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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, 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 No. 1-7200
Wynn's International, Inc.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
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 92668
(Address of principal executive offices) (Zip Code)
</TABLE>
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 5, 1995, Registrant had 6,002,077 shares of common stock outstanding.
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WYNN'S INTERNATIONAL, INC.
I N D E X
---------
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I - Financial Information
Item 1 - Financial Statements:
Consolidated Condensed Balance Sheets -
March 31, 1995 (unaudited) and
December 31, 1994 2
Unaudited Consolidated Condensed Statements
of Income - Three Months Ended March 31,
1995 and 1994 3
Unaudited Consolidated Condensed Statements
of Cash Flows - Three Months Ended March 31,
1995 and 1994 4-5
Notes to Unaudited Consolidated Condensed
Financial Statements 6
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-9
Part II - Other Information
Item 1 - Legal Proceedings 10
Item 6 - Exhibits and Reports on Form 8-K 11
Signatures 12
Exhibits
Exhibit 11 - Computation of Net Income Per
Common Share - Primary
Exhibit 11 - Computation of Net Income Per
Common Share - Assuming Full Dilution
Exhibit 27 - Financial Data Schedule
</TABLE>
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WYNN'S INTERNATIONAL, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
March 31
1995 December 31
(unaudited) 1994
----------- -----------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 5,888 $ 16,446
Accounts receivable, less $1,908 allowance for
doubtful accounts ($1,835 at December 31, 1994) 59,417 47,500
Inventories:
Finished goods 24,253 22,781
Raw materials and work in process 18,712 19,971
-------- --------
42,965 42,752
Prepaid expenses and other current assets
(including prepaid taxes based on income
of $6,542 at March 31, 1995 and $6,080
at December 31, 1994) 14,675 13,302
-------- --------
Total current assets 122,945 120,000
Property, plant and equipment, at cost less
accumulated depreciation and amortization 48,594 48,192
Other assets 8,205 8,280
-------- --------
$179,744 $176,472
======== ========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Notes payable $ 2,065 $ 239
Accounts payable 24,010 19,708
Dividends payable 125 614
Taxes based on income 3,173 1,211
Accrued liabilities 28,406 29,234
Long-term debt due within one year 8,158 8,161
-------- --------
Total current liabilities 65,937 59,167
Long-term debt due after one year 781 14,948
Deferred taxes based on income 6,770 6,917
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, 6,349,327
shares issued (5,918,692 at December 31, 1994) 6,349 5,919
Capital in excess of par value 15,758 9,871
Retained earnings 89,171 86,250
Equity adjustment from foreign currency
translation (762) (2,238)
Unearned compensation (679) (781)
Common stock held in treasury 347,250 shares,
at cost (3,581) (3,581)
-------- --------
Total stockholders' equity 106,256 95,440
-------- --------
$179,744 $176,472
======== ========
</TABLE>
See accompanying notes
2
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WYNN'S INTERNATIONAL, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in Thousands Except Per Share amounts)
<TABLE>
<CAPTION>
Three Months Ended
---------------------
March 31
---------------------
1995 1994
-------- --------
<S> <C> <C>
Revenues:
Net sales $ 78,074 $ 76,783
Interest income 189 181
-------- --------
78,263 76,964
-------- --------
Cost and expenses:
Cost of sales 49,831 51,044
Selling, general & administrative 21,983 20,436
Interest expense 570 867
-------- --------
72,384 72,347
-------- --------
Income before taxes based on income 5,879 4,617
Provision for taxes based on income 2,234 1,916
-------- --------
Net income $ 3,645 $ 2,701
======== ========
Income per share of common stock:
Primary $ .62 $ .48
======== ========
Fully diluted $ .60 $ .46
======== ========
Cash dividend per common share $ .13 $ .11
======== ========
</TABLE>
See accompanying notes
3
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WYNN'S INTERNATIONAL, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31
-----------------------
1995 1994
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers $ 66,030 $ 69,391
Cash paid to suppliers and employees (63,879) (64,413)
Cash paid on warranty kit claims (2,933) (1,670)
Interest received 233 231
Interest paid (1,187) (1,635)
Income taxes paid (818) (2,378)
-------- --------
Net cash used in operating activities (2,554) (474)
-------- --------
Cash flows from investing activities:
Additions to property, plant and equipment (2,144) (2,967)
Proceeds from sale of property, plant and equipment 234 267
Other cash (disbursements) receipts - net (37) 16
-------- --------
Net cash used in investing activities (1,947) (2,684)
-------- --------
Cash flows from financing activities:
Borrowings under lines of credit - net 1,826 241
Payments of long-term debt (7,920) (7,938)
Dividends paid (1,213) (605)
