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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________
FORM 10-K
(Mark One)
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended DECEMBER 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 NUMBER 1-7200
WYNN'S INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-2854312
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
500 NORTH STATE COLLEGE BOULEVARD
SUITE 700
ORANGE, CALIFORNIA 92868
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (714) 938-3700
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of Each Class Name of Each Exchange on Which Registered
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Common Stock, par value $1 per share New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
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 [ ]
The aggregate market value of voting stock held by non-affiliates of the
Registrant was $288,562,857 as of March 12, 1997. All outstanding shares of
voting stock, except for shares held by executive officers and members of the
Board of Directors of Registrant, are deemed to be held by non-affiliates.
On March 12, 1997, Registrant had 13,714,717 shares of Common Stock
outstanding.
Parts I and II incorporate information by reference from the Annual
Report to Stockholders for the year ended December 31, 1996. Part III
incorporates information by reference from the Proxy Statement for the Annual
Meeting of Stockholders to be held on May 7, 1997.
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
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PART I
ITEM 1. BUSINESS
Wynn's International, Inc., through its subsidiaries, is engaged
primarily in the automotive and industrial components business and the
specialty chemicals business. The Company designs, produces and sells
O-rings and other seals and molded elastomeric and thermoplastic polymer
products. The Company also formulates, produces and sells specialty chemical
products, service programs and automotive service equipment and distributes,
primarily in southern California, locks and hardware products manufactured by
others. Prior to the sale in May 1996 of the principal operating assets of
its wholly-owned subsidiary, Wynn's Climate Systems, Inc. ("Wynn's Climate
Systems"), the Company designed, produced and sold automotive air
conditioning systems and components.
O-rings and other molded polymer products are marketed under the trade
name "Wynn's-Precision." Specialty chemical products and automotive service
equipment are marketed under various trademarks, including WYNN'S-Registered
Trademark-, FRICTION PROOFING-Registered Trademark-, X-TEND-Registered
Trademark-, SPIT FIRE-Registered Trademark-, CHARGE-Registered Trademark-,
DU-ALL-Registered Trademark-, TRANSERVE-TM- and WYNN'S PRODUCT
WARRANTY-Registered Trademark-.
The Company's executive offices are located at 500 North State College
Boulevard, Suite 700, Orange, California 92868. Its telephone number is
(714) 938-3700. The terms "Wynn's International, Inc.," "Wynn's," "Company"
and "Registrant" herein refer to Wynn's International, Inc. and its
subsidiaries unless the context indicates otherwise.
FINANCIAL INFORMATION BY BUSINESS SEGMENT AND GEOGRAPHIC DATA
The Company's operations are conducted in two industry segments:
Automotive and Industrial Components, and Specialty Chemicals. Financial
information relating to the Company's business segments for the five years
ended December 31, 1996 is incorporated by reference from Note 14 of "Notes
to Consolidated Financial Statements" on pages 29 through 31 of the Company's
Annual Report to Stockholders for the year ended December 31, 1996 (the "1996
Annual Report").
SPECIALTY CHEMICALS
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The Specialty Chemicals Division consists of Wynn Oil Company and its
subsidiaries ("Wynn Oil"). During 1996, net sales at Wynn Oil were
$148,018,000, or 51% of the Company's total net sales, as compared to
$132,173,000 and 50% for 1995. The operating profit of the division during
1996 was $15,627,000, or 40% of the Company's total operating profit,
compared with $11,526,000 and 35% for 1995. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business
Segment and Geographical Information" on pages 13 through 17 and 29 through
31, respectively, of the 1996 Annual Report, which are hereby incorporated by
reference. See also "Other Factors Affecting the Business."
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PRODUCTS
The principal business of Wynn Oil is the development, manufacture and
marketing of a wide variety of specialty chemical car care and industrial
products and related service programs under the WYNN'S-Registered Trademark-,
X-TEND-Registered Trademark- and WYNN'S PRODUCT WARRANTY-Registered
Trademark-trademarks. Wynn Oil offers the following lines of products: (a)
professional chemical products, programs and equipment for use by automotive
service technicians, (b) automotive chemical products for use by consumers,
(c) chemical products for use in metal working and machining operations, and
(d) the Wynn's Product Warranty program.
All professional and consumer products manufactured by Wynn Oil are
formulated to provide preventive or corrective maintenance for automotive
engines, transmissions, steering systems, fuel delivery systems,
differentials, engine cooling systems and other automotive mechanical parts.
Wynn Oil also manufactures equipment designed to work with Wynn Oil chemical
products to assist automotive service technicians with regular tasks, such as
flushing the cooling and transmission systems of an automobile. For example,
the patented DU-ALL-Registered Trademark- antifreeze power drain and fill and
recycling system is a portable machine used in conjunction with proprietary
chemicals to service a vehicle's cooling system and recycle the used
antifreeze. The DU-ALL-Registered Trademark- system has been approved by
General Motors, Chrysler and Hyundai. The TRANSERVE-TM- automatic
transmission flush system is a portable machine used in conjunction with Wynn
Oil's chemicals to flush, refill and treat the transmission fluid in a
vehicle. The TRANSERVE-TM- machine has been approved by Chrysler.
Wynn Oil's industrial specialty chemical products include forging
compounds, cleaners, solvents, release agents, lubricants, cutting and
drawing fluids and multipurpose coolants. These chemical products are used
in precision metal forming and machining operations. They are a mix of full
synthetic, semi-synthetic and petroleum-based fluids that address specific
functions and levels of operation severity.
Wynn Oil also markets the Wynn's Product Warranty program. The Wynn's
Product Warranty program consists of kits of a premium line of automotive
treatment products that are accompanied by a special product warranty. The
kits are typically sold through car dealers to purchasers of used automobiles
and light trucks. The kits contain proprietary treatment products that have
been specially formulated to help prevent damage to various internally
lubricated parts and systems of the automobile. The products include an
engine oil treatment, a fuel system conditioner, a transmission fluid
treatment, a power steering supplement, a differential treatment, a cooling
system conditioner and an air conditioning system treatment. The product
warranty accompanying the products states, in effect, that if the vehicle
owner treats the vehicle as directed and damage occurs to specified
components of the vehicle during the warranty period, which damage is the
type of damage that the products are designed to help prevent, then Wynn Oil
will provide reimbursement for the damage, up to the limits of liability and
subject to certain conditions and exceptions. The items reimbursed include
the costs of certain parts and labor and, in some instances, the costs of
towing and a rental car. See "Other Factors Affecting the Business."
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DISTRIBUTION
Wynn Oil's car care products are sold in the United States and in
approximately 100 foreign countries. See "Foreign Operations."
Wynn Oil distributes its products through a wide range of distribution
channels. Domestically, Wynn Oil distributes its products primarily through
independent distributors, sales representatives and warehouse distributors, and
also through chain stores. Wynn Oil also uses internal sales management in the
sale and distribution of its products. In addition, Wynn Oil distributes the
Wynn's Product Warranty program through new and used car dealers and a few auto
auctions. Wynn Oil also markets the Wynn's Product Warranty program in the
United States and Canada through cooperative arrangements with national and
regional automobile finance companies. In recent years, these automobile
finance companies have played an increasingly greater role in the marketing of
the Wynn's Product Warranty program. No assurance can be given that such
finance companies will continue to market the Wynn's Product Warranty program.
Foreign sales of Wynn Oil products are made principally through wholly-owned
subsidiaries, which sell primarily through independent distributors, warehouse
distributors or manufacturers' representative organizations, with a direct sales
force in France and the Netherlands. Wynn Oil also engages in direct export
sales from the U.S. to independent distributors in Asia and Latin America, and
from Belgium to independent distributors in Scandinavia, Europe, North Africa,
the Middle East and former republics of the USSR. See "Other Factors Affecting
the Business."
PRODUCTION
Wynn Oil has manufacturing facilities in California and Belgium. Other
foreign subsidiaries either purchase products directly from the manufacturing
facilities in the United States or Belgium or have the products manufactured
locally by outside contract suppliers according to Wynn Oil's specifications
and formulae. Wynn Oil periodically reviews its production and sourcing
locations in light of fluctuating foreign currency rates.
Wynn Oil utilizes a large number of chemicals in the production of its
various specialty chemical products. Primary raw materials necessary for the
production of these products, as well as the finished products, generally
have been available from several sources. An adequate supply of materials
was available in 1996 and is expected to continue to be available for the
foreseeable future.
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AUTOMOTIVE AND INDUSTRIAL COMPONENTS
The Automotive and Industrial Components Division consists of
Wynn's-Precision, Inc. ("Precision"), and Robert Skeels & Company ("Skeels").
The Automotive and Industrial Components Division also consisted of Wynn's
Climate Systems prior to the sale of the principal operating assets of Wynn's
Climate Systems in May 1996. During 1996, sales from continuing operations
of the Automotive and Industrial Components Division were $140,513,000, or
49% of the Company's total net sales, as compared with $130,411,000 and 50%
in 1995. The operating profit from continuing operations of the division in
1996 was $23,124,000, or 60% of the Company's total operating profit, as
compared with $21,828,000 and 65% in 1995. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business
Segment and Geographical Information" on pages 13 through 17 and 29 through
31, respectively, of the 1996 Annual Report, which are hereby incorporated by
reference. See also "Other Factors Affecting the Business."
WYNN'S-PRECISION, INC.
(O-RINGS, SEALS AND OTHER MOLDED ELASTOMERIC AND THERMOPLASTIC POLYMER PRODUCTS)
PRODUCTS
Precision and its affiliated companies design, manufacture and market a
variety of static and dynamic sealing products. The principal products of
Precision are O-rings, composite gaskets, engineered seals, and convoluted
boots and seals that are reinforced with plastic, metal and fabric. These
products are made from elastomeric and thermoplastic polymers. The products
are used for a variety of sealing applications that include engines,
transmissions, steering pumps and assemblies, fuel handling, suspension/brake
systems, refrigeration and electronics. Precision's primary customers are
manufacturers of automobiles, trucks, off-highway vehicles, fluid handling
equipment, aircraft/aerospace components, and the military.
DISTRIBUTION
Precision sells its products primarily through a direct sales force to
original equipment manufacturer ("OEM") customers. Precision also markets
its products throughout the United States through independent distributors
and through Company-operated regional service centers located in California,
Illinois, Indiana, Kansas, Michigan, Minnesota, New York, North Carolina,
Ohio, Pennsylvania, Texas and Wisconsin. Precision's Canadian operation
distributes products principally through a direct sales force to OEM
customers, through independent distributors and through Precision-operated
service centers in Canada and England.
PRODUCTION
Precision's manufacturing facilities are located in Arizona, Kentucky,
Tennessee, Texas, Virginia and Ontario, Canada. Precision's administrative
headquarters are located at the site of its main manufacturing facility in
Lebanon, Tennessee. Also located in Lebanon, Tennessee are Precision's own
tool production facility and a facility dedicated exclusively to injection
molding. Over the past several years, Precision has made significant
investments in modern computerized production equipment and
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facilities. In 1996, Precision continued to invest in new production
equipment, which expanded production capacity primarily at Precision's
Lebanon, Tennessee and Virginia facilities. In 1996, Precision purchased from
Lawson Mardon Wheaton Inc. the operating assets of its automotive plastics
business located in Springfield, Kentucky. As a result of the transaction,
Precision acquired a 76,375 square foot manufacturing facility and equipment
dedicated to injection molding, injection blow molding and extrusion blow
molding.
The principal raw materials used by Precision are elastomeric and
thermoplastic polymers. These raw materials generally have been available from
numerous sources in sufficient quantities to meet Precision's requirements.
Adequate supplies of raw materials were available in 1996 and are expected to
continue to be available in 1997.
ROBERT SKEELS & COMPANY
(BUILDERS HARDWARE)
Robert Skeels & Company ("Skeels") is a wholesale distributor of builders
hardware products, including lock sets and locksmith supplies.
Skeels' main facility is located in Compton, California. In addition,
Skeels has a leased satellite sales facility located in Fullerton, California.
Skeels supplies approximately 35,000 items to retail hardware, locksmith
and lumberyard outlets in southern California, Arizona, and Nevada. Skeels also
sells directly to large institutional customers. Most of Skeels' sales are
derived from replacement items used by industry, institutions and in-home
remodeling and repair.
Skeels has been a distributor of Schlage lock products since 1931. Skeels
also distributes other well-known brands such as Lawrence, Kwikset and Master.
Skeels' distributorship arrangements generally are cancelable by the
manufacturers without cause.
WYNN'S CLIMATE SYSTEMS, INC.
(AUTOMOTIVE AIR CONDITIONING SYSTEMS AND COMPONENTS)
Prior to the sale of its principal operating assets in May 1996, Wynn's
Climate Systems designed, manufactured and marketed automotive air
conditioning systems and components for both automotive OEMs and the
automotive aftermarket. Wynn's Climate Systems also operated installation
centers in Arizona, California, Colorado and North Carolina that installed
air conditioners and accessories for automobile dealers and retail customers.
Revenues from discontinued operations with respect to Wynn's Climate Systems
for the period January 1 to May 23, 1996 were $20,353,000.
Wynn's Climate Systems sold its air conditioning components to OEM
customers and distributors. It sold its air conditioning systems to OEM
customers and their distributors and dealers, and to distributors in the
automotive aftermarket. In addition, through its installation centers, Wynn's
Climate Systems sold air conditioning systems and accessories to automobile
dealers and retail customers.
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Wynn's Climate Systems manufactured its products in its 185,000 square
foot facility located in Fort Worth, Texas. Wynn's Climate Systems manufactured
many of the components that it used in the production of its air conditioning
systems. Outside vendors supplied certain finished components such as
compressors, accumulators and receiver/dryers.
OTHER FACTORS AFFECTING THE BUSINESS
COMPETITION
All phases of the Company's business have been and remain highly
competitive. The Company's products and services compete with those of numerous
companies, some of which have financial resources greater than those of the
Company. Sales by the Automotive and Industrial Components Division are in part
related to the sales of vehicles by its OEM customers.
Precision has a large number of competitors in the market for static and
dynamic sealing products, some of which competitors are substantially larger
than Precision. The markets in which Precision competes are also sensitive to
changes in price. Requests for price reductions are not uncommon. Precision
attempts to work with its customers to identify ways to lower costs and prices.
Precision focuses on high technology, high quality sealing devices and has made
significant investments in advanced equipment and other means to raise
productivity. In 1996, Precision invested approximately $7.5 million in new
production equipment, which expanded its production capacity primarily at its
Lebanon, Tennessee and Virginia facilities. Also in 1996, Precision acquired a
manufacturing facility and related equipment located in Springfield, Kentucky.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages 13 through 17 of the 1996 Annual Report, which is hereby
incorporated by reference. Precision's major focus is to be the low cost
producer of superior quality products within its industry. Precision believes
it must expand into additional areas of sealing technology in order to continue
to be an effective competitor.
Competition with respect to Wynn Oil's specialty chemical and equipment
products consists principally of other automotive aftermarket chemical and
industrial fluid companies. Some major oil companies also market their own
additive products through retail service stations, independent dealers and
garages. Certain national retailers and car manufacturers market private label
brands of specialty chemical products. Wynn Oil's DU-ALL-Registered Trademark-
antifreeze recycling equipment and chemicals compete against other antifreeze
recycling processes, some of which also have received OEM approval. Similarly,
Wynn Oil's TRANSERVE- transmission fluid flush and fill equipment and chemicals
compete against other transmission flush equipment. The Wynn's Product Warranty
program competes with programs offered by other companies that feature lubricant
kits backed by product warranties. The Wynn's Product Warranty program also
competes with service contract and extended warranty programs offered by service
contract providers and insurance companies. The principal methods of competition
vary by geographic locale and by the relative market share held by the Company
compared to other competitors.
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Skeels continues to face intense price competition from numerous
cash-and-carry discount retailers. Skeels also has observed some manufacturers
selling directly to retailers to increase volume.
KEY CUSTOMERS
Sales to General Motors constituted approximately 10.1% of the total net
sales of the Company in 1996. No other customer represented more than 10% of
total net sales of the Company in 1996.
GOVERNMENT REGULATIONS
The number of governmental rules and regulations affecting the Company's
business and products continues to increase.
