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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 June 30, 1997
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)
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<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 92868
(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 August 1, 1997, Registrant had 12,821,053 shares of common stock outstanding.
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WYNN'S INTERNATIONAL, INC.
I N D E X
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Page No.
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Part I - Financial Information
Item 1 - Financial Statements:
Consolidated Condensed Balance Sheets -
June 30, 1997 (unaudited) and
December 31, 1996 2
Unaudited Consolidated Condensed Statements
of Income - Three Months and Six Months Ended June 30,
1997 and 1996 3
Unaudited Consolidated Condensed Statements
of Cash Flows - Six Months Ended June 30,
1997 and 1996 4
Notes to Unaudited Consolidated Condensed
Financial Statements 5-6
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-11
Part II - Other Information
Item 1 - Legal Proceedings 12
Item 4 - Submission of Matters to a Vote of Security Holders 13
Item 6 - Exhibits and Reports on Form 8-K 14
Signatures 15
</TABLE>
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WYNN'S INTERNATIONAL, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
June 30
1997 December 31
(unaudited) 1996
----------- -----------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 26,912 $ 53,304
Accounts receivable, less $940 allowance for
doubtful accounts ($870 at December 31, 1996) 56,915 48,347
Inventories:
Finished goods 19,126 19,789
Raw materials and work in process 11,758 11,151
-------- --------
30,884 30,940
Prepaid expenses and other current assets
(including deferred tax assets of $12,354 at
June 30, 1997 and $12,025 at December 31, 1996) 22,888 21,411
-------- --------
Total current assets 137,599 154,002
Property, plant and equipment, at cost less
accumulated depreciation and amortization 46,667 44,719
Other assets 6,207 6,384
-------- --------
$190,473 $205,105
======== ========
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LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Notes payable $ 72 $ -
Accounts payable 19,539 18,137
Taxes based on income 2,935 3,676
Accrued liabilities 43,993 42,531
Long-term debt due within one year 21 69
-------- --------
Total current liabilities 66,560 64,413
Deferred taxes based on income 7,540 7,740
Commitments and contingencies
Stockholders' equity:
Preferred stock, $1 par value;
500,000 shares authorized, none issued - -
Common stock, $1 par value;
40,000,000 shares authorized, 14,573,804
shares issued (14,546,540 at December 31, 1996) 14,574 14,547
Capital in excess of par value 8,439 10,377
Retained earnings 126,416 115,418
Equity adjustment from foreign currency
translation (3,680) (1,985)
Unearned compensation (161) (139)
Common stock held in treasury 1,762,501 shares,
at cost (869,962 at December 31, 1996) (29,215) (5,266)
-------- --------
Total stockholders' equity 116,373 132,952
-------- --------
$190,473 $205,105
======== ========
</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 Six Months Ended
--------------------- -------------------
June 30 June 30
--------------------- -------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Net sales $ 81,040 $ 71,826 $158,927 $143,289
Interest income 457 319 1,124 574
-------- -------- -------- --------
81,497 72,145 160,051 143,863
-------- -------- -------- --------
Cost and expenses:
Cost of sales 50,264 43,183 97,879 85,750
Selling, general & admin-
istrative 20,872 19,969 41,673 41,447
Interest expense 60 53 115 105
-------- -------- -------- --------
71,196 63,205 139,667 127,302
-------- -------- -------- --------
Income from continuing operations
before taxes based on income 10,301 8,940 20,384 16,561
Provision for taxes based on
income 3,802 3,412 7,583 6,310
-------- -------- -------- --------
Income from continuing operations 6,499 5,528 12,801 10,251
-------- -------- -------- --------
Discontinued operations:
Income from discontinued
operations, net of income
taxes of $8 and $39 - 36 - 71
Income (loss) on disposal of
discontinued operations, net of
income taxes (benefits) of $181
and $(5,402) 319 (1,540) 319 (1,540)
-------- -------- -------- --------
Net income $ 6,818 $ 4,024 $ 13,120 $ 8,782
======== ======== ======== ========
Income per share of common stock:
Primary:
Continuing operations $.48 $.39 $.92 $.72
Discontinued operations:
From operations - - - .01
Income (loss) on disposal .02 (.11) .02 (.11)
-------- -------- -------- --------
Total $.50 $.28 $.94 $.62
======== ======== ======== ========
Fully diluted:
Continuing operations $.48 $.39 $.91 $.72
Discontinued operations:
From operations - - - -
Income (loss) on disposal .02 (.11) .03 (.11)
-------- -------- -------- --------
Total $.50 $.28 $.94 $.61
======== ======== ======== ========
Cash dividend per common share $.08 $.0667 $.16 $.1333
======== ======== ======== ========
