-----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, B5s87cXYxqgLilNG791lWAaMXc5P5pmypEkHb6GFOcqDBy19fen4lpYssSKimP1/ oRZygn3qXYuUgMhr86lK4w== 0000108721-97-000002.txt : 19970512 0000108721-97-000002.hdr.sgml : 19970512 ACCESSION NUMBER: 0000108721-97-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970509 SROS: NYSE 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: 1934 Act SEC FILE NUMBER: 001-07200 FILM NUMBER: 97598595 BUSINESS ADDRESS: STREET 1: 500 NORTH STATE COLLEGE BLVD CITY: ORANGE STATE: CA ZIP: 92668 BUSINESS PHONE: 7149383700 MAIL ADDRESS: STREET 1: 500 NORTH STATE COLLEGE BLVD CITY: ORANGE STATE: CA ZIP: 92668 10-Q 1 FORM 10-Q DATED MARCH 31, 1997 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, 1997 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 2, 1997, Registrant had 12,614,717 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, 1997 (unaudited) and December 31, 1996 2 Unaudited Consolidated Condensed Statements of Income - Three Months Ended March 31, 1997 and 1996 3 Unaudited Consolidated Condensed Statements of Cash Flows - Three Months Ended March 31, 1997 and 1996 4 Notes to Unaudited Consolidated Condensed Financial Statements 5-6 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 7-10 Part II - Other Information Item 6 - Exhibits and Reports on Form 8-K 11 Signatures 12
WYNN'S INTERNATIONAL, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in Thousands, Except Per Share Amounts)
March 31 1997 December 31 (unaudited) 1996 ----------- ----------- ASSETS Current assets: Cash and cash equivalents $ 47,845 $ 53,304 Accounts receivable, less $867 allowance for doubtful accounts ($870 at December 31, 1996) 55,460 48,347 Inventories: Finished goods 20,110 19,789 Raw materials and work in process 11,857 11,151 -------- -------- 31,967 30,940 Prepaid expenses and other current assets (including deferred tax assets of $12,291 at Mar. 31, 1997 and $12,025 at December 31, 1996) 22,062 21,157 Net assets of discontinued operations - 254 -------- -------- Total current assets 157,334 154,002 Property, plant and equipment, at cost less accumulated depreciation and amortization 45,855 44,719 Other assets 6,277 6,384 -------- -------- $209,466 $205,105 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 18,399 $ 18,137 Taxes based on income 4,422 3,676 Accrued liabilities 41,538 42,531 Long-term debt due within one year 43 69 -------- -------- Total current liabilities 64,402 64,413 Deferred taxes based on income 7,579 7,740 Commitments and contingencies Stockholders' equity: Preferred stock, $1 par value; 500,000 shares authorized, none issued - - Common stock, $1 par value; 20,000,000 shares authorized, 14,573,804 shares issued (14,546,540 at December 31, 1996) 14,574 14,547 Capital in excess of par value 10,784 10,377 Retained earnings 120,623 115,418 Equity adjustment from foreign currency translation (3,112) (1,985) Unearned compensation (183) (139) Common stock held in treasury 859,087 shares, at cost (869,962 at December 31, 1996) (5,201) (5,266) -------- -------- Total stockholders' equity 137,485 132,952 -------- -------- $209,466 $205,105 ======== ========
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 --------------------- 1997 1996 -------- -------- Revenues: Net sales $ 77,887 $ 71,463 Interest income 667 255 -------- -------- 78,554 71,718 -------- -------- Cost and expenses: Cost of sales 47,615 42,567 Selling, general & administrative 20,801 21,478 Interest expense 55 52 -------- -------- 68,471 64,097 -------- -------- Income from continuing operations before taxes based on income 10,083 7,621 Provision for taxes based on income 3,781 2,898 -------- -------- Income from continuing operations 6,302 4,723 -------- -------- Discontinued operations: Income from discontinued operations, net of income taxes of $31 - 35 -------- -------- Net income $ 6,302 $ 4,758 ======== ======== Income per share of common stock: Primary: Continuing operations $.44 $ .33 Discontinued operations - .01 -------- -------- Total $.44 $ .34 ======== ======== Fully diluted: Continuing operations $.44 $ .33 Discontinued operations - - -------- -------- Total $.44 $ .33 ======== ======== Cash dividend per common share $.08 $.0667 ======== ========
See accompanying notes 3 WYNN'S INTERNATIONAL, INC. UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in Thousands)