Wynn Oil markets the Wynn's Product Warranty program in approximately
forty-four states in the U.S. and also in Canada. Questions have been raised by
certain state and Canadian provincial regulators as to whether the product
warranty that accompanies the kit is in the nature of insurance or a regulated
service contract. Wynn Oil attempts to resolve these questions to the
satisfaction of each such regulator. At times, it has elected to withdraw the
Wynn's Product Warranty program from certain states. No assurance can be given
that governmental regulations will not significantly affect the marketing of the
Wynn's Product Warranty in the United States or other countries in the future.
Over the past few years, sales of the Wynn's Product Warranty program have
become an increasingly important element of Wynn Oil's domestic business.
ENVIRONMENTAL MATTERS
The Company is involved in certain environmental proceedings and potential
proceedings principally arising out of the past or present use of various
substances which have been or may be deemed to be hazardous. At December 31,
1996, the Company had recorded consolidated accrued reserves of approximately
$5.8 million relating to environmental matters. In establishing such reserves,
the Company evaluates to the extent known for each matter the nature and extent
of the underlying contamination, the estimated cost of the likely remedy, the
number and financial strength of other potentially responsible parties, and the
evidence against the various potentially responsible parties. During this
evaluation process, the Company makes its best estimate of its likely exposure
with respect to each matter based on information known to the Company at that
time. Such estimates may involve a range of exposures for each matter. The
Company provides aggregate reserves for no less than the minimum amount of the
aggregate range of outcomes established by the Company.
The Company lacks sufficient information at this time to provide an
estimate of its "reasonably possible" (as such term is defined in Statement of
Financial Accounting Standard No. 5) potential liability from all environmental
matters. In establishing reserves for environmental matters, the Company
assumes that it has appropriately evaluated key factors, such as expected remedy
costs, the likely degree of responsibility and ability to pay of other
potentially responsible parties, and the Company's probable allocable share. It
is reasonably possible that regulatory or technical developments or subsequently
developed information could cause the Company to reevaluate its present range of
outcomes and to record additional liabilities for existing environmental
matters. However, based upon
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information presently known to the Company, the Company believes that any
such additional liabilities should not materially affect the Company's
consolidated financial position, annual results of operations or cash flow.
See Note 11 of "Notes to Consolidated Financial Statements" on page 27 of the
1996 Annual Report, which is hereby incorporated by reference.
All potentially significant environmental matters presently known to the
Company are described below.
(a) In July 1990, Wynn Oil received a general notice letter from the
United States Environmental Protection Agency (the "EPA") stating that it
may be a potentially responsible party ("PRP") with respect to the San
Gabriel Valley, California Superfund Sites regional groundwater problem.
In March 1994, the EPA issued its Record of Decision ("ROD") with respect
to the Baldwin Park Operable Unit ("BPOU") of the San Gabriel Valley
Superfund Sites. Wynn Oil's Azusa facility (the "Azusa Facility") is
located within the BPOU. In the ROD, the EPA selected an interim remedial
action to treat the contaminated groundwater (the "Interim Remedial
Action") for the BPOU that is estimated to cost $47 million in capital and
non-recurring costs and $4 to $5 million in annual operating costs. Since
January 1995, the EPA has issued "pre-Special Notice" letters to eighteen
entities, including Wynn Oil, with respect to the BPOU. The EPA has
indicated that it considers Wynn Oil to be one of the four largest
contributors to the regional groundwater problem in the BPOU. Wynn Oil
disagrees with the views expressed by the EPA.
Wynn Oil has joined the BPOU Steering Committee (the "Steering
Committee") which is working toward the development of a "Consensus Plan."
In general, the Consensus Plan is a cooperative effort among the Steering
Committee members, certain water supply entities and the Federal Bureau of
Reclamation to integrate the Interim Remedial Action with a water supply
project. Under this approach, federal funding would be available for 25%
of the project's capital costs and revenues from the sale of the treated
water would help defray the project's annual operating costs. If agreement
is reached among these entities, the Steering Committee's costs of
implementing the Interim Remedial Action reportedly could be reduced to
approximately $35 to $40 million. This amount is based on the assumption
that the Steering Committee members would pay minimal past costs of the EPA
and that the treated water would not be subject to supplemental nitrate
removal. However, no assurance can be given that such assumptions will
prove to be correct or that the Consensus Plan will be implemented. In
furtherance of the Consensus Plan, the Steering Committee has already
funded certain pre-design costs and other costs on an interim basis subject
to reallocation among all of the PRPs which ultimately share the costs of
implementing the Interim Remedial Action.
The Steering Committee has begun the process of allocating among its
members the cost for implementing the Consensus Plan. There is no
assurance that a negotiated allocation of responsibility will be reached.
Wynn Oil's ultimate share of the total remedial costs cannot be estimated
with certainty at this time. In establishing appropriate reserves for this
matter, the Company has assumed that the Consensus Plan will be adopted and
that the total Steering Committee costs of implementing the Consensus Plan
(including the Interim Remedial Action
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and the related water supply project) plus the Steering Committee's share
of EPA's past costs will be in the range of $35 to $40 million.
(b) The California Regional Water Quality Control Board-Los Angeles
Region (the "RWQCB") sent letters to Wynn Oil and certain other facilities
in the general area asking them to submit remedial action plans for vadose
zone remediation at their respective facilities. In December 1995, Wynn
Oil's consultants responded to the RWQCB stating that such remediation was
neither warranted nor cost effective at the Azusa Facility. In December
1996, Wynn Oil received a letter from the RWQCB stating that the RWQCB had
completed a preliminary review of the December 1995 response from Wynn
Oil's consultants and that the RWQCB would be responding shortly. The
letter stated that the RWQCB was considering a coordinated regional
directive regarding the subsurface soil cleanup in the BPOU. Wynn Oil may
at some later date elect or be required to take specific remedial actions
with respect to soils conditions at the Azusa Facility.
(c) In February 1995, the owner (the "Property Owner") of certain
real property (the "Site") formerly leased by Alkid Corporation ("Alkid"),
an inactive subsidiary of the Company, filed a lawsuit in federal court
against Alkid, Wynn's International, Inc. and Wynn Oil (collectively the
"Wynn's Defendants") and another former lessee and its principal. The
complaint alleges that the defendants stored solid and hazardous wastes at
the Site and that the storage devices for the wastes leaked, causing
contamination of the soils and groundwater. The complaint seeks relief
under CERCLA, the Resource Conservation Recovery Act of 1976 and common
law, including an unspecified amount of damages and an injunction to compel
the defendants to clean up the Site. After the Wynn's Defendants were
served with the lawsuit in June 1995, the parties filed various crossclaims
and counterclaims against each other. Subsequent to the filing of the
responsive pleadings, the Property Owner and the Wynn's Defendants agreed
to fund a joint investigation of the Site with each paying one-half of the
cost. After this investigation was completed, all parties to the
litigation agreed to fund an additional investigation of the Site with each
paying one-third of the cost. During the pendency of these investigations,
the litigation, including all discovery, has been stayed. After completion
of the current investigation, the parties expect to hold a joint status
conference with the trial judge. The Company does not have sufficient
information to estimate the cost of cleanup at the Site.
(d) In January 1991, Wynn's Climate Systems received a letter from
the Texas Natural Resource Conservation Commission (the "TNRCC") alleging
that soil adjacent to one of its leased manufacturing facilities was
contaminated with hazardous substances. The TNRCC directed Wynn's Climate
Systems to determine the extent of such contamination and then take
appropriate remedial measures. Wynn's Climate Systems retained
environmental consultants to conduct soil sampling and otherwise comply
with the directive of the TNRCC. Performance of this work was completed in
late 1991 and the consultants' report was submitted to the TNRCC in
February 1992. In 1994, Wynn's Climate Systems received a request from the
TNRCC for additional information. Wynn's Climate Systems furnished the
requested information to the TNRCC and then voluntarily conducted
additional investigation activities at this facility. Wynn's Climate
Systems' lease of this facility expired in December 1994. Due to a dispute
with the property owner following expiration of the lease, Wynn's Climate
Systems was unable to
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perform any additional work at the site in 1995 or early 1996. In April
1996, the property owner notified Wynn's Climate Systems that it would
grant access to Wynn's Climate Systems for further investigation of the
site. Wynn's Climate Systems has submitted a report to the TNRCC
recommending a remedial action plan for the site and is awaiting a response.
(e) Wynn's Climate Systems is one of approximately 100 hazardous
waste generators that have been identified as potentially responsible
parties for the Chemical Recycling, Inc. ("CRI") site in Wylie, Texas (the
"CRI Site"). A PRP Steering Committee (the "CRI Committee") was formed to
negotiate with the EPA on behalf of its members an agreement to take
remedial measures voluntarily at the CRI Site. Approximately 85 PRPs,
including Wynn's Climate Systems, have agreed to participate in the CRI
Committee and have signed Consent Agreements with the EPA with respect to
the CRI Site. Remediation efforts have begun at the CRI Site under the
guidance of the CRI Committee. No significant developments occurred in
1996. As of March 1997, Wynn's Climate Systems' proportionate share of the
total volume of waste contributed to the CRI Site by CRI Committee members
was approximately two-tenths of one percent (0.2%).
The foregoing "Environmental Matters" section and Note 11 of "Notes to
Consolidated Financial Statements" on page 27 of the 1996 Annual Report (which
is incorporated by reference herein) contain various "forward looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended,
which represent the Company's expectations or beliefs concerning future events,
including statements regarding estimates of the Company's liabilities associated
with identified environmental matters and the likelihood that any liability in
excess of reserves for such matters will not materially affect the Company's
financial position or annual results of operations or cash flows. 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, without limitation, the following: (i) the
actual nature and extent of the contamination, (ii) the remedial action
selected, (iii) the cleanup level required, (iv) changes in regulatory
requirements, (v) with respect to the San Gabriel Valley Superfund Sites, the
Steering Committee costs of implementing the Interim Remedial Action and the
water supply project and the amount of EPA past costs required to be paid by the
Steering Committee members, (vi) the ability of other potentially responsible
parties, if any, to pay their respective shares, and (vii) any insurance
recoveries. Results actually achieved thus may differ materially from expected
results included in these and any other forward looking statements contained
herein.
FOREIGN CURRENCY FLUCTUATIONS
In 1996, the United States dollar generally increased in value compared to
1995 in the currencies of most countries in which the Company does business.
This increase in the value of the U.S. dollar caused aggregate foreign sales and
operating profit to be translated into lower dollar values than what would have
been reported if exchange rates had remained the same as in 1995. In 1996, the
Equity Adjustment from Foreign Currency Translation account on the Consolidated
Balance Sheet decreased by $815,000, which caused a corresponding decrease in
Total Stockholders' Equity. See "Foreign Operations."
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PATENTS AND TRADEMARKS
The Company holds a number of patents and trademarks which are used in the
operation of its businesses. In 1989, Wynn Oil filed a lawsuit in the federal
district court in Detroit, Michigan against another company and its principal
stockholder for infringement of Wynn Oil's X-TEND-Registered Trademark-
trademark. In 1994, the court awarded Wynn Oil approximately $3.2 million in
damages and attorneys' fees. Subsequently, the defendants filed a timely appeal
to the United States Court of Appeals for the Sixth Circuit, but did not file a
bond to stay execution of the judgment. Between May and December 1994, Wynn Oil
sought out assets of the defendants to satisfy the judgment. Prior to Wynn Oil
executing upon the defendants' assets, the defendants filed bankruptcy petitions
in late 1994 in Florida. The bankruptcy filings resulted in an automatic stay
of all pending collection efforts. In July 1995, the Court of Appeals upheld
the District Court's finding of liability, but held that the District Court
erred in the calculation of certain portions of the damages award and remanded
the case to the District Court for a final determination of the damage award.
On remand, the District Court awarded Wynn Oil total damages and attorneys' fees
of approximately $2.4 million. The defendants did not appeal the revised
judgment of the District Court. Wynn Oil and its counsel are continuing to work
through the bankruptcy proceedings in Florida to maximize Wynn Oil's ultimate
recovery against the defendants. No portion of the judgment has been included
in the results of operations of the Company and all of the Company's costs
relating to this case have been expensed as incurred. See "Legal Proceedings."
SEASONALITY OF THE BUSINESS
Although sales at the Company's various businesses are somewhat seasonal,
the consolidated results of operations generally do not reflect seasonality.
RESEARCH AND DEVELOPMENT
Precision maintains research and engineering facilities in Tennessee,
Virginia and Canada. Research and development is an important aspect of
Precision's business as Precision has developed and continues to develop
numerous specialized compounds to meet the specific needs of its various
customers. Precision also has technical centers in Tennessee, Virginia and
Canada to design sealing solutions, construct prototype products and to perform
comprehensive testing of materials and products. Precision maintains extensive
research, development and engineering facilities to provide outstanding service
to its customers.
Wynn Oil maintains research and product performance centers in California,
Belgium, France and South Africa. The main activities of the research staff are
the development of new specialty chemicals and other products, improvement of
existing products, including finding new applications for their use, evaluation
of competitive products and performance of quality control procedures.
11
<PAGE>
FOREIGN OPERATIONS
The following table shows sales to foreign customers for the years 1996,
1995 and 1994:
<TABLE>
1996 1995 1994
------------ ------------ -----------
<S> <C> <C> <C>
Total Sales Outside the United States: $113,609,000 $101,389,000 $90,178,000
Percent of Net Sales 39.4% 38.6% 38.4%
Sales by Foreign Subsidiaries $ 93,949,000 $ 91,946,000 $81,739,000
Percent of Net Sales 32.6% 35.0% 34.8%
Export Sales by Domestic Subsidiaries $ 19,660,000 $ 9,443,000 $ 8,439,000
Percent of Net Sales 6.8% 3.6% 3.6%
</TABLE>
Consolidated operating results are reported in United States dollars.
Because the Company's foreign subsidiaries conduct operations in the currencies
of the countries in which they are based, all financial statements of the
foreign subsidiaries must be translated into United States dollars. As the
value of the United States dollar increases or decreases relative to these
foreign currencies, the United States dollar value of items on the financial
statements of the foreign subsidiaries is reduced or increased, respectively.
Consequently, changes in dollar sales of the foreign subsidiaries from year to
year are not necessarily indicative of changes in actual sales recorded in local
currency. See Note 3 and Note 14 of "Notes to Consolidated Financial
Statements" on page 24 and 29 through 31, respectively, of the 1996 Annual
Report, which are hereby incorporated by reference.
The value of any foreign currency relative to the United States dollar is
affected by a variety of factors. It is exceedingly difficult to predict what
such value may be at any time in the future. Consequently, the ability of the
Company to control the impact of foreign currency fluctuations is limited.
A material portion of the Company's business is conducted outside the
United States. Consequently, the Company's ability to continue such operations
or maintain their profitability is to some extent subject to control and
regulation by the United States government and foreign governments.
EMPLOYEES
At December 31, 1996, the Company had 1,962 employees.
A majority of the production and maintenance employees at the Lebanon,
Tennessee plant of Precision are represented by a local lodge of the
International Association of Machinists and Aerospace Workers. The collective
bargaining agreement for this facility will expire in April 1998.
The production and maintenance employees at the Orillia, Ontario, Canada
plant of Precision are represented by a local unit of the Amalgamated
Steelworkers of America. The collective bargaining agreement for the unit will
expire in January 2000.
12
<PAGE>
A majority of the production and maintenance employees at the Lynchburg,
Virginia plant of Dynamic Seals, Inc., an affiliate of Precision, are
represented by a local of the International Chemical Workers Union. The
collective bargaining agreement for this facility expires in February 1999.
A majority of the production and maintenance employees at the Springfield,
Kentucky plant of Precision are represented by a local unit of the International
United Paperworkers Union. Precision did not assume the collective bargaining
agreement for this facility when Precision acquired the plant in 1996.
Precision expects to enter into negotiations with the union in 1997 for a new
collective bargaining agreement.
The Company considers its relations with its employees to be good.
EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------
The executive officers of the Company, who are appointed annually, are as
follows:
<TABLE>
Executive
Officer Since Age
--------------- -----
<S> <C> <C> <C>
James Carroll Chairman of the Board and Chief 1988 67
Executive Officer
John W. Huber President and Chief Operating Officer 1996 53
Seymour A. Schlosser Vice President-Finance and Chief 1989 51
Financial Officer
Gregg M. Gibbons Vice President-Corporate Affairs, 1986 44
General Counsel and Secretary
</TABLE>
The principal occupations of Messrs. Carroll, Schlosser and Gibbons for
the past five years have been their current respective positions with the
Company. Mr. Huber was named President and Chief Operating Officer of the
Company in December 1996. For the five years immediately preceding his
appointment as President and Chief Operating Officer of the Company, Mr. Huber
was President and Chief Executive Officer of Wynn's-Precision, Inc., a wholly-
owned subsidiary of the Company. There is no arrangement or understanding
between any executive officer and any other person pursuant to which he was
selected as an officer. There is no family relationship between any executive
officers of the Company.
13
<PAGE>
ITEM 2. PROPERTIES
The following is a summary description of the Company's facilities, all of
which the Company believes to be of adequate construction, as of March 14, 1997:
<TABLE>
Square If Lease,
Held in Fee Footage Year of
Location or by Lease (Approximate) Termination Present Use
-------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
WYNN'S INTERNATIONAL, INC.
Orange, California Lease 6,894 1998 Administrative
AUTOMOTIVE AND INDUSTRIAL
COMPONENTS:
WYNN'S-PRECISION, INC.
Domestic
--------
Lebanon, Tennessee Fee 140,000 -- Manufacturing,
Warehouse,
Administrative
Lebanon, Tennessee Fee 78,000 -- Manufacturing
Lebanon, Tennessee Fee 35,000 -- Manufacturing
Livingston, Tennessee Fee 33,000 -- Manufacturing,
Warehouse
Tempe, Arizona Fee 32,572 -- Manufacturing,
Warehouse
Springfield, Kentucky Fee 76,375 -- Manufacturing
Rancho Cucamonga, California Lease 2,880 1999 Warehouse
Elgin, Illinois Lease 4,539 1998 Warehouse
Peoria, Illinois Lease 10,000 2000 Warehouse
Indianapolis, Indiana Lease 1,800 2001 Warehouse
Lenexa, Kansas Lease 2,089 1997 Warehouse
Farmington Hills, Michigan Lease 1,963 1998 Administrative
Wyoming, Michigan Lease 2,000 1997 Warehouse
Golden Valley, Minnesota Lease 3,800 1999 Warehouse
</TABLE>
14
<PAGE>
<TABLE>
Square If Lease,
Held in Fee Footage Year of
Location or by Lease (Approximate) Termination Present Use
-------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
West Seneca, New York Lease 2,679 2000 Warehouse
Charlotte, North Carolina Lease 3,675 1999 Warehouse
Dayton, Ohio Lease 6,193 1998 Warehouse
Bensalem, Pennsylvania Lease 2,326 1998 Warehouse
Fort Worth, Texas Lease 3,600 1998 Warehouse
Milwaukee, Wisconsin Lease 2,700 1999 Warehouse
Foreign
-------
Orillia, Ontario, Canada Fee 48,000 -- Manufacturing,
Warehouse,
Administrative
Concord, Ontario, Canada Lease 3,455 1999 Warehouse
Edmonton, Alberta, Canada Lease 2,700 1999 Warehouse
Calgary, Alberta, Canada Lease 1,600 1998 Warehouse
Boucherville, Quebec, Canada Lease 3,403 1999 Warehouse
Aldershot, England Lease 2,300 Month-to- Warehouse,
Month Administrative
DYNAMIC SEALS, INC.
Lynchburg, Virginia Fee 101,000 -- Manufacturing,
Warehouse,
Administrative
Houston, Texas Lease 14,000 1997 Manufacturing,
Warehouse,
Administrative
Houston, Texas Lease 14,000 1997 Warehouse,
Administrative
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Square If Lease,
Held in Fee Footage Year of
Location or by Lease (Approximate) Termination Present Use
-------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
ROBERT SKEELS & COMPANY
Compton, California Fee 59,019 -- Warehouse,
Administrative
Fullerton, California Lease 1,600 1997 Warehouse,
Administrative
SPECIALTY CHEMICALS:
WYNN OIL COMPANY
Domestic
--------
Azusa, California Fee 122,630 -- Manufacturing,
Warehouse,
Administrative
Foreign
-------
Frenchs Forest, Lease 24,224 2000 Warehouse,
New South Wales, Australia Administrative
Carrington, New South Wales, Lease 13,175 1999 Warehouse,
Australia Administrative
St. Niklaas, Belgium Fee 82,600 -- Manufacturing,
Warehouse,
Administrative
Mississauga, Ontario, Canada Lease 32,798 2001 Warehouse,
Administrative
Mississauga, Ontario, Canada Lease 2,536 1997 Service Center
Reading, Berkshire, England Lease 3,154 2004 Administrative
Strasbourg, France Lease 557 1997 Administrative
Paris, France Lease 8,853 1997 Administrative
Cestas, France Lease 18,669 1999 Warehouse,
Administrative
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Square If Lease,
Held in Fee Footage Year of
Location or by Lease (Approximate) Termination Present Use
-------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
Lyon, France Lease 465 1998 Administrative
Abbeville, France Lease 929 1998 Administrative
Thiers, France Lease 465 1997 Administrative
Toulouse, France Lease 485 1997 Administrative
Celle, Germany Lease 7,209 2002 Warehouse,
Administrative
Mexico City, Mexico Lease 2,500 1997 Warehouse,
Administrative
Wynberg, Sandton, South Africa Fee 32,280 -- Warehouse,
Administrative
Edenvale, Transvaal, South Africa Fee 10,921 -- Leased to Third Party
Caracas, Venezuela Lease 1,615 Month-to- Administrative
Month
</TABLE>
The Company believes that all of its operating properties are adequately
maintained, fully utilized and suitable for the purposes for which they are
used. With respect to those leases expiring in 1997 and 1998, the Company
believes it will be able to renew such leases on acceptable terms or find
suitable alternate facilities.
ITEM 3. LEGAL PROCEEDINGS
Various claims and actions, considered normal to Registrant's business,
have been asserted and are pending against Registrant and its subsidiaries.
Registrant believes that such claims and actions should not have any material
adverse effect upon the consolidated results of operations, cash flows or the
financial position of Registrant based on information presently known to
Registrant. See also "Environmental Matters" and Note 11 of "Notes to
Consolidated Financial Statements" on page 27 of the 1996 Annual Report,
which is hereby incorporated by reference.
In 1994, the United States District Court for the Eastern District of
Michigan, Southern Division, in the case of WYNN OIL COMPANY V. AMERICAN WAY
SERVICE CORPORATION AND THOMAS A. WARMUS, Case No. 89-CV-71777-DT, awarded
Wynn Oil approximately $3.2 million in damages and attorneys' fees in an
action brought by Wynn Oil in 1989 asserting trademark infringement by the
defendants. Subsequently, the defendants filed a timely appeal to the United
States Court of Appeals for the Sixth Circuit, but did not file a bond to
stay execution of the judgment. Between May and December 1994, Wynn Oil
sought out assets of the defendants to satisfy the judgment. Prior to Wynn
Oil executing upon
17
<PAGE>
the defendants' assets, the defendants filed bankruptcy petitions in late
1994 in Florida. The bankruptcy filings resulted in an automatic stay of all
pending collection efforts. In July 1995, the Court of Appeals upheld the
District Court's finding of liability, but held that the District Court erred
in the calculation of certain portions of the damages award and remanded the
case to the District Court for a final determination of the damage award. On
remand, the District Court awarded Wynn Oil total damages and attorneys' fees
of approximately $2.4 million. The defendants did not appeal the revised
judgment of the District Court. Wynn Oil and its counsel are continuing to
work through the bankruptcy proceedings in Florida to maximize Wynn Oil's
ultimate recovery against the defendants. No portion of the judgment has
been included in the results of operations of Registrant and all of
Registrant's costs relating to this case have been expensed as incurred.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
fourth quarter of 1996.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The information appearing under "Common Stock Prices and Cash Dividends
Per Share: 1996-1995" on page 33 of the 1996 Annual Report and "Number of
Stockholders" and "Stock Exchange Listing" on page 33 of the 1996 Annual
Report is hereby incorporated by reference.
On February 5, 1997, the Board of Directors of Registrant declared a
cash dividend of $0.08 per share payable March 31, 1997 to stockholders of
record on March 14, 1997.
Registrant currently expects that it will continue to pay dividends in
the future, in amounts per share at least comparable to dividends paid during
the past two years.
Registrant has not sold any unregistered securities during the past
three years.
ITEM 6. SELECTED FINANCIAL DATA
Incorporated by reference from page 12 of the 1996 Annual Report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Incorporated by reference from the 1996 Annual Report, pages 13
through 17.
18
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated financial statements of Registrant at December 31, 1996 and
1995 and for each of the three years in the period ended December 31, 1996
(including unaudited supplementary data) and the report of independent
auditors thereon are incorporated by reference from the 1996 Annual Report,
pages 17 through 32.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information appearing under "Election of Directors" on pages 5 and 6
of Registrant's definitive proxy statement for the Annual Meeting of
Stockholders to be held on May 7, 1997 ("Registrant's 1997 Proxy Statement")
is hereby incorporated by reference. A list of executive officers of
Registrant is provided in Item 1 of Part I of this report.
ITEM 11. EXECUTIVE COMPENSATION
The information appearing under "Board of Directors and Committees of
the Board--Compensation of Directors" and "--Compensation Committee
Interlocks and Insider Participation," and "Executive Compensation" on pages
7 through 12 of Registrant's 1997 Proxy Statement is hereby incorporated by
reference. The Report of the Compensation Committee on pages 13 through 15
of Registrant's 1997 Proxy Statement shall not be deemed to be incorporated
by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information appearing under "Security Ownership of Certain
Beneficial Owners and Management" on pages 2 through 4 of Registrant's 1997
Proxy Statement is hereby incorporated by reference.
19
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information appearing under "Election of Directors--Certain
Relationships and Related Transactions" on page 6 of Registrant's 1997 Proxy
Statement is hereby incorporated by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) (1) See Index to Financial Statements and Financial Statement
Schedules Covered By Report of Independent Auditors.
(2) See Index to Financial Statements and Financial Statement
Schedules Covered By Report of Independent Auditors.
(3) See Index to Exhibits.
(b) On October 9, 1996, Registrant filed a report on Form 8-K/A amending
Registrant's Current Report on Form 8-K dated May 23, 1996. The Form
8-K, as amended, reports the sale of the principal operating assets of
Registrant's subsidiary, Wynn's Climate Systems, to Moog Automotive,
Inc. The report includes the unaudited pro forma consolidated
condensed financial statements representing the results of continuing
operations and the balance sheet, after giving effect to certain pro
forma adjustments related to the sale as if the sale had occurred (i)
January 1, 1996 for the statement of income for the three months ended
March 31, 1996, (ii) January 1, 1995 for the statements of income for
the years ended December 31, 1995, 1994 and 1993 and the three months
ended March 31, 1995, and (iii) March 31, 1996 for the balance sheet.
20
<PAGE>
WYNN'S INTERNATIONAL, INC.
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
SCHEDULES COVERED BY REPORT OF INDEPENDENT AUDITORS
(ITEM 14(a))
Page References
----------------------------------
Form 10-K 1996 Annual Report
--------- ------------------
Consolidated Statements of Income for
each of the three years in the period
ended December 31, 1996 ................. 18
Consolidated Balance Sheets at
December 31, 1996 and 1995 .............. 19
Consolidated Statements of Stockholders'
Equity for each of the three years in
the period ended December 31, 1996 ....... 20
Consolidated Statements of Cash Flows
for each of the three years in the
period ended December 31, 1996 .......... 21
Notes to Consolidated Financial
Statements .............................. 22 - 32
Consolidated schedule for each of the
three years in the period ended
December 31, 1996:
VIII - Valuation and Qualifying
Accounts .............................. F-2
All other schedules are omitted since the required information is not
present or is not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the consolidated
financial statements, including the notes thereto.
The consolidated financial statements listed in the above index, which
are included in the 1996 Annual Report, are hereby incorporated by reference.
With the exceptions of the pages listed in the above index and the items
referred to in Items 1, 5, 6, 7 and 8, the 1996 Annual Report is not deemed
to be filed as part of this report.
F-1
<PAGE>
WYNN'S INTERNATIONAL, INC.
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
THREE YEARS ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Allowance for
doubtful accounts
deducted from Balance at Charged to
accounts beginning costs and Deductions Other Balance at
receivable of year expenses (1) (2) end of year
- ----------------- ---------- ---------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C>
1996 $710,000 $312,000 $(256,000) $104,000 $870,000
---------- ---------- ----------- --------- -----------
1995 $884,000 $244,000 $(418,000) $ -- $710,000
---------- ---------- ----------- --------- -----------
1994 $954,000 $ 88,000 $(158,000) $ -- $884,000
---------- ---------- ----------- --------- -----------
</TABLE>
______________________
(1) Represents accounts written off against the reserve.
(2) Acquisition of business.
F-2
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below hereby authorizes each of
James Carroll, John W. Huber, Seymour A. Schlosser and Gregg M. Gibbons as
attorney-in-fact to sign on his behalf, individually and in each capacity stated
below, and to file all amendments and/or supplements to this Annual Report on
Form 10-K.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on March 25, 1997.
WYNN'S INTERNATIONAL, INC.
By JAMES CARROLL
---------------------------------------
James Carroll
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
DATE
March 25, 1997 By JAMES CARROLL
---------------------------------------
James Carroll
Chairman of the Board
Chief Executive Officer
Director
March 25, 1997 By SEYMOUR A. SCHLOSSER
---------------------------------------
Seymour A. Schlosser
Vice President-Finance
(Principal Financial and Accounting
Officer)
II-1
<PAGE>
DATE
March 25, 1997 By WESLEY E. BELLWOOD
---------------------------------------
Wesley E. Bellwood
Director/Chairman Emeritus
March 25, 1997 By BARTON BEEK
---------------------------------------
Barton Beek
Director
March 25, 1997 By JOHN D. BORIE
---------------------------------------
John D. Borie
Director
March 25, 1997 By BRYAN L. HERRMANN
---------------------------------------
Bryan L. Herrmann
Director
March 25, 1997 By ROBERT H. HOOD, JR.
---------------------------------------
Robert H. Hood, Jr.
Director
March 25, 1997 By RICHARD L. NELSON
---------------------------------------
Richard L. Nelson
Director
March 25, 1997 By JAMES D. WOODS
---------------------------------------
James D. Woods
Director
II-2
<PAGE>
WYNN'S INTERNATIONAL, INC.
