-----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, tZPqvw3beiALlzSymYgwdJhaypH0RIr+UVL3a1vKDkGZewqkj9vLPNXwzxER3T88 6IWF7WRvyK0EMc+DN9JTkA== 0000797975-95-000001.txt : 19950214 0000797975-95-000001.hdr.sgml : 19950214 ACCESSION NUMBER: 0000797975-95-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950213 SROS: NYSE 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: 95509626 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 December 31, 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 (IRS 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 December 31, 1994 - ----------------------------- -------------------------------- Common stock, $0.01 par value 21,234,785 Shares TABLE OF CONTENTS PART I. FINANCIAL INFORMATION ============================== Pages ----- Consolidated Balance Sheets December 31, 1994 and March 31, 1994 3 Consolidated Statements of Income Three and nine months ended December 31, 1994 and 1993 4 Consolidated Statements of Cash Flows Nine months ended December 31, 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 PART 1. FINANCIAL INFORMATION ============================== ARMOR ALL PRODUCTS CORPORATION CONSOLIDATED BALANCE SHEETS (unaudited) December 31, March 31, 1994 1994 -------- -------- (in thousands) ASSETS - ------ Current Assets Cash and cash equivalents $ 44,383 $ 26,251 Accounts receivable 36,248 67,963 Inventories 9,548 4,182 Deferred taxes 347 765 Prepaid expenses 5,621 64 ------- ------- Total current assets 96,147 99,225 Property 8,840 8,699 Goodwill 26,804 27,650 Patents and Trademarks 15,308 16,217 Other Intangibles 0 35 ------- ------- Total assets $147,099 $151,826 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Current Liabilities Accounts payable $ 8,378 $ 10,923 Payable to McKesson 1,010 1,526 Accrued selling expenses 4,501 8,802 Accrued compensation 3,396 2,669 Income and other taxes payable 2,468 4,282 Dividends payable 2,152 3,386 Other liabilities 2,401 3,288 ------- ------- Total current liabilities 24,306 34,876 ------- ------- Deferred Income Taxes 728 921 ------- ------- Stockholders' Equity Common stock 212 212 Other capital 60,459 59,323 Unearned compensation - restricted stock (825) (1,101) Retained earnings 63,031 58,388 Cumulative translation adjustment (812) (793) ------- ------- Total stockholders' equity 122,065 116,029 ------- ------- Total liabilities and stockholders' equity $147,099 $151,826 ======= ======= See accompanying financial notes. -3- ARMOR ALL PRODUCTS CORPORATION CONSOLIDATED STATEMENTS OF INCOME (unaudited) Quarter Ended Nine Months Ended December 31, December 31, -------------- --------------- 1994 1993 1994 1993 ---- ---- ---- ---- (in thousands except per share amounts) REVENUES $39,244 $33,407 $136,947 $117,361 COSTS AND EXPENSES Cost of sales 17,100 13,870 58,427 48,095 Selling, general and administrative 15,133 13,087 52,164 45,144 Amortization of intangibles 606 494 1,852 2,102 ------ ------ ------- ------- Total costs and expenses 32,839 27,451 112,443 95,341 ------ ------ ------- ------- OPERATING INCOME 6,405 5,956 24,504 22,020 INTEREST INCOME 576 405 1,357 1,074 ------ ------ ------- ------- INCOME BEFORE INCOME TAXES 6,981 6,361 25,861 23,094 INCOME TAXES 2,981 2,739 11,043 9,986 ------ ------ ------- ------- NET INCOME $ 4,000 $ 3,622 $ 14,818 $ 13,108 ====== ====== ======= ======= EARNINGS PER COMMON SHARE $.19 $.17 $.70 $.62 === === === === DIVIDENDS PER COMMON SHARE $.16 $.16 $.48 $.48 === === === === WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 21,222 21,123 21,195 21,107 See accompanying financial notes. -4- ARMOR ALL PRODUCTS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Nine Months Ended December 31, ----------------- 1994 1993 ------ ------ (in thousands) Operating Activities Net income $14,818 $13,108 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 3,070 3,067 Provision for losses on receivables 185 364 Deferred income taxes 225 (211) ------ ------ Total 18,298 16,328 ------ ------ Effect of changes in Accounts receivable 31,530 27,254 Inventories (5,366) 811 Prepaid expenses (5,557) (1,883) Accounts payable (2,545) (3,131) Taxes payable (2,130) (2,689) Accrued selling expenses (4,301) (3,425) Accrued compensation (201) (1,114) Other liabilities (887) (470) ------ ------ Total 10,543 15,353 ------ ------ Net cash provided by operating activities 28,841 31,681 ------ ------ Investing Activities Capital expenditures (1,083) (974) Other (81) (497) ------ ------ Net cash used by investing activities (1,164) (1,471) ------ ------ Financing Activities Payable to McKesson (516) (2,054) Issuance of common stock 1,136 421 Dividends paid (10,165) (9,278) ------ ------ Net cash used by financing activities (9,545) (10,911) ------ ------ Net increase in cash and cash equivalents 18,132 19,299 Cash and cash equivalents at beginning of period 26,251 33,858 ------ ------ Cash and cash equivalents at end of period $44,383 $53,157 ====== ====== 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 December 31, 1994 and the results of its operations and its cash flows for the nine-month periods ended December 31, 1994 and 1993. Such adjustments were of a normal recurring nature. The results of operations for the three and nine months ended December 31, 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 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: $40,741,000 at 5.6% on December 31, 1994 and $22,076,000 at 3.4% on March 31, 1994. 