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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, 1996
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>
Delware 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 April 30, 1996, Registrant had 9,100,360 shares of common stock outstanding.
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WYNN'S INTERNATIONAL, INC.
I N D E X
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<CAPTION>
Page No.
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Part I - Financial Information
Item 1 - Financial Statements:
Consolidated Condensed Balance Sheets -
March 31, 1996 (unaudited) and
December 31, 1995 2
Unaudited Consolidated Condensed Statements
of Income - Three Months Ended March 31,
1996 and 1995 3
Unaudited Consolidated Condensed Statements
of Cash Flows - Three Months Ended March 31,
1996 and 1995 4
Notes to Unaudited Consolidated Condensed
Financial Statements 5
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 6-8
Part II - Other Information
Item 1 - Legal Proceedings 9
Item 6 - Exhibits and Reports on Form 8-K 10
Signatures 11
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
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WYNN'S INTERNATIONAL, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
March 31
1996 December 31
(unaudited) 1995
----------- -----------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 18,059 $ 23,127
Accounts receivable, less $1,389 allowance for
doubtful accounts ($1,344 at December 31, 1995) 59,631 50,590
Inventories:
Finished goods 22,399 22,074
Raw materials and work in process 15,811 15,771
-------- --------
38,210 37,845
Prepaid expenses and other current assets
(including deferred tax assets of $8,044 at
March 31, 1996 and $7,442 at December 31,
1995) 16,349 15,140
-------- --------
Total current assets 132,249 126,702
Property, plant and equipment, at cost less
accumulated depreciation and amortization 49,107 48,549
Other assets 6,444 6,514
-------- --------
$187,800 $181,765
======== ========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Accounts payable $ 21,333 $ 20,640
Dividends payable 3 789
Taxes based on income 3,447 2,289
Accrued liabilities 35,803 34,729
Long-term debt due within one year 90 91
-------- --------
Total current liabilities 60,676 58,538
Long-term debt due after one year 49 75
Deferred taxes based on income 6,948 6,919
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, 9,614,523
shares issued (9,564,998 at December 31, 1995) 9,614 9,565
Capital in excess of par value 13,703 13,173
Retained earnings 102,469 98,619
Equity adjustment from foreign currency
translation (1,807) (1,170)
Unearned compensation (271) (373)
Common stock held in treasury 520,875 shares,
at cost (3,581) (3,581)
-------- --------
Total stockholders' equity 120,127 116,233
-------- --------
$187,800 $181,765
======== ========
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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)
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<CAPTION>
Three Months Ended
March 31
---------------------
1996 1995
-------- --------
<S> <C> <C>
Revenues:
Net sales $ 83,085 $ 78,074
Interest income 274 189
-------- --------
83,359 78,263
-------- --------
Cost and expenses:
Cost of sales 52,464 49,831
Selling, general & administrative 23,156 21,983
Interest expense 52 570
-------- --------
75,672 72,384
-------- --------
Income before taxes based on income 7,687 5,879
Provision for taxes based on income 2,929 2,234
-------- --------
Net income $ 4,758 $ 3,645
======== ========
Income per share of common stock:
Primary $ .50 $ .42
======== ========
Fully diluted $ .50 $ .40
======== ========
Cash dividend per common share $ .10 $.0867
======== ========
</TABLE>
See accompanying notes
3
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WYNN'S INTERNATIONAL, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
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<CAPTION>
Three Months Ended
March 31
-----------------------
1996 1995
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 4,758 $ 3,645
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 2,120 1,970
Provision for uncollectible accounts 92 83
Amortization of stock compensation 102 102
Gain on sale of property, plant & equipment (13) (13)
Benefit for deferred income taxes (381) (546)
Changes in operating assets and liabilities:
Accounts receivable (net) (9,133) (12,000)
Inventories (750) (213)
Prepaid expenses and other current assets (607) (911)
Other assets (21) (107)
Accounts payable 693 4,302
Product warranty program reserves 1,189 181
Taxes based on income 1,032 1,962
Accrued liabilities (115) (1,009)
-------- --------
Net cash used in operating activities (1,034) (2,554)
-------- --------
Cash flows from investing activities:
Additions to property, plant and equipment (2,357) (2,144)
Proceeds from sale of property, plant & equipment 44 234
Other - net - (37)
-------- --------
Net cash used in investing activities (2,313) (1,947)
-------- --------
Cash flows from financing activities:
Borrowings under lines of credit - net - 1,826
Payments of long-term debt (27) (7,920)
Dividends paid (1,694) (1,213)
Proceeds from exercise of stock options 579 67
-------- --------
Net cash used in financing activities (1,142) (7,240)
-------- --------
Effect of exchange rate changes (579) 1,183
-------- --------
Net decrease in cash and cash equivalents (5,068) (10,558)
-------- --------
Cash and cash equivalents at beginning of year 23,127 16,446
-------- --------
Cash and cash equivalents at March 31 $ 18,059 $ 5,888
======== ========
</TABLE>
See accompanying notes
4
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WYNN'S INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1996 AND 1995
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 1995 Annual Report to Stockholders.