INDEX TO EXHIBITS
(Item 14(a))
Exhibit
Number Description
- ------ -----------
3.1 Certificate of Incorporation, as amended, of Registrant
3.2 Certificate of Designations of Junior Participating Preferred Stock
(incorporated herein by reference to Exhibit 4.2 to Registrant's Report
on Form 8-K dated March 3, 1989)
3.3 By-Laws, as amended, of Registrant
4.1 Shareholder Rights Agreement, dated as of March 3, 1989, between
Registrant and First Interstate Bank of California, as Rights Agent
(incorporated by reference to Exhibit 4.1 to Registrant's Report on
Form 8-K dated March 3, 1989)
4.2 Amendment No. 1 to Shareholder Rights Agreement, dated June 11, 1990
(incorporated by reference to Exhibit 28.2 to Registrant's Report on
Form 8-K dated June 11, 1990)
10.1 Employment Agreement, dated February 15, 1995, between Registrant and
James Carroll (incorporated by reference to Exhibit 10.1 to
Registrant's Report on Form 10-K for the fiscal year ended
December 31, 1994)
10.2 Employment Agreement, dated December 11, 1996, between Registrant and
John W. Huber
10.3 Employment Agreement, dated January 1, 1997,between Registrant and
Seymour A. Schlosser
10.4 Employment Agreement, dated January 1, 1997, between Registrant and
Gregg M. Gibbons
10.5 Wynn's International, Inc. Amended and Restated 1980 Stock Option and
Appreciation Rights Plan (incorporated herein by reference to Exhibit
4.1 to Registrant's Registration Statement on Form S-8, Registration
No. 2-68157)
<PAGE>
Exhibit
Number Description
- ------ -----------
10.6 Wynn's International, Inc. Amended and Restated 1982 Incentive Stock
Option Plan (incorporated herein by reference to Exhibit 4.2 to
Registrant's Registration Statement on Form S-8, Registration
No. 2-68157)
10.7 Wynn's International, Inc. Stock-Based Incentive Award Plan
(incorporated herein by reference to Exhibit 28.1 to Registrant's
Registration Statement on Form S-8, Registration No. 33-30296 and
Exhibit 28.2 to Registrant's Registration Statement on Form S-8,
Registration No. 33-64090)
10.8 Amendment 1996-1 to Wynn's International, Inc. Stock-Based Incentive
Award Plan
10.9 Wynn's International, Inc. 1997 Corporate Management Incentive Plan
10.10 Executive Deferred Compensation Agreement, dated February 18, 1997,
between Registrant and James Carroll
10.11 Form of Indemnification Agreement between Registrant and a director
of Registrant (incorporated herein by reference to Exhibit 10.11
to Registrant's Report on Form 10-K for the fiscal year ended
December 31, 1993)
10.12 Form of Indemnification Agreement between Registrant and an officer of
Registrant
10.13 Wynn's International, Inc. Non-Employee Directors' Stock Option Plan
(incorporated herein by reference to Exhibit C of Registrant's Definitive
Proxy Statement relating to its Annual Meeting of Stockholders held on
May 11, 1994, filed with the Commission on March 25, 1994)
10.14 Amendment 1996-1 to Wynn's International, Inc. Non-Employee Directors'
Stock Option Plan
10.15 Asset Purchase Agreement, dated as of May 23, 1996,by and between Moog
Automotive, Inc. and Wynn's Climate Systems, Inc., Wynn's Climate
Equipment Company and Wynn's (UK) Limited (incorporated herein by
reference to Exhibit 2.1 to Registrant's Current Report on Form 8-K
dated May 23, 1996)
11 Computation of Net Income Per Common Share - Primary and Assuming Full
Dilution
<PAGE>
Exhibit
Number Description
- ------ -----------
13 Portions of Registrant's Annual Report to Stockholders for the fiscal
year ended December 31, 1996 that have been expressly incorporated by
reference as a part of this Annual Report on Form 10-K
21 Subsidiaries of Registrant
23 Consent of Independent Auditors
27 Financial Data Schedule
<PAGE>
Exhibit 3.1
CERTIFICATE OF INCORPORATION
OF
WYNN'S INTERNATIONAL, INC.
AS AMENDED THROUGH MARCH 13, 1997
FIRST: The name of the corporation is
WYNN'S INTERNATIONAL, INC.
SECOND: Its registered office in the State of Delaware is located at 32
Loockerman Square, Suite L-100, Kent County, Dover, Delaware. The name and
address of its registered agent if The Corporation Trust Company, 32 Loockerman
Square, Suite L-100, Dover, Delaware.
THIRD: The nature of the business or purposes to be transacted or
promoted by the corporation is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of Delaware.
FOURTH: The corporation shall be authorized to issue two classes of
shares of stock to be designated, respectively, "Common" and "Preferred," the
total number of shares which the corporation shall have authority to issue shall
be twenty million five hundred thousand (20,500,000); the total number of shares
of Common Stock shall be twenty million (20,000,000) and the par value of each
share of Common Stock shall be one dollar ($1.00); and the total number of
shares of Preferred Stock shall be five hundred thousand (500,000) and the par
value of each share of Preferred Stock shall be one dollar ($1.00).
The Preferred Stock may be issued from time to time in one or more series.
The Board of Directors is hereby expressly vested with authority to fix by
resolution or resolutions the designations and the powers, preferences and
relative, participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, including, without limitation, the voting
powers, if any, the dividend rate, conversion rights, redemption price, or
liquidation preference, of any series of Preferred Stock, and to fix the number
of shares constituting any such series, and to increase or decrease the number
of shares of any such series (but not below the number of shares thereof then
outstanding). In case the number of shares of any such series shall be so
decreased, the shares constituting such decrease shall resume the status which
they had prior to the adoption of the resolution or resolutions originally
fixing the number of shares of such series. The number of authorized shares of
any class or classes of stock may be increased or decreased (but not below the
number of shares thereof then outstanding) by the affirmative vote of the
holders of a majority of the stock of the corporation entitled to vote.
FIFTH: In furtherance and not in limitation of the powers conferred by
law, the Board of Directors is expressly authorized to make, alter or repeal the
By-Laws of the corporation.
<PAGE>
SIXTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a
summary way of this corporation or of any creditor or stockholder thereof, or
on the application of any receiver or receivers appointed for this
corporation under the provisions of Section 201 of Title 8 of the Delaware
Code or on the application of trustees in dissolution or of any receiver or
receivers appointed for this corporation under the provisions of Section 279
of Title 8 of the Delaware Code, order a meeting of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, to be summoned in such manner as the said
court directs. If a majority in number representing three-fourths in value of
the creditors or class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, agree to any compromise
or arrangement and to any reorganization of this corporation as a consequence
of such compromise or arrangement, the said compromise or arrangement and the
said reorganization shall, if sanctioned by the court to which the said
application has been made, be binding on all the creditors or class of
creditors, and/or on all the stockholders or class of stockholders, of this
corporation, as the case may be, and also on this corporation.
SEVENTH: The corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate in any manner now or
hereafter prescribed by law, except as may be limited by paragraph TENTH; and
all rights herein conferred upon the shareholders are granted subject to this
reservation.
EIGHTH: The number of directors of the corporation shall be such number
as may be fixed from time to time by the By-Laws of the corporation. The
directors shall be classified with respect to the time for which they shall
severally hold office by dividing them into three classes, each consisting as
nearly as possible of one-third of the whole number of the Board of Directors.
All directors of the corporation shall hold office until their successors are
duly elected and qualified. The directors of the first class shall hold office
until the annual meeting of the stockholders of the corporation to be held in
1974 and until their successors are duly elected and qualified; the directors of
the second class shall hold office until the annual meeting of the stockholders
of the corporation to be held in 1975 and until their successors are duly
elected and qualified; and the directors of the third class shall hold office
until the annual meeting of stockholders of the corporation to be held in 1976
and until their successors are duly elected and qualified. At each annual
meeting of stockholders of the corporation, the successors to the directors
whose term shall expire in that year shall be elected to hold office for a term
of three (3) years, so that the term of office of one class of directors shall
expire in each year.
NINTH: In the event that it is proposed that this corporation enter into
a merger or consolidation with any other corporation and such other corporation
and/or its affiliates singly or in the aggregate own or control directly or
indirectly shares representing ten percent (10%) or more of the voting power of
this corporation, or that this corporation sell, lease or exchange substantially
all of its assets or business to or with such other corporation or any affiliate
of it, or
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that such other corporation or any affiliate of it sell, lease or exchange
substantially all of its assets or business to or with this corporation, the
affirmative vote of the holders of shares representing not less than
seventy-five percent (75%) of the voting power of this corporation shall be
required for the approval of any such proposal; provided, however, that the
foregoing shall not apply to any such merger, consolidation or sale of assets or
business which was approved by resolutions of the Board of Directors of this
corporation prior to the acquisition of the ownership or control of shares
representing at least ten percent (10%) of the voting power of this corporation
by such other corporation and/or its affiliates, nor shall it apply to any such
merger, consolidation or sale of assets or business between this corporation and
another corporation of which shares representing fifty percent (50%) or more of
the voting power is owned by this corporation. For the purposes hereof, an
"affiliate" is any person (including a corporation, partnership, trust, estate
or individual) who directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the person
specified; and "control" means the possession, directly or indirectly, of the
power to direct or cause the direction or management and policies of a person,
whether through the ownership of voting securities, by contract, or otherwise.
TENTH: The amendment of Paragraphs EIGHTH, NINTH and/or TENTH of the
Certificate of Incorporation and/or the inclusion in this Certificate of
Incorporation of a provision calling for cumulative voting shall require the
approval of the holders of shares representing at least seventy-five percent
(75%) of the voting power of this corporation.
ELEVENTH: Meetings of stockholders may be held outside the State of
Delaware, if the By-Laws so provide. The books of the corporation may be kept
(subject to any provisions of law) outside of the State of Delaware. Elections
of directors need not be by ballot unless the By-Laws of the corporation shall
so provide.
TWELFTH: The name and mailing address of the incorporator is Robert L.
Pike, 611 West Sixth Street, Los Angeles, California 90017.
THIRTEENTH: To the fullest extent permitted by the General Corporation
Laws of the State of Delaware as the same exists or may hereafter be amended, a
director of the corporation shall not be personally liable to the corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director. Any repeal or modification of this Article THIRTEENTH shall not
result in any liability for a director with respect to any action or omission
occurring prior to such repeal or modification.
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Exhibit 3.3
BY-LAWS
OF
WYNN'S INTERNATIONAL, INC.
AS AMENDED ON FEBRUARY 5, 1997
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Wilmington,
County of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other places
both within and without the State of Delaware as the board of directors may from
time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of directors
shall be held in the City of Fullerton, State of California, at such place as
may be fixed from time to time by the board of directors, or at such other place
either within or without the State of Delaware as shall be designated from time
to time by the board of directors and stated in the notice of the meeting.
Meetings of stockholders for any other purpose may be held at such time and
place, within or without the State of Delaware, as shall be stated in the notice
of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of stockholders, commencing with the year
1977, shall be held on the fourth Wednesday of April if not a legal holiday, and
if a legal holiday, then on the next secular day following, at 10:00 A.M., or at
such other date and time as shall be designated from time to time by the board
of directors and stated in the notice of the meeting, at which they shall elect
by a plurality vote by written ballot the successors to the class of directors
whose terms shall expire in that year, and transact such other business as may
properly be brought before the meeting.
Section 3. Written notice of the annual meeting stating the place, date
and hour of the meeting shall be given to each stockholder entitled to vote at
such meeting not less than ten nor more than sixty days before the date of the
meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, or cause to be prepared and made, at least
ten days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder. Such list shall be open
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to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the Certificate of
Incorporation, may be called by the President and shall be called by the
President or Secretary at the request in writing of a majority of the board of
directors.
Section 6. Written notice of a special meeting stating the place, date
and hour of the meeting and the purpose or purposes for which the meeting is
called, shall be given not less than ten nor more than sixty days before the
date of the meeting, to each stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the Certificate of
Incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which, by express provision of the statutes or
of the Certificate of Incorporation, a different vote is required, in which case
such express provision shall govern and control the decision of such question.
Section 10. Unless otherwise provided in the Certificate of
Incorporation, each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such
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stockholder, but no proxy shall be voted on after three years from its date,
unless the proxy provides for a longer period.
Section 11. Unless otherwise provided in the Certificate of
Incorporation, any action required to be taken at any annual or special meeting
of stockholders of the corporation, or any action which may be taken at any
annual or special meeting of such stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole board
shall be eight (8) and shall be classified with respect to the time for which
they shall severally hold office by dividing them into three (3) classes, Class
I and Class III each shall consist of three (3) directors and Class II shall
consist of two (2) directors. All directors of the corporation shall hold
office until their successors are duly elected and qualified. The directors of
Class I shall hold office until the annual meeting of stockholders of the
corporation to be held in 1974 and until their successors are duly elected and
qualified; the directors of Class II shall hold office until the annual meeting
of stockholders of the corporation to be held in 1975 and until their successors
are duly elected and qualified; and the directors of Class III shall hold office
until the annual meeting of stockholders of the corporation to be held in 1976
and until their successors are duly elected and qualified. In the event of any
increase or decrease in the authorized number of directors (i) each director
then serving as such shall nevertheless continue as a director of the class of
which he or she is a member until the expiration of his or her current term, or
his or her death, retirement, resignation, or removal, and (ii) the
newly-created or eliminated directorships resulting from such increase or
decrease shall be apportioned by the Board among the three classes of directors
so as to maintain the number of directorships in such classes as nearly equal as
possible. At each annual meeting of the stockholders of the corporation, the
successors to the class of directors whose terms shall expire in that year shall
be elected to hold office for a term of three (3) years, so that the term of
office of one class of directors shall expire in each year.
Section 2. Vacancies in the board of directors may be filled by a
majority of the directors then in office, though less than a quorum, or by a
sole remaining director, and any director so chosen shall hold office for the
remainder of the full term of the director whose place he has been elected to
fill and until his successor is duly elected and shall
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qualify. If there are no directors in office, then an election of directors may
be held in the manner provided by statute.
A vacancy or vacancies in the board of directors shall be deemed to exist
in case of the death, resignation or removal of any director, or if the
stockholders fail at any annual or special meeting of stockholders at which any
director or directors are elected to elect the full authorized number of
directors to be voted for at that meeting, or if there are newly created
directorships resulting from any increase in the authorized number of directors.
If, at the time of filling any vacancy, the directors then in office shall
constitute less than a majority of the whole board (as constituted immediately
prior to any such increase), the Court of Chancery may, upon application of any
stockholder or stockholders holding at least ten percent of the total number of
the shares at the time outstanding having the right to vote for such directors,
summarily order an election to be held to fill any such vacancies or newly
created directorships, or to replace the directors chosen by the directors then
in office.
Section 3. The business of the corporation shall be managed by its board
of directors which may exercise all such powers of the corporation and do all
such lawful acts and things as are not by statute or by the Certificate of
Incorporation or by these By-Laws directed or required to be exercised or done
by the stockholders. The Chairman of the board of directors shall preside at
all meetings of the stockholders and of the board of directors.
MEETING OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 5. Immediately following each annual meeting of stockholders and
at the place thereof, or at such other time and place as shall be fixed by
resolution of the board of directors prior to the annual meeting of the
stockholders, the board of directors shall hold a meeting for the purpose of
organization, election of officers, and the transaction of such other business
as they deem necessary. Notice of such meetings is hereby dispensed with. In
the event a meeting of the board of directors is not held immediately after the
annual meeting of the stockholders, or in the event the board of directors fails
to fix the time and place for such meeting, the meeting may be held at such time
and place as shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.
Section 6. Regular meetings of the board of directors may be held without
notice at such time and at such place as shall from time to time be determined
by the board.
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Section 7. Special meetings of the board may be called by the President
on two (2) days' notice to each director, either personally or by mail or by
telegram; special meetings shall be called by the President or Secretary in like
manner and on like notice on the written request of two directors.
Section 8. At all meetings of the board a majority of directors shall
constitute a quorum for the transaction of business and the act of a majority of
the directors present at any meeting at which there is a quorum shall be the act
of the board of directors, except as may be otherwise specifically provided by
statute or by the Certificate of Incorporation. If a quorum shall not be
present at any meeting of the board of directors the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 9. Unless otherwise restricted by the Certificate of
Incorporation or these By-Laws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting, if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
Section 10. Unless otherwise restricted by the Certificate of
Incorporation or these By-Laws, members of the board of directors or any
committee thereof may participate in a meeting of such board or committee by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this section shall constitute presence in
person at such meeting.
COMMITTEES OF DIRECTORS
Section 11. The board of directors may, by resolution passed by a
majority of the whole board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation. The board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. In
the absence or disqualification of a member of a committee, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not he or they constitute a quorum, may unanimously appoint another member of
the board of directors to act at the meeting in the place of any such absent or
disqualified member. Any such committee, to the extent provided in the
resolution of the board of directors, shall have and may exercise all the powers
and authority of the board of directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference to amending the Certificate of Incorporation,
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the
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stockholders a dissolution of the corporation or a revocation of a dissolution,
or amending the By-Laws of the corporation; and, unless the resolution or the
Certificate of Incorporation expressly so provide, no such committee shall have
the power or authority to declare a dividend or to authorize the issuance of
stock. Such committee or committees shall have such name or names as may be
determined from time to time by resolution adopted by the board of directors.
Section 12. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors when required.
