0000797975-95-000009.txt : 19950811 0000797975-95-000009.hdr.sgml : 19950811 ACCESSION NUMBER: 0000797975-95-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950810 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: 95560785 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 June 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 June 30, 1995 ----------------------------- ---------------------------- Common stock, $0.01 par value 21,282,135 shares TABLE OF CONTENTS PART I. FINANCIAL INFORMATION ============================== Pages ----- Consolidated Balance Sheets June 30, 1995 and March 31, 1995 3 Consolidated Statements of Income Three months ended June 30, 1995 and 1994 4 Consolidated Statements of Cash Flows Three months ended June 30, 1995 and 1994 5 Financial Notes 6 - 7 Financial Review 8 PART II. OTHER INFORMATION =========================== Item ---- 4 Submission of Matters to a Vote of Security Holders 9 6 Exhibits and Reports on Form 8-K 9 - 2 - PART 1. FINANCIAL INFORMATION ============================== ARMOR ALL PRODUCTS CORPORATION CONSOLIDATED BALANCE SHEETS (unaudited) June 30, March 31, 1995 1995 ------ ------ (in thousands) ASSETS ------ Current Assets Cash and cash equivalents $ 34,664 $ 22,249 Accounts receivable 39,072 84,865 Inventories 16,162 12,695 Deferred taxes 752 956 Prepaid expenses 13,394 801 ------- ------- Total current assets 104,044 121,566 Property 9,180 9,373 Goodwill 26,240 26,522 Patents and Trademarks 15,095 15,389 ------- ------- Total assets $154,559 $172,850 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current Liabilities Accounts payable $ 9,004 $ 17,385 Payable to McKesson 1,683 2,595 Accrued selling expenses 4,983 8,590 Accrued compensation 1,554 2,513 Income and other taxes payable 1,530 5,429 Dividends payable 3,404 3,404 Other liabilities 2,563 3,468 ------- ------- Total current liabilities 24,721 43,384 ------- ------- Deferred Income Taxes 478 481 ------- ------- Stockholders' Equity Common stock 213 213 Other 61,294 61,157 Unearned compensation - restricted stock (882) (980) Retained earnings 69,391 69,338 Cumulative translation adjustment (656) (743) ------- ------- Total stockholders' equity 129,360 128,985 ------- ------- Total liabilities and stockholders' equity $154,559 $172,850 ======= ======= See accompanying financial notes. - 3 - ARMOR ALL PRODUCTS CORPORATION CONSOLIDATED STATEMENTS OF INCOME (unaudited) Three Months Ended June 30 ------------------ 1995 1994 ------ ------ (in thousands except per share amounts) REVENUES $ 50,224 $ 56,568 ------- ------- COSTS AND EXPENSES: Cost of sales 24,394 24,001 Selling, general and administrative 19,508 21,116 Amortization of intangibles 613 623 ------- ------- Total costs and expenses 44,515 45,740 ------- ------- OPERATING INCOME 5,709 10,828 Interest income 251 270 ------- ------- INCOME BEFORE INCOME TAXES 5,960 11,098 Income taxes 2,503 4,739 ------- ------- NET INCOME $ 3,457 $ 6,359 ======= ======= EARNINGS PER COMMON SHARE $ .16 $ .30 ======= ======= DIVIDENDS PER COMMON SHARE $ .16 $ .16 ======= ======= WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 21,276 21,171 ======= ======= See accompanying financial notes. - 4 - ARMOR ALL PRODUCTS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Three Months Ended June 30 ------------------ 1995 1994 ------ ------ (in thousands) Operating Activities Net income $ 3,457 $ 6,359 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 1,077 1,007 Deferred income taxes 201 400 ------- ------- Total 4,735 7,766 ------- ------- Effect of changes in Accounts receivable 45,793 31,209 Inventories (3,467) (283) Prepaid expenses (12,593) (7,266) Accounts payable (8,381) 1,358 Accrued selling expenses (3,607) (1,622) Accrued compensation (959) (992) Income and other taxes payable (3,899) 343 Other liabilities (905) 617 ------- ------- Total 11,982 23,364 ------- ------- Net cash provided by operating activities 16,717 31,130 ------- ------- Investing Activities Capital expenditures (174) (301) Other 51 61 ------- ------- Net cash used by investing activities (123) (240) ------- ------- Financing Activities Payable to McKesson ( 912) (510) Issuance of common stock 137 125 Dividends paid (3,404) (3,386) ------- ------- Net cash used by financing activities (4,179) (3,771) ------- ------- Net increase in cash and cash equivalents 12,415 27,119 Cash and cash equivalents at beginning of period 22,249 26,251 ------- ------- Cash and cash equivalents at end of period $ 34,664 $ 53,370 ======= ======= 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 June 30, 1995 and the results of its operations and its cash flows for the three-month periods ended June 30, 1995 and 1994. Such adjustments were of a normal recurring nature. The results of operations for the three-month periods ended June 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 