-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, T89cYWxDtBO/uE0qlNtxXqLRXoZ2vY6W1NP960nbmyG0Ru1T/YV+NSBMT9UD7QHp UgvMv18JgXRRY1+Td0761Q== 0000797975-94-000008.txt : 19941111 0000797975-94-000008.hdr.sgml : 19941111 ACCESSION NUMBER: 0000797975-94-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941110 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARMOR ALL PRODUCTS CORP CENTRAL INDEX KEY: 0000797975 STANDARD INDUSTRIAL CLASSIFICATION: 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: 94558629 BUSINESS ADDRESS: STREET 1: 6 LIBERTY DR CITY: ALISO VIEJO STATE: CA ZIP: 92656 BUSINESS PHONE: 7143620600 10-Q 1 ARMORALL-10Q-2QTR 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, 1994 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, 1994 - ----------------------------- --------------------------------- Common stock, $0.01 par value 21,194,698 shares TABLE OF CONTENTS PART I. FINANCIAL INFORMATION ============================== Pages ----- Consolidated Balance Sheets September 30, 1994 and March 31, 1994 3 Consolidated Statements of Income Three and six months ended September 30, 1994 and 1993 4 Consolidated Statements of Cash Flows Six months ended September 30, 1994 and 1993 5 Financial Notes 6 - 7 Financial Review 8 - 9 PART II. OTHER INFORMATION =========================== Item - ---- 6 Exhibits and Reports on Form 8-K 10 - 2 - PART 1. FINANCIAL INFORMATION ============================== ARMOR ALL PRODUCTS CORPORATION CONSOLIDATED BALANCE SHEETS (unaudited) September 30, March 31, 1994 1994 -------- -------- (in thousands) ASSETS - ------ Current Assets Cash and cash equivalents $ 46,788 $ 26,251 Accounts receivable 31,174 67,963 Inventories 8,402 4,182 Deferred taxes 403 765 Prepaid expenses 7,664 64 ------- ------- Total current assets 94,431 99,225 Property 8,783 8,699 Goodwill 27,086 27,650 Patents and Trademarks 15,624 16,217 Other Intangibles 0 35 ------- ------- Total assets $145,924 $151,826 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Current Liabilities Accounts payable $ 8,210 $ 10,923 Payable to McKesson 1,021 1,526 Accrued selling expenses 5,497 8,802 Accrued compensation 2,051 2,669 Income and other taxes payable 1,209 4,282 Dividends payable 3,391 3,386 Other liabilities 2,797 3,288 ------- ------- Total current liabilities 24,176 34,876 ------- ------- Deferred Income Taxes 839 921 ------- ------- Stockholders' Equity Common stock 212 212 Other capital 59,795 59,323 Unearned compensation - restricted stock (917) (1,101) Retained earnings 62,427 58,388 Cumulative translation adjustment (608) (793) ------- ------- Total stockholders' equity 120,909 116,029 ------- ------- Total liabilities and stockholders' equity $145,924 $151,826 ======= ======= See accompanying financial notes. - 3 - ARMOR ALL PRODUCTS CORPORATION CONSOLIDATED STATEMENTS OF INCOME (unaudited) Three Months Ended Six Months Ended September 30 September 30 --------------- --------------- 1994 1993 1994 1993 ------ ------ ------ ------ (in thousands except per share amounts) REVENUES $41,135 $36,232 $97,703 $83,954 ------ ------ ------ ------ COSTS AND EXPENSES Cost of sales 17,326 14,972 41,327 34,225 Selling, general and administrative 15,915 13,455 37,031 32,057 Amortization of intangibles 623 804 1,246 1,608 ------ ------ ------ ------ Total costs and expenses 33,864 29,231 79,604 67,890 ------ ------ ------ ------ OPERATING INCOME 7,271 7,001 18,099 16,064 INTEREST INCOME 511 405 781 669 ------ ------ ------ ------ INCOME BEFORE INCOME TAXES 7,782 7,406 18,880 16,733 INCOME TAXES 3,323 3,376 8,062 7,247 ------ ------ ------ ------ NET INCOME $ 4,459 $ 4,030 $10,818 $ 9,486 ====== ====== ====== ====== EARNINGS PER COMMON SHARE $.21 $.19 $.51 $.45 === === === === DIVIDENDS PER COMMON SHARE $.16 $.16 $.32 $.32 === === === === WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 21,191 21,105 21,181 21,099 See accompanying financial notes. - 4 - ARMOR ALL PRODUCTS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Six Months Ended September 30 -------------------- 1994 1993 -------- -------- (in thousands) Operating Activities Net income $10,818 $ 9,486 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 2,013 2,257 Provision for losses on receivables 274 266 Deferred income taxes 280 (31) ------ ------ Total 13,385 11,978 ------ ------ Effect of changes in Accounts receivable 36,515 30,021 Inventories (4,220) 1,035 Prepaid expenses (7,600) (4,073) Accounts payable (2,713) (2,395) Accrued selling expenses (3,305) (2,477) Accrued compensation (618) (1,289) Income and other taxes payable (3,073) (3,545) Other liabilities (491) (125) ------ ------ Total 14,495 17,152 ------ ------ Net cash provided by operating activities 27,880 29,130 ------ ------ Investing Activities Capital expenditures (667) (735) Other 129 (277) ------ ------ Net cash used by investing activities (538) (1,012) ------ ------ Financing Activities Payable to McKesson (505) 331 Issuance of common stock 472 323 Dividends paid (6,772) (5,902) ------ ------ Net cash used by financing activities (6,805) (5,248) ------ ------ Net increase in cash and cash equivalents 20,537 22,870 Cash and cash equivalents at beginning of period 26,251 33,858 ------ ------ Cash and cash equivalents at end of period $46,788 $56,728 ====== ====== 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, 1994 and the results of its operations and its cash flows for the six-month periods ended September 30, 1994 and 1993. Such adjustments were of a normal recurring nature. The results of operations for the six-month periods ended September 30, 1994 and 1993 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, 1994. 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: $39,040,000 at 4.8% on September 30, 1994 and $22,076,000 at 3.4% on March 31, 1994. 3. INVENTORIES Inventories are comprised of the following: September 30, March 31, 1994 1994 ------------- ------------- Finished Goods $ 7,098 $ 3,514 Raw Materials 1,304 668 ------ ------ Total $ 8,402 $ 4,182 ====== ====== - 6 - ARMOR ALL PRODUCTS CORPORATION FINANCIAL NOTES 4. PREPAID EXPENSES Prepaid expenses at September 30, 1994 include $7,527,000 of payments related to media advertising. The Company allocates the annual media advertising expense among interim periods in proportion to estimated annual sales volume. 5. INTEREST INCOME Interest income is comprised of the following: Three Months Six Months Ended September 30 September 30 --------------- --------------- 1994 1993 1994 1993 ------ ------ ------ ------ (in thousands) Interest income - McKesson $475 $359 $706 $591 Interest income - other 36 46 75 78 ---- ---- ---- ---- Interest income $511 $405 $781 $669 ==== ==== ==== ==== - 7 - ARMOR ALL PRODUCTS CORPORATION FINANCIAL REVIEW Results of Operations - --------------------- Revenues increased $4.9 million or 13.5% in the second quarter and increased $13.7 million or 16.4% in the six-month period. The increases were primarily attributable to sales in the United States of Armor All(R) QuickSilver(TM) Wheel Cleaner, which was developed internally by the Company and introduced in December 1993, and to sales of Armor All(R) E-Z Deck Wash(R) Cleaner and the other home care product lines acquired by the Company in January 1994. United States revenues from the Company's line of protectants, waxes, washes and other car care products were slightly lower than in the year-ago periods because of softer industry-wide consumer purchases and competitive pressures in these categories. International sales increased due to the Company's expansion into new markets and the shipment of new products into existing markets. Cost of sales as a percentage of revenues was 42.1% and 41.3% in the quarters ended September 30, 1994 and 1993, respectively, and 42.3% and 40.8% in the respective six-month periods. The higher cost percentages in the current year were primarily due to a shift in the product mix, with a greater proportion of sales coming from the new products, which have lower margins initially due to start-up costs. Selling, general and administrative expense as a percentage of revenues was 38.7% and 37.1% in the quarters ended September 30, 1994 and 1993, respectively, and 37.9% and 38.2% in the respective six-month periods. The increase in the current quarter is primarily due to a higher level of promotional spending and start-up expenses associated with the new home care division. The small decrease in the current six-month period occurred because the aforementioned costs were more than offset by a reduction in automotive consumer