3. INVENTORIES Inventories are comprised of the following: December 31, March 31, 1994 1994 ------ ------ (in thousands) Finished Goods $8,017 $3,514 Raw Materials 1,531 668 ----- ----- Total $9,548 $4,182 ===== ===== -6- ARMOR ALL PRODUCTS CORPORATION FINANCIAL NOTES 4. PREPAID EXPENSES Prepaid expenses at December 31, 1994 include $5,529,000 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: Quarter Ended Nine Months Ended December 31 December 31 ----------- ------------ 1994 1993 1994 1993 ---- ---- ---- ---- (in thousands) Interest income - McKesson $526 $357 $1,232 $ 948 Interest income - other 50 48 125 126 --- --- ----- ----- Interest income $576 $405 $1,357 $1,074 === === ===== ===== 6. SUBSEQUENT EVENT On February 13, 1995, the Company announced that it has initiated a program to replace retailers' inventory of certain aerosol cans of Armor All(R) QuickSilver(TM) Wheel Cleaner with new cans containing an improved spray actuator. As a result, the Company expects to incur a one-time charge of about $.05 per share against fourth quarter earnings. -7- ARMOR ALL PRODUCTS CORPORATION FINANCIAL REVIEW Results of Operations - --------------------- Revenues increased $5.8 million or 17.5% in the third quarter ended December 31, 1994 in comparison with the third quarter of the prior year. This increase was primarily due to higher shipments in the United States of the Company's line of protectant products -- Armor All(R) Protectant, Armor All(R) Low-Gloss Natural Finish Protectant and Armor All(R) Tire Foam Protectant -- in connection with a new promotional program launched in November 1994. Sales of Armor All(R) QuickSilver(TM) Wheel Cleaner were also higher. In addition, the Company commenced shipments in December 1994 of WaxPax(TM) Instant Car Wax. Sales of Armor All(R) E-Z Deck Wash(R) Cleaner and the Company's other home care products, which were acquired in January 1994, made a small contribution to the third quarter revenue growth. International revenues declined slightly from the prior year due to changes in the timing of shipments to certain major customers and distributors. Revenues increased $19.6 million or 16.7% in the nine months ended December 31, 1994 in comparison with the corresponding period of the prior year. This increase was primarily attributable to sales in the United States of Armor All QuickSilver Wheel Cleaner, Armor All E-Z Deck Wash Cleaner and the Company's other home care products. Domestic revenues of the Company's line of protectants, waxes, washes and other car care products were slightly lower than in the year-ago period. International sales increased due to the Company's expansion into new markets as well as to the shipment of new products into existing markets. Cost of sales as a percentage of revenues was 43.6% and 41.5% in the quarters ended December 31, 1994 and 1993, respectively, and 42.7% and 41.0% in the respective nine-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, and from certain promotional programs. Also, the prior year's third quarter gross margin was favorably impacted by unusually large year-end settlements received by Company under its international distribution agreement with S.C. Johnson. Selling, general and administrative expense as a percentage of revenues was 38.6% and 39.2% in the quarters ended December 31, 1994 and 1993, respectively, and 38.1% and 38.5% in the respective nine-month periods. The decreases are primarily due to the absorption of fixed administrative costs over a higher sales volume. The percentage of promotional spending remained relatively constant, as the cost of the new automotive promotional program and the introductory costs associated with the new home care product line were offset by a reduction in certain automotive coupon programs from a year ago. -8- ARMOR ALL PRODUCTS CORPORATION FINANCIAL REVIEW The Company's estimated effective income tax rates were 42.7% and 43.1% in the quarters ended December 31, 1994 and 1993, respectively, and 42.7% and 43.2% in the respective nine-month periods. The higher rates in the prior year principally reflect the enactment of the Omnibus Budget Reconciliation Act, which increased the federal corporate income tax rate from 34% to 35% retroactive to January 1993. 