</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>
Six Months Ended
June 30
-----------------------
1997 1996
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Income from continuing operations $ 12,801 $ 10,251
Adjustments:
Depreciation and amortization 3,918 3,428
Provision for uncollectible accounts 163 117
Amortization of stock compensation 97 203
Gain on sale of property, plant & equipment (21) (14)
Benefit for deferred income taxes (440) (2,838)
Changes in operating assets and liabilities:
Accounts receivable (net) (8,731) (4,832)
Inventories 56 165
Prepaid expenses and other current assets (1,402) (1,580)
Other assets (26) (42)
Accounts payable 1,402 (917)
Product warranty program reserves 623 1,556
Taxes based on income (762) (2,497)
Accrued liabilities 1,755 1,896
-------- --------
Net cash provided by continuing operations 9,433 4,896
-------- --------
Income from discontinued operations - 71
Income (loss) on disposal of discontinued
operations 319 (1,540)
Net items providing cash from discontinued
operations - 1,071
-------- --------
Net cash provided by (used in) discontinued
operations 319 (398)
-------- --------
Net cash provided by all operating activities 9,752 4,498
-------- --------
Cash flows from investing activities:
Additions to property, plant and equipment (5,974) (4,177)
Proceeds from sale of property, plant & equipment 117 18
Net proceeds from disposition of net assets of
discontinued operations 254 8,967
Other - net 8 1
-------- --------
Net cash provided by (used in) investing
activities (5,595) 4,809
-------- --------
Cash flows from financing activities:
Borrowings under lines of credit - net 72 36
Payments of long-term debt (48) (51)
Dividends paid (3,038) (2,607)
Proceeds from exercise of stock options 1,767 1,021
Purchase of treasury stock (27,746) (218)
-------- --------
Net cash used in financing activities (28,993) (1,819)
-------- --------
Effect of exchange rate changes (1,556) (840)
-------- --------
Net increase (decrease) in cash and cash equivalents (26,392) 6,648
-------- --------
Cash and cash equivalents at beginning of year 53,304 23,127
-------- --------
Cash and cash equivalents at June 30 $ 26,912 $ 29,775
======== ========
</TABLE>
See accompanying notes
4
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WYNN'S INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1997 AND 1996
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 1996 Annual Report to Stockholders.
2) The results of operations for the six months ended June 30, 1997 are not
necessarily indicative of results of operations for the year ending
December 31, 1997. 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) On May 23, 1996, the Company sold the principal operating assets of
Wynn's Climate Systems, Inc. (WCS), a manufacturer and marketer of
automotive air conditioning systems and components. The results of
operations for WCS and the income or loss on disposal of WCS' principal
net operating assets have been classified on the statements of income as
discontinued operations. Revenues from discontinued operations for the
period January 1 to May 23, 1996 were $20,353,000.
4) On March 26, 1997, the Company commenced a Dutch Auction self-tender
offer (the "Tender Offer") to purchase for cash up to 1,100,000 shares,
or approximately 8.0%, of its issued and outstanding Common Stock at a
purchase price of not greater than $25.00 per share nor less than $22.00
per share. Pursuant to the Tender Offer, which terminated on April 22,
1997, the Company purchased 1,100,000 shares of its Common Stock at a
purchase price of $24.25 per share. The aggregate cost to the Company of
the Tender Offer, including expenses, was approximately $27 million. In
the quarter ending June 30, 1997, the shares repurchased were treated as
treasury shares and the purchase price and related expenses have been
reported as a reduction in equity as the cost of treasury shares.
5) Cash payments for interest and income taxes are as follows:
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<CAPTION>
Six months ended June 30
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1997 1996
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<S> <C> <C>
Interest $ 51,000 $ 52,000
Income taxes 8,966,000 6,282,000
</TABLE>
5
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WYNN'S INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1997 AND 1996
6) The number of shares used in the calculation of primary and fully diluted
earnings per share information is as follows:
<TABLE>
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Three months ended June 30 Six months ended June 30
-------------------------- ------------------------
1997 1996 1997 1996
---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Primary 13,599,957 14,284,604 13,965,899 14,226,339
Fully diluted 13,633,128 14,300,306 14,027,131 14,295,093
</TABLE>
The number of shares and the related earnings per share data for the
periods ended June 30, 1996 have been adjusted retroactively to reflect
the 3 for 2 stock split effected in December 1996.
