-----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, U/8DzBPlzmB3l87i0iO3X+ug6M/20trn/sb5Ok9s56ggaE39lHrzbjj8eOscG6e7 wwcA2vXCGzPIJ3WxmR82yg== 0000108721-00-000002.txt : 20000510 0000108721-00-000002.hdr.sgml : 20000510 ACCESSION NUMBER: 0000108721-00-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000509 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WYNNS INTERNATIONAL INC CENTRAL INDEX KEY: 0000108721 STANDARD INDUSTRIAL CLASSIFICATION: GASKETS, PACKAGING AND SEALING DEVICES & RUBBER & PLASTIC HOSE [3050] IRS NUMBER: 952854312 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-07200 FILM NUMBER: 622353 BUSINESS ADDRESS: STREET 1: 500 NORTH STATE COLLEGE BLVD STREET 2: SUITE 700 CITY: ORANGE STATE: CA ZIP: 92868 BUSINESS PHONE: 7149383700 MAIL ADDRESS: STREET 1: 500 NORTH STATE COLLEGE BLVD STREET 2: SUITE 700 CITY: ORANGE STATE: CA ZIP: 92868-1607 10-Q 1 FORM 10-Q DATED MARCH 31, 2000 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 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, 2000 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _________________ to _________________ Commission File No. 1-7200 Wynn's International, Inc. (Exact name of Registrant as specified in its charter) Delaware 95-2854312 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 500 North State College Blvd., Ste. 700, Orange, CA 92868 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (714) 938-3700 _______________________________________________________________________________ Former name, former address & 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 [ ] At May 1, 2000, Registrant had 18,688,189 shares of common stock outstanding. WYNN'S INTERNATIONAL, INC. I N D E X ---------
Page No. -------- Part I - Financial Information Item 1 - Financial Statements: Consolidated Condensed Balance Sheets - March 31, 2000 (unaudited) and December 31, 1999 2 Unaudited Consolidated Condensed Statements of Income - Three Months Ended March 31, 2000 and 1999 3 Unaudited Consolidated Condensed Statements of Cash Flows - Three Months Ended March 31, 2000 and 1999 4 Notes to Unaudited Consolidated Condensed Financial Statements 5-7 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 8-13 Part II - Other Information Item 1 - Legal Proceedings 14 Item 6 - Exhibits and Reports on Form 8-K 15 Signatures 16
WYNN'S INTERNATIONAL, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in Thousands, Except Per Share Amounts)
March 31 2000 December 31 (unaudited) 1999 ------------ ----------- ASSETS Current assets: Cash and cash equivalents $ 8,869 $ 12,134 Cash and cash equivalents restricted for vehicle service contract obligations 33,818 25,820 Accounts receivable, less $1,370 allowance for doubtful accounts ($1,276 at December 31, 1999) 94,664 92,879 Inventories: Finished goods 30,067 30,305 Raw materials and work in process 20,079 19,399 -------- -------- 50,146 49,704 Prepaid expenses and other current assets (including deferred tax assets of $9,524 at March 31, 2000 and $10,078 at December 31, 1999) 29,448 28,612 -------- -------- Total current assets 216,945 209,149 Property, plant and equipment, at cost less accumulated depreciation and amortization 103,651 98,931 Other assets 55,892 50,892 -------- -------- $376,488 $358,972 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable $ 608 $ 6,200 Accounts payable 35,297 36,280 Taxes based on income 477 - Deferred vehicle service contract revenue and product warranty program reserves 40,075 33,683 Accrued liabilities 31,407 35,340 Long-term debt due within one year 332 346 -------- -------- Total current liabilities 108,196 111,849 Long-term debt due after one year 58,194 48,287 Deferred taxes based on income 8,928 9,182 Other liabilities 40,602 34,473 Commitments and contingencies - - Stockholders' equity: Preferred stock, $1 par value; 500,000 shares authorized, none issued - - Common stock, $0.01 par value; 40,000,000 shares authorized, 21,898,335 shares issued 219 219 Capital in excess of par value 22,656 22,732 Retained earnings 189,174 182,692 Accumulated other comprehensive income (8,223) (6,973) Unearned compensation (39) (48) Common stock held in treasury 3,247,525 shares, at cost (3,265,577 at December 31, 1999) (43,219) (43,441) -------- -------- Total stockholders' equity 160,568 155,181 -------- -------- $376,488 $358,972 ======== ========
See accompanying notes 2 WYNN'S INTERNATIONAL, INC. UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Dollars in Thousands, Except Per Share Amounts)