COMPENSATION OF DIRECTORS
Section 13. Unless otherwise restricted by the Certificate of
Incorporation, the board of directors shall have the authority to fix the
compensation of directors. The directors may be paid their expenses, if any, of
attendance at each meeting of the board of directors and may be paid a fixed sum
for attendance at each meeting of the board of directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
Certificate of Incorporation or of these By-Laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the Certificate of Incorporation or of these
By-Laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board
of directors and shall be a Chairman of the Board, a President, one or more Vice
Presidents,
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a Secretary and a Treasurer. The board of directors may also choose one or more
Assistant Secretaries and Assistant Treasurers. Any number of offices may be
held by the same person, unless the Certificate of Incorporation or these
By-Laws otherwise provide.
Section 2. The board of directors at its first meeting after each annual
meeting of stockholders shall choose a Chairman of the Board, a President, one
or more Vice Presidents, a Secretary and a Treasurer.
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the
board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
THE CHAIRMAN OF THE BOARD
Section 6. The Chairman of the Board shall be the Chief Executive Officer
of the corporation, shall preside at all meetings of the stockholders and of the
board of directors and shall have general and active management of the business
of the corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
THE PRESIDENT
Section 7. Subject to the supervisory powers of the Chairman of the
Board, the President shall be the Chief Operating Officer of the corporation,
and, in the absence of the Chairman of the Board, shall preside at all meetings
of the stockholders, and at all meetings of the board of directors and perform
such other duties as may be assigned to him from time to time by the board of
directors or the By-Laws.
Section 8. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
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THE VICE PRESIDENTS
Section 9. In the absence of the President or in the event of his
inability or refusal to act, the Vice Presidents in the order determined by the
board of directors (or if there be no such determination, then in the order of
their election) shall perform the duties of the President, and when so acting,
shall have all the powers of and subject to all the restrictions upon the
President. The Vice Presidents shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARY
Section 10. The Secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
President, under whose supervision he shall be. He shall have custody of the
corporate seal of the corporation and he, or an Assistant Secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such Assistant
Secretary. The board of directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by his
signature.
Section 11. The Assistant Secretary, or if there be more than one, the
Assistant Secretaries in the order determined by the board of directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the Secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the Secretary and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 12. The Treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 13. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the President and the board of directors, at
its regular meetings, or when the board of
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directors so requires, an account of all his transactions as Treasurer and of
the financial condition of the corporation.
Section 14. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the corporation.
Section 15. The Assistant Treasurer, or if there shall be more than one,
the Assistant Treasurers in the order determined by the board of directors (or
if there be no such determination, then in the order of their election) shall,
in the absence of the Treasurer or in the event of his inability or refusal to
act, perform the duties and exercise the powers of the Treasurer and shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled to
have a certificate, signed by, or in the name of the corporation by, the
Chairman or Vice Chairman of the board of directors, or the President or a Vice
President and the Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary of the corporation, certifying the number of shares owned by
him in the corporation. If the corporation shall be authorized to issue more
than one class of stock or more than one series of any class, the powers,
designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualification,
limitations or restrictions of such preferences and/or rights shall be set forth
in full or summarized on the face or back of the certificate which the
corporation shall issue to represent such class or series of stock, provided
that, except as otherwise provided in Section 202 of the General Corporation Law
of Delaware, in lieu of the foregoing requirements, there may be set forth on
the face or back of the certificate which the corporation shall issue to
represent such class or series of stock, a statement that the corporation will
furnish without charge to each stockholder who so requests the powers,
designations, preferences and relative, participating, optional or other special
rights or each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
Section 2. Any of or all the signatures on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
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LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the board of directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen, or destroyed.
TRANSFERS OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
FIXING RECORD DATE
Section 5. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim
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to or interest in such share or shares on the part of any other person, whether
or not it shall have express or other notice thereof, except as otherwise
provided by the laws of Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation, subject
to the provisions of the Certificate of Incorporation, if any, may be declared
by the board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the Certificate of Incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meeting contingencies, or for equalizing dividends, or
for repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name of
the corporation, the year of its organization and the words "Corporate Seal,
Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
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REPRESENTATION OF SHARES OF OTHER CORPORATIONS
Section 6. The President or any Vice President and the Secretary or
Assistant Secretary of this corporation are authorized to vote, represent and
exercise on behalf of this corporation all rights incident to any and all shares
of any other corporation or corporations standing in the name of this
corporation. The authority herein granted to said officers to vote or represent
on behalf of this corporation any and all shares held by this corporation in any
other corporation or corporations may be exercised either by such officers in
person or by any person authorized so to do by proxy or power of attorney duly
executed by said officers.
INDEMNIFICATION
SECTION 7.1 POLICY. It is the policy and intention of the corporation to
provide to its officers and directors broad and comprehensive indemnification
from liability to the full extent permitted by law.
SECTION 7.2 RIGHT TO INDEMNIFICATION. Each person who was or is a party
or is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
of the corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is an alleged
action or inaction in an official capacity or in any other capacity while
serving as a director, officer, employee or agent, shall be indemnified and held
harmless by the corporation to the fullest extent permitted by the laws of
Delaware, as the same exists or may hereafter be amended, against all costs,
charges, expenses, liabilities and losses (including attorneys' fees, judgments,
fines, ERISA excise taxes or penalties and amounts paid or to be paid in
settlement) reasonably incurred or suffered by such person in connection
therewith and such indemnification shall continue as to a person who has ceased
to be a director, officer, employee or agent and shall inure to the benefit of
his or her heirs, executors and administrators; PROVIDED, HOWEVER, that except
as provided in Section 7.3 hereof, the corporation shall indemnify any such
person seeking indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) was
authorized by the Board of Directors of the corporation. The right to
indemnification conferred in this Article shall be a contract right and shall
include the right to be paid by the corporation the expenses incurred in
defending any such proceeding in advance of its final disposition; PROVIDED,
HOWEVER, that, if the Delaware General Corporation Law requires, the payment of
such expenses incurred by a director or officer in his or her capacity as a
director or officer (and not in any other capacity in which service was or is
rendered by such person while a director or officer, including, without
limitation, service to an employee benefit plan) in advance of the final
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disposition of a proceeding, shall be made only upon delivery to the corporation
of an undertaking, by or on behalf of such director or officer, to repay all
amounts so advanced if it shall ultimately be determined that such director of
officer is not entitled to be indemnified under this Article or otherwise. The
corporation may, by action of its Board of Directors, provide indemnification to
employees and agents of the corporation with the same scope and effect as the
foregoing indemnification of directors and officers.
SECTION 7.3 RIGHT OF CLAIMANT TO BRING SUIT. If a claim under this
Article is not paid in full by the corporation within thirty days after a
written claim has been received by the corporation, the claimant may at any time
thereafter bring suit against the corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be entitled
to be paid also the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required undertaking, if any, is required, has been tendered to the
corporation) that the claimant has failed to meet a standard of conduct which
makes it permissible under Delaware law for the corporation to indemnify the
claimant for the amount claimed. Neither the failure of the corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
actions that indemnification of the claimant is permissible in the
circumstances because he or she has met such standard of conduct, nor an actual
determination by the corporation (including its Board of Directors, independent
legal counsel or its stockholders) that the claimant has not met such standard
of conduct, shall be a defense to the action or create a presumption that the
claimant has failed to meet such standard of conduct.
SECTION 7.4 NON-EXCLUSIVITY OF RIGHTS. The right to indemnification and
the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Article shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
SECTION 7.5 INSURANCE. The corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
corporation would have the power to indemnify such person against such expenses,
liability or loss under Delaware law.
SECTION 7.6 EXPENSES AS A WITNESS. To the extent that any director,
officer, employee or agent of the corporation is by reason of such position, or
a position with another entity at the request of the corporation, a witness in
any action, suit or proceeding, he or she shall be indemnified against all costs
and expenses actually and reasonably incurred by him or her or on his or her
behalf in connection therewith.
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SECTION 7.7 INDEMNITY AGREEMENT. The corporation may enter into
agreements with any director, officer, employee or agent of the corporation to
the fullest extent permitted by Delaware law.
SECTION 7.8 EFFECT OF REPEAL OR MODIFICATION. Any repeal or modification
of this Section 7 shall not result in any liability for a director with respect
to any action or omission occurring prior to such repeal or modification.
ARTICLE VIII
AMENDMENTS
Section 1. These By-Laws may be altered, amended or repealed or new
by-laws may be adopted by the stockholders or by the board of directors at any
regular meeting of the stockholders or of the board of directors or at any
special meeting of the stockholders or of the board of directors if notice of
such alteration, amendment, repeal or adoption of new by-laws be contained in
the notice of such special meeting.
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Exhibit 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of
the 11th day of December, 1996, by and between WYNN'S INTERNATIONAL, INC., a
Delaware corporation with its principal offices in Orange, California
("Corporation"), and JOHN W. HUBER, an individual residing in Lebanon, Tennessee
("Executive").
W I T N E S S E T H :
WHEREAS, immediately prior to the execution of this Agreement, Executive
served as President and Chief Executive Officer of Wynn's-Precision, Inc., a
wholly-owned subsidiary of Corporation; and
WHEREAS, Corporation desires to retain the services of Executive, and
Executive desires to be employed by Corporation, as President and Chief
Operating Officer of Corporation; and
WHEREAS, the Board of Directors of Corporation (the "Board of Directors")
and the Compensation Committee (the "Committee") of the Board of Directors
recognize that the continuing possibility of an unsolicited tender offer or
other takeover bid for Corporation will be unsettling to Executive and other
senior executives of Corporation and, therefore, to enhance the value of
Corporation for the benefit of its stockholders, desire to make arrangements to
help assure the dedication by Executive to Executive's duties to Corporation,
notwithstanding the occurrence of a tender offer or takeover bid; and
<PAGE>
WHEREAS, in particular, the Board of Directors and the Committee believe it
is important, should Corporation receive proposals from third parties with
respect to its future, to enable Executive, without being influenced by the
uncertainties of Executive's own situation, to assess and advise the Board of
Directors whether such proposals would be in the best interests of Corporation
and its stockholders, and to take such other action regarding such proposals as
the Board of Directors might determine to be appropriate; and
WHEREAS, the Board of Directors and the Committee also wish to demonstrate
to Executive and other senior executives of Corporation that Corporation is
concerned with the welfare of its executives and intends to see that loyal
executives are treated fairly; and
WHEREAS, in view of the foregoing and in further consideration of
Executive's employment with Corporation, the Board of Directors and the
Committee have determined that it is in the best interests of Corporation and
its stockholders for Corporation to agree to pay Executive termination
compensation in the event Executive should leave the employ of Corporation under
certain circumstances;
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
and promises of the parties set forth below, the parties hereby agree as
follows:
1. DUTIES.
(a) Corporation hereby employs Executive as President and Chief
Operating Officer of Corporation during the term of this Agreement, with
powers
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and duties consistent with such positions. Executive, during the term of
this Agreement, shall perform such additional or different duties, and
accept the election or appointment to such other offices or positions, as
may be mutually agreeable to Executive and the Board of Directors.
Executive agrees to serve in such executive offices and directorships in
other subsidiaries or affiliated companies of Corporation as he may be
requested to do throughout the term of this Agreement without additional
fixed compensation.
(b) Executive shall be employed at Corporation's headquarters in
Orange County, California, and shall devote substantially his full time and
efforts to perform his duties faithfully, diligently and to the best of his
ability to advance the interests of Corporation; subject, however, to
reasonable working hours, conditions and vacations as are consistent with
his position and with due regard to the preservation of his good health.
Nothing herein shall be deemed to preclude or prohibit Executive from
performing during regular business hours services within the business and
civic community which are customary for persons in similar capacities,
including, without limitation, serving on boards of other companies,
advisory groups, committees and panels, but only in furtherance of and not
to the detriment of his principal duties hereunder. Further, Corporation
shall give Executive a reasonable opportunity to perform his duties and
shall not expect Executive to devote more time hereunder, nor assign duties
or functions to Executive, other than as may be customary and reasonable
for an executive in Executive's position.
2. COMPENSATION.
(a) Effective as of the date hereof, and during the entire term of
this
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Agreement, Corporation shall pay to Executive an annual salary of not less
than Three Hundred Twenty-Six Thousand Dollars ($326,000.00), payable in
equal installments on Corporation's regular payroll dates, for any and all
services which Executive may render to Corporation.
(b) The Board of Directors annually shall review the amount of
Executive's salary, and shall, when the Board of Directors in its sole
judgment deems it appropriate, make adjustments in the amount of such
salary. Any such adjustments shall take effect on the date established by
the Board of Directors. Nothing herein shall be construed to authorize or
empower any reduction of Executive's salary below his then current rate of
salary by the Board of Directors or otherwise during the term of this
Agreement. The Committee, in accordance with customary policy, shall make
such recommendations to the Board of Directors as it believes are
appropriate with respect to salary adjustments hereunder.
3. EXPENSES. Corporation will reimburse Executive for all usual,
reasonable and necessary expenses paid or incurred by him in the performance of
his duties hereunder, subject to the right of Corporation at any time to place
reasonable limitations on expenses thereafter to be incurred or reimbursed.
4. EMPLOYEE BENEFITS. Executive shall be entitled to and shall receive
all other benefits of employment generally available to other executives of
Corporation, including, among other things, participation in any hospital,
surgical, medical or other group health and accident benefit plans, life
insurance benefits, and Corporation's annual vacation plan. In addition,
Executive will be entitled to participate in all incentive compensation, stock
option, profit sharing, pension, retirement or bonus plans as from
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time to time may be in existence during the term of this Agreement in accordance
with their respective terms and provisions, but, to the extent participation or
the amount of participation is at the discretion of the Board of Directors or
any committee thereof, then Executive's participation shall likewise be solely
subject to such discretion.
5. TERM AND TERMINATION.
(a) The term of this Agreement shall commence on the date hereof and
shall terminate upon the first to occur of the following events:
(i) December 31, 1999 (the "Last Day of the Stated Term");
(ii) The death or permanent disability of Executive;
(iii) The 30th day following written notice from Corporation to
Executive; or
(iv) Executive is discharged for Cause.
(b) If Executive dies or becomes permanently disabled during the term
of this Agreement, this Agreement shall terminate on the last day of the
month during which his death or permanent disability, as the case may be,
occurred. Commencing thirty (30) days after the date of such termination,
there shall be paid to Executive or Executive's representative in the event
of permanent disability, or to his executor or estate in the event of
death, an amount equal to one year of Executive's then current salary,
payable in twelve (12) equal monthly installments. If Executive is absent
from employment or unable to render services
5
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hereunder on a full-time basis by reason of physical or mental illness or
disability for six (6) months or more in the aggregate in any twelve (12)
month period during the term of this Agreement, Executive shall be
considered permanently disabled.
(c) If Corporation should terminate this Agreement pursuant to
Section 5(a)(iii):
(i) Executive shall immediately cease to be President and Chief
Operating Officer of Corporation, and such other office or position
Executive then holds, and if requested by a majority of the Board of
Directors of Corporation, shall immediately resign from the Board of
Directors and from any of the Boards of Directors of any of
Corporation's subsidiaries of which Executive may be a member.
(ii) Corporation shall be obligated and shall continue to pay
Executive an amount equal to his then current salary but at a rate of
not less than Three Hundred Twenty-Six Thousand Dollars ($326,000.00)
per annum from the date of such termination until the Last Day of the
Stated Term. Such payments shall be made in installments payable as
provided in Section 2(a) hereof. Corporation also immediately shall
pay Executive in a lump sum an amount equal to the amount of the
remaining unpaid portion of any yearly incentive compensation award,
and the amount, if any, of any forfeiture of Executive's interest in
any profit sharing plan in which Executive is a participant.
(iii) For the purposes of participation in any hospital,
surgical,
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medical or other group health and accident insurance and group life
insurance plans maintained by Corporation, Executive shall continue to
be an employee of Corporation through the Last Day of the Stated Term.
Except for such purposes, unless the Board of Directors otherwise
determines by resolution, Executive shall not continue to be an
employee of Corporation for any other purposes and shall not be
entitled to continue to participate in Corporation's Retirement Plan
or 401(k) Plan, or in any other plans, programs and benefits of
Corporation; provided, however, nothing herein shall preclude
Executive from any vested rights or benefits he may have in such plans
on the effective date of termination. If a contrary determination is
made by the Board of Directors, the duties of Executive shall be only
as mutually agreed upon by Executive and Corporation, and may be
refused by Executive without penalty hereunder.
