-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MwbTIdlV7Tdy0dY3sG5bcp7TkPR9qG9sSzGXMOvkZa17SjFtiu2x9jqWCre3BO+y FnsaKKsDAP9BsqSyahSQww== 0001017710-97-000004.txt : 19970813 0001017710-97-000004.hdr.sgml : 19970813 ACCESSION NUMBER: 0001017710-97-000004 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970812 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: REMINGTON PRODUCTS CO LLC CENTRAL INDEX KEY: 0001017710 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC HOUSEWARES & FANS [3634] STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-07429 FILM NUMBER: 97657267 BUSINESS ADDRESS: STREET 1: 60 MAIN STREET CITY: BRIDGEPORT STATE: CT ZIP: 06604 BUSINESS PHONE: 2033674400 10-K/A 1 FORM 10-K/A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 - For the fiscal year ended December 31, 1996. OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. Commission file number 333-07429 Remington Products Company, L.L.C. ---------------------------------- (Exact name of registrant as specified in its charter) Delaware 06-1451076 ---------- ----------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 60 Main Street, Bridgeport, Connecticut 06604 ---------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (203) 367-4400 -------------- Securities registered pursuant to Section 12(b) of the Act: Title of Each class Name of each exchange on which registered None None ---------------------- ----------------------- Securities registered pursuant to Section 12(g) of the Act: 11% Series B Senior Subordinated Notes due 2006 ----------------------------------------------- (Title of Class) 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [x/] PART I ITEM 1. BUSINESS General Remington Products Company, L.L.C. (the "Company" or "Remington") is a major manufacturer and marketer of men's and women's electrical personal care appliances. The Company distributes on a worldwide basis men's and women's electric shavers and accessories, women's personal care appliances, including hairsetters, curling irons and hairdryers, men's electric grooming products, travel products and other small electric consumer appliances. The Company is a Delaware limited liability company that will continue in existence until December 31, 2016 or dissolution prior thereto as determined under the Company's LLC Agreement. Prior to May 23, 1996, the Company operated as Remington Products Company ("RPC"), a Delaware general partnership, of which RPI Corp. (formerly known as Remington Products, Inc.) ("RPI"), a company controlled by Mr. Victor K. Kiam, II and Remsen Partners ("Remsen"), an entity controlled by Mr. Isaac Perlmutter, were each 50% partners. On May 23, 1996 (the "Closing Date"), there was a reorganization of the Company (the "Reorganization"), pursuant to which: (i) RPC made a cash distribution in an amount of $56.9 million to Remsen (less estimated excluded obligations of $6.6 million) and $48.0 million to RPI (less estimated excluded obligations of $7.1 million and net of a $10.9 million reduction pursuant to the preliminary working capital adjustment); (ii) Vestar Shaver Corp. ("Vestar Corp. I") and Vestar Razor Corp. ("Vestar Corp. II" and, together with Vestar Corp. I, the "Vestar Members"), corporations controlled by Vestar Equity Partners, L.P. ("Vestar"), purchased Remsen's interest in the Company for $33.4 million (the "Vestar Investment"); (iii) certain members of senior management of the Company (the "Management Investors") acquired an equity interest of $1.1 million (including a cash purchase of $0.86 million and assuming exercise of certain management options with an aggregate exercise price of $0.26 million) in the Company; (iv) the Company paid estimated excluded obligations of approximately $10.7 million; (v) RPI retained an equity investment in the Company with an implied value of $35.4 million (the "Kiam Investment and, collectively with the Vestar Investment and the Management Investment, the "Equity Investment"); and (vi) RPC was merged with and into the Company. In addition, as part of the Reorganization, $41.3 million of existing indebtedness of RPC was refinanced. The funds required to consummate the Reorganization were provided by an initial offering by the Company and its wholly owned subsidiary, Remington Capital Corp. ("Capital"), of $130 million of 11% Senior Subordinated Notes due 2006 to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended, borrowings under a Senior Credit Agreement and the cash proceeds of the Equity Investments. On November 4, 1996, pursuant to a Registration Statement on Form S-4 under the Securities Act of 1933, the Company completed an offer to exchange its 11% Series B Senior Subordinated Notes due 2006 for all of the outstanding 11% Senior Subordinated Notes due 2006 issued in connection with the reorganization. -2- Description of Business Products Electric Shavers. The Company is a leading distributor of men's and women's electric shavers. The Company's primary men's electric shaver lines are the Triple Foil(TM), Dual Foil/XLR(TM) , each with the Micro-Screen(R) cutting system, and rotary shavers while the primary women's electric shaver lines are the Ladies' wet/dry, the WER (Women's Electric Razor) and rotary shavers. The Company also manufactures and distributes electric shaver accessories consisting of shaver replacement parts (primarily foils and cutters), preshave products and cleaning agents. Electric shavers accounted for 44%, 44% and 47% of the Company's total net sales for the years ended December 31, 1996, 1995 and 1994 respectively. Women's Personal Care Appliances. Remington entered the women's personal care appliance market in the United States and expanded its presence overseas through the acquisition in December 1993 of the Clairol personal care appliance business from Bristol-Myers Squibb Company. These products consist primarily of hairsetters, hairdryers, make-up mirrors, curling irons and curling brushes. The Company's hairsetter products include flocked rollers (both dry and mist) and Remington Express Set(R) hairsetter, which heats in 90 seconds, the