7) In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, Earnings per Share,
which is required to be adopted on December 31, 1997. At that time, the
Company will be required to change the method currently used to compute
earnings per share and to restate all prior periods. Under the new
requirements for calculating primary earnings per share, the dilutive
effect of stock options and pending performance shares will be excluded.
The impact is expected to result in an increase in primary earnings per
share for the quarters ended June 30, 1997 and 1996 of $.02 and $.01 per
share, respectively, and for the six months ended June 30, 1997 and 1996
of $.04 and $.02 per share, respectively. The impact of this Statement
on the calculation of fully diluted earnings per share for these quarters
and six-month periods is not expected to be material.
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 CONTINUING OPERATIONS
- --------------------------------
Comparison of the three months ended June 30, 1997 and 1996
- -----------------------------------------------------------
Net sales for the second quarter of 1997 were $81.0 million, a 13%
increase compared to sales of $71.8 million in the second quarter of 1996.
Sales of the Automotive and Industrial 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 Robert Skeels &
Company (Skeels), a small regional wholesale distributor of builders hardware
products, increased 23% in the second quarter of 1997 compared to the
second quarter of 1996, primarily reflecting higher sales volume at
Precision. Precision's sales increased at all divisions, with the most
significant growth occurring at its Virginia and Tennessee operations.
Also contributing to the increase in sales was Precision's September 1996
acquisition of an automotive sealing business in Kentucky. The increase in
sales at Precision's Virginia operation was due to growth of its expanded
composite gasket product line. The increase in sales at Precision's
Tennessee operation, which manufactures and sells primarily O-rings, was
due mainly to higher sales to the automotive, heavy truck and off-road
markets. This increase in revenues occurred despite lower U.S. automotive
production rates during the most recent quarter compared to the prior year.
Sales at Skeels increased in the second quarter of 1997 compared to the
same quarter in 1996.
Sales at the Specialty Chemicals Division, principally car care products,
increased 4% in the second quarter compared to the same quarter in 1996.
Excluding the effect of foreign exchange rate fluctuations, total net sales
of this Division would have increased 9% in the most recent quarter
compared to the same quarter in 1996. Sales increased 2% in the U.S.
compared to the prior year primarily due to higher export sales to Asian
and Latin American distributors and slightly higher sales of the division's
product warranty programs. Foreign subsidiary sales increased 5% in the
most recent quarter compared to the prior year, despite the continued
negative translation effect of the strong U.S. dollar.
The consolidated cost of sales in the second quarter of 1997 increased to
62.0% of sales compared to 60.1% in the second quarter of 1996. The
decrease in the consolidated gross margin percentage was due to the change
in mix of revenues. Precision generated higher gross profit due to the
higher sales volume, but its gross margin as a percentage of sales
decreased, primarily due to increased production costs and continued
pricing pressures. At the Specialty Chemicals Division, gross profit
increased due to the higher sales, and also increased as a percentage of
sales due to the increase in foreign sales, which generally have a higher
gross margin than sales in the U.S.
Selling, general and administrative (SG&A) expenses in the second quarter of
1997 were $20.9 million (25.8% of sales) compared to $20.0 million (27.8% of
sales) for the second quarter of 1996. The increase in SG&A expenses was
primarily due to higher expenses at Precision, reflecting the higher sales
volumes, and at Corporate,
7
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
- -------------------------------------------------
reflecting increased executive and incentive compensation costs. SG&A expenses
declined at the Specialty Chemicals Division, reflecting reduced spending
for advertising and promotional programs and the translation effect of a
strong U.S. dollar. As a percentage of sales, SG&A expenses declined at
Precision due to the higher revenues and constant monitoring of costs and at
the Specialty Chemicals Division due to the lower spending.
