-----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, NKi24+ci9rCheLL/TUtaJmE48GSWj+8Xpuq+OKfi1jnNkGFBTxmFJy/G+0+uedoE J8rJVRFnftNAEnSD4UkoDw== 0000797975-95-000010.txt : 19951119 0000797975-95-000010.hdr.sgml : 19951119 ACCESSION NUMBER: 0000797975-95-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARMOR ALL PRODUCTS CORP CENTRAL INDEX KEY: 0000797975 STANDARD INDUSTRIAL CLASSIFICATION: SPECIALTY CLEANING, POLISHING AND SANITATION PREPARATIONS [2842] IRS NUMBER: 330178217 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14946 FILM NUMBER: 95592793 BUSINESS ADDRESS: STREET 1: 6 LIBERTY DR CITY: ALISO VIEJO STATE: CA ZIP: 92656 BUSINESS PHONE: 7143620600 10-Q 1 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 quarter ended September 30, 1995 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 number 0-14946 ------- ARMOR ALL PRODUCTS CORPORATION - ------------------------------------------------------------------ (Exact Name of Registrant as specified in its charter DELAWARE 33-0178217 - ------------------------------- -------------------- (State or other jurisdiction of (I.R.S. Employer Incorporation or organization) Identification No.) 6 Liberty, Aliso Viejo, California 92656 - ------------------------------------------------------------------ (Address of principal executive offices) (Zip Code) (714) 362-0600 - ------------------------------------------------------------------ (Registrant's telephone number, including area code) 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at September 30, 1995 - ----------------------------- --------------------------------- Common stock, $0.01 par value 21,298,185 shares TABLE OF CONTENTS PART I. FINANCIAL INFORMATION =============================== Pages ----- Consolidated Balance Sheets September 30, 1995 and March 31, 1995 3 Consolidated Statements of Income Three and six months ended September 30, 1995 and 1994 4 Consolidated Statements of Cash Flows Six months ended September 30, 1995 and 1994 5 Financial Notes 6 - 7 Financial Review 8 PART II. OTHER INFORMATION =========================== Item - ---- 6 Exhibits and Reports on Form 8-K 9 PART 1. FINANCIAL INFORMATION ============================== ARMOR ALL PRODUCTS CORPORATION CONSOLIDATED BALANCE SHEETS (unaudited) Sept. 30, March 31, 1995 1995 ------ ------ (in thousands) ASSETS ====== Current Assets Cash and cash equivalents $ 41,656 $ 22,249 Accounts receivable 30,026 84,865 Inventories 13,646 12,695 Deferred taxes 831 956 Prepaid expenses 10,529 801 ------- ------- Total current assets 96,688 121,566 Property 8,969 9,373 Goodwill 25,958 26,522 Patents and Trademarks 14,799 15,389 ------- ------- Total assets $146,414 $172,850 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY ==================================== Current Liabilities Accounts payable $ 6,256 $ 17,385 Payable to McKesson 1,438 2,595 Accrued selling expenses 2,664 8,590 Accrued compensation 1,388 2,513 Dividends payable 3,406 3,404 Taxes payable and other liabilities 2,100 8,897 ------- ------- Total current liabilities 17,252 43,384 ------- ------- Deferred Income Taxes 603 481 ------- ------- Stockholders' Equity Common stock 213 213 Other capital 61,510 61,157 Unearned compensation - restricted stock (1,305) (980) Retained earnings 68,692 69,338 Cumulative translation adjustment (551) (743) ------- ------- Total stockholders' equity 128,559 128,985 ------- ------- Total liabilities and stockholders' equity $146,414 $172,850 ======= ======= See accompanying financial notes. - 3 - ARMOR ALL PRODUCTS CORPORATION CONSOLIDATED STATEMENTS OF INCOME (unaudited) Three Months Ended Six Months Ended September 30, September 30, --------------- --------------- 1995 1994 1995 1994 ------ ------ ------ ------ (in thousands except per share amounts) REVENUES $39,772 $41,135 $89,996 $97,703 COSTS AND EXPENSES Cost of sales 18,225 17,326 42,619 41,327 Selling, general and administrative 16,736 15,915 36,244 37,031 Amortization of intangibles 614 623 1,227 1,246 ------ ------ ------ ------ Total costs and expenses 35,575 33,864 80,090 79,604 ------ ------ ------ ------ OPERATING INCOME 4,197 7,271 9,906 18,099 INTEREST INCOME 471 511 722 781 ------ ------ ------ ------ INCOME BEFORE INCOME TAXES 4,668 7,782 10,628 18,880 INCOME TAXES 1,961 3,323 4,464 8,062 ------ ------ ------ ------ NET INCOME $ 2,707 $ 4,459 $ 6,164 $10,818 ====== ====== ====== ====== EARNINGS PER COMMON SHARE $ .13 $ .21 $ .29 $ .51 ====== ====== ====== ====== DIVIDENDS PER COMMON SHARE $ .16 $ .16 $ .32 $ .32 ====== ====== ====== ====== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 21,290 