Smart Setter(R) hairsetter, which incorporates a new proprietary technology that indicates to users when optimum heat levels have been reached by changing the color of the rollers. Women's personal care appliances accounted for 28%, 30% and 27% of the Company's total net sales for the years ended December 31, 1996, 1995 and 1994, respectively. Men's Grooming Products. Men's grooming products consist of beard and mustache trimmers, nose hair and ear hair trimmers and home haircut kits. Other Products. Remington's travel appliances consist of products that provide personal grooming and other general household functions for domestic and international travel. These items include travel hairdryers, steamers, irons, voltage converter/adapter plugs and shavers. In the home health appliance product category, Remington sells foot spas and back massagers outside the United States. Distribution The Company's products are sold in the United States and internationally in over 85 countries through mass merchandisers, catalog showrooms, drug store chains and department stores in addition to the Company's 96 service stores. In the United States, the Company sells products through mass-merchant retailers such as Wal- Mart, K-Mart and Target, department stores such as Sears, catalog showrooms such as Service Merchandise, drug store chains including Walgreens, Eckerd and Revco, and Remington's own service stores. Throughout the United States, the Company's products are sold in excess of 10,000 retail outlets. Wal-Mart accounted for 17%, 16% and 16% of the Company's net sales during the years ended December 31, 1996, 1995 and 1994. No other customer has accounted for more than 10% of the Company's net sales during the years ended December 31, 1996, 1995, and 1994. -3- Service Stores Remington opened its first service store in 1981. As of March 15, 1997, the Company owned and operated a chain of 96 service stores with 84 in the United States, nine in the United Kingdom and three in Australia. During 1996, the Company opened a total of four permanent and 12 seasonal service stores in the United States, two permanent stores in the United Kingdom and acquired a chain of three stores in Australia. The stores in the United States are in many of the major markets with concentrations on the East Coast and in the major cities of the South and West. The majority of the stores are located in shopping malls, outlet malls and in prime locations within large metropolitan areas. The stores sell and service a variety of Remington and non-Remington shavers, knives, scissors, clocks, personal care appliances and related products. The service stores also oversee sales of replacement parts to approximately 300 independent authorized shaver service dealers across the United States. In 1996, the Company's service stores generated worldwide net sales of $38.6 million, with $33.7 million in the U.S. and $4.9 million internationally. Remington products accounted for approximately 50% of these net sales. Manufacturing Operations Remington conducts all in-house manufacturing at its Bridgeport, Connecticut facility. The Company assembles foil shavers and manufactures foil cutting systems in Bridgeport using proprietary cutting technology and a series of specially designed machines. Remington's Bridgeport facility can produce in excess of 30,000 shavers a day, yet is flexible enough to operate economically at much lower capacities. The electric shaver business is highly seasonal, with significant production swings during the course of the year. As a result of such swings, Remington's manufacturing process has been structured to utilize temporary workers. As a result of these factors, during peak periods approximately 30% of Remington's work force (excluding that of the service stores) is composed of temporary workers. Suppliers A substantial portion of the Company's finished goods inventories are manufactured for the Company by suppliers located in China, Japan and Thailand. In determining whether to manufacture products in-house or source them from third party suppliers, the Company balances the potential cost savings in labor, materials and overhead that a foreign manufacturer can provide with the flexibility, quality control and protection of confidentiality inherent in in-house production. While Remington sources a large portion of its materials and products from third-party suppliers, it continues to manufacture its triple foil and certain other shavers in-house and maintains ownership of tools and molds used by many of its suppliers. The Company's three most significant suppliers, Izumi Products, Inc. ("Izumi"), Raymond International and Fourace Industries, Ltd., accounted for approximately 44% of the Company's overall cost of sales in 1996. These three suppliers' manufacturing facilities are located in China and Japan. Since purchases by Remington account for a significant portion of the overall sales of these suppliers, the Company has generally been able to negotiate favorable purchase terms. Remington has had a relationship with these suppliers for many years and management considers its present relationships to be good. -4- Research and Product Development Research and development efforts at Remington allow the Company to maintain its unique manufacturing strength in cutting systems for shavers. The Company is currently concentrating its efforts on a new premium line of shavers including foil improvements and new cutting and trimmer configurations. The Company also devotes resources to the development of new technology for women's personal care products, including hairsetters, hairdryers and curling irons. Patents and Trademarks The Company owns approximately 180 patent and patent applications for both design and utility that are maintained in approximately 40 countries. The Company's patents cover electric shavers, cutting and trimming mechanisms and women's personal care products such as hairsetters, hairdryers and curling irons. In addition, the Company maintains over 300 different trade names in approximately 100 countries covering a variety of products. These