RIVER HOLDING CORP - 10-Q Quarterly Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Form 10-Q

(Mark One)
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2003

OR

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________.

Commission file number - 333-56135



RIVER HOLDING CORP.
(Exact name of registrant as specified in its charter)



Delaware		95-4674065
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

599 Lexington Drive, 18^th Floor
New York, New York		10022
(Address of Principal Executive Offices)		(Zip Code)

(212) 758-2555
(Registrant’s telephone number, including area code)

Not Applicable
(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 o

Not Applicable x

Indicate by check mark whether the Registrant is an accelerated filer (as defined by Rule 12b-2 of the Exchange Act).

Yes o

No x

The number of shares of Common Stock, $0.01 par value, outstanding (the only class of common stock of the Company outstanding) was 9,144,293 on May 13, 2003.

RIVER HOLDING CORP. AND SUBSIDIARIES

QUARTER ENDED MARCH 31, 2003

TABLE OF CONTENTS

			Page

PART I	FINANCIAL INFORMATION

	Item 1.	River Holding Corp. Unaudited Condensed Consolidated Financial Statements:

		Unaudited Condensed Consolidated Balance Sheets as of March 31, 2003 and December 31, 2002	1

		Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2003 and March 31, 2002	3

		Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2003 and March 31, 2002	4

		Notes to Unaudited Condensed Consolidated Financial Statements	6

		Hudson Respiratory Care Inc. Unaudited Condensed Consolidated Financial Statements:

		Unaudited Condensed Consolidated Balance Sheets as of March 31, 2003 and December 31, 2002	14

		Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2003 and March 31, 2002	16

		Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2003 and March 31, 2002	17

		Notes to Unaudited Condensed Consolidated Financial Statements	19

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27

	Item 3.	Quantitative and Qualitative Disclosures About Market Risks	31

	Item 4.	Controls and Procedures	32

PART II	OTHER INFORMATION

	Item 1.	Legal Proceedings	33

	Item 2.	Changes in Securities	33

	Item 3.	Defaults Upon Senior Securities	33

	Item 4.	Submission of Matters to a Vote of Security Holders	33

	Item 5.	Other Information	33

	Item 6.	Exhibits and Reports on Form 8-K	33

SIGNATURE			34

CERTIFICATIONS			35

RIVER HOLDING CORP. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

ASSETS

(amounts in thousands)

	March 31, 2003		December 31, 2002

CURRENT ASSETS:
Cash	$	5,267	$	6,425
Accounts receivable, less allowance for doubtful accounts of $1,495 and $1,331 at March 31, 2003 and December 31, 2002, respectively		23,938		24,214
Inventories, net		21,367		22,624
Other current assets		2,279		1,459

Total current assets		52,851		54,722
PROPERTY, PLANT AND EQUIPMENT, net		44,570		45,769
OTHER ASSETS:
Goodwill		35,421		34,137
Deferred financing and other costs, net		7,424		7,888
Other assets		1,008		987

Total other assets		43,853		43,012

Total assets	$	141,274	$	143,503

See notes to unaudited condensed financial statements

RIVER HOLDING CORP. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

LIABILITIES, MANDATORILY-REDEEMABLE PREFERRED STOCK
AND STOCKHOLDERS’ DEFICIT

(amounts in thousands, except per share amounts)

	March 31, 2003			December 31, 2002

CURRENT LIABILITIES:
Notes payable to bank	$	14,703		$	13,783
Accounts payable		9,821			10,379
Accrued liabilities		25,524			22,302

Total current liabilities		50,048			46,464
NOTES PAYABLE TO BANK, net of current portion		49,243			55,792
SENIOR SUBORDINATED NOTES PAYABLE		115,000			115,000
NOTE PAYABLE TO AFFILIATE		39,317			39,317
OTHER NON-CURRENT LIABILITIES		2,023			1,961

Total liabilities		255,631			258,534
COMMITMENTS AND CONTINGENCIES (Note 4)
MANDATORILY-REDEEMABLE PREFERRED STOCK, $0.01 par value; 1,800 shares authorized; 497 shares issued and outstanding at March 31, 2003 and December 31, 2002; liquidation preference --$49,735		49,207			49,189
Accrued preferred stock dividend, payable in kind		2,621			1,192

		51,828			50,381
STOCKHOLDERS’ EQUITY (DEFICIT):
Junior preferred stock, $0.01 par value; 10 shares authorized; 3 shares outstanding at March 31, 2003 and December 31, 2002		3,627			3,524
Common stock, $0.01 par value; 15,000 shares authorized; 9,144 issued and outstanding at March 31, 2003 and December 31, 2002		97,848			97,848
Additional paid in capital		881			881
Cumulative translation adjustment		3,461			2,740
Accumulated deficit		(272,002	)		(270,405	)

Total stockholders’ deficit		(166,185	)		(165,412	)

Total liabilities, mandatorily-redeemable preferred stock and stockholders’ deficit	$	141,274		$	143,503

See notes to unaudited condensed financial statements

RIVER HOLDING CORP. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands)

	Three Months Ended

	March 31, 2003		March 31, 2002

NET SALES	$	45,879	$	43,292
COST OF SALES		26,586		25,797

Gross Profit		19,293		17,495
OPERATING EXPENSES:
Selling, distribution, general & administrative		12,757		11,822
Research and development		640		597

		13,397		12,419

Income from operations		5,896		5,076
INTEREST EXPENSE AND OTHER, net		5,261		4,863

Income before provision for income taxes		635		213
PROVISION FOR INCOME TAXES		681		424

Net loss	$	(46)	$	(211)

OTHER COMPREHENSIVE INCOME:
Foreign currency translation gain		721		413

Comprehensive income	$	675	$	202

See notes to unaudited condensed financial statements

RIVER HOLDING CORP. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(amount in thousands)

	Three Months Ended

	March 31, 2003			March 31, 2002

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(46	)	$	(211	)
Adjustments to reconcile net loss to net cash provided by operating activities-
Depreciation and amortization		2,961			2,954
Amortization of deferred financing costs		464			436
Provision for bad debts		197			150
(Gain) loss on disposal of equipment		(6	)		632
Change in operating assets and liabilities:
Accounts receivable		342			(2,139	)
Inventories		1,413			1,599
Other current assets		(799	)		(263	)
Other assets		(19	)		(192	)
Accounts payable		(625	)		(4,137	)
Accrued liabilities		3,111			2,914
Other non-current liabilities		12			819

Net cash provided by operating activities		7,005			2,562
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment		(1,723	)		(1,911	)
Proceeds from sales of property, plant and equipment		17			—

Net cash used in investing activities		(1,706	)		(1,911	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of notes payable to bank		(7,734	)		(1,546	)
Proceeds from bank borrowings		1,582			—
Payment of capital lease obligations		(13	)		—

Net cash used by financing activities		(6,165	)		(1,546	)
Effect of exchange rate changes on cash		(292	)		40

NET DECREASE IN CASH

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