Three Months Ended March 31 --------------------- 2000 1999 -------- -------- Revenues: Net sales $143,318 $ 88,538 Interest income 606 551 -------- -------- 143,924 89,089 -------- -------- Costs and expenses: Cost of sales 99,969 53,478 Selling, general & administrative 30,310 23,946 Interest expense 1,184 19 -------- -------- 131,463 77,443 -------- -------- Income before taxes based on income 12,461 11,646 Provision for taxes based on income 4,673 4,193 -------- -------- Net income $ 7,788 $ 7,453 ======== ======== Earnings per share of common stock: Basic $.42 $.40 ==== ==== Diluted $.41 $.39 ==== ==== Cash dividend per common share $.07 $.07 ==== ====
See accompanying notes 3 WYNN'S INTERNATIONAL, INC. UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in Thousands)
Three Months Ended March 31 ----------------------- 2000 1999 -------- -------- Cash flows from operating activities: Net income $ 7,788 $ 7,453 Adjustments: Depreciation and amortization 4,347 2,146 Provision for uncollectible accounts 162 85 Amortization of stock compensation 7 12 Gain on sale of property, plant & equipment (6) (8) Provision (benefit) for deferred income taxes 881 (623) Change in operating assets and liabilities, net of the effect of acquisition: Cash and cash equivalents restricted for vehicle service contract obligations (7,998) (3,174) Accounts receivable (net) (1,947) (1,495) Refundable income taxes 2,267 - Inventories (442) 1,437 Prepaid expenses and other current assets (3,657) (2,039) Other assets (5,054) (228) Accounts payable (983) (1,695) Deferred vehicle service contract revenue and product warranty program reserves 6,392 4,455 Taxes based on income 477 3,298 Accrued and other liabilities 2,794 (1,329) -------- -------- Net cash provided by operating activities 5,028 8,295 -------- -------- Cash flows from investing activities: Additions to property, plant and equipment (9,410) (4,121) Acquisition of business (6,326) - Other - net (112) 36 -------- -------- Net cash used in investing activities (15,848) (4,085) -------- -------- Cash flows from financing activities: Borrowings under short-term lines of credit-net 608 - Borrowings under long-term lines of credit-net 10,600 - Payments of long-term debt (126) - Dividends paid (2,609) (2,446) Proceeds from exercise of stock options 549 2,006 Purchase of treasury stock (401) (6,052) -------- -------- Net cash provided by (used in) financing activities 8,621 (6,492) -------- -------- Effect of exchange rate changes (1,066) (1,229) -------- -------- Net decrease in cash and cash equivalents (3,265) (3,511) -------- -------- Cash and cash equivalents at beginning of year 12,134 44,329 -------- -------- Cash and cash equivalents at March 31 $ 8,869 $ 40,818 ======== ========
See accompanying notes 4 WYNN'S INTERNATIONAL, INC. NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS MARCH 31, 2000 AND 1999 1) The accompanying unaudited consolidated condensed financial statements include all adjustments which in the opinion of management are necessary for a fair presentation of the information for the interim period herein reported. These unaudited consolidated condensed financial statements should be read in conjunction with the consolidated financial statements included in the 1999 Annual Report to Stockholders. 2) The results of operations for the three months ended March 31, 2000 are not necessarily indicative of results of operations for the year ending December 31, 2000. Accounting measurements at interim dates inherently involve greater imprecision than at year-end, which is due, in part, to increased reliance on the use of estimates at interim dates. 3) Cash payments for interest and income taxes are as follows:
Three Months Ended March 31 ------------------------- 2000 1999 ---------- ---------- Interest $ 920,000 $ 9,000 Income taxes 1,048,000 1,518,000
4) During the three months ended March 31, 2000, the deferred purchase price for the December 1999 acquisition of Goshen Rubber Companies, Inc. (Goshen) was reduced by $581,000. This adjustment resulted in a corresponding decrease in goodwill and the long-term note payable to the former shareholders of Goshen. 5 WYNN'S INTERNATIONAL, INC. NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED) March 31, 2000 AND 1999 5) The computation of basic and diluted earnings per share of common stock for the three months ended March 31, 2000 and 1999 is as follows:
Three Months Ended March 31 -------------------------- 2000 1999 ----------- ----------- Net income $ 7,788,000 $ 7,453,000 =========== =========== Weighted average number of shares outstanding 18,659,059 18,804,845 Net shares assumed issued using the treasury stock method for stock options outstanding during each period based on average market price 254,822 433,530 Net shares assumed issued for performance shares pending issuance based on satisfaction of vesting requirements 5,239 6,702 ----------- ----------- Diluted shares 18,919,120 19,245,077 =========== =========== Income per common share: Basic $.42 $.40 ==== ==== Diluted $.41 $.39 ==== ====