Three Months Ended March 31 ----------------------- 1997 1996 -------- -------- Cash flows from operating activities: Net income from continuing operations $ 6,302 $ 4,723 Adjustments: Depreciation and amortization 1,933 1,712 Provision for uncollectible accounts 74 90 Amortization of stock compensation 50 102 Gain on sale of property, plant & equipment (8) (9) Benefit for deferred income taxes (378) (381) Changes in operating assets and liabilities: Accounts receivable (net) (7,187) (4,214) Inventories (1,027) (1,041) Prepaid expenses and other current assets (639) (643) Other assets 29 (27) Accounts payable 262 366 Product warranty program reserves 237 1,189 Taxes based on income 746 1,032 Accrued liabilities (314) (32) -------- -------- Net cash provided by continuing operations 80 2,867 -------- -------- Net income from discontinued operations - 35 Net items using cash from discontinued operations - (4,029) -------- -------- Net cash used in discontinued operations - (3,994) -------- -------- Net cash provided by (used in) all operating activities 80 (1,127) -------- -------- Cash flows from investing activities: Additions to property, plant and equipment (3,160) (2,232) Proceeds from sale of property, plant & equipment 27 14 Net proceeds from disposition of net assets of discontinued operations 254 - Other - net 7 1 -------- -------- Net cash used in investing activities (2,872) (2,217) -------- -------- Cash flows from financing activities: Payments of long-term debt (26) (27) Dividends paid (2,013) (1,694) Proceeds from exercise of stock options 405 579 -------- -------- Net cash used in financing activities (1,634) (1,142) -------- -------- Effect of exchange rate changes (1,033) (582) -------- -------- Net decrease in cash and cash equivalents (5,459) (5,068) -------- -------- Cash and cash equivalents at beginning of year 53,304 23,127 -------- -------- Cash and cash equivalents at March 31 $ 47,845 $ 18,059 ======== ========
See accompanying notes 4 WYNN'S INTERNATIONAL, INC. NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS MARCH 31, 1997 AND 1996 1) The accompanying unaudited consolidated condensed financial statements include all adjustments which in the opinion of management are necessary to 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 1996 Annual Report to Stockholders. 2) The results of operations for the three months ended March 31, 1997 are not necessarily indicative of results of operations for the year ending December 31, 1997. 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) On May 23, 1996, the Company sold the principal operating assets of Wynn's Climate Systems, Inc. (WCS), a manufacturer and marketer of automotive air conditioning systems and components. As of March 31, 1997, the Company has received $26.5 million (including tax benefits of $2.6 million) of an expected total of $29 million (including tax benefits of $4.6 million) in connection with the transaction. The results of operations for WCS have been classified on the statements of income as discontinued operations. Revenues from discontinued operations for the three months ended March 31, 1996 were $11,622,000. 4) On March 26, 1997, the Company commenced a Dutch Auction self-tender offer (the "Tender Offer") to purchase for cash up to 1,100,000 shares, or approximately 8.0%, of its issued and outstanding Common Stock at a purchase price of not greater than $25.00 per share nor less than $22.00 per share. Pursuant to the Tender Offer, which terminated on April 22, 1997, the Company purchased 1,100,000 shares of its Common Stock at a purchase price of $24.25 per share. The aggregate cost to the Company of the Tender Offer, including expenses, was approximately $27.1 million. In the quarter ending June 30, 1997, the shares repurchased will be treated as treasury shares and the purchase price and related expenses will be reported as a reduction in equity as the cost of treasury shares. 5) Cash payments for interest and income taxes are as follows:
Three months ended March 31 --------------------------- 1997 1996 ---------- ---------- Interest $ 23,000 $ 28,000 Income taxes 3,413,000 2,278,000
5 WYNN'S INTERNATIONAL, INC. NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED) MARCH 31, 1997 AND 1996 6) The number of shares used in the calculation of primary and fully diluted earnings per share information is as follows:
Three months ended March 31 --------------------------- 1997 1996 ---------- ---------- Primary 14,323,969 14,144,483 Fully diluted 14,360,476 14,207,768