Income before taxes based on income increased 15% to $10.3 million in 1997
from $8.9 million in the second quarter of 1996. In the Automotive and
Industrial Components Division, Precision's operating profit increased 8%
compared to the second quarter of 1996 due to the higher sales. The
Specialty Chemicals Division experienced a 25% increase in operating profit
in the quarter ended June 30, 1997 due primarily to improved results at its
U.S., Australian, Belgium and French-based operations.
The effective tax rate in the second quarter of 1997 was 36.9%, down from
the 38.2% rate in the second quarter of 1996. The decrease reflects the
anticipated reduction in the 1997 full year rate to 37.2%, which is the
same as the 1996 full year rate.
Income from continuing operations increased 18% to $6.5 million in the
second quarter of 1997 compared to $5.5 million in the second quarter of
1996 as a result of the increase in pretax income and the lower effective
tax rate. Primary income per share in the second quarter of 1997 increased
to $.48 from $.39 in 1996 due to the higher income. The number of shares
used in the calculation of primary earnings per share decreased 5% in 1997
due primarily to the repurchase in April 1997 of 1.1 million shares of the
Company's outstanding stock pursuant to a Dutch Auction self-tender offer.
Fully diluted earnings per share from continuing operations increased 23%
in 1997 compared to 1996 due to the increased income.
Comparison of the six months ended June 30, 1997 and 1996
- ---------------------------------------------------------
Net sales for the first half of 1997 increased 11% to $158.9 million from
$143.3 million in the same period of last year. Sales were up 20% for the
Automotive Components Division compared to the first six months of 1996 due
primarily to higher sales at Precision's Virginia and Tennessee operations,
and the inclusion of sales from its Kentucky operation which was acquired
in September 1996. Sales at Skeels increased in the first half of 1997
compared to the same period last year. Sales for the Specialty Chemicals
Division increased 3% in the first six months of 1997 compared to the same
period in 1996 due primarily to higher sales in the U.S., Australia,
Belgium, Canada and Mexico. Excluding the effect of foreign exchange rate
fluctuations, total sales of this Division would have increased 8% in the
first six months of 1997 compared to the same period in 1996.
Interest income increased $.6 million during the first six months of 1997
compared to the same period in 1996 due to higher average cash and cash
equivalent balances on deposit.
Total cost of sales for the first half of 1997 was 61.6% of sales compared
to 59.8% in the first half of 1996. The Specialty Chemicals Division
generated slightly higher gross margins, but Precision experienced reduced
gross margins. The increase in gross margin percentage at the Specialty
Chemicals Division was the result of a change in sales mix. Precision's
gross margin declined due primarily to higher production costs and general
price pressures.
8
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
- -------------------------------------------------
Selling, general and administrative expenses increased slightly to $41.7
million for the first six months of 1997 from $41.4 million for the same
period in 1996. The increase primarily reflects higher spending levels at
Precision due to the higher revenues, partially offset by a decline in
expenses at the Specialty Chemicals Division due to a change in revenue
mix, reduced advertising and promotional programs, and the translation
effect of a strong U.S. dollar. Operating expenses at Corporate for the
first six months of 1997 were slightly below 1996 levels for the comparable
period.
Income before taxes based on income increased to $20.4 million from $16.6
million in the first half of 1996. The Specialty Chemicals Division had a
27% increase in operating profit compared to the first half of last year
primarily due to improved results at its U.S., Australian, Belgium and
French operations. In the Automotive Components Division, both Precision's
and Skeels' operating profit increased compared to the first half of 1996
as a result of higher sales.
Income from continuing operations increased 25% to $12.8 million in the
first half of 1997 from $10.3 million in the same period in 1996 due to the
growth in income before taxes and a decrease in the effective tax rate to
37.2% from 38.1% in the six months ended June 30, 1996. The decrease in
the effective tax rate is 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.
Primary earnings per share rose 28% to $.92 in the first half of 1997
compared to $.72 in the same period in 1996. The increase in primary
earnings per share is attributable to the increase in income and a 2%
decrease in the number of shares used in the calculation of primary
earnings per share for the reason explained in the analysis of the second
quarter. Fully diluted earnings per share increased in 1997 compared to
1996 due to the higher income.
RESULTS OF DISCONTINUED OPERATIONS
- ----------------------------------
On May 23, 1996, the Company sold the principal operating assets of Wynn's
Climate Systems, Inc., (WCS), the automotive air conditioning business
which was formerly part of the Automotive and Industrial Components
Division. The results of operations for WCS have been classified on the
statements of income as discontinued operations. Income from discontinued
operations of $319,000 in the second quarter of 1997 was attributable to
adjustments to certain estimated reserves arising from the May 1996 sale.