21,191 21,283 21,181 See accompanying financial notes. - 4 - ARMOR ALL PRODUCTS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Six Months Ended September 30, ---------------- 1995 1994 ------ ------ (in thousands) Operating Activities Net income $ 6,164 $10,818 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 1,968 1,829 Deferred income taxes 247 280 Other (325) 184 ------ ------ Total 8,054 13,111 ------ ------ Effect of changes in Accounts receivable 54,839 36,789 Inventories (951) (4,220) Prepaid expenses (9,728) (7,600) Accounts payable (11,129) (2,713) Accrued selling expenses (5,926) (3,305) Accrued compensation (1,125) (618) Taxes payable and other liabilities (6,797) (3,564) ------ ------ Total 19,183 14,769 ------ ------ Net cash provided by operating activities 27,237 27,880 ------ ------ Investing Activities Capital expenditures (337) (667) Other 119 129 ------ ------ Net cash used by investing activities (218) (538) ------ ------ Financing Activities Payable to McKesson (1,157) (505) Issuance of common stock 353 472 Dividends paid (6,808) (6,772) ------ ------ Net cash used by financing activities (7,612) (6,805) ------ ------ Net increase in cash and cash equivalents 19,407 20,537 Cash and cash equiv. at beginning of period 22,249 26,251 ------ ------ Cash and cash equivalents at end of period $41,656 $46,788 ====== ====== See accompanying financial notes. - 5 - ARMOR ALL PRODUCTS CORPORATION FINANCIAL NOTES 1. BASIS OF PRESENTATION --------------------- The accompanying consolidated financial statements present the financial position and results of operations of Armor All Products Corporation and its subsidiaries (the "Company"). In the opinion of the Company, these unaudited consolidated financial statements include all adjustments necessary for a fair presentation of its financial position as of September 30, 1995 and the results of its operations and its cash flows for the six-month periods ended September 30, 1995 and 1994. Such adjustments were of a normal recurring nature. The results of operations for the six-month periods ended September 30, 1995 and 1994 are not necessarily indicative of the results for the full years. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and related notes thereto included in the Company's Annual Report to Shareholders for the year ended March 31, 1995. That report has previously been filed with the Securities and Exchange Commission as an exhibit to the Annual Report on Form 10-K. 2. CASH MANAGEMENT --------------- Pursuant to an agreement with McKesson, the Company's U.S. operations participate daily in a cash management program administered by McKesson. Under this arrangement, the Company invests any excess cash in the cash management program and has unrestricted access to such invested cash to fund its operating disbursements. If the Company needs additional cash above the amount invested, such cash requirements are met through borrowings from McKesson. All amounts invested in the cash management program with McKesson are deposited in a separate bank account in the Company's name, which is used for cash management program transactions. Included in cash and cash equivalents in the accompanying consolidated balance sheets are the following amounts invested in the cash management program: $37,875,000 at 5.7% on September 30, 1995 and $18,182,000 at 6.0% on March 31, 1995. - 6 - ARMOR ALL PRODUCTS CORPORATION FINANCIAL NOTES 3. INVENTORIES ----------- Inventories are comprised of the following: Sept. 30, March 31, 1995 1995 ------ ------ Finished Goods $11,671 $10,338 Raw Materials 1,975 2,357 ------ ------ Total $13,646 $12,695 ====== ====== 4. PREPAID EXPENSES ---------------- Prepaid expenses at September 30, 1995 includes approximately $8,700,000 of payments related to fiscal year 1996 media advertising. The Company allocates the annual media advertising expense among interim periods in proportion to estimated annual sales volume. In addition, prepaid expenses at September 30, 1995 includes approximately $1,500,000 of media advertising purchased on a forward buying basis for airing in early fiscal year 1997. 