The number of shares and the related earnings per share data for all periods have been adjusted retroactively to reflect the 3 for 2 stock split effected in December 1996. 6 WYNN'S INTERNATIONAL, INC. ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF CONTINUING OPERATIONS - -------------------------------- Comparison of the three months ended March 31, 1997 and 1996 - ------------------------------------------------------------ Net sales for the first quarter of 1997 were $77.9 million, a 9% increase compared to sales of $71.5 million in the first quarter of 1996. Sales of the Automotive and Industrial Components Division, which is comprised of Wynn's-Precision, Inc. (Precision), a Lebanon, Tennessee-based supplier of O-rings, seals and molded rubber products, and Robert Skeels & Company (Skeels), a small regional wholesale distributor of builders hardware products, increased 17% in the first quarter of 1997 compared to the first quarter of 1996, primarily reflecting higher sales volume at Precision. Sales increased at Precision's Virginia, Tennessee, Arizona and Canadian operations. Contributing to the increase in sales was Precision's September 1996 acquisition of an automotive sealing business in Kentucky. The increase in sales at its Virginia operation was due to growth of its expanded composite gasket product line. The increase in sales at its Tennessee operation, which manufactures and sells primarily O-rings, was due to higher U.S. automotive production rates during the most recent quarter compared to the prior year. Sales at Skeels declined slightly in the first quarter of 1997 compared to the same quarter in 1996. Sales at the Specialty Chemicals Division, principally car care products, increased 1% in the first quarter compared to the same quarter in 1996. Excluding the effect of foreign exchange rate fluctuations, total net sales of this Division would have increased 6% in the most recent quarter compared to the comparable quarter in 1996. Sales increased 7% in the U.S. compared to the prior year primarily due to higher sales of the division's product warranty programs and higher export sales to Asian and Latin American distributors. Foreign subsidiary sales, especially in France and Belgium, decreased on a dollar denominated basis from the prior year primarily due to the negative translation effect of a strong U.S. dollar. Interest income increased $.4 million during the first quarter of 1997 compared to the first quarter of 1996 due to higher cash and cash equivalent balances on deposit in the most recent quarter. The consolidated cost of sales in the first quarter of 1997 increased to 61.1% of sales compared to 59.6% in the first quarter of 1996. The decrease in the consolidated gross margin percentage was due to the change in mix of revenues. Precision generated higher gross profit due to the higher sales volume, but its gross margin as a percentage of sales decreased, primarily due to increased manufacturing costs and continued pricing pressure. At the Specialty Chemicals Division, the gross profit increased slightly, but declined as a percentage of sales due to the increased sales of the product warranty kit programs, which have a lower gross margin than the other specialty chemical products. Selling, general and administrative (SG&A) expenses in the first quarter of 1997 were $20.8 million (26.7% of sales) compared to $21.5 million (30.1% of sales) for the first quarter of 1996. SG&A expenses declined $.9 million at the Specialty 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) - ------------------------------------------------- Chemicals Division, reflecting reduced spending for advertising and promotional programs and the translation effect of a strong U.S. dollar. The decline was partially offset by an increase in SG&A expenses at Precision due to the higher sales volumes. SG&A expenses declined as a percentage of sales at the Specialty Chemicals Division due to the change in revenue mix and lower spending. SG&A expenses also declined as a percentage of sales at Precision due to the higher revenues and constant monitoring of costs. Operating expenses at Corporate also declined in the first quarter of 1997 compared to the same period in 1996. Income before taxes based on income increased 32% to $10.1 million in 1997 from $7.6 million in the first quarter of 1996. In the Automotive and Industrial Components Division, Precision's operating profit increased 12% compared to the first quarter of 1996 due to the higher sales. The Specialty Chemicals Division experienced a 29% increase in operating profit in the quarter ended March 31, 1997 due primarily to improved results at its U.S.