VANDALIA, Ohio--(BUSINESS WIRE)--May 21, 1999--Evenflo's net sales increased to $94.9 million in the first quarter ending March 31, 1999, an increase of $1.9 million or, 2%, over the $93 million for the prior year quarter ending March 31, 1998. The increase in sales was driven by a 19% increase in International net sales, increasing to $11.9 million for the quarter ending March 31, 1999 from $10.0 million for the quarter ending March 31, 1998. U.S. net sales of $83 million for the quarter equaled year ago. The company's gross profit rose $2.4 million or, 12.4%, to $22.1 million for the three months ending March 31, 1999. The improvement is due to the Company's cost improvement program, favorable purchase prices and volume rebates from major suppliers and the increase in international sales. Evenflo's selling, general and administrative (SG&A) expenses increased to $18.6 million for the three months ending March 31, 1999. This compares to $16.4 million of SG&A for the prior year quarter ending March 31, 1998. The increase in SG&A was principally due to four factors. First, the Company increased outside services to aid in the re-engineering of some business processes. Second, the Company incurred increased expense associated with international operations. Third, the Company experienced higher customer marketing promotional expense because of timing and mix differences in the retail program. Finally, the Company incurred additional recruitment expenses. EBITDA for the quarter increased to $7.9 million for the quarter ending March 31, 1999. This is a 12.4% increase over the $7.0 million for the quarter ending March 31, 1998. Included in the quarter ending March 31, 1999 results is a $0.4 million currency gain vs. a $0.2 million currency loss for the period ending March 31, 1998. For the three month period ending March 31, 1999 the company's net cash used before financing activities was $9.2 million compared to usage of $11.3 million in the year earlier period. Borrowings under Evenflo's $100 million revolving credit increased by $7.0 million during the most recent quarter. At March 31, 1999, the Company had $52.4 million of available borrowing capacity under the bank revolving credit facility. On May 14, 1999, the Company launched an offer to exchange its privately placed 11 3/4% Senior Notes due 2006 for its publicly registered 11 3/4% Series B Senior Notes due 2006. The exchange offer, unless extended, expires June 15, 1999. Evenflo Company, Inc. is one of the largest manufacturers and marketers of juvenile products in the United States as well as a leader in several international markets. Evenflo Company, Inc. and Subsidiaries Statement of Earnings (Loss) and Deficit For three months ended March 31, 1999 and 1998 (Dollar amounts in thousands) --------------------------------------------------------------------- March 31, March 31, 1999 1998 ----- ---- Net sales $ 94,860 93,048 Cost of sales 72,806 73,421 -------- -------- Gross profit 22,054 19,627 Selling, general and administrative expenses 18,625 16,426 Restructuring costs 0 1,560 -------- -------- Income (loss) from operations 3,429 1,641 Interest expense, net 3,758 2,584 Currency (gain) loss, net (387) 170 -------- -------- Earnings (loss) before income taxes 58 (1,113) Income taxes (benefit) 258 (1,141) -------- -------- Net earnings (loss) before extraordinary loss $ (200) 28 Extraordinary (loss) on early extinguishment of debt net of 38% tax benefit 0 0 -------- -------- Net earnings (200) 28 Other comprehensive (loss), currency 0 (3) -------- -------- Comprehensive earnings (loss) $ (200) 25 -------- -------- -------- -------- Net earnings (loss) before extraordinary loss $ (200) 28 Income taxes (benefit) 258 (1,141) Interest expense, net 3,758 2,584 Depreciation and amortization 4,069 3,564 Restructuring 0 1,560 -------- -------- EBITDA 7,885 6,595 Unusual costs 0 423 -------- -------- Adjusted EBITDA $ 7,885 7,018 -------- -------- -------- -------- Evenflo Company, Inc. and Subsidiaries Consolidated Balance Sheets March 31, 1999 and December 31, 1998 Dollar amounts in thousands) --------------------------------------------------------------------- March 31, December 31, Assets 1999 1998 ------ ---- ---- Current assets: Cash 1,981 4,197 Receivables, less allowance of $ 1,334 and $1,177 95,576 79,605 Inventories 60,531 52,542 Deferred income taxes 11,621 11,397 Prepaid expenses 1,070 1,308 -------- -------- Total current assets 170,779 149,049 Property, plant and equipment, net 64,879 64,881 Intangible assets, net 45,942 46,329 Deferred financing costs 5,530 5,715 Deferred income taxes 7,525 7,660 Other 1,825 1,819 -------- -------- Total Assets 296,480 275,453 -------- -------- -------- -------- Liabilities and Shareholder's Equity ------------------------------------ Current liabilities: Accounts payable 36,544 32,260 Bankers acceptances and letters of credit 32,839 19,725 Accrued expenses 33,246 36,652 Income taxes (270) (411) -------- -------- Total current liabilities 102,359 88,226 Senior notes 110,000 110,000 Revolving credit loans 14,800 7,800 Long term debt to Spalding 0 0 Payable to Spalding 0 0 Deferred income taxes 0 0 Pension 3,658 3,658 Post retirement benefits 1,399 1,383 -------- -------- Total liabilities 232,216 211,067 Shareholder's equity: Preferred stock $.01 par value, 10,000,000 authorized, 400,000 outstanding (liquidation value, $40,000,000.) 40,000 40,000 Common Stock: Class A, $1 par value, 20,000,000 shares authorized; 10,000,000 outstanding 10,000 10,000 Class B, $1 par value, 5,000,000 shares authorized: none outstanding 0 0 Paid-in capital 61,387 61,387 Retained earnings (deficit) (43,031) (42,831) Currency translation (4,092) (4,170) -------- -------- Total shareholder's equity 64,264 64,386 -------- -------- Total liabilities and shareholder's equity 296,480 275,453 -------- -------- -------- --------  