5. INTEREST INCOME --------------- Interest income is comprised of the following: Three Months Six Months Ended Ended September 30, September 30, ------------- ------------- 1995 1994 1995 1994 ---- ---- ---- ---- (in thousands) Interest income - McKesson $445 $475 $653 $706 Interest income - other 26 36 69 75 ---- ---- ---- ---- Interest income $471 $511 $722 $781 ==== ==== ==== ==== - 7 - ARMOR ALL PRODUCTS CORPORATION FINANCIAL REVIEW Results of Operations - --------------------- Revenues decreased $1.4 million or 3.3% in the second quarter and decreased $7.7 million or 7.9% in the six-month period ended September 30, 1995. The decreases were primarily attributable to lower shipments of automotive division products in the United States and Canada. The lower shipments reflect a weakness in orders from the retail sector for the entire automotive appearance industry, due partially to unfavorable weather conditions. In addition, a number of key retailers continued to reduce inventory levels in response to the soft consumer sales, which had a further adverse impact on the Company's shipments. Partially offsetting the lower automotive revenues were significantly higher shipments in the Company's home care division due to the launch of three new products in February 1995: Armor All(R) Vinyl Siding Wash, Armor All(R) Deck Protector Waterproofing Sealer and Armor All(R) WaterProofing Sealer. International revenues were relatively unchanged from the prior year, as lower revenues from Mexico, resulting from the economic effects of the peso devaluation, offset higher revenues from most other regions. Cost of sales as a percentage of revenues was 45.8% and 42.1% in the quarters ended September 30, 1995 and 1994, respectively, and 47.4% and 42.3% in the respective six-month periods. The higher cost percentages in the current year were due to a number of factors, including higher costs of a new formula for Armor All(R) Protectant, increased raw material costs and higher carrying costs associated with higher inventory levels. Selling, general and administrative expense as a percentage of revenues was 42.1% and 38.7% in the quarters ended September 30, 1995 and 1994, respectively, and 40.3% and 37.9% in the respective six-month periods. These percentage increases were mainly due to the absorption over lower revenues of the fixed marketing and promotional costs related to the Company's strategy of building automotive market share and launching new products. Another factor was the greater mix of home care shipments, which had higher promotional expenses associated with the launch of the aforementioned three new products. Financial Resources and Liquidity - --------------------------------- The Company's working capital requirements fluctuate during the year, traditionally peaking in the spring due to extended payment terms offered in connection with the Company's winter sales promotional activities. Cash inflow is strongest during the summer months as these receivables are collected. This pattern resulted in cash flow from operations of $27.2 million and $27.9 million in the six-month periods ended September 30, 1995 and 1994, respectively, as accounts receivable were reduced from March 31 levels. The cash inflow from operations in 1996 was relatively unchanged from fiscal 1995, despite the lower net income, largely as a result of higher collections of accounts receivable due to a higher accounts receivable balance at the beginning of the current year than at the beginning of the prior year. This factor was partially offset by higher payments in the current year for media advertising and certain payables and accrued liabilities. At September 30, 1995, the Company had a total cash balance of $41.7 million, including $37.9 million invested in the McKesson cash management program (see Note 2), and no outstanding debt. As long as the Company continues to participate in the McKesson cash management program, McKesson will make available to the Company the amount of cash necessary to provide the Company with sufficient funds to meet its needs, as defined in its annual capital and operating plans. - 8 - PART II. OTHER INFORMATION =========================== Item 6. Exhibits and Reports on Form 8-K - ------------------------------------------ (a) Exhibits (27) Financial Data Schedule (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter ended September 30, 1995. - 9 - S I G N A T U R E ================= 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. ARMOR ALL PRODUCTS CORPORATION (Registrant) Dated: November 14, 1995 By/s/Michael G. McCafferty ------------------------------ Michael G. McCafferty Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) - 10 - INDEX TO EXHIBITS Exhibit Number - ------- (27) Financial Data Schedule - 11 - EX-27 2
5 0000797975 ARMOR-ALL-PRODUCTS 1,000 6-MOS MAR-31-1996 JUL-01-1995 SEP-30-1995 41,656 0 31,783 (1,757) 13,646 96,688 15,031 (6,062) 146,414 17,252 0 213 0 0 128,346 146,414 39,772 39,772 18,225 18,225 0 1,478 0 4,668 1,961 0 0 0 0 2,707 .13 0
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