-based operations, especially the product warranty division. The effective tax rate in the first quarter of 1997 was 37.5%, down from the 38.0% rate in the first quarter of 1996 and slightly above the full year 1996 rate of 37.2%. Income from continuing operations increased 33% to $6.3 million in the first quarter of 1997 compared to $4.7 million in the first quarter of 1996 as a result of the increase in pretax income and lower effective tax rate. Primary income per share in the first quarter of 1997 increased to $.44 from $.33 in 1996 due to the higher income. The number of shares used in the calculation of primary earnings per share increased 1% in 1997 due primarily to the exercise of stock options in 1996 and 1997 and an increase in the number of outstanding stock options required to be included in the calculation of outstanding shares. Fully diluted earnings per share from continuing operations increased 33% in 1997 compared to 1996 due to the increased income. RESULTS OF DISCONTINUED OPERATIONS - ---------------------------------- On May 23, 1996, the Company sold the principal operating assets of Wynn's Climate Systems, Inc., (WCS), the automotive air conditioning business which was formerly part of the Automotive and Industrial Components Division. The results of operations for WCS have been classified on the statements of income as discontinued operations. Revenues from discontinued operations for the three months ended March 31, 1996 were $11,622,000. FINANCIAL CONDITION - ------------------- Working capital at the end of the first quarter was $92.9 million compared to $89.6 million at December 31, 1996. The current ratio at the end of the first quarter of 1997 was 2.44 to 1 compared to 2.39 to 1 at December 31, 1996. The Company has adequate cash and cash equivalents and lines of credit to meet foreseeable working capital requirements. 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) - ------------------------------------------------- On March 26, 1997, the Company commenced a Dutch Auction self-tender offer (the "Tender Offer") to purchase for cash up to 1,100,000 shares of its issued and outstanding Common Stock. Pursuant to the Tender Offer, which terminated on April 22, 1997, the Company purchased 1,100,000 shares of its Common Stock at a purchase price of $24.25 per share. The aggregate cost to the Company of the Tender Offer, including expenses, was approximately $27.1 million, which was funded from cash and cash equivalents. The shares purchased in the Tender Offer will be treated as treasury shares. The aggregate cost of the Tender Offer will be reported as a reduction in the equity of the Company for the period ending June 30, 1997. Cash and cash equivalents were $47.8 million at March 31, 1997 compared to $53.3 million at December 31, 1996. The decrease in cash and cash equivalents was primarily due to an increase in accounts receivable and inventories, and the funding of incentive compensation, capital expenditures and dividend payments. Accounts receivable increased $7.1 million to $55.5 million at March 31, 1997 from $48.3 million at December 31, 1996. This increase was primarily due to the higher sales at Precision and the offering of extended terms to certain large customers of the Specialty Chemicals' product warranty division. Inventories increased $1.0 million to $32.0 million at the end of the first quarter compared to $30.9 million at December 31, 1996. Inventories increased at the Specialty Chemicals Division, primarily in the U.S. professional products division, but declined at Precision. During the three months ended March 31, 1997, the Company purchased $3.2 million of new property, plant and equipment, primarily for the Automotive and Industrial Components Division. The Company anticipates that capital expenditures will be approximately $11 million in 1997. Stockholders' equity at March 31, 1997 was $137.5 million or $10.02 per share compared to $133.0 million or $9.72 per share at December 31, 1996. The increase of $4.5 million is attributable to net income of $6.3 million, $.4 million from the exercise of stock options and the amortization of unearned compensation, reduced by a $1.1 million decrease in the foreign currency translation account and $1.1 million of dividends declared. 