Proceeds from exercise of stock options 67 13
-------- --------
Net cash used in financing activities (7,240) (8,289)
-------- --------
Effect of exchange rate changes 1,183 121
-------- --------
Net decrease in cash and cash equivalents (10,558) (11,326)
-------- --------
Cash and cash equivalents at beginning of year 16,446 21,397
-------- --------
Cash and cash equivalents at March 31 $ 5,888 $ 10,071
======== ========
</TABLE>
See accompanying notes
4
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WYNN'S INTERNATIONAL, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (CONTINUED)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31
-----------------------
1995 1994
-------- --------
<S> <C> <C>
Reconciliation of net income to net cash
used in operating activities
- ----------------------------------------
Net income $ 3,645 $ 2,701
-------- --------
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 1,970 1,676
Provision for uncollectible accounts 83 140
Amortization of stock compensation 102 102
Gain on sale of property, plant & equipment (13) (3)
Provision (benefit) for deferred income taxes (546) (653)
Decrease (increase) in:
Accounts receivable (net) (12,000) (7,342)
Inventories (213) (1,821)
Prepaid expenses (911) 132
Other assets (107) 21
Increase (decrease) in:
Accounts payable 4,302 4,895
Warranty kit reserves 181 (75)
Taxes based on income 1,962 191
Accrued liabilities (1,009) (438)
-------- --------
Total adjustments (6,199) (3,175)
-------- --------
Net cash used in operating activities $ (2,554) $ (474)
======== ========
</TABLE>
Supplemental disclosure of noncash investing
and financing activities
- --------------------------------------------
In 1995 and 1994, additional common stock was
issued upon the conversion of $6,250,000 and
$250,000, respectively, of long-term debt.
See accompanying notes
5
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WYNN'S INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1995 AND 1994
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 1994 Annual Report to
Stockholders.
2) The results of operations for the three months ended March 31, 1995 are
not necessarily indicative of results of operations for the year ending
December 31, 1995. 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) The number of shares used in the calculation of primary and fully
diluted earnings per share information is as follows:
<TABLE>
<CAPTION>
Three months ended March 31
---------------------------
1995 1994
--------- ---------
<S> <C> <C>
Primary 5,846,309 5,671,004
Fully diluted 6,139,473 6,104,904
</TABLE>
6
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WYNN'S INTERNATIONAL, INC.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
Comparison of the three months ended March 31, 1995 and 1994
- ------------------------------------------------------------
Net sales for the first quarter of 1995 were $78.1 million, a 2% increase
compared to $76.8 million in the first quarter of 1994. Sales decreased 8%
for the Automotive 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 Wynn's Climate Systems, Inc. (WCS), a Fort Worth,
Texas-based supplier of automotive air conditioning products. Precision's
revenues increased 14% in the first quarter of 1995 compared to the first
quarter of 1994, principally due to higher sales volumes at the Tennessee,
Virginia and Canadian operations. Precision's revenue growth was attributable
to the relatively high U.S. automotive and offroad construction vehicle
production rates and the continued strength in industrial activity. WCS
experienced a 40% decrease in sales during the first quarter of 1995 compared
to the first quarter of 1994. The revenue decline was attributable to the
July 1994 expiration of a kit assembly agreement with Mazda. Sales to Mazda,
an importer of vehicles from Japan, decreased 79% in the first quarter of 1995
compared to the first quarter of 1994. Sales to the aftermarket, including
sales through WCS company-owned installation centers, increased 16% during the
first quarter. WCS is expected to have a substantial decrease in revenues in
the second quarter of 1995 compared to the second quarter of 1994 due to the
expiration of the Mazda kit assembly agreement. For the second half of 1995,
WCS' revenues are expected to be approximately the same as in 1994.
Sales at the Specialty Chemicals Division, principally car care products,
increased 21% in the most recent quarter compared to the first quarter of
1994. Sales increased 33% in the U.S. compared to the prior year primarily
due to higher sales of product warranty kits and sales to direct export
customers. Foreign subsidiary sales increased 15% from the prior year
primarily due to increased sales from this Division's French, Belgium and
South African operations. Excluding the effect of foreign exchange rate
fluctuations, total net sales of this Division would have increased 15% in the
most recent quarter compared to the comparable quarter in 1994.
Sales by the Builders Hardware Division, the relatively small regional
builders hardware products wholesale distributor, were virtually the same in
the first quarter of 1995 compared to the first quarter of 1994.