At June 30, 1997, the remaining net reserves arising from the sale of WCS'
assets were not significant. Revenues from discontinued operations for the
period January 1, 1996 to May 23, 1996 were $20,353,000.
FINANCIAL CONDITION
- -------------------
Working capital at the end of the second quarter was $71.0 million
compared to $89.6 million at December 31, 1996. The current ratio at the
end of the second quarter of 1997 was 2.07 to 1 compared to 2.39 to 1 at
December 31, 1996. The Company has adequate cash and cash equivalents and
lines of credit to meet foreseeable working capital requirements.
9
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
- -------------------------------------------------
On March 26, 1997, the Company commenced a Dutch Auction self-tender offer
(the "Tender Offer") to purchase for cash up to 1,100,000 shares of its
issued and outstanding Common Stock. Pursuant to the Tender Offer, which
terminated on April 22, 1997, the Company purchased 1,100,000 shares of its
Common Stock at a purchase price of $24.25 per share. The aggregate cost
to the Company of the Tender Offer, including expenses, was approximately
$27 million, which was funded from cash and cash equivalents. The shares
purchased in the Tender Offer were treated as treasury shares and the
aggregate cost has been reported as a reduction in the equity of the
Company as the cost of treasury shares.
Cash and cash equivalents were $26.9 million at June 30, 1997 compared to
$53.3 million at December 31, 1996. The decrease in cash and cash
equivalents was primarily due to the funding of the Tender Offer to
repurchase 1.1 million shares of the Company's common stock for
approximately $27 million.
Accounts receivable increased $8.6 million to $56.9 million at June 30,
1997 from $48.3 million at December 31, 1996. This increase was primarily
due to the higher sales at Precision and the Specialty Chemicals Division.
Inventories were $30.9 million at the end of the second quarter, unchanged
from the $30.9 million at December 31, 1996. Inventories increased at the
Specialty Chemicals Division, primarily in the U.S. professional products
division, but declined at Precision.
During the six months ended June 30, 1997, the Company purchased $6.0
million of new property, plant and equipment, primarily for the Automotive
and Industrial Components Division. The Company anticipates that capital
expenditures will be approximately $11 million in 1997.
Stockholders' equity at June 30, 1997 was $116.4 million or $9.08 per
share compared to $133.0 million or $9.72 per share at December 31, 1996.
The decrease of $16.6 million is attributable to net income of $13.1
million, $1.8 million from the exercise of stock options and the
amortization of unearned compensation, reduced by repurchases of the
Company's common stock for $27.7 million, a $1.7 million decrease in the
foreign currency translation account and $2.1 million of dividends
declared.
FORWARD-LOOKING STATEMENTS
- --------------------------
The preceding financial statements and Management's Discussion and
Analysis contain various "forward-looking statements" representing the
Company's expectations or beliefs concerning future events. The statements
include the following: the anticipated level of capital expenditures; the
sufficiency of working capital; and the sales growth of the composite
gasket product line.
The Company cautions that these statements are further qualified by
important factors that could cause actual results to differ materially from
those in the forward-looking statements, including the following: sales of
new and used cars in the U.S.; automotive and off-road construction vehicle
production rates in North America; continued pricing pressure in the U.S.
automotive industry; the impact of competitive products on the composite
gasket product line; the Company's ultimate liability for environmental
matters; and general economic conditions, especially in North America and
Western Europe.
10
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
- -------------------------------------------------
The Company's actual results thus may differ materially from the expected
results expressed or implied by the forward-looking statements.
11
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WYNN'S INTERNATIONAL, INC.
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
On May 15, 1997, the United States Environmental Protection Agency ("EPA")
issued Special Notice letters to 19 companies and entities, including Wynn Oil
Company, with respect to the Baldwin Park Operable Unit ("BPOU") of the San
Gabriel Valley, California Superfund Sites. The Special Notice letters
initiated an administrative process in which the recipients have 60 days to
submit a good faith offer to undertake the requested work and another 60 days
to reach agreement with the EPA as to the terms of a consent decree.