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: the anticipated level of capital expenditures; the sufficiency of working capital; and the sales growth of the composite gasket product line and the product warranty program. 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: sales of new and used cars in the U.S.; automotive and off-road construction vehicle production rates in North America; continued pricing pressure in the U.S. automotive industry; the impact of competitive products on the composite gasket product line and product warranty program; attempts by state governments to regulate the product warranty program; the Company's 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) - ------------------------------------------------- ultimate liability for environmental matters; and general economic conditions, especially in North America and Western Europe. The Company's actual results thus may differ materially from the expected results expressed or implied by the forward-looking statements. 10 WYNN'S INTERNATIONAL, INC. ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 11 - Computation of net income per common share - primary and assuming full dilution. 27 - Financial data schedule. (b) Registrant has not filed any reports on Form 8-K during the quarter for which this report is filed. 11 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 9, 1997 James Carroll ----------------------- ------------------------------------------ James Carroll Chairman and Chief Executive Officer Date May 9, 1997 Seymour A. Schlosser ----------------------- ------------------------------------------ Seymour A. Schlosser Vice President-Finance (Principal Financial and Accounting Officer) 12 WYNN'S INTERNATIONAL, INC. INDEX TO EXHIBITS Exhibit Number Description - ------ ----------- 11 Computation of Net Income Per Common Share - Primary and Assuming Full Dilution 27 Financial Data Schedule (included with EDGAR version only) EX-11 2 EXHIBIT 11 - COMPUTATION OF NET INCOME PER COMMON SHARE Exhibit 11 WYNN'S INTERNATIONAL, INC. COMPUTATION OF NET INCOME PER COMMON SHARE - PRIMARY (Dollars in Thousands, Except Per Share Amounts)
Three Months Ended March 31 ------------------------- 1997 1996 ---------- ---------- Income from continuing operations $ 6,302 $ 4,723 Discontinued operations: Income from operations - 35 ---------- ---------- Total net income $ 6,302 $ 4,758 ========== ========== Weighted average number of shares issued 13,707,134 13,620,153 Net shares assumed issued using the treasury stock method for stock options outstanding during each period based on average market price 613,191 524,330 Net shares assumed issued for performance shares pending issuance based on satisfaction of vesting requirements 3,644 - ---------- ---------- Common and common equivalent shares 14,323,969 14,144,483 ========== ========== Income per common share: Continuing operations $.44 $.33 Discontinued operations - .01 ---------- ---------- Total $.44 $.34 ========== ========== COMPUTATION OF NET INCOME PER COMMON SHARE - ASSUMING FULL DILUTION (Dollars in Thousands, Except Per Share Amounts) Three Months Ended March 31 ------------------------- 1997 1996 ---------- ---------- Income from continuing operations $ 6,302 $ 4,723 Discontinued operations: Income from operations - 35 ---------- ---------- Total net income $ 6,302 $ 4,758 ========== ========== Weighted average number of shares issued 13,707,134 13,620,153 Net shares assumed issued using the treasury stock method for stock options outstanding during each period based on average or ending market price, whichever is higher 649,698 587,615 Net shares assumed issued for performance shares pending issuance based on satisfaction of vesting requirements 3,644 - ---------- ---------- Fully diluted shares 14,360,476 14,207,768 ========== ========== Income per common share: Continuing operations $.44 $.33 Discontinued operations - - ---------- ---------- Total $.44 $.33 ========== ==========
EX-27 3 EXHIBIT 27 - FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL STATEMENTS CONTAINED IN FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-1997 MAR-31-1997 47,845 0 56,327 867 31,967 157,334 45,855 0 209,466 64,402 0 0 0 14,574 122,911 209,466 77,887 78,554 47,615 47,615 20,727 74 55 10,083 3,781 6,302 0 0 0 6,302 .44 .44 PROPERTY, PLANT AND EQUIPMENT, AT COST LESS ACCUMULATED DEPRECIATION AND AMORTIZATION
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