(iv) If termination shall be without Cause under Section
5(a)(iii), all stock options granted to Executive prior to the date of
this Agreement under any stock option plan of Corporation (other than
Corporation's Employee Stock Purchase Plan), notwithstanding the
provisions of any stock option plan or agreement, shall vest
immediately and become exercisable by Executive. Nothing herein shall
otherwise affect the obligations of Corporation or Executive under the
terms of such stock option agreement, which, except for the provisions
hereof, shall be otherwise enforceable in accordance with its terms.
(v) Any benefits of indemnification provided by the By-Laws of
Corporation or in any Indemnification Agreement between Corporation
and Executive shall be continued for the benefit of Executive, and any
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officers' and directors' liability insurance which may be maintained
by Corporation and outstanding on the date of termination shall be
continued for the benefit of Executive for such reasonable period of
time as may be determined by the Board of Directors to afford
protection to Executive.
(d) Corporation agrees that its obligations for the continuation of
Executive's salary and other benefits in accordance with Sections 5(c)(ii)
through 5(c)(v) above shall be absolute and unconditional, and the amounts
due under Sections 5(c)(ii) and 5(c)(iii) above or Section 15 shall not be
subject to offset, reduction or mitigation for any reason whatsoever;
provided, however, that if Executive should breach any other provision of
this Agreement while he is receiving benefits pursuant to Sections 5(c)(ii)
through 5(c)(v) above, all obligations of Corporation hereunder shall cease
to be effective on the actual date of such breach.
(e) "Cause" as used in Section 5(a)(iv) shall mean only gross
negligence, dishonesty, incompetence, a willful breach of this Agreement,
or violation of any reasonable rule or regulation of the Board of
Directors, the violation of which results in significant damage to
Corporation and with respect to which, except in the case of incompetence
or dishonesty, Executive fails to correct or make reasonable efforts to
correct within a reasonable time after receipt of written notice thereof.
"Cause" shall be determined only by the affirmative vote of a majority of
the authorized number of the Board of Directors (excluding, for this
purpose, Executive) at a meeting for which notice has been given that it is
proposed to consider the issue of "Cause" or at a meeting occurring not
less than seven (7) days after a meeting at which one or more directors
indicate an intention to present a motion to such effect.
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(f) If Corporation should terminate this Agreement pursuant to
Section 5(a)(iv), this Agreement shall terminate immediately or at such
later date as shall be designated by the Board of Directors and all of
Executive's rights hereunder shall terminate effective upon such
termination. Except as otherwise specified in any notice of termination,
Executive shall not continue thereafter to be an employee of Corporation
for any purpose and all rights Executive might thereafter have as an
employee pursuant to any plan or understanding shall cease.
6. CONFIDENTIAL INFORMATION. Executive agrees that he will not at any
time, both during and after the term of this Agreement, divulge, furnish or make
accessible to any party (except to an entity which shall succeed to the business
of Corporation or its subsidiaries, and except as may be required in the conduct
of the regular course of business of Corporation or its subsidiaries, or as
specifically authorized by the Board of Directors or as may be required by law)
any trade secrets, patents, patent applications, inventions or customers of
Corporation or of any subsidiary of Corporation until such time as such
information has been disclosed to the public otherwise than by Executive.
7. RESTRICTIVE COVENANT DURING TERM. Executive agrees that until the
Last Day of the Stated Term, he will neither directly nor indirectly engage in a
business competing with any of the businesses conducted by Corporation or any of
its subsidiaries, nor without the prior written consent of the Board of
Directors, directly or indirectly, have any interest in, own, manage, operate,
control, be connected with as a stockholder, joint venturer, officer, employee,
partner or consultant, or otherwise engage, invest or participate in any
business which shall be competitive with any of the businesses conducted by
Corporation, or by any subsidiary of Corporation; provided, however, nothing
contained in this Section 7 shall prevent Executive from investing or trading in
9
<PAGE>
stocks, bonds, commodities, securities, real estate, or other forms of
investment for his own benefit (directly or indirectly), so long as such
investment activities do not significantly interfere with Executive's services
to be rendered hereunder and, to the extent that such investment activities
would, but for this proviso, be prohibited hereby, would not be material either
to Executive or the concern in which such investment is made.
8. APPROVAL BY CORPORATION. This Agreement has been approved by the
Board of Directors in accordance with the authority granted and restrictions
imposed by action of the Board of Directors. It shall be executed by the Chief
Executive Officer or other duly qualified officer.
9. WAIVER OR MODIFICATION. Any waiver, alteration or modification of any
of the provisions of this Agreement or cancellation or replacement of this
Agreement shall not be valid unless made in writing and signed by the parties
hereto.
10. CONSTRUCTION. Except as to matters of internal corporate policy and
regulation, which shall be governed by the laws of the State of Delaware (the
state of incorporation of Corporation), this Agreement shall be governed by the
laws of the State of California. If any litigation shall occur between
Executive and Corporation which litigation arises out of or as a result of this
Agreement or the acts of the parties hereto pursuant to this Agreement, or which
seeks an interpretation of this Agreement, the prevailing party shall be
entitled to recover all costs and expenses of such litigation, including
reasonable attorneys' fees and costs.
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11. BINDING EFFECT.
(a) The rights and obligations of Corporation under this Agreement
shall be binding upon any successor or assigns of Corporation. In the
event of any consolidation or merger of Corporation into or with another
corporation, such other corporation shall assume this Agreement and shall
become obligated to perform all of the terms and conditions hereof, and
Executive's obligations hereunder shall continue in favor of such other
corporation.
(b) If Corporation shall adopt a plan of liquidation or be or become
a party to any action which has the substantive effect of finally
terminating its business and affairs, all sums which would have been
payable to Executive during the remaining term of this Agreement (assuming
the continuation of Executive's then salary through the Last Day of the
Stated Term) shall become due and payable to Executive not later than the
effective date of such plan or action; except in the case of a liquidation
of Corporation into an acquiring company or subsidiary of such acquiring
company after a consolidation or merger of Corporation into or with another
corporation, and the rights and obligations of Corporation under this
Agreement are expressly assumed by the acquiring company as part of the
plan of liquidation.
(c) This Agreement supersedes all prior and contemporaneous
agreements, amendments, memoranda or understandings, express or implied and
written or oral, between Corporation and Executive.
12. WAIVER. Waiver by either party of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent breach
of any
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other provision of this Agreement.
13. COUNTERPARTS. This Agreement may be executed in any number of
identical counterparts, each of which shall be construed as an original for all
purposes, but all of which taken together shall constitute one and the same
Agreement.
14. NOTICES. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed to be effective (i) upon
receipt if delivered in person, (ii) upon receipt if sent by registered or
certified United States mail, return receipt requested and postage and fees
prepaid, to the addresses of the parties set forth below, or such other address
as shall be furnished by notice hereunder by any such party or (iii) twenty-four
hours after having been sent by Federal Express or other overnight delivery
service to such address:
Corporation: 500 North State College Boulevard
Suite 700
Orange, California 92868
Executive: 3109 Palmer Place
Lebanon, Tennessee 37090
No failure or refusal to accept delivery of any envelope containing such notice
shall affect the validity of such notice or the giving thereof.
15. TERMINATION AFTER CHANGE IN CONTROL.
(a) Cumulative to any other provision of the Employment Agreement,
if, within two years after a change in control of Corporation, Executive's
employment with Corporation terminates for any reason, either voluntarily
or involuntarily, other than by death, permanent disability or retirement
at or after
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Executive's normal retirement date under Corporation's Retirement Plan,
Corporation promptly will pay Executive, upon Executive's request, as
termination compensation, a lump sum amount, determined as provided in
subsection (b) of this Section 15, and such other amounts as are provided
in subsection (c) of this Section 15. For purposes of this Section, a
"change in control of Corporation" shall mean a change in control of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"); provided that, without
limitation, such a change in control of Corporation shall be deemed to have
occurred if (i) any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act) is or becomes the beneficial owner, directly
or indirectly, of securities of Corporation representing 40% or more of the
combined voting power of Corporation's then outstanding securities; or (ii)
during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors of Corporation
cease for any reason to constitute at least a majority thereof unless the
election of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning
of the period.
(b) The lump sum compensation payable to Executive (the "Severance
Payment") shall be equal to the average annual compensation (including
salary and bonuses under the Corporate Management Incentive Compensation
Plan or any predecessor or successor annual incentive compensation plan)
paid or payable by Corporation to Executive during the five most recent
calendar years ending before the date of the change in control of
Corporation (the "Base Amount") multiplied by 2.99; provided, however, if
Executive voluntarily terminates his employment with Corporation, except
after (i) any material adverse change in
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Executive's duties, location of employment or benefits, or (ii) any
material adverse change to Executive in the application of the formula of
the Corporate Management Incentive Compensation Plan or any modification in
Corporation's accounting methods or practices materially adverse to
Executive, including the assessment of a management fee, then the Severance
Payment shall be equal to the highest annual compensation (including salary
and bonuses under the Corporate Management Incentive Compensation Plan or
any successor annual incentive compensation plan) paid or payable by
Corporation to Executive for services rendered in any one of the three
calendar years ending with the year of such termination.
(c) In addition, if Executive's employment with Corporation so
terminates within two (2) years after such a change in control of
Corporation:
(i) any bonus awards previously made to Executive and not
previously paid immediately shall vest upon such termination and shall
be paid;
(ii) Executive's participation in, and terminating distributions
and vested rights under, any applicable retirement plan, profit
sharing plan and stock incentive plan of Corporation or any of its
subsidiaries shall be governed by the terms of those respective plans;
and
(iii) In the event of termination of employment under the
circumstances described in subsection (a) of this Section 15, the
arrangements provided for by this Section 15, by any stock option or
other agreement between Corporation and Executive in effect at the
time and by
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any other applicable plan of Corporation shall constitute the entire
obligation of Corporation to Executive and performance thereof shall
constitute full settlement of any claim that Executive might otherwise
assert against Corporation on account of such termination, provided,
however, that this provision and this Agreement shall have no impact
on the obligations of Corporation under that certain Indemnification
Agreement dated as of the date hereof between Corporation and
Executive.
(d) Notwithstanding any provision in this Agreement to the contrary,
in the event that any payment or benefit received or to be received by
Executive in connection with a change in control of Corporation or the
termination of Executive's employment, whether payable pursuant to the
terms of this Agreement or any other plan, arrangement or agreement with
Corporation (collectively the "Total Payments"), would not be deductible
(in whole or part) as a result of Section 280G of the Code, the Severance
Payment shall be reduced until no portion of the Total Payments is not
deductible as a result of Section 280G of the Code, or the Severance
Payment is reduced to zero. For purposes of this limitation, (i) no
portion of the Total Payments, the receipt or enjoyment of which Executive
shall have effectively waived in writing prior to the date of payment of
the Severance Payment, shall be taken into account, (ii) no portion of the
Total Payments shall be taken into account which, in the opinion of tax
counsel selected by Corporation's independent auditors and acceptable to
Executive, does not constitute a "parachute payment" within the meaning of
Section 280G(b)(2) of the Code, (iii) the Severance Payment shall be
reduced only to the extent necessary so that the Total Payments (excluding
payments referred to in clause (i) or (ii)) in their entirety constitute
reasonable compensation for services actually rendered within the meaning
of Section 280G(b)(4) of the Code, in the opinion of the tax
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counsel referred to in clause (ii); and (iv) the value of any non-cash
benefit or any deferred payment or benefit included in the Total Payments
shall be determined by Corporation's independent auditors in accordance
with the principles of Sections 280G(d)(3) and (4) of the Code.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
CORPORATION:
WYNN'S INTERNATIONAL, INC.
By /S/ James Carroll
------------------------------
James Carroll
Chairman of the Board and Chief
Executive Officer
EXECUTIVE:
/S/ John W. Huber
------------------------------
John W. Huber
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Exhibit 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of
the 1st day of January, 1997, by and between WYNN'S INTERNATIONAL, INC., a
Delaware corporation with its principal offices in Orange, California
("Corporation"), and SEYMOUR A. SCHLOSSER, an individual residing in Costa Mesa,
California ("Executive").
W I T N E S S E T H :
WHEREAS, Executive presently serves as Vice President-Finance and Chief
Financial Officer of Corporation pursuant to an employment agreement dated
January 1, 1995 between Corporation and Executive (the "Prior Employment
Agreement"); and
WHEREAS, Corporation desires to continue to retain the services of
Executive, whose experience, knowledge and abilities with respect to the
business and affairs of Corporation and its subsidiaries are extremely valuable
to Corporation; and
WHEREAS, the Board of Directors of Corporation (the "Board of Directors")
and the Compensation Committee (the "Committee") of the Board of Directors
recognize that the continuing possibility of an unsolicited tender offer or
other takeover bid for Corporation is unsettling to Executive and other senior
executives of Corporation and, therefore, to enhance the value of Corporation
for the benefit of its stockholders, desire to make arrangements to help assure
the continuing dedication by Executive to Executive's duties to Corporation,
notwithstanding the occurrence of a tender offer or takeover bid; and
<PAGE>
WHEREAS, in particular, the Board of Directors and the Committee believe it
is important, should Corporation receive proposals from third parties with
respect to its future, to enable Executive, without being influenced by the
uncertainties of Executive's own situation, to assess and advise the Board of
Directors whether such proposals would be in the best interests of Corporation
and its stockholders, and to take such other action regarding such proposals as
the Board of Directors might determine to be appropriate; and
WHEREAS, the Board of Directors and the Committee also wish to demonstrate
to Executive and other senior executives of Corporation that Corporation is
concerned with the welfare of its executives and intends to see that loyal
executives are treated fairly; and
WHEREAS, in view of the foregoing and in further consideration of
Executive's employment with Corporation, the Board of Directors and the
Committee have determined that it is in the best interests of Corporation and
its stockholders for Corporation to agree to pay Executive termination
compensation in the event Executive should leave the employ of Corporation under
certain circumstances;
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
and promises of the parties set forth below, the parties hereby agree as
follows:
1. DUTIES.
(a) Corporation hereby continues to employ Executive as Vice
President-Finance and Chief Financial Officer of Corporation during the
term of
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this Agreement, with powers and duties consistent with such positions.
Executive, during the term of this Agreement, shall perform such additional
or different duties, and accept the election or appointment to such other
offices or positions, as may be mutually agreeable to Executive and the
Board of Directors. Executive agrees to serve in such executive offices
and directorships in other subsidiaries or affiliated companies of
Corporation as he may be requested to do throughout the term of this
Agreement without additional fixed compensation.
(b) Executive shall be employed at Corporation's headquarters in
Orange County, California, and shall devote substantially his full time and
efforts to perform his duties faithfully, diligently and to the best of his
ability to advance the interests of Corporation; subject, however, to
reasonable working hours, conditions and vacations as are consistent with
his position and with due regard to the preservation of his good health.
Nothing herein shall be deemed to preclude or prohibit Executive from
performing during regular business hours services within the business and
civic community which are customary for persons in similar capacities,
including, without limitation, serving on boards of other companies,
advisory groups, committees and panels, but only in furtherance of and not
to the detriment of his principal duties hereunder. Further, Corporation
shall give Executive a reasonable opportunity to perform his duties and
shall not expect Executive to devote more time hereunder, nor assign duties
or functions to Executive, other than as may be customary and reasonable
for an executive in Executive's position.
2. COMPENSATION.
(a) Effective as of January 1, 1997, and during the entire term of
this
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Agreement, Corporation shall pay to Executive an annual salary of not less
than Two Hundred Thirty-Six Thousand Dollars ($236,000.00), payable in
equal installments on Corporation's regular payroll dates, for any and all
services which Executive may render to Corporation.
(b) The Board of Directors annually shall review the amount of
Executive's salary, and shall, when the Board of Directors in its sole
judgment deems it appropriate, make adjustments in the amount of such
salary. Any such adjustments shall take effect on the date established by
the Board of Directors. Nothing herein shall be construed to authorize or
empower any reduction of Executive's salary below his then current rate of
salary by the Board of Directors or otherwise during the term of this
Agreement. The Committee, in accordance with customary policy, shall make
such recommendations to the Board of Directors as it believes are
appropriate with respect to salary adjustments hereunder.