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 $28.8 million and $31.7 million in the nine-month periods ended December 31, 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 an increase in inventory levels due to (1) a purchase of remaining inventory from one of the Company's independent packagers in connection with a transition of certain production activities to another location and (2) the advance production of certain promotional items scheduled for shipment during the peak January-March selling season. In addition, prepaid expenses increased over the prior year due to higher media advertising expenditures to support the introduction of the new automotive and home care products discussed above; as explained in financial note 4, media advertising expense is allocated among interim periods based on estimated annual sales volume. 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. Subsequent Event - ---------------- On February 13, 1995, the Company announced that it has initiated a program to replace retailers' inventory of certain aerosol cans of Armor All QuickSilver Wheel Cleaner with new cans containing an improved spray actuator. As a result, the Company expects to incur a one-time charge of about $.05 per share against fourth quarter earnings. -9- PART II. OTHER INFORMATION =========================== Item 6. Exhibits and Reports on Form 8-K - --------------------------------------------- (a) Exhibits None (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter ended December 31, 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: February 13, 1995 /s/ Kenneth M. Evans -------------------------------- Kenneth M. Evans, President and Chief Executive Officer /s/ Mark Krikorian -------------------------------- Mark Krikorian, Controller (Principal Accounting Officer) -11- INDEX TO EXHIBITS Exhibit Number - ------- (27) Financial Data Schedule -12- Exhibit (27) ARMOR ALL PRODUCTS CORPORATION FINANCIAL DATA SCHEDULE December 31, 1994 (in millions except per share amounts) This schedule contains summary financial information extracted from the Armor All Products Corporation Consolidated Financial Statements as of December 31, 1994 and March 31, 1994 and for the nine months ended December 31, 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 $ 44.4 $ 26.3 5-02(2) Marketable securities - - 5-02(3)(a)(1) Accounts receivable - trade 37.6 69.3 5-02(4) Allowance for doubtful accounts (1.4) (1.3) 5-02(6) Inventory 9.5 4.2 5-02(9) Total current assets 96.1 99.2 5-02(13) Property, plant and equipment 13.9 12.9 5-02(14) Accumulated depreciation (5.1) (4.2) 5-02(18) Total assets 147.1 151.8 5-02(21) Total current liabilities 24.3 34.9 5-02(22) Bonds, mortgages and similar debt - - 5-02(28) Preferred stock - mandatory redemption - - 5-02(29) Preferred stock - no mandatory redemption - - 5-02(30) Common stock 0.2 0.2 5-02(31) Other stockholders' equity 121.9 115.8 5-02(32) Total liabilities & stockholders' equity 147.1 151.8 5-03(b)(1)(a) Net sales of tangible products 136.9 117.4 5-03(b)(1) Total revenues 136.9 117.4 5-03(b)(2) Total costs & exp. appl. to sales & revenues 58.4 48.1 5-03(b)(3) Other costs and expenses - - 5-03(b)(5) Provision for doubtful accounts & notes 0.2 0.4 5-03(b)(8) Interest & amortization of debt discount - - 5-03(b)(10) Income before taxes & other items 25.9 23.1 5-03(b)(11) Income tax expense 11.0 10.0 5-03(b)(14) Income/loss from continuing operations - - 5-03(b)(15) Discontinued operations - - 5-03(b)(17) Extraordinary items - - 5-03(b)(18) Cumulative effect-chngs. in acctg. prin. - - 5-03(b)(19) Net income or loss 14.8 13.1 5-03(b)(20) Earnings per share - primary 0.70 0.62 5-03(b)(20) Earnings per share - fully diluted - -
February 13, 1995 Securities and Exchange Commission File Desk, Room 1004 450 Fifth Street, NW Washington, DC 20549 RE: Armor All Products Corporation - Direct Transmission Quarterly Report on Form 10-Q - Quarter Ended December 31, 1994 SEC File No. 1-13252 - ----------------------------------------------- Gentlemen/Ladies: On behalf of Armor All Products Corporation (the "Company"), we submit for filing via direct transmission the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 1994, together with exhibit 27. Should you have any questions regarding this filing, please telephone me collect at (415)983-8367 Very truly yours, /s/ Dana T. Iaipica DANA T. IAIPICA Assistant Secretary cc: The Nasdaq Stock Market, Inc. 1735 K Street, NW Washington, DC 20006-1500 Attn: Perry Peregoy Managing Director Nasdaq Market Services (w/3 conformed copies) -----END PRIVACY-ENHANCED MESSAGE-----