6 WYNN'S INTERNATIONAL, INC. NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED) MARCH 31, 2000 AND 1999 6) Accumulated other comprehensive income on the Company's Consolidated Condensed Balance Sheets consists of cumulative equity adjustments from foreign currency translation. Total comprehensive income for the three months ended March 31, 2000 and 1999 was $6,538,000 and $6,167,000, respectively. The reported amounts for total comprehensive income differ from net income due to foreign currency translation adjustments. The tax effect related to foreign currency translation adjustments is immaterial and has not been recognized as part of Comprehensive Income or in Accumulated Other Comprehensive Income. 7) Segment information for the three months ended March 31, 2000 and 1999 is as follows:
Three Months Ended March 31 ---------------------------------------------- Net Sales Pretax Profit (Loss) --------------------- --------------------- (In thousands) 2000 1999 2000 1999 -------------- -------- -------- -------- -------- Automotive and Industrial Components $ 98,492 $ 47,235 $ 10,066 $ 8,885 Specialty Chemicals 44,826 41,303 4,390 4,156 Corporate and Other - - (1,995) (1,395) -------- -------- -------- -------- Consolidated Totals $143,318 $ 88,538 $ 12,461 $ 11,646 ======== ======== ======== ========
The Company evaluates segment performance based on pretax profit or loss from operations, including intercompany interest income and expense allocations and other intercompany charges, but excluding certain expenses for goodwill amortization, litigation and environmental matters and nonrecurring gains and losses. Excluded items are generally considered part of corporate activities. 7 WYNN'S INTERNATIONAL, INC. ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS - --------------------- Comparison of the three months ended March 31, 2000 and 1999 - ------------------------------------------------------------ Net sales for the first quarter of 2000 were $143.3 million, a 62% increase compared to sales of $88.5 million in the first quarter of 1999. The most recent quarter includes the results of operations of Goshen Rubber Companies, Inc. (Goshen) which was acquired by the Company in late December 1999. Excluding the Goshen revenues, sales increased 7% over the first quarter of 1999. Sales of the Automotive and Industrial Components Division, which is comprised of Wynn's-Precision, Inc. (Precision) and Goshen, suppliers of O-rings, seals and other rubber, plastic and urethane products, and Robert Skeels & Company (Skeels), a small regional wholesale distributor of builders hardware products, increased 109% in the first quarter of 2000 compared to the first quarter of 1999. This increase primarily reflects the acquisition of Goshen which added approximately $48 million of incremental revenue in the first quarter of 2000. Precision's sales increased 6% in the first quarter of 2000 compared to the same quarter last year. Precision's sales increased at all of its divisions with the majority of the increase coming from its Tennessee-based operations. The increase in sales at Precision's Tennessee operation, which manufactures and sells primarily O-rings, was due mainly to higher sales to automotive and off-road construction markets. Sales at Skeels increased in the first quarter of 2000 compared to the same quarter in 1999. Sales at the Specialty Chemicals Division, principally car care products, increased 9% in the first quarter of 2000 compared to the same quarter in 1999. Sales in the U.S. increased 20% compared to the prior year primarily due to higher sales of vehicle service contract programs and higher sales of equipment and related chemicals for professional repair facilities. These sales increases were partially offset by lower sales of product warranty programs and lower export sales to Asian distributors. Foreign subsidiary sales decreased 3% in the first quarter of 2000 compared to the prior year primarily due to the adverse effect of a strong U.S. dollar during the most recent quarter relative to the currencies of countries in which the Company operates. Excluding the impact of foreign exchange rate fluctuations, sales at the Specialty Chemicals Division would have increased 13%. Interest income in the first quarter of 2000 was $.6 million, which was approximately the same amount as in the first quarter of 1999. Despite the acquisition of Goshen in late December 1999, for which approximately $38 million of the Company's cash and cash equivalents was used, the Company continues to earn interest income from