2) The results of operations for the three months ended March 31, 1996 are
not necessarily indicative of results of operations for the year ending
December 31, 1996. 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) Cash payments for interest and income taxes are as follows:
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<CAPTION>
Three months ended March 31
---------------------------
1996 1995
---------- ----------
<S> <C> <C>
Interest $ 28,000 $1,187,000
Income taxes 2,278,000 818,000
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In 1995, additional common stock was issued upon the conversion of
$6,250,000 of long-term debt.
4) The number of shares used in the calculation of primary and fully diluted
earnings per share information is as follows:
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<CAPTION>
Three months ended March 31
---------------------------
1996 1995
---------- ----------
<S> <C> <C>
Primary 9,429,783 8,769,371
Fully diluted 9,471,973 9,209,117
</TABLE>
The number of shares and the related earnings per share data for all
periods have been adjusted retroactively to reflect the 3 for 2 stock
split effected in December 1995.
5
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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, 1996 and 1995
- ------------------------------------------------------------
Net sales for the first quarter of 1996 were $83.1 million, a 6% increase
compared to $78.1 million in the first quarter of 1995. Sales of 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,
remained approximately the same. Precision's revenues increased 2% in the
first quarter of 1996 compared to the first quarter of 1995, reflecting
higher sales volume at the Virginia, Arizona and Canadian operations,
offset partially by lower sales volumes at the Tennessee operations. The
reduction in sales at the Tennessee operation, which manufactures and sells
primarily O-rings, was due to the decline in U.S. automotive production
rates during the most recent quarter compared to the prior year. The
increase in sales at the Virginia operation was due to growth in sales from
the relatively new applications of its composite gasket product line. WCS
experienced a small decrease in sales during the first quarter of 1996
compared to the first quarter of 1995. The revenue decline was
attributable to decreased sales in its original equipment manufacturers
("OEM") division and lower sales to the U.S. aftermarket (including
company-owned installation centers), partially offset by increased sales to
WCS' European OEM customers.
Sales at the Specialty Chemicals Division, principally car care products,
increased 17% in the first quarter compared to the same quarter in 1995.
Sales increased 35% in the U.S. compared to the prior year primarily due to
higher sales of the division's product warranty programs and sales to
direct export customers. Foreign subsidiary sales increased 6% from the
prior year primarily due to higher sales from this Division's French, South
African, U.K. and Canadian operations. Excluding the effect of foreign
exchange rate fluctuations, total net sales of this Division would have
increased 16% in the most recent quarter compared to the comparable quarter
in 1995.
Sales by the Builders Hardware Division, the relatively small regional
builders hardware products wholesale distributor, increased 8% in the first
quarter of 1996 compared to the first quarter of 1995.
The consolidated cost of sales for the first quarter of 1996 was 63.1% of
sales, an improvement from 63.8% in the first quarter of 1995. The
increase in the consolidated gross margin percentage was due to the change
in mix of revenues. The gross margin percentage increased at Precision due
to the higher volumes at its Virginia operations, partially offset by lower
volumes at Precision's Tennessee operations. The gross margin percentage
remained unchanged at WCS. The gross margin percentage decreased at the
Specialty Chemicals Division and the Builders Hardware Division due to a
change in the sales mix.
6
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
- -------------------------------------------------
Selling, general and administrative expenses in the first quarter of 1996
were $23.2 million (27.9% of sales) compared to $22.0 million (28.2% of
sales) for the first quarter of 1995. 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 selling, general and administrative expenses at the Specialty Chemicals
Division reflects increased spending associated with higher revenues, but
expenses declined as a percentage of sales. Operating expenses increased
at Precision primarily due to higher personnel and related costs.
Consolidated interest expense in the first quarter of 1996 declined
compared to the first quarter of 1995 due to the elimination during 1995 of
virtually all of the Company's interest-bearing debt.
Income before taxes based on income increased 31% to $7.7 million in 1996
from $5.9 million in the first quarter of 1995. In the Automotive
Components Division, Precision's operating profit increased slightly
compared to the first quarter of 1995. WCS recorded a small operating
profit in the first quarter of 1996, down slightly compared to the same
period in 1995. The decline in operating profit was principally due to the
lower sales. The Specialty Chemicals Division experienced a 46% increase
in operating profit in the quarter ended March 31, 1996 due primarily to
improved results at its U.S. and Western European based operations.
The effective tax rate in the first quarter of 1996 was 38.1%, virtually
unchanged from the 38.0% rate in the first quarter of 1995.