promotion expenses from a heavy first quarter promotional period a year ago. In addition, fixed administrative costs were absorbed over a higher sales volume in the current year. Operating income increased $0.3 million or 3.9% in the second quarter and $2.0 million or 12.7% in the six-month period. Net income increased $0.4 million or 10.6% in the second quarter and $l.3 million or 14.0% in the six-month period. Net income grew at a faster rate than operating income due to a higher tax rate in the prior year as a result of the enactment in August 1993 of the Omnibus Budget Reconciliation Act, which increased the federal corporate income tax rate from 34% to 35% retroactive to January 1993. The Company's effective income tax rates were 42.7% and 45.6% in the quarters ended September 30, 1994 and 1993, respectively, and 42.7% and 43.3% in the respective six-month periods. - 8 - ARMOR ALL PRODUCTS CORPORATION FINANCIAL REVIEW 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 $27.9 million and $29.1 million in the six-month periods ended September 30, 1994 and 1993, respectively, as accounts receivable were reduced from March 31 levels. The lower cash inflow in fiscal 1995, despite the higher net income, is largely due to a one-time purchase of inventory from one of the Company's independent packagers in connection with the consolidation of certain production activities at a single location in order to attain cost savings through economies of scale. In addition, the Company has incurred higher media advertising expenditures in the current year to support the introduction of the new automotive and home care products discussed above. At September 30, 1994, the Company had a total cash balance of $46.8 million, including $39.0 million invested in the McKesson cash management program, 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. - 9 - 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, 1994. - 10 - 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 10, 1994 By /s/ Mervyn J. McCulloch --------------------------- Mervyn J. McCulloch Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) - 11 - EX-27 2 ARMORALL-EX27-2QTR WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE. EXHIBIT (27) DATA STATED IN MILLIONS, EXCEPT PER SHARE AMOUNTS
ARMOR ALL PRODUCTS CORPORATION FINANCIAL DATA SCHEDULE SEPTEMBER 30, 1994 This schedule contains summary financial information extracted from the Armor All Products Corporation Consollidated Financial Statements as of September 30, 1994 and March 31, 1994 and for the six months ended September 30, 1994 and 1993 and is qualified in its entirety by reference to such financial statements. Regulation Number Statement Caption FY95 FY94 - ------------- -------------------------- ------ ------ 5-02-(1) Cash and cash items $ 46.8 $ 26.3 5-02(2) Marketable securities 0 0 5-02(3)(a)(1) Accounts receivable - trade 32.7 69.3 5-02(4) Allowance for doubtful accounts (1.5) (1.3) 5-02(6) Inventory 8.4 4.2 5-02(9) Total current assets 94.4 99.2 5-02(13) Property, plant and equipment 13.6 12.9 5-02(14) Accumulated depreciation (4.8) (4.2) 5-02(18) Total assets 145.9 151.8 5-02(21) Total current liabilities 24.2 34.9 5-02(22) Bonds, mortgages and similar debts 0 0 5-02(28) Preferred stock-mandatory redemption 0 0 5-02(29) Preferred stock-no mandatory redemption 0 0 5-02(30) Common stock 0.2 0.2 5-02(31) Other stockholders' equity 120.7 115.8 5-02(32) Total liabilities and stockholders' equity 145.9 151.8 5-03(b)(1)(a) Net sales of tangible products 97.7 84.0 5-03(b)(1) Total revenues 97.7 84.0 5-03(b)(2) Total costs and expenses applicable to revenues41.3 34.2 5-03(b)(3) Other costs and expenses 0 0 5-03(b)(5) Provision for doubtful accounts and notes 0.3 0.3 5-03(b)(8) Interest and amortization of debt discount 0 0 5-03(b)(10) Income before taxes and other items 18.9 16.7 5-03(b)(11) Income tax expense 8.1 7.2 5-03(b)(14) Income/loss from continuing operations 0 0 5-03(b)(15) Discontinued operations 0 0 5-03(b)(17) Extraordinary items 0 0 5-03(b)(18) Cumulative effect-changes in accounting principles0 0 5-03(b)(19) Net income or loss 10.8 9.5 5-03(b)(20) Earnings per share - primary 0.51 0.45 5-03(b)(20) Earnings per share - fully diluted 0 0
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