In early June 1997, pursuant to a newly developed test method, perchlorates
were detected in certain groundwater wells in the BPOU. Perchlorates are ions
of ammonium perchlorate or potassium perchlorate, which are most commonly
associated with the manufacturing of solid rocket fuel, fireworks and
explosives. Perchlorate is not known to be carcinogenic, but it has been
linked to thyroid problems. It is unclear whether any present treatment
technology can practicably remove perchlorate to the State provisional action
level of 18 parts per billion.
On June 19, 1997, a representative of the BPOU Steering Committee wrote to EPA
Region IX requesting a 60-day extension to provide a good faith offer pursuant
to the Special Notice process. The letter raised the issue whether the EPA's
Record of Decision, as currently written, could be implemented in light of the
perchlorate issue. On June 30, 1997, the EPA wrote to the BPOU Steering
Committee agreeing to extend the deadline for submission of a good faith offer
to August 29, 1997.
In late July 1997, a lawsuit was filed by approximately 100 persons against
five water producers in the San Gabriel Valley and the 19 companies and
entities, including Wynn Oil Company, which received the May 15, 1997 Special
Notice letters from the EPA with respect to the BPOU. The lawsuit alleges that
the plaintiffs received contaminated drinking water and suffered adverse health
effects as a consequence thereof. The plaintiffs are seeking unspecified
compensatory damages, punitive damages and injunctive relief. The Company
intends to respond to the lawsuit after receipt of service of process.
12
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WYNN'S INTERNATIONAL, INC.
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Stockholders on May 7, 1997. At such
meeting, the stockholders approved the following matters:
1. The election of three directors for three-year terms ending in 2000;
2. The approval of an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of the
Company's Common Stock from 20,000,000 to 40,000,000;
3. The approval of an amendment to the Company's Stock-Based Incentive
Award Plan to increase the number of shares available for grant from
1,096,875 shares to 1,246,875 shares;
4. The approval of an amendment to the Company's Stock-Based Incentive
Award Plan to limit the number of shares which may be covered by stock
options and stock appreciation rights that are granted to an
individual during any calendar year; and
5. The approval of Ernst & Young LLP as independent auditors of the
Company for the fiscal year ending December 31, 1997.
The number of votes cast for or withheld and the number of abstentions as to
each matter voted upon at the meeting are as follows:
<TABLE>
<CAPTION>
Item For Withheld
---- --- --------
<S> <C> <C>
Election of Directors:
Wesley E. Bellwood 13,130,971 34,194
John D. Borie 13,092,496 72,669
James D. Woods 13,142,211 22,954
<CAPTION>
Item For Withheld Abstained
---- --- -------- ---------
<S> <C> <C> <C>
Amend Certificate
of Incorporation 12,817,275 326,989 11,901
Increase Option Shares
Available for Grant 11,666,887 1,474,515 23,763
Limit Individual Grants
Under Option Plan 12,901,566 242,252 21,347
Appointment of Ernst
& Young LLP 13,096,297 65,149 3,719
</TABLE>
13
<PAGE>
<PAGE>
WYNN'S INTERNATIONAL, INC.
PART II - OTHER INFORMATION
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.
14
<PAGE>
<PAGE>
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 August 7, 1997 James Carroll
---------------------- -------------------------------------------
James Carroll
Chairman and Chief Executive Officer
Date August 7, 1997 Seymour A. Schlosser
---------------------- -------------------------------------------
Seymour A. Schlosser
Vice President-Finance
(Principal Financial and Accounting Officer)
15
<PAGE>
<PAGE>
WYNN'S INTERNATIONAL, INC.