3. EXPENSES. Corporation will reimburse Executive for all usual,
reasonable and necessary expenses paid or incurred by him in the performance of
his duties hereunder, subject to the right of Corporation at any time to place
reasonable limitations on expenses thereafter to be incurred or reimbursed.
4. EMPLOYEE BENEFITS. Executive shall be entitled to and shall receive
all other benefits of employment generally available to other executives of
Corporation, including, among other things, participation in any hospital,
surgical, medical or other group health and accident benefit plans, life
insurance benefits, and Corporation's annual vacation plan. In addition,
Executive will be entitled to participate in all incentive compensation, stock
option, profit sharing, pension, retirement or bonus plans as from
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time to time may be in existence during the term of this Agreement in accordance
with their respective terms and provisions, but, to the extent participation or
the amount of participation is at the discretion of the Board of Directors or
any committee thereof, then Executive's participation shall likewise be solely
subject to such discretion.
5. TERM AND TERMINATION.
(a) The term of this Agreement shall commence on the date hereof and
shall terminate upon the first to occur of the following events:
(i) December 31, 1999 (the "Last Day of the Stated Term");
(ii) The death or permanent disability of Executive;
(iii) The 30th day following written notice from Corporation
to Executive; or
(iv) Executive is discharged for Cause.
(b) If Executive dies or becomes permanently disabled during the term
of this Agreement, this Agreement shall terminate on the last day of the
month during which his death or permanent disability, as the case may be,
occurred. Commencing thirty (30) days after the date of such termination,
there shall be paid to Executive or Executive's representative in the event
of permanent disability, or to his executor or estate in the event of
death, an amount equal to one year of Executive's then current salary,
payable in twelve (12) equal monthly installments. If Executive is absent
from employment or unable to render services
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hereunder on a full-time basis by reason of physical or mental illness or
disability for six (6) months or more in the aggregate in any twelve (12)
month period during the term of this Agreement, Executive shall be
considered permanently disabled.
(c) If Corporation should terminate this Agreement pursuant to
Section 5(a)(iii):
(i) Executive shall immediately cease to be Vice
President-Finance and Chief Financial Officer of Corporation, and such
other office or position Executive then holds, and if requested by a
majority of the Board of Directors of Corporation, shall immediately
resign from the Board of Directors and from any of the Boards of
Directors of any of Corporation's subsidiaries of which Executive may
be a member.
(ii) Corporation shall be obligated and shall continue to pay
Executive an amount equal to his then current salary but at a rate of
not less than Two Hundred Thirty-Six Thousand Dollars ($236,000.00)
per annum from the date of such termination until the Last Day of the
Stated Term. Such payments shall be made in installments payable as
provided in Section 2(a) hereof. Corporation also immediately shall
pay Executive in a lump sum an amount equal to the amount of the
remaining unpaid portion of any yearly incentive compensation award,
and the amount, if any, of any forfeiture of Executive's interest in
any profit sharing plan in which Executive is a participant.
(iii) For the purposes of participation in any hospital,
surgical,
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medical or other group health and accident insurance and group life
insurance plans maintained by Corporation, Executive shall continue to
be an employee of Corporation through the Last Day of the Stated Term.
Except for such purposes, unless the Board of Directors otherwise
determines by resolution, Executive shall not continue to be an
employee of Corporation for any other purposes and shall not be
entitled to continue to participate in Corporation's Retirement Plan
or 401(k) Plan, or in any other plans, programs and benefits of
Corporation; provided, however, nothing herein shall preclude
Executive from any vested rights or benefits he may have in such plans
on the effective date of termination. If a contrary determination is
made by the Board of Directors, the duties of Executive shall be only
as mutually agreed upon by Executive and Corporation, and may be
refused by Executive without penalty hereunder.
(iv) If termination shall be without Cause under Section
5(a)(iii), all stock options granted to Executive prior to the date of
this Agreement under any stock option plan of Corporation (other than
Corporation's Employee Stock Purchase Plan), notwithstanding the
provisions of any stock option plan or agreement, shall vest
immediately and become exercisable by Executive. Nothing herein shall
otherwise affect the obligations of Corporation or Executive under the
terms of such stock option agreement, which, except for the provisions
hereof, shall be otherwise enforceable in accordance with its terms.
(v) Any benefits of indemnification provided by the By-Laws of
Corporation or in any Indemnification Agreement between Corporation
and Executive shall be continued for the benefit of Executive, and any
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officers' and directors' liability insurance which may be maintained
by Corporation and outstanding on the date of termination shall be
continued for the benefit of Executive for such reasonable period of
time as may be determined by the Board of Directors to afford
protection to Executive.
(d) Corporation agrees that its obligations for the continuation of
Executive's salary and other benefits in accordance with Sections 5(c)(ii)
through 5(c)(v) above shall be absolute and unconditional, and the amounts
due under Sections 5(c)(ii) and 5(c)(iii) above or Section 15 shall not be
subject to offset, reduction or mitigation for any reason whatsoever;
provided, however, that if Executive should breach any other provision of
this Agreement while he is receiving benefits pursuant to Sections 5(c)(ii)
through 5(c)(v) above, all obligations of Corporation hereunder shall cease
to be effective on the actual date of such breach.
(e) "Cause" as used in Section 5(a)(iv) shall mean only gross
negligence, dishonesty, incompetence, a willful breach of this Agreement,
or violation of any reasonable rule or regulation of the Board of
Directors, the violation of which results in significant damage to
Corporation and with respect to which, except in the case of incompetence
or dishonesty, Executive fails to correct or make reasonable efforts to
correct within a reasonable time after receipt of written notice thereof.
"Cause" shall be determined only by the affirmative vote of a majority of
the authorized number of the Board of Directors (excluding, for this
purpose, Executive) at a meeting for which notice has been given that it is
proposed to consider the issue of "Cause" or at a meeting occurring not
less than seven (7) days after a meeting at which one or more directors
indicate an intention to present a motion to such effect.
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(f) If Corporation should terminate this Agreement pursuant to
Section 5(a)(iv), this Agreement shall terminate immediately or at such
later date as shall be designated by the Board of Directors and all of
Executive's rights hereunder shall terminate effective upon such
termination. Except as otherwise specified in any notice of termination,
Executive shall not continue thereafter to be an employee of Corporation
for any purpose and all rights Executive might thereafter have as an
employee pursuant to any plan or understanding shall cease.
6. CONFIDENTIAL INFORMATION. Executive agrees that he will not at any
time, both during and after the term of this Agreement, divulge, furnish or make
accessible to any party (except to an entity which shall succeed to the business
of Corporation or its subsidiaries, and except as may be required in the conduct
of the regular course of business of Corporation or its subsidiaries, or as
specifically authorized by the Board of Directors or as may be required by law)
any trade secrets, patents, patent applications, inventions or customers of
Corporation or of any subsidiary of Corporation until such time as such
information has been disclosed to the public otherwise than by Executive.
7. RESTRICTIVE COVENANT DURING TERM. Executive agrees that until the
Last Day of the Stated Term, he will neither directly nor indirectly engage in a
business competing with any of the businesses conducted by Corporation or any of
its subsidiaries, nor without the prior written consent of the Board of
Directors, directly or indirectly, have any interest in, own, manage, operate,
control, be connected with as a stockholder, joint venturer, officer, employee,
partner or consultant, or otherwise engage, invest or participate in any
business which shall be competitive with any of the businesses conducted by
Corporation, or by any subsidiary of Corporation; provided, however, nothing
contained in this Section 7 shall prevent Executive from investing or trading in
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stocks, bonds, commodities, securities, real estate, or other forms of
investment for his own benefit (directly or indirectly), so long as such
investment activities do not significantly interfere with Executive's services
to be rendered hereunder and, to the extent that such investment activities
would, but for this proviso, be prohibited hereby, would not be material either
to Executive or the concern in which such investment is made.
8. APPROVAL BY CORPORATION. This Agreement has been approved by the
Board of Directors in accordance with the authority granted and restrictions
imposed by action of the Board of Directors. It shall be executed by the Chief
Executive Officer or other duly qualified officer.
9. WAIVER OR MODIFICATION. Any waiver, alteration or modification of any
of the provisions of this Agreement or cancellation or replacement of this
Agreement shall not be valid unless made in writing and signed by the parties
hereto.
10. CONSTRUCTION. Except as to matters of internal corporate policy and
regulation, which shall be governed by the laws of the State of Delaware (the
state of incorporation of Corporation), this Agreement shall be governed by the
laws of the State of California. If any litigation shall occur between
Executive and Corporation which litigation arises out of or as a result of this
Agreement or the acts of the parties hereto pursuant to this Agreement, or which
seeks an interpretation of this Agreement, the prevailing party shall be
entitled to recover all costs and expenses of such litigation, including
reasonable attorneys' fees and costs.
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11. BINDING EFFECT.
(a) The rights and obligations of Corporation under this Agreement
shall be binding upon any successor or assigns of Corporation. In the
event of any consolidation or merger of Corporation into or with another
corporation, such other corporation shall assume this Agreement and shall
become obligated to perform all of the terms and conditions hereof, and
Executive's obligations hereunder shall continue in favor of such other
corporation.
(b) If Corporation shall adopt a plan of liquidation or be or become
a party to any action which has the substantive effect of finally
terminating its business and affairs, all sums which would have been
payable to Executive during the remaining term of this Agreement (assuming
the continuation of Executive's then salary through the Last Day of the
Stated Term) shall become due and payable to Executive not later than the
effective date of such plan or action; except in the case of a liquidation
of Corporation into an acquiring company or subsidiary of such acquiring
company after a consolidation or merger of Corporation into or with another
corporation, and the rights and obligations of Corporation under this
Agreement are expressly assumed by the acquiring company as part of the
plan of liquidation.
(c) This Agreement supersedes all prior and contemporaneous
agreements, amendments, memoranda or understandings, express or implied and
written or oral, between Corporation and Executive.
12. WAIVER. Waiver by either party of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent breach
of any
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other provision of this Agreement.
13. COUNTERPARTS. This Agreement may be executed in any number of
identical counterparts, each of which shall be construed as an original for all
purposes, but all of which taken together shall constitute one and the same
Agreement.
14. NOTICES. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed to be effective (i) upon
receipt if delivered in person, (ii) upon receipt if sent by registered or
certified United States mail, return receipt requested and postage and fees
prepaid, to the addresses of the parties set forth below, or such other address
as shall be furnished by notice hereunder by any such party or (iii) twenty-four
hours after having been sent by Federal Express or other overnight delivery
service to such address:
Corporation: 500 North State College Boulevard
Suite 700
Orange, California 92868
Executive: 1839 Tanager Drive
Costa Mesa, California 92626
No failure or refusal to accept delivery of any envelope containing such notice
shall affect the validity of such notice or the giving thereof.
15. TERMINATION AFTER CHANGE IN CONTROL.
(a) Cumulative to any other provision of the Employment Agreement,
if, within two years after a change in control of Corporation, Executive's
employment with Corporation terminates for any reason, either voluntarily
or involuntarily, other than death, permanent disability or retirement at
or after
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Executive's normal retirement date under Corporation's Retirement Plan,
Corporation promptly will pay Executive, upon Executive's request, as
termination compensation, a lump sum amount, determined as provided in
subsection (b) of this Section 15, and such other amounts as are provided
in subsection (c) of this Section 15. For purposes of this Section, a
"change in control of Corporation" shall mean a change in control of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"); provided that, without
limitation, such a change in control of Corporation shall be deemed to have
occurred if (i) any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act) is or becomes the beneficial owner, directly
or indirectly, of securities of Corporation representing 40% or more of the
combined voting power of Corporation's then outstanding securities; or (ii)
during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors of Corporation
cease for any reason to constitute at least a majority thereof unless the
election of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning
of the period.
(b) The lump sum compensation payable to Executive (the "Severance
Payment") shall be equal to the average annual compensation (including
salary and bonuses under the Corporate Management Incentive Compensation
Plan or any predecessor or successor annual incentive compensation plan)
paid or payable by Corporation to Executive during the five most recent
calendar years ending before the date of the change in control of
Corporation (the "Base Amount") multiplied by 2.99; provided, however, if
Executive voluntarily terminates his employment with Corporation, except
after (i) any material adverse change in
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Executive's duties, location of employment or benefits, or (ii) any
material adverse change to Executive in the application of the formula of
the Corporate Management Incentive Compensation Plan or any modification in
Corporation's accounting methods or practices materially adverse to
Executive, including the assessment of a management fee, then the Severance
Payment shall be equal to the highest annual compensation (including salary
and bonuses under the Corporate Management Incentive Compensation Plan or
any successor annual incentive compensation plan) paid or payable by
Corporation to Executive for services rendered in any one of the three
calendar years ending with the year of such termination.
(c) In addition, if Executive's employment with Corporation so
terminates within two (2) years after such a change in control of
Corporation:
(i) any bonus awards previously made to Executive and not
previously paid immediately shall vest upon such termination and shall
be paid;
(ii) Executive's participation in, and terminating distributions
and vested rights under, any applicable retirement plan, profit
sharing plan and stock incentive plan of Corporation or any of its
subsidiaries shall be governed by the terms of those respective plans;
and
(iii) In the event of termination of employment under the
circumstances described in subsection (a) of this Section 15, the
arrangements provided for by this Section 15, by any stock option or
other agreement between Corporation and Executive in effect at the
time and by
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any other applicable plan of Corporation shall constitute the entire
obligation of Corporation to Executive and performance thereof shall
constitute full settlement of any claim that Executive might otherwise
assert against Corporation on account of such termination, provided,
however, that this provision and this Agreement shall have no impact
on the obligations of Corporation under that certain Indemnification
Agreement dated August 4, 1993 between Corporation and Executive.
(d) Notwithstanding any provision in this Agreement to the contrary,
in the event that any payment or benefit received or to be received by
Executive in connection with a change in control of Corporation or the
termination of Executive's employment, whether payable pursuant to the
terms of this Agreement or any other plan, arrangement or agreement with
Corporation (collectively the "Total Payments"), would not be deductible
(in whole or part) as a result of Section 280G of the Code, the Severance
Payment shall be reduced until no portion of the Total Payments is not
deductible as a result of Section 280G of the Code, or the Severance
Payment is reduced to zero. For purposes of this limitation, (i) no
portion of the Total Payments, the receipt or enjoyment of which Executive
shall have effectively waived in writing prior to the date of payment of
the Severance Payment, shall be taken into account, (ii) no portion of the
Total Payments shall be taken into account which, in the opinion of tax
counsel selected by Corporation's independent auditors and acceptable to
Executive, does not constitute a "parachute payment" within the meaning of
Section 280G(b)(2) of the Code, (iii) the Severance Payment shall be
reduced only to the extent necessary so that the Total Payments (excluding
payments referred to in clause (i) or (ii)) in their entirety constitute
reasonable compensation for services actually rendered within the meaning
of Section 280G(b)(4) of the Code, in the opinion of the tax
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counsel referred to in clause (ii); and (iv) the value of any non-cash
benefit or any deferred payment or benefit included in the Total Payments
shall be determined by Corporation's independent auditors in accordance
with the principles of Sections 280G(d)(3) and (4) of the Code.
16. CANCELLATION OF PRIOR EMPLOYMENT AGREEMENT. Corporation and Executive
agree that the Prior Employment Agreement hereby is canceled as of the date
hereof and shall be of no further force and effect.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
CORPORATION:
WYNN'S INTERNATIONAL, INC.
By /s/ James Carroll
-------------------------------
James Carroll
Chairman of the Board and Chief
Executive Officer
EXECUTIVE:
/s/ Seymour A. Schlosser
----------------------------------
Seymour A. Schlosser
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Exhibit 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of
the 1st day of January, 1997, by and between WYNN'S INTERNATIONAL, INC., a
Delaware corporation with its principal offices in Orange, California
("Corporation"), and GREGG M. GIBBONS, an individual residing in Anaheim,
California ("Executive").