its invested cash and cash equivalents restricted for vehicle service contract obligations. The consolidated cost of sales in the first quarter of 2000 increased to 69.8% of sales compared to 60.4% in the first quarter of 1999. The decrease in the consolidated gross margin percentage was primarily due to the acquisition of Goshen 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) - ------------------------------------------------- which has a lower gross margin percentage than the Company's other business units. Precision's gross margin percentage declined in the first quarter of 2000 compared to the same period in 1999 due to a change in sales mix resulting from the higher sales of O-rings to the automotive and off-road markets. The Specialty Chemicals Division's gross margin percentage decreased in the first quarter of 2000 compared to the same period last year due to a change in sales mix and lower gross margins from sales of product warranty programs and vehicle service contracts. Selling, general and administrative (SG&A) expenses in the first quarter of 2000 were $30.3 million (21.1% of sales) compared to $23.9 million (27.0% of sales) for the first quarter of 1999. The increase in SG&A expenses was primarily due to the acquisition of Goshen, which added approximately $6 million of additional SG&A expenses, and the higher sales volumes at Precision. SG&A expenses decreased slightly at the Specialty Chemicals Division during the first quarter of 2000 compared to the same period last year. As a percentage of sales, SG&A expenses at Goshen are significantly less than the Company's prior year's consolidated percentage of sales. Consequently, the acquisition of Goshen caused a corresponding decline in the current year's consolidated ratio of SG&A expenses to sales, even though the dollar amount of SG&A expenses was up significantly. As a percentage of sales, SG&A expenses declined at the Specialty Chemicals Division and increased slightly at Precision. Corporate operating expenses increased slightly in the first quarter of 2000 compared to the first quarter of 1999. Interest expense in the first quarter of 2000 was $1.2 million compared to virtually no interest expense in the first quarter of 1999. The increase in interest expense is primarily due to amounts borrowed to fund the December 1999 acquisition of Goshen. Income before taxes based on income increased 7% to $12.5 million in 2000 from $11.6 million in the first quarter of 1999. In the Automotive and Industrial Components Division, pretax profit increased 13% in the first quarter of 2000 compared to the same period in 1999 primarily due to the acquisition of Goshen and productivity gains at Precision's Tennessee-based operations, which benefited from new product introductions and higher U.S. automotive production rates. Skeels' reported a small increase in pretax profit in the first quarter of 2000 compared to the first quarter of 1999 due to the increase in sales. Pretax profit at the Specialty Chemicals Division increased 6% in the first quarter of 2000 compared to the 1999 first quarter. Pretax profit increased at the Specialty Chemicals Division's U.S.-based operations, especially from the vehicle service contract business. Pretax profit was negatively affected at this Division's foreign operations during the first quarter of 2000 compared to the same period last year due to a strong U.S. dollar relative to the currencies of the countries in which Wynn Oil Company operates. Excluding the impact of foreign exchange rate fluctuations, pretax profit at the Specialty Chemicals Division would have increased 10%. The effective tax rate in the first quarter of 2000 was 37.5%, up from the 36.0% tax rate in the first quarter of 1999. As previously announced, the increase in the effective tax rate in 2000 is primarily due to the anticipated nondeductible amortization of goodwill related to the acquisition of Goshen. 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) - ------------------------------------------------- Net income increased 4% to $7.8 million in the first quarter of 2000 compared to net income of $7.5 million in the first quarter of 1999 due to the increase in pretax income, partially offset by the higher effective tax rate. Basic income per share in the first quarter of 2000 increased 5% to $.42 from $.40 in 1999 due to the higher net income and lower average number of shares outstanding. The number of shares used in the calculation of basic earnings per share decreased 1% in the first quarter of 2000 compared to the same period in 1999 primarily due to repurchases of the Company's common stock principally during 1999 pursuant to the Company's share repurchase program. Diluted earnings