million
higher than at December 31, 2003.
Our cash and cash equivalents increased by $1.0 million at March 31, 2004,
from $24.7 million at December 31, 2003. The increase resulted primarily from
$2.0 million provided by operating activities, offset by $0.5 million used for
investing and $0.5 million used for financing activities.
Net cash of $2.0 million provided by operating activities consisted
primarily of $3.4 million from net income adjusted for non-cash items, offset by
$1.4 million used in working capital and other activities. Net cash used in
working capital and other activities resulted primarily from an increase in
prepaids and accounts payable offset by a decrease in accounts receivables,
inventories, accrued royalty expense and accrued selling expense. Days sales
outstanding were 63 for the quarter ended March 31, 2004 and 64 for the year
ended December 31, 2003. The decrease in days sales outstanding is primarily
attributable to a decrease in accounts receivable for the quarter ended March
31, 2004 as compared to the year ended December 31, 2003. Inventory turns were
1.2 for the quarter ended March 31, 2004 and 1.4 for the comparable period in
2003.
Net cash of $0.5 million used in investing activities resulted from
capital expenditures. Capital expenditures for the quarter ended March 31, 2004
consisted primarily of additions to machinery and molds for new production
molds.
Net cash of $0.5 million was used by financing activities consisting of
primarily a cash dividend and purchase of treasury stock slightly offset by
proceeds on the issuance of common stock under our stock option plans.
-7-
Estimated uses of cash for the full year of 2004 include capital
expenditures for building and improvements, machinery and molds, and equipment
of approximately $3 - 4 million. We expect to fund expenditures for capital
requirements as well as liquidity needs from available cash balances and
internally generated funds. We have an unsecured line of credit of $10 million,
which is subject to annual renewal at the option of the bank. Any amounts
outstanding under the line are payable upon demand by the bank. For the quarter
ended March 31, 2004 we had no borrowings under the line of credit and as of
December 31, 2003 there were no balances outstanding.
-8-
Part I, Item 3.
Quantitative and Qualitative Disclosure about Market Risk
We are exposed to certain market risks, which include changes in United
States and international interest rates as well as changes in currency exchange
rates as measured against the United States dollar and each other. We attempt to
reduce material risks by using foreign currency forward exchange contracts and
managing our working capital to minimize currency and interest rate exposure.
Foreign Currency Market Risk
Our international operations are subject to certain opportunities and
risks, including currency fluctuations. In the quarter ended March 31, 2004, our
international sales accounted for 13% of total net sales. The value of the
United States dollar affects our financial results, and changes in exchange
rates may affect our revenues, gross margins, operating expenses, and retained
earnings as expressed in United States dollars. From time to time, we use
forward exchange contracts to hedge cash flows arising from sales denominated in
foreign currencies to limit the impact of currency fluctuations. Principal
currencies hedged include the Euro, the British Pound, and the Canadian Dollar.
We also attempt to minimize currency exposure risk through working capital
management.
Interest Rate Risks
Changes in interest rates affect interest income earned on the Company's
cash equivalents and short-term investments, composed primarily of U.S. treasury
obligations and short-term money market instruments. We do not attempt to reduce
or eliminate our market exposure to changes in interest rates in the U.S. or in
international operations.
Also see the Company's disclosure regarding Market Risk in Item 7A of its
Annual Report on Form 10-K for the fiscal year ended December 31, 2003, as filed
with the SEC.
Part I, Item 4.
Controls and Procedures
We have established disclosure controls and procedures to ensure that
material information relating to us, including our consolidated subsidiaries, is
made known to the officers who certify our financial reports and to other
members of senior management and the Board of Directors.
9(a) Evaluation of disclosure controls and procedures. Our management,
with the participation of our principal executive officer and principal
financial officer, has evaluated the effectiveness of the design and
operation of our disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended) as of the end of the period covered by this Quarterly Report on
Form 10-Q. Based on this evaluation, our principal executive officer and
principal financial officer concluded that these disclosure controls and
procedures are effective and designed to ensure that the information
required to be disclosed in our reports filed or submitted under the
Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the requisite time periods.
9(b) Changes in internal controls. There was no change in our internal
control over financial reporting (as defined in Rules 13a-15(f) and
15d-15(f) under the Securities Exchange Act of 1934, as amended) that
occurred during our last fiscal quarter that has materially affected, or
is reasonably likely to materially affect, our internal control over
financial reporting.
-9-
THE FIRST YEARS INC.
PART II - OTHER INFORMATION
Item 1: Legal Proceedings
We are not involved in any legal proceedings that are material to our
business or financial condition.