The consolidated cost of sales for the first quarter of 1995 was 63.8% of
sales, an improvement from 66.5% in the first quarter of 1994 due to the
change in mix of revenues. The gross margin percentage increased at Precision
due to the higher production and sales volume, while the gross margin
percentage declined at WCS due to the lower sales volume. The gross margin
percentage decreased at the Specialty Chemicals Division due to a change in
the sales mix.
Selling, general and administrative expenses in the first quarter of 1995
were $22.0 million (28.2% of sales) compared to $20.4 million (26.6% of sales)
for the first
7
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<PAGE>9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
- -------------------------------------------------
quarter of 1994. The increase in total selling, general and administrative
expenses is primarily attributable to higher expenses at the Specialty
Chemicals Division and Precision. The increase in expenses at the Specialty
Chemicals Division reflects increased spending associated with higher
revenues, although as a percentage of sales, expenses declined. Precision's
operating expenses in absolute dollars increased over 1994 levels due to the
higher revenues, but decreased as a percentage of Precision's revenues.
Operating expenses decreased at WCS, although proportionally less than the
decline in revenues. Corporate expenses increased slightly compared to the
prior year. Consolidated interest expense declined primarily due to the
reduction in the remaining principal amount of the Company's long-term debt
resulting from a principal payment of $7.9 million in March 1995 against the
Company's 10.75% Senior Note and the conversion in March 1995 of $6,250,000
of the Company's 9% subordinated convertible notes.
Income before taxes based on income increased 27% to $5.9 million in 1995 from
$4.6 million in the first quarter of 1994. In the Automotive Components
Division, Precision had a substantial increase in operating profit compared to
the first quarter of 1994 principally as a result of higher sales and
production volumes and the related higher gross profit. WCS recorded a
significant decline in operating profits in the first quarter of 1995 compared
to the same period last year, principally due to the lower sales to Mazda.
WCS expects to report a small operating loss for the calendar year ending
December 31, 1995 due to development and marketing costs associated with the
component technology business. The Specialty Chemicals Division experienced a
24% increase in operating profit in the quarter ended March 31, 1995 due
primarily to improved results at its U.S. based, French and South African
operations.
The effective tax rate in the first quarter of 1995 was 38.0%, which was
comparable to the 39% rate for the 1994 full year, but lower than the 41.5%
rate in the first quarter of 1994. The decline in the 1995 effective tax rate
is primarily due to the expected higher level of profitability in the U.S.,
which has a lower corporate income tax rate than many of the international
jurisdictions in which the Company operates.
Net income increased 35% to $3.6 million in the first quarter of 1995
compared to $2.7 million in the first quarter of 1994, reflecting the increase
in pretax income and the lower effective income tax rate. Primary income per
share increased in the first quarter of 1995 to $.62 from $.48 in 1994 due to
the higher net income. The number of shares used in the calculation of
earnings per share increased 3% in 1995 due to the conversion of convertible
notes into 426,135 shares of the Company's common stock during the first
quarter of 1995 and the exercise of stock options in 1994 and 1995. Fully
diluted earnings per share increased in 1995 compared to 1994 due to the
increased net income.
FINANCIAL CONDITION
- -------------------
Working capital at the end of the first quarter was $57.0 million compared to
$60.8 million at December 31, 1994. The current ratio was 1.86 to 1 at the
end of the first quarter of this year compared to 2.03 to 1 at December 31,
1994. In March 1995, the Company paid the third installment of $7.9 million
of the Company's 10.75%
8
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<PAGE>10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
- -------------------------------------------------
long-term senior debt. The remaining outstanding principal balance of the
Company's 10.75% senior debt is scheduled to be repaid in one additional
installment of $7.9 million due in March 1996. The Company anticipates
funding the March 1996 payment from internally generated funds and/or its
lines of credit. The Company has adequate lines of credit to meet foreseeable
working capital requirements, including the scheduled repayment of debt.
Cash and cash equivalents decreased $10.6 million to $5.9 million at March
31, 1995 from $16.4 million at December 31, 1994. The decrease was primarily
due to a reduction in the Company's long-term debt and the related payment of
accrued interest.
Accounts receivable at March 31, 1995 increased $11.9 million from December
31, 1994, principally as a result of the higher sales at Precision, WCS and
the Specialty Chemicals Division compared to the quarter ended December 31,
1994. Inventories increased slightly to $43.0 million at the end of the first
quarter of this year compared to $42.8 million at December 31, 1994.