per share also increased 5% in the first quarter of 2000 compared to 1999 for the same reasons as the increase in basic earnings per share. The number of shares used in the calculation of diluted earnings per share decreased 2% in the most recent quarter compared to the first quarter of 1999 due to the share repurchases and fewer outstanding stock options required to be included in the diluted shares calculation. FINANCIAL CONDITION - ------------------- Working capital at the end of the first quarter was $108.7 million compared to $97.3 million at December 31, 1999. The current ratio at the end of the first quarter of 2000 was 2.01 to 1 compared to 1.87 to 1 at December 31, 1999. The increase in the current ratio was caused principally by the payment of a note payable for $6.2 million to the former shareholders of Goshen. This note was paid with funds borrowed under the Company's long-term line of credit. Cash and cash equivalents decreased $3.3 million to $8.9 million at March 31, 2000 compared to $12.1 million at December 31, 1999. The decrease in cash and cash equivalents was primarily due to cash provided by operating activities of $5.0 million, $11.2 million of borrowings from long-term debt and short-term notes payable and $.5 million of proceeds from the exercise of stock options, offset by $9.4 million of capital expenditures, $6.3 million of payments for the acquisition of Goshen (including $6.2 million for a note payable), $.4 million used for repurchases of the Company's common stock and dividends paid of $2.6 million. Cash and cash equivalents restricted for vehicle service contract obligations increased $8.0 million to $33.8 million at March 31, 2000 from $25.8 million at December 31, 1999. This increase was due to the growth in sales of vehicle service contracts partially reduced by amounts paid for vehicle service contract obligations. Accounts receivable increased $1.8 million to $94.7 million at March 31, 2000 from $92.9 million at December 31, 1999. This increase was primarily due to the higher sales at Precision in the most recent quarter compared to the fourth quarter of 1999. Accounts receivable also increased at Goshen, but decreased slightly at the Specialty Chemicals Division. Inventories increased to $50.1 million at the end of the first quarter of this year compared to $49.7 million at December 31, 1999. Inventories increased at the Specialty Chemicals Division due primarily to higher levels of professional equipment inventories at its U.S.-based operations. Inventories decreased slightly at Precision and Goshen at March 31, 2000 compared to the prior year end. 10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) - ------------------------------------------------- During the three months ended March 31, 2000, the Company purchased $9.4 million of new property, plant and equipment, primarily for the Automotive and Industrial Components Division. As previously reported, the Company anticipates that total capital expenditures in 2000 will be approximately $23 million, which will be funded from current operations. As previously announced, the Company is continuing to explore possible niche acquisitions. Deferred vehicle service contract revenue and product warranty program reserves and other liabilities increased $6.4 million and $6.1 million, respectively, at March 31, 2000 compared to amounts at December 31, 1999. These increases primarily reflect the increase in sales from vehicle service contracts at the Specialty Chemicals Division. Revenue from vehicle service contracts is deferred and recognized in proportion to the expected claims incurred under the service contract programs. Deferred revenues, to be recognized in future years, were $51.8 million at March 31, 2000 and $39.3 million at December 31, 1999. At March 31, 2000, the Company has a $60.0 million unsecured domestic committed bank line of credit which allows for borrowings through October 2004. At March 31, 2000, $50.6 million was borrowed under this line of credit compared to $40.0 million at December 31, 1999. The increase of $10.6 million was primarily due to funds borrowed to repay a $6.2 million note payable to the former shareholders of Goshen and to fund certain working capital requirements at Goshen and general capital expenditures. The Company's policy is to classify borrowings under this revolving credit facility as long-term debt since the Company has the ability under the credit agreement, and the intent, to maintain obligations for longer than one year. The Company believes that additional lines of credit could be obtained if necessary. Under present circumstances, neither additional lines of credit nor additional long-term financing are required to