INDEX TO EXHIBITS
Exhibit
Number Description
- ------ -----------
11 Computation of Net Income Per Common Share - Primary
and Assuming Full Dilution
27 Financial Data Schedule (included with EDGAR version
only)
<PAGE>
<PAGE> 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
June 30
-------------------------
1997 1996
---------- ----------
<S> <C> <C>
Income from continuing operations $ 6,499 $ 5,528
Discontinued operations:
Income from operations - 36
Income (loss) on disposal 319 (1,540)
---------- ----------
Total net income $ 6,818 $ 4,024
========== ==========
Weighted average number of shares issued 13,044,031 13,652,760
Net shares assumed issued using the treasury stock
method for stock options outstanding during each
period based on average market price 550,319 631,844
Net shares assumed issued for performance shares
pending issuance based on satisfaction of
vesting requirements 5,607 -
---------- ----------
Common and common equivalent shares 13,599,957 14,284,604
========== ==========
Income per common share:
Continuing operations $.48 $.39
Discontinued operations:
Income from operations - -
Income (loss) on disposal .02 (.11)
---------- ----------
Total $.50 $.28
========== ==========
<CAPTION>
Six Months Ended
June 30
-------------------------
1997 1996
---------- ----------
<S> <C> <C>
Income from continuing operations $ 12,801 $ 10,251
Discontinued operations:
Income from operations - 71
Income (loss) on disposal 319 (1,540)
---------- ----------
Total net income $ 13,120 $ 8,782
========== ==========
Weighted average number of shares issued 13,375,583 13,636,457
Net shares assumed issued using the treasury stock
method for stock options outstanding during each
period based on average market price 585,691 589,882
Net shares assumed issued for performance shares
pending issuance based on satisfaction of
vesting requirements 4,625 -
---------- ----------
Common and common equivalent shares 13,965,899 14,226,339
========== ==========
Income per common share:
Continuing operations $.92 $.72
Discontinued operations:
Income from operations - .01
Income (loss) on disposal .02 (.11)
---------- ----------
Total $.94 $.62
========== ==========
</TABLE>
1
<PAGE>
<PAGE>
Exhibit 11
WYNN'S INTERNATIONAL, INC.
COMPUTATION OF NET INCOME PER COMMON SHARE - ASSUMING FULL DILUTION
(Dollars in Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
Three Months Ended
June 30
-------------------------
1997 1996
---------- ----------
<S> <C> <C>
Income from continuing operations $ 6,499 $ 5,528
Discontinued operations:
Income from operations - 36
Income (loss) on disposal 319 (1,540)
---------- ----------
Total net income $ 6,818 $ 4,024
========== ==========
Weighted average number of shares issued 13,044,031 13,652,760
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 583,490 647,546
Net shares assumed issued for performance shares
pending issuance based on satisfaction of
vesting requirements 5,607 -
---------- ----------
Fully diluted shares 13,633,128 14,300,306
========== ==========
Income per common share:
Continuing operations $.48 $.39
Discontinued operations:
Income from operations - -
Income (loss) on disposal .02 (.11)
---------- ----------
Total $.50 $.28
========== ==========
<CAPTION>
Six Months Ended
June 30
-------------------------
1997 1996
---------- ----------
<S> <C> <C>
Income from continuing operations $ 12,801 $ 10,251
Discontinued operations:
Income from operations - 71
Income (loss) on disposal 319 (1,540)
---------- ----------
Total net income $ 13,120 $ 8,782
========== ==========
Weighted average number of shares issued 13,375,583 13,636,457
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 646,923 658,636
Net shares assumed issued for performance shares
pending issuance based on satisfaction of
vesting requirements 4,625 -
---------- ----------
Fully diluted shares 14,027,131 14,295,093
========== ==========
Income per common share:
Continuing operations $.91 $.72
Discontinued operations:
Income from operations - -
Income (loss) on disposal .03 (.11)
---------- ----------
Total $.94 $.61
========== ==========
</TABLE>
2
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS CONTAINED IN FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 26,912
<SECURITIES> 0
<RECEIVABLES> 57,855
<ALLOWANCES> 940
<INVENTORY> 30,884
<CURRENT-ASSETS> 137,599
<PP&E> 46,667<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 190,473
<CURRENT-LIABILITIES> 66,560
<BONDS> 0
0
0
<COMMON> 14,574
<OTHER-SE> 101,799
<TOTAL-LIABILITY-AND-EQUITY> 190,473
<SALES> 158,927
<TOTAL-REVENUES> 160,051
<CGS> 97,879
<TOTAL-COSTS> 97,879
<OTHER-EXPENSES> 41,510
<LOSS-PROVISION> 163
<INTEREST-EXPENSE> 115
<INCOME-PRETAX> 20,384
<INCOME-TAX> 7,583
<INCOME-CONTINUING> 12,801
<DISCONTINUED> 319
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,120
<EPS-PRIMARY> .94
<EPS-DILUTED> .94
<FN>
<F1>PROPERTY, PLANT AND EQUIPMENT, AT COST LESS ACCUMULATED DEPRECIATION AND
AMORTIZATION
</FN>
</TABLE>