Inventories increased at Precision and the Specialty Chemicals Division due to
the higher revenue levels. Inventory also increased at certain foreign
locations of the Specialty Chemicals Division due to the currency translation
impact of the changes in exchange rates between December 31, 1994 and March 31,
1995. Inventories decreased approximately $1.6 million at WCS primarily as a
result of the previously reported sale in January 1995 of substantially all
the inventory (and other assets) of WCS' refrigerant recovery and recycling
machine product line.
During the three months ended March 31, 1995, the Company purchased $2.1
million of new property, plant and equipment, primarily for the Automotive
Components Division. The Company anticipates that capital expenditures will
be approximately $12 million in 1995 and will be funded by cash flow from
operations.
Effective March 1, 1995, the holder of the Company's 9% Subordinated
Convertible Notes due March 6, 1996, elected to convert the entire remaining
principal balance of $6,250,000 into 426,135 shares of the Company's common
stock.
Stockholders' equity at March 31, 1995 was $106.3 million or $17.70 per share
compared to $95.4 million or $17.13 per share at December 31, 1994. The
increase of $10.8 million is attributable to net income of $3.6 million, $.1
million from common stock transactions, a $1.5 million increase in the foreign
currency translation account, the amortization of $.1 million of unearned
compensation and the conversion of $6.2 million of convertible notes, reduced
by $.7 million of dividends declared.
9
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PART II - OTHER INFORMATION
WYNN'S INTERNATIONAL, INC.
ITEM 1 - LEGAL PROCEEDINGS
Various claims and actions, considered normal to the Company's business, have
been asserted and are pending against the Company and its subsidiaries. The
Company believes that such claims and actions should not have any material
adverse effect upon the results of operations or the financial position of the
Company based upon information presently known to the Company.
10
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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
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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 11, 1995 JAMES CARROLL
-------------------------- --------------------------------------------
James Carroll
President and Chief Executive Officer
Date May 11, 1995 SEYMOUR A. SCHLOSSER
-------------------------- --------------------------------------------
Seymour A. Schlosser
Vice President-Finance
(Principal Financial and Accounting Officer)
12
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Exhibit 11
WYNN'S INTERNATIONAL, INC.
COMPUTATION OF NET INCOME PER COMMON SHARE - PRIMARY
(Dollars in Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31
------------------------
1995 1994
--------- ---------
<S> <C> <C>
Net income $ 3,645 $ 2,701
========= =========
Weighted average number of shares issued 5,718,272 5,540,285
Net shares assumed issued using the treasury
stock method for stock options outstanding
during each period based on average market
price 128,037 130,719
--------- ---------
Common and common equivalent shares 5,846,309 5,671,004
========= =========
Income per common share $ .62 .48
========= =========
</TABLE>
COMPUTATION OF NET INCOME PER COMMON SHARE - ASSUMING FULL DILUTION
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Ended
March 31
------------------------
1995 1994
--------- ---------
<S> <C> <C>
Net income $ 3,645 $ 2,701
Net interest expense from convertible notes 59 92
--------- ---------
Adjusted net income $ 3,704 $ 2,793
========= =========
Weighted average number of shares issued 5,718,272 5,540,285
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 141,846 130,719
Dilutive effect of assumed conversion of
notes outstanding 279,355 433,900
--------- ---------
Fully diluted shares 6,139,473 6,104,904
========= =========
Income per common share $ .60 $ .46
========= =========
</TABLE>
<TABLE> <S> <C>
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS CONTAINED IN FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1995
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 5,888
<SECURITIES> 0
<RECEIVABLES> 61,325
<ALLOWANCES> 1,908
<INVENTORY> 42,965
<CURRENT-ASSETS> 122,945
<PP&E> 48,594<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 179,744
<CURRENT-LIABILITIES> 65,937
<BONDS> 781
<COMMON> 6,349
0
0
<OTHER-SE> 99,907
<TOTAL-LIABILITY-AND-EQUITY> 179,744
<SALES> 78,074
<TOTAL-REVENUES> 78,263
<CGS> 49,831
<TOTAL-COSTS> 49,831
<OTHER-EXPENSES> 21,900
<LOSS-PROVISION> 83
<INTEREST-EXPENSE> 570
<INCOME-PRETAX> 5,879
<INCOME-TAX> 2,234
<INCOME-CONTINUING> 3,645
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,645
<EPS-PRIMARY> .62
<EPS-DILUTED> .60
<FN>
<F1>Property, Plant and Equipment, At Cost Less
Accumulated Depreciation and Amortization
</FN>
</TABLE>