W I T N E S S E T H :
WHEREAS, Executive presently serves as Vice President-Corporate Affairs,
General Counsel and Secretary of Corporation pursuant to an employment agreement
dated as of January 1, 1995 between Corporation and Executive (the "Prior
Employment Agreement"); and
WHEREAS, Corporation desires to continue to retain the services of
Executive, whose experience, knowledge and abilities with respect to the
business and affairs of Corporation and its subsidiaries are extremely valuable
to Corporation; and
WHEREAS, the Board of Directors of Corporation (the "Board of Directors")
and the Compensation Committee (the "Committee") of the Board of Directors
recognize that the continuing possibility of an unsolicited tender offer or
other takeover bid for Corporation is unsettling to Executive and other senior
executives of Corporation and, therefore, to enhance the value of Corporation
for the benefit of its stockholders, desire to make arrangements to help assure
the continuing dedication by Executive to Executive's duties to Corporation,
notwithstanding the occurrence of a tender offer or takeover bid; and
<PAGE>
WHEREAS, in particular, the Board of Directors and the Committee believe it
is important, should Corporation receive proposals from third parties with
respect to its future, to enable Executive, without being influenced by the
uncertainties of Executive's own situation, to assess and advise the Board of
Directors whether such proposals would be in the best interests of Corporation
and its stockholders, and to take such other action regarding such proposals as
the Board of Directors might determine to be appropriate; and
WHEREAS, the Board of Directors and the Committee also wish to demonstrate
to Executive and other senior executives of Corporation that Corporation is
concerned with the welfare of its executives and intends to see that loyal
executives are treated fairly; and
WHEREAS, in view of the foregoing and in further consideration of
Executive's employment with Corporation, the Board of Directors and the
Committee have determined that it is in the best interests of Corporation and
its stockholders for Corporation to agree to pay Executive termination
compensation in the event Executive should leave the employ of Corporation under
certain circumstances;
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
and promises of the parties set forth below, the parties hereby agree as
follows:
1. DUTIES.
(a) Corporation hereby continues to employ Executive as Vice
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President-Corporate Affairs, General Counsel and Secretary of Corporation
during the term of this Agreement, with powers and duties consistent with
such positions. Executive, during the term of this Agreement, shall
perform such additional or different duties, and accept the election or
appointment to such other offices or positions, as may be mutually
agreeable to Executive and the Board of Directors. Executive agrees to
serve in such executive offices and directorships in other subsidiaries or
affiliated companies of Corporation as he may be requested to do throughout
the term of this Agreement without additional fixed compensation.
(b) Executive shall be employed at Corporation's headquarters in
Orange County, California, and shall devote substantially his full time and
efforts to perform his duties faithfully, diligently and to the best of his
ability to advance the interests of Corporation; subject, however, to
reasonable working hours, conditions and vacations as are consistent with
his position and with due regard to the preservation of his good health.
Nothing herein shall be deemed to preclude or prohibit Executive from
performing during regular business hours services within the business and
civic community which are customary for persons in similar capacities,
including, without limitation, serving on boards of other companies,
advisory groups, committees and panels, but only in furtherance of and not
to the detriment of his principal duties hereunder. Further, Corporation
shall give Executive a reasonable opportunity to perform his duties and
shall not expect Executive to devote more time hereunder, nor assign duties
or functions to Executive, other than as may be customary and reasonable
for an executive in Executive's position.
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2. COMPENSATION.
(a) Effective as of January 1, 1997, and during the entire term of
this Agreement, Corporation shall pay to Executive an annual salary of not
less than Two Hundred Thirty Thousand Dollars ($230,000.00), payable in
equal installments on Corporation's regular payroll dates, for any and all
services which Executive may render to Corporation.
(b) The Board of Directors annually shall review the amount of
Executive's salary, and shall, when the Board of Directors in its sole
judgment deems it appropriate, make adjustments in the amount of such
salary. Any such adjustments shall take effect on the date established by
the Board of Directors. Nothing herein shall be construed to authorize or
empower any reduction of Executive's salary below his then current rate of
salary by the Board of Directors or otherwise during the term of this
Agreement. The Committee, in accordance with customary policy, shall make
such recommendations to the Board of Directors as it believes are
appropriate with respect to salary adjustments hereunder.
3. EXPENSES. Corporation will reimburse Executive for all usual,
reasonable and necessary expenses paid or incurred by him in the performance of
his duties hereunder, subject to the right of Corporation at any time to place
reasonable limitations on expenses thereafter to be incurred or reimbursed.
4. EMPLOYEE BENEFITS. Executive shall be entitled to and shall receive
all other benefits of employment generally available to other executives of
Corporation, including, among other things, participation in any hospital,
surgical, medical or other
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group health and accident benefit plans, life insurance benefits, and
Corporation's annual vacation plan. In addition, Executive will be entitled to
participate in all incentive compensation, stock option, profit sharing,
pension, retirement or bonus plans as from time to time may be in existence
during the term of this Agreement in accordance with their respective terms and
provisions, but, to the extent participation or the amount of participation is
at the discretion of the Board of Directors or any committee thereof, then
Executive's participation shall likewise be solely subject to such discretion.
5. TERM AND TERMINATION.
(a) The term of this Agreement shall commence on the date hereof and
shall terminate upon the first to occur of the following events:
(i) December 31, 1999 (the "Last Day of the Stated Term");
(ii) The death or permanent disability of Executive;
(iii) The 30th day following written notice from Corporation to
Executive; or
(iv) Executive is discharged for Cause.
(b) If Executive dies or becomes permanently disabled during the term
of this Agreement, this Agreement shall terminate on the last day of the
month during which his death or permanent disability, as the case may be,
occurred. Commencing thirty (30) days after the date of such termination,
there shall be paid to Executive or Executive's representative in the event
of permanent
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disability, or to his executor or estate in the event of death, an amount
equal to one year of Executive's then current salary, payable in twelve
(12) equal monthly installments. If Executive is absent from employment or
unable to render services hereunder on a full-time basis by reason of
physical or mental illness or disability for six (6) months or more in the
aggregate in any twelve (12) month period during the term of this
Agreement, Executive shall be considered permanently disabled.
(c) If Corporation should terminate this Agreement pursuant to
Section 5(a)(iii):
(i) Executive shall immediately cease to be Vice
President-Corporate Affairs, General Counsel and Secretary of
Corporation, and such other office or position Executive then holds,
and if requested by a majority of the Board of Directors of
Corporation, shall immediately resign from the Board of Directors and
from any of the Boards of Directors of any of Corporation's
subsidiaries of which Executive may be a member.
(ii) Corporation shall be obligated and shall continue to pay
Executive an amount equal to his then current salary but at a rate of
not less than Two Hundred Thirty Thousand Dollars ($230,000.00) per
annum from the date of such termination until the Last Day of the
Stated Term. Such payments shall be made in installments payable as
provided in Section 2(a) hereof. Corporation also immediately shall
pay Executive in a lump sum an amount equal to the amount of the
remaining unpaid portion of any yearly incentive compensation award,
and the amount, if
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any, of any forfeiture of Executive's interest in any profit sharing
plan in which Executive is a participant.
(iii) For the purposes of participation in any hospital,
surgical, medical or other group health and accident insurance and
group life insurance plans maintained by Corporation, Executive shall
continue to be an employee of Corporation through the Last Day of the
Stated Term. Except for such purposes, unless the Board of Directors
otherwise determines by resolution, Executive shall not continue to be
an employee of Corporation for any other purposes and shall not be
entitled to continue to participate in Corporation's Retirement Plan
or 401(k) Plan, or in any other plans, programs and benefits of
Corporation; provided, however, nothing herein shall preclude
Executive from any vested rights or benefits he may have in such plans
on the effective date of termination. If a contrary determination is
made by the Board of Directors, the duties of Executive shall be only
as mutually agreed upon by Executive and Corporation, and may be
refused by Executive without penalty hereunder.
(iv) If termination shall be without Cause under Section
5(a)(iii), all stock options granted to Executive prior to the date of
this Agreement under any stock option plan of Corporation (other than
Corporation's Employee Stock Purchase Plan), notwithstanding the
provisions of any stock option plan or agreement, shall vest
immediately and become exercisable by Executive. Nothing herein shall
otherwise affect the obligations of Corporation or Executive under the
terms of such stock option agreement, which, except for the provisions
hereof, shall be otherwise enforceable in accordance with its terms.
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(v) Any benefits of indemnification provided by the By-Laws of
Corporation or in any Indemnification Agreement between Corporation
and Executive shall be continued for the benefit of Executive, and any
officers' and directors' liability insurance which may be maintained
by Corporation and outstanding on the date of termination shall be
continued for the benefit of Executive for such reasonable period of
time as may be determined by the Board of Directors to afford
protection to Executive.
(d) Corporation agrees that its obligations for the continuation of
Executive's salary and other benefits in accordance with Sections 5(c)(ii)
through 5(c)(v) above shall be absolute and unconditional, and the amounts
due under Sections 5(c)(ii) and 5(c)(iii) above or Section 15 shall not be
subject to offset, reduction or mitigation for any reason whatsoever;
provided, however, that if Executive should breach any other provision of
this Agreement while he is receiving benefits pursuant to Sections 5(c)(ii)
through 5(c)(v) above, all obligations of Corporation hereunder shall cease
to be effective on the actual date of such breach.
(e) "Cause" as used in Section 5(a)(iv) shall mean only gross
negligence, dishonesty, incompetence, a willful breach of this Agreement,
or violation of any reasonable rule or regulation of the Board of
Directors, the violation of which results in significant damage to
Corporation and with respect to which, except in the case of incompetence
or dishonesty, Executive fails to correct or make reasonable efforts to
correct within a reasonable time after receipt of written notice thereof.
"Cause" shall be determined only by the affirmative vote of a majority of
the authorized number of the Board of Directors (excluding, for
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this purpose, Executive) at a meeting for which notice has been given that
it is proposed to consider the issue of "Cause" or at a meeting occurring
not less than seven (7) days after a meeting at which one or more directors
indicate an intention to present a motion to such effect.
(f) If Corporation should terminate this Agreement pursuant to
Section 5(a)(iv), this Agreement shall terminate immediately or at such
later date as shall be designated by the Board of Directors and all of
Executive's rights hereunder shall terminate effective upon such
termination. Except as otherwise specified in any notice of termination,
Executive shall not continue thereafter to be an employee of Corporation
for any purpose and all rights Executive might thereafter have as an
employee pursuant to any plan or understanding shall cease.
6. CONFIDENTIAL INFORMATION. Executive agrees that he will not at any
time, both during and after the term of this Agreement, divulge, furnish or make
accessible to any party (except to an entity which shall succeed to the business
of Corporation or its subsidiaries, and except as may be required in the conduct
of the regular course of business of Corporation or its subsidiaries, or as
specifically authorized by the Board of Directors or as may be required by law)
any trade secrets, patents, patent applications, inventions or customers of
Corporation or of any subsidiary of Corporation until such time as such
information has been disclosed to the public otherwise than by Executive.
7. RESTRICTIVE COVENANT DURING TERM. Executive agrees that until the
Last Day of the Stated Term, he will neither directly nor indirectly engage in a
business competing with any of the businesses conducted by Corporation or any of
its subsidiaries, nor without the prior written consent of the Board of
Directors, directly or indirectly, have any interest in, own, manage, operate,
control, be connected with as a stockholder,
9
<PAGE>
joint venturer, officer, employee, partner or consultant, or otherwise engage,
invest or participate in any business which shall be competitive with any of the
businesses conducted by Corporation, or by any subsidiary of Corporation;
provided, however, nothing contained in this Section 7 shall prevent Executive
from investing or trading in stocks, bonds, commodities, securities, real
estate, or other forms of investment for his own benefit (directly or
indirectly), so long as such investment activities do not significantly
interfere with Executive's services to be rendered hereunder and, to the extent
that such investment activities would, but for this proviso, be prohibited
hereby, would not be material either to Executive or the concern in which such
investment is made.
8. APPROVAL BY CORPORATION. This Agreement has been approved by the
Board of Directors in accordance with the authority granted and restrictions
imposed by action of the Board of Directors. It shall be executed by the Chief
Executive Officer or other duly qualified officer.
9. WAIVER OR MODIFICATION. Any waiver, alteration or modification of any
of the provisions of this Agreement or cancellation or replacement of this
Agreement shall not be valid unless made in writing and signed by the parties
hereto.
10. CONSTRUCTION. Except as to matters of internal corporate policy and
regulation, which shall be governed by the laws of the State of Delaware (the
state of incorporation of Corporation), this Agreement shall be governed by the
laws of the State of California. If any litigation shall occur between
Executive and Corporation which litigation arises out of or as a result of this
Agreement or the acts of the parties hereto pursuant to this Agreement, or which
seeks an interpretation of this Agreement, the prevailing party shall be
entitled to recover all costs and expenses of such litigation,
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including reasonable attorneys' fees and costs.
11. BINDING EFFECT.
(a) The rights and obligations of Corporation under this Agreement
shall be binding upon any successor or assigns of Corporation. In the
event of any consolidation or merger of Corporation into or with another
corporation, such other corporation shall assume this Agreement and shall
become obligated to perform all of the terms and conditions hereof, and
Executive's obligations hereunder shall continue in favor of such other
corporation.
(b) If Corporation shall adopt a plan of liquidation or be or become
a party to any action which has the substantive effect of finally
terminating its business and affairs, all sums which would have been
payable to Executive during the remaining term of this Agreement (assuming
the continuation of Executive's then salary through the Last Day of the
Stated Term) shall become due and payable to Executive not later than the
effective date of such plan or action; except in the case of a liquidation
of Corporation into an acquiring company or subsidiary of such acquiring
company after a consolidation or merger of Corporation into or with another
corporation, and the rights and obligations of Corporation under this
Agreement are expressly assumed by the acquiring company as part of the
plan of liquidation.
(c) This Agreement supersedes all prior and contemporaneous
agreements, amendments, memoranda or understandings, express or implied and
written or oral, between Corporation and Executive.
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12. WAIVER. Waiver by either party of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent breach
of any other provision of this Agreement.
13. COUNTERPARTS. This Agreement may be executed in any number of
identical counterparts, each of which shall be construed as an original for all
purposes, but all of which taken together shall constitute one and the same
Agreement.
14. NOTICES. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed to be effective (i) upon
receipt if delivered in person, (ii) upon receipt if sent by registered or
certified United States mail, return receipt requested and postage and fees
prepaid, to the addresses of the parties set forth below, or such other address
as shall be furnished by notice hereunder by any such party or (iii) twenty-four
hours after having been sent by Federal Express or other overnight delivery
service to such address:
Corporation: 500 North State College Boulevard
Suite 700
Orange, California 92868
Executive: 451 Peralta Hills Drive
Anaheim, California 92807
No failure or refusal to accept delivery of any envelope containing such notice
shall affect the validity of such notice or the giving thereof.
15. TERMINATION AFTER CHANGE IN CONTROL.
(a) Cumulative to any other provision of the Employment Agreement,
if, within two years after a change in control of Corporation, Executive's
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employment with Corporation terminates for any reason, either voluntarily
or involuntarily, other than by death, permanent disability or retirement
at or after Executive's normal retirement date under Corporation's
Retirement Plan, Corporation promptly will pay Executive, upon Executive's
request, as termination compensation, a lump sum amount, determined as
provided in subsection (b) of this Section 15, and such other amounts as
are provided in subsection (c) of this Section 15. For purposes of this
Section, a "change in control of Corporation" shall mean a change in
control of a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"); provided
that, without limitation, such a change in control of Corporation shall be
deemed to have occurred if (i) any "person" (as such term is used in
Sections 13(d) and 14(d)(2) of the Exchange Act) is or becomes the
beneficial owner, directly or indirectly, of securities of Corporation
representing 40% or more of the combined voting power of Corporation's then
outstanding securities; or (ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors of Corporation cease for any reason to constitute at least a
majority thereof unless the election of each new director was approved by a
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period.
(b) The lump sum compensation payable to Executive (the "Severance
Payment") shall be equal to the average annual compensation (including
salary and bonuses under the Corporate Management Incentive Compensation
Plan or any predecessor or successor annual incentive compensation plan)
paid or payable by Corporation to Executive during the five most recent
calendar years ending before the date of the change in control of
Corporation (the "Base Amount")
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multiplied by