Item 2: Changes in Securities and Use of Proceeds
The following table contains information about the Company's purchases of
equity securities during the first quarter of 2004:
Total Number of Approximate Dollar
Shares Purchased Value of Shares
as Part of a that May Yet Be
Total Number of Average Price Publicly Announced Purchased Under
Period Shares Purchased(1) Paid Per Share Program the Program(2)
February 18, 2004 .................... 6,744 $16.31 0 $4,000,000
(1) The Company acquired 6,744 shares of its common stock during the
first three months of 2004 through delivery of mature shares by an
employee for exercise of stock options.
(2) In October 1998, the Company announced the adoption of a stock
repurchase program, and in October 2000, the Company announced an
extension of this program. Pursuant to the stock repurchase program,
the Company may purchase up to $20,000,000 shares of common stock.
The repurchase program is not subject to a set expiration date. No
repurchase program has expired or has been terminated during the
period covered by the table.
Item 3: Defaults Upon Senior Securities
Not Applicable
Item 4: Submission of Matters to a Vote of Securityholders.
No matters were submitted to a vote of security holders, through
solicitation of proxies or otherwise, during the three months ended March 31,
2004.
Item 5:
Not Applicable
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits -- The following exhibits are filed as part of this Report:
3.1 Restated Articles of Organization of the Company. Filed as
Exhibit 3.1 to the Company's Registration Statement on Form
S-1on October 5, 1995 (File No. 33-62673) and incorporated
herein by reference.
3.2 Articles of Amendment to Restated Articles of Organization of
the Company. Filed as Exhibit 3.1.2 to the Company's annual
report on Form 10-K for the period ended December 31, 2003 and
incorporated herein by reference.
3.3 By-laws of the Company. Filed as Exhibit (3)(ii) to the
Company's annual report on Form 10-K for the period ended
December 31, 1999 and incorporated herein by reference.
4.1 Specimen certificate for shares of Common Stock of the
Company. Filed as Exhibit 4.1 to the Company's Registration
Statement on Form S-1 (File No. 33-62673) and incorporated
herein by reference.
4.2 Rights Agreement, dated as of November 19, 2001, between the
Company and EquiServe Trust Company, N.A. Filed as Exhibit 4.1
to the Company's Registration Statement on Form 8-A on
November 20,2001 and incorporated herein by reference.
31.1 Certification of Chief Executive Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
-10-
32 Certification of Officers pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
(b) Reports on Form 8-K:
During the first quarter of 2004, the Company filed the following
reports on Form 8-K.
Item 5. Other Items:
On January 6, 2004, the Company filed a Current Report on Form
8-K, dated the same date, regarding its press release
reporting that the Company had retained Goldman Sachs to
explore strategic alternatives.
On March 1, 2004, the Company "furnished" a Current Report on
Form 8-K, dated the same date, regarding its earnings press
release for the quarter ended December 31, 2003.
On March 1, 2004, the Company filed a Current Report on Form
8-K, dated the same date, regarding its press release
announcing a quarterly cash dividend.
On March 16, 2004, the Company filed a Current Report on Form
8-K, dated the same date, regarding its press release
announcing that Richard E. Wenz resigned from the Board of
Directors.
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THE FIRST YEARS INC.
SIGNATURES
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.
THE FIRST YEARS INC.
Registrant
Date 5/10/04
By: /s/ John R. Beals
---------------------
John R. Beals,
Senior Vice President and Treasurer,
(Duly Authorized Officer and Principal
Financial Officer)
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THE FIRST YEARS INC.
EXHIBIT INDEX
Exhibit Description
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3.1 Restated Articles of Organization of the Company. Filed as
Exhibit 3.1 to the Company's Registration Statement on Form S-1
on October 5, 1995 (File No. 33-62673) and incorporated herein
by reference.
3.2 Articles of Amendment to Restated Articles of Organization of
the Company. Filed as Exhibit 3.1.2 to the Company's annual
report on Form 10-K for the period ended December 31, 2003 and
incorporated herein by reference.
3.3 By-laws of the Company. Filed as Exhibit (3)(ii) to the
Company's annual report on Form 10-K for the period ended
December 31, 1999 and incorporated herein by reference.
4.1 Specimen certificate for shares of Common Stock of the Company.
Filed as Exhibit 4.1 to the Company's Registration Statement on
Form S-1 (File No. 33-62673) and incorporated herein by
reference.
4.2 Rights Agreement, dated as of November 19, 2001, between the
Company and EquiServe Trust Company, N.A. Filed as Exhibit 4.1
to the Company's Registration Statement on Form 8-A on November
20, 2001 and incorporated herein by reference.
31.1 Certification of Chief Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
32 Certification of Officers pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
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