Net income increased 31% to $4.8 million in the first quarter of 1996
compared to $3.6 million in the first quarter of 1995 as a result of the
increase in pretax income. Primary income per share increased in the first
quarter of 1996 to $.50 from $.42 in 1995 due to the higher net income.
The number of shares used in the calculation of primary earnings per share
increased 8% in 1996 due primarily to the conversion of convertible notes
into 639,203 shares of the Company's common stock in March of 1995 and the
exercise of stock options in 1995 and 1996. Fully diluted earnings per
share increased 25% in 1996 compared to 1995 due to the increased net
income.
FINANCIAL CONDITION
- -------------------
Working capital at the end of the first quarter was $71.6 million compared
to $68.2 million at December 31, 1995. The current ratio was 2.18 to 1 at
the end of the first quarter of this year compared to 2.16 to 1 at December
31, 1995. The Company has adequate cash and cash equivalents and lines of
credit to meet foreseeable working capital requirements.
Cash and cash equivalents were $18.1 million at March 31, 1996 compared to
$23.1 million at December 31, 1995. The decrease in cash and cash
equivalents was primarily due to the annual payment of employee incentive
compensation, the funding of dividend payments and the increase in the
Company's accounts receivable.
Accounts receivable increased $9.0 million to $59.6 million at March 31,
1996 from $50.6 million at December 31, 1995. This increase was
principally due to the higher sales at WCS, Precision and the Specialty
Chemicals Division compared to the quarter
7
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MANAGEMENT'S DISCUSSION AND ANLAYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
- -------------------------------------------------
ended December 31, 1995 and WCS' seasonal offering of extended terms to
selected customers during the first quarter of the year. Inventories
increased slightly to $38.2 million at the end of the first quarter of this
year compared to $37.8 million at December 31, 1995.
During the three months ended March 31, 1996, the Company purchased $2.4
million of new property, plant and equipment, primarily for the Automotive
Components Division. The Company anticipates that in 1996 capital
expenditures will be approximately $11 million.
Stockholders' equity at March 31, 1996 was $120.1 million or $13.21 per
share compared to $116.2 million or $12.85 per share at December 31, 1995.
The increase of $3.9 million is attributable to net income of $4.8 million,
$.5 million from common stock transactions and the amortization of $.1
million of unearned compensation, reduced by a $.6 million decrease in the
foreign currency translation account and $.9 million of dividends declared.
8
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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.
9
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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.
10
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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 1, 1996 James Carroll
------------------- --------------------------------------------
James Carroll
President and Chief Executive Officer
Date May 1, 1996 Seymour A. Schlosser
------------------- --------------------------------------------
Seymour A. Schlosser
Vice President-Finance
(Principal Financial and Accounting Officer)
11
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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)
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<CAPTION>
Three Months Ended
March 31
------------------------
1996 1995
--------- ---------
<S> <C> <C>
Net income $ 4,758 $ 3,645
========= =========
Weighted average number of shares issued 9,080,230 8,577,315
Net shares assumed issued using the treasury
stock method for stock options outstanding
during each period based on average market
price 349,553 192,056
--------- ---------
Common and common equivalent shares 9,429,783 8,769,371
========= =========
Income per common share $ .50 $ .42
========= =========
COMPUTATION OF NET INCOME PER COMMON SHARE - ASSUMING FULL DILUTION
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<CAPTION>
Three Months Ended
March 31
------------------------
1996 1995
--------- ---------
<S> <C> <C>
Net income $ 4,758 $ 3,645
Net interest expense from convertible notes - 59
--------- ---------
Adjusted net income $ 4,758 $ 3,704
========= =========
Weighted average number of shares issued 9,080,230 8,577,315
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 391,743 212,770
Dilutive effect of assumed conversion of
notes outstanding - 419,032
--------- ---------
Fully diluted shares 9,471,973 9,209,117
========= =========
Income per common share $ .50 $ .40
========= =========
</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, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 18,059
<SECURITIES> 0
<RECEIVABLES> 61,020
<ALLOWANCES> 1,389
<INVENTORY> 38,210
<CURRENT-ASSETS> 132,249
<PP&E> 49,107<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 187,800
<CURRENT-LIABILITIES> 60,676
<BONDS> 49
0
0
<COMMON> 9,614
<OTHER-SE> 110,513
<TOTAL-LIABILITY-AND-EQUITY> 187,800
<SALES> 83,085
<TOTAL-REVENUES> 83,359
<CGS> 52,464
<TOTAL-COSTS> 52,464
<OTHER-EXPENSES> 23,064
<LOSS-PROVISION> 92
<INTEREST-EXPENSE> 52
<INCOME-PRETAX> 7,687
<INCOME-TAX> 2,929
<INCOME-CONTINUING> 4,758
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,758
<EPS-PRIMARY> .50
<EPS-DILUTED> .50
<FN>
<F1>Property, Plant and Equipment, At Cost Less Accumulated Depreciation and
Amortization
</FN>
</TABLE>