supplement working capital requirements. Stockholders' equity at March 31, 2000 was $160.6 million or $8.61 per share compared to $155.2 million or $8.33 per share at December 31, 1999. The increase of $5.4 million is attributable to net income of $7.8 million and $.5 million from the exercise of stock options, including the related tax effect, reduced by $1.3 million of dividends declared, $.4 million of repurchases of the Company's common stock and a $1.2 million decrease in the accumulated other comprehensive income account. YEAR 2000 MATTERS - ----------------- In prior years, the Company discussed the nature and progress of its plans to become Year 2000 ready. As a result of the Year 2000 date change, the Company did not experience any significant disruptions to its business operations, nor has any customer or vendor of the Company reported any significant effects related to the date change. Management will continue to monitor its own systems and its customers' and vendors' reports regarding Year 2000 issues. The costs incurred by the Company thus far, and expected to be incurred in the future, are not significant. Management does not expect any future significant effects on its customers or vendors or disruptions to the Company's business operations resulting from Year 2000 issues. See Forward-Looking Statements. 11 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) - ------------------------------------------------- EURO CURRENCY CONVERSION - ------------------------ The Euro currency ("Euro") was introduced on January 1, 1999, and the 11 participating European Monetary Union member countries established irrevocable fixed conversion rates between their local currencies and the Euro. However, the local currencies in those countries will continue to be used as legal tender through January 1, 2002. Thereafter, the local currencies will be canceled and Euro bills and coins will be used for cash transactions in the participating countries. From January 1, 1999 to December 31, 2001, companies will be allowed to transact noncash transactions in either Euro or the local currency. The Company and certain of its European subsidiaries are currently evaluating the Euro conversion and the potential impact on their operations. At the present time, the Company believes the necessary changes and costs incurred thus far, and expected to be incurred in the future, are not significant. See Forward-Looking Statements. PENDING ADOPTION OF STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 133 - ----------------------------------------------------------------------- In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities. Statement 133 standardizes the accounting for derivative instruments by requiring that an entity recognize those items as assets or liabilities in the balance sheet and measure them at fair market value. Statement 133 is effective for quarterly financial statements for fiscal years beginning after June 15, 2000, and therefore the Company will adopt the new requirements beginning January 1, 2001. The Company is in the process of evaluating the impact of Statement 133 on the Company's financial statements. The Company does not anticipate that the adoption of Statement 133 will have a significant impact on the Company's results of operations, cash flows or financial position. FORWARD-LOOKING STATEMENTS - -------------------------- The preceding financial statements and Management's Discussion and Analysis contain various "forward-looking statements" representing the Company's expectations or beliefs concerning future events. The statements include the following: Precision's ability to continue to increase revenues and profits and improve operating efficiencies; the ability of the Company to obtain additional lines of credit, if necessary; the sufficiency of the Company's current lines of credit to supplement foreseeable working capital requirements; the anticipated level of capital expenditures; the lack of impact of the Year 2000 issues on the Company's vendors, customers or its business operations; and the lack of impact of the Euro currency conversion on the Company's business operations. The Company cautions that these statements are further qualified by important factors that could cause actual results to differ materially from those in the forward-looking statements, including the following: the impact of the December 1999 acquisition of Goshen on the Company's future results of operations and cash flows; sales of new and used cars in the U.S.; automotive and off-road construction vehicle production rates in North America; currency exchange rates relative to the U.S. 12 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) - ------------------------------------------------- dollar; short-term