trade names have resulted in the issuance of over 1,300 registered trademarks. As a result of the common origins of the Company and Remington Arms, the Remington mark is owned by each company with respect to its principal products as well as associated products. Thus, the Company owns the Remington mark for shavers, shaver accessories, grooming products and health care products, while Remington Arms owns the mark for firearms, sporting goods and products for industrial use, including industrial hand tools. The terms of a 1986 agreement between the Company and Remington Arms provided for their respective rights to use the Remington trademark on products which are not considered "principal products of interest" for either company. A separate company, Remington Licensing Corporation, owns the Remington trademark in the U.S. with respect to any overlapping uses and the Company and Remington Arms are each licensed to use the mark in their respective areas of interest. The Company retains the Remington trademark for nearly all products which it believes can benefit from the use of the brand name in the Company's distribution channels. The Company has aggressively enforced its ownership of the Remington brand name. Competition The Company believes that the markets for all of its product lines are highly competitive and that competition for retail sales to consumers is based on several factors, including brand name recognition, value, quality, price and availability. Primary competitive factors with respect to selling such products to retailers are brand reputation, product categories offered, broad coverage within each product category, support and service in addition to price. Remington competes with established companies, several of which have substantially greater resources than those of the Company. There are no substantial regulatory barriers to entry for new competitors in the electric personal appliance industry. However, suppliers that are able to maintain, or increase, the amount of retail shelf space allocated to their respective products may gain a competitive advantage. The Company believes that the allocation of space by retailers is influenced by many factors, including brand name recognition by consumers, product quality and prices, service levels provided by the supplier and the supplier's ability to support promotions. -5- The rotary shaver market is significant outside the United States. The future expansion of sales of the Company's rotary shavers outside the United States will be affected by, among other factors, the outcome of ongoing legal actions against Philips Electronics, N.V. ("Philips"). Philips holds patents and trademarks outside the United States on certain of its shaver designs that restrict the Company from entering these markets. The Company is currently challenging such trademarks and patents in the United Kingdom. During 1996, in Canada, the Company successfully challenged certain of Philips' trademarks. Employees As of December 31, 1996, the Company employed approximately 1,150 people in the United States and abroad of which approximately 240 were employed part-time. None of the Company's employees are represented by a union. Remington believes relations with its employees are good. Environmental Matters The Company's manufacturing operations are subject to federal, state and local environmental laws and regulations. The Company believes it is in substantial compliance with all such environmental laws which are applicable to its operations. The Company has reported to the Connecticut Department of Environmental Protection that it has detected petroleum and solvent compounds in soil and ground water samples taken from its Bridgeport facility at levels which may require further investigation or cleanup. In addition to its ongoing program of environmental compliance, the Company has provided reserves to cover the anticipated costs of remediation which may be necessary at its Bridgeport facility. The Company believes that the costs for any remediation activities which are eventually undertaken would not be material to the Company's financial position and results of operations. International Operations and Distribution Remington's international operations (excluding export sales from the U.S.) generated approximately 39%, 36% and 33% of the Company's net sales in 1996, 1995 and 1994, respectively. The Company's international network of subsidiaries and distributors currently extends to over 85 countries worldwide. The Company markets products throughout Europe, the Middle East, Africa, Asia and a portion of South America through its subsidiary in the United Kingdom, and distributes products to Japan, Central America and the remainder of South America from its United States headquarters. The Company distributes its products directly in the United Kingdom, Australia, Canada, Germany, France, New Zealand and Ireland. In all other parts of the world the Company distributes its products through strategic alliances with local distributors. Remington enjoys leading market positions in many personal grooming products in the United Kingdom and Australia, while also having a market presence in Canada. As in the United States market, the primary asset of the Company's international operations is the Remington brand name. The Company distributes products internationally through electric product stores, drug stores, specialized shaver shops, catalog showrooms, department stores, mail order and television and the Company's service stores. As in the United States, Remington has established direct relationships with many of the leading international retailers. Additional financial information relating to Remington's international operations is set forth in Note 14 (Geographic Information) of the "Notes to Consolidated Financial Statements" of the Company appearing elsewhere herein. -6- SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. REMINGTON PRODUCTS COMPANY, L.L.C. By: /s/ Kris J. Kelley Kris J. Kelley, Vice President and Controller Date: August 12, 1997 -7- -----END PRIVACY-ENHANCED MESSAGE-----