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: $30,905,000 at 6.0% on June 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: June 30, March 31, 1995 1995 ------ ------ (in thousands) Finished goods $14,305 $10,338 Raw materials 1,857 2,357 ------ ------ Total $16,162 $12,695 ====== ====== 4. PREPAID EXPENSES Prepaid expenses at June 30, 1995 include $12,856,000 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 Ended June 30 ---------------- 1995 1994 ------ ------ (in thousands) Interest income - McKesson $208 $231 Interest income - other 43 39 --- --- Interest income $251 $270 === === - 7 - ARMOR ALL PRODUCTS CORPORATION FINANCIAL REVIEW Results of Operations --------------------- Revenues decreased $6.3 million or 11% in the quarter ended June 30, 1995 in comparison with the prior year quarter. The decrease was primarily attributable to lower shipments of automotive division products in the United States and Canada. Shipments of all of the Company's principal automotive product lines -- including protectants, wheel cleaners, wax and wash products -- were lower than in the prior year. This revenue decline reflects a weakness in orders from the retail sector for the entire automotive appearance industry, partially attributable to unusually wet and cool spring weather in many parts of North America. In addition, certain retailers, reacting to lower consumer demand, reduced their purchases in order to lower their inventory levels; such actions had a further adverse impact on the Company's first quarter 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) Deck Protector Waterproofing Sealer, Armor All(R) WaterProofing Sealer and Armor All(R) Vinyl Siding Wash. International revenues increased mainly due to higher shipments to Japan and the United Kingdom, partially offset by the adverse effects of the Mexican peso devaluation. Cost of sales as a percentage of revenues was 48.6% and 42.4% in the quarters ended June 30, 1995 and 1994, respectively. The higher cost percentage in the current year was due to several factors, including higher costs of a new formula for Armor All(R) Protectant, increased raw materials costs, provisions for the discontinuance of several products, and the absorption of fixed costs over lower automotive volume. In addition, the higher mix of home care products had an adverse impact since such new products initially have lower margins due to start-up costs. Selling, general and administrative expense as a percentage of revenues was 38.8% and 37.3% in the quarters ended June 30, 1995 and 1994, respectively. The increase in the current quarter is primarily due to the greater mix of home care products, which have higher new product launch costs and other promotional expense. Another factor was the absorption of fixed administrative costs over a lower automotive sales volume. 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 $16.7 million and $31.1 million in the three-month periods ended June 30, 1995 and 1994, respectively, as accounts receivable were reduced from March 31 levels. The lower cash inflow in the first quarter of fiscal 1996 is primarily due to higher payments for media advertising, changes in the timing of payments for certain payables and accrued liabilities, increases in inventory to support new products and promotions, and lower net income. These factors were partially offset by 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. 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 4. Submission of Matters to a Vote of Security Holders ------------------------------------------------------------- The Company's Annual Meeting of Stockholders was held on July 31, 1995. The Board of Directors' nominees for director as listed in the proxy statement were each elected to serve for a one- year term by the following vote: Votes Votes For Withheld ------------ --------- William A. Armstrong 19,688,705 150,777 Jon S. Cartwright 19,692,255 147,227 Kenneth M. Evans 19,692,046 147,436 David L. Mahoney 19,683,305 156,177 David E. McDowell 19,688,665 150,817 Karen Gordon Mills 19,692,255 147,227 Alan Seelenfreund 19,594,043 245,439 Item 6. Exhibits and Reports on Form 8-K ------------------------------------------ (a) Exhibits 27 Financial Data Schedule (b) Reports No reports on Form 8-K were filed during the quarter ended June 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: August 10, 1995 By/s/Kenneth M. Evans ---------------------------- Kenneth M. Evans President and Chief Executive Officer By/s/Mark D. Krikorian ---------------------------- Mark D. Krikorian Vice President and Controller - 10 - EX-27 2
5 0000797975 ARMOR-ALL-CORPORATION 1,000 3-MOS MAR-31-1996 APR-01-1995 JUN-30-1995 34,664 0 40,947 (1,875) 16,162 104,044 14,879 (5,699) 154,559 24,721 0 213 0 0 129,147 154,559 50,224 50,224 24,394 24,394 0 1,000 0 5,960 2,503 0 0 0 0 3,457 .16 .16