domestic and international interest rates; the impact of competitive products and pricing; attempts by state governments to regulate the product warranty program or change existing regulation of vehicle service contract programs; termination of one or more of the product warranty division's alliances with automobile finance companies or a significant slowdown in the business of these companies; legal, regulatory or technical developments or subsequently developed information causing an increase in the Company's estimated liability for environmental matters and related litigation; the ability of the Company's vendors and customers to successfully resolve any Year 2000 and Euro currency conversion issues in their respective businesses; and general economic conditions, especially in North America, Western Europe and the Asia/Pacific area. The Company's actual results thus may differ materially from the expected results expressed or implied by the forward-looking statements. 13 WYNN'S INTERNATIONAL, INC. PART II - OTHER INFORMATION Item 1 - Legal Proceedings Various claims and actions, considered normal to Registrant's business, have been asserted and are pending against Registrant and its subsidiaries. Registrant believes that such claims and actions should not have any material adverse effect upon the consolidated results of operations, cash flows or the financial position of Registrant based on information presently known to Registrant. See also Item 1 - "Environmental Matters" and Item 3 - "Legal Proceedings" in the Registrant's Report on Form 10-K for the year ended December 31, 1999. 14 WYNN'S INTERNATIONAL, INC. PART II - OTHER INFORMATION Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits 27 - Financial data schedule. (b) Registrant filed a report on Form 8-K/A dated February 25, 2000 amending Registrant's previous report on Form 8-K filed with the Commission on December 30, 1999 (the "Current Report") describing Registrant's acquisition of all of the outstanding capital stock of Goshen Rubber Companies, Inc., an Indiana corporation ("Goshen"), on December 17, 1999. In accordance with the instructions to paragraphs (a)(4) and (b)(2) of Item 7 of Form 8-K, the Current Report omitted the financial statements of businesses acquired and the pro forma financial information required by such paragraphs. Accordingly, Registrant amended the Current Report by deleting Item 7 thereof and replacing it in its entirety with the following: ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial statements of businesses acquired. (1) Audited consolidated financial statements of Goshen for the years ended June 30, 1999 and 1998. (2) Unaudited consolidated balance sheet of Goshen at September 30, 1999. (3) Unaudited consolidated statements of income of Goshen for the three months ended September 30, 1999 and 1998. (4) Unaudited consolidated statements of cash flows of Goshen for the three months ended September 30, 1999 and 1998. (5) Audited financial statements of Waukesha Rubber Company, Inc. ("Waukesha") for the years ended October 31, 1998 and 1997. (Waukesha was acquired by Goshen on August 31, 1999.) (6) Unaudited balance sheet of Waukesha at July 31, 1999. (7) Unaudited statements of income of Waukesha for the nine months ended July 31, 1999 and 1998. (8) Unaudited statements of cash flows of Waukesha for the nine months ended July 31, 1999 and 1998. 15 WYNN'S INTERNATIONAL, 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. WYNN'S INTERNATIONAL, INC. ------------------------------------------- (Registrant) Date May 8, 2000 /s/ James Carroll ----------------------- ------------------------------------------- James Carroll Chairman and Chief Executive Officer Date May 8, 2000 /s/ Seymour A. Schlosser ----------------------- ------------------------------------------- Seymour A. Schlosser Vice President-Finance (Principal Financial and Accounting Officer) 16 WYNN'S INTERNATIONAL, INC. INDEX TO EXHIBITS Exhibit Number Description - ------- ----------- 27 Financial Data Schedule (included with EDGAR version only) EX-27 2 EXHIBIT 27 - FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL STATEMENTS CONTAINED IN FORM 10-Q FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-2000 MAR-31-2000 42,687 0 96,034 1,370 50,146 216,945 103,651 0 376,488 108,196 58,194 0 0 219 160,349 376,488 143,318 143,924 99,969 99,969 30,148 162 1,184 12,461 4,673 7,788 0 0 0 7,788 .42 .41 Includes Cash and Cash Equivalents Restricted for Vehicle Service Contract Obligations of $33,818 Property, Plant and Equipment, At Cost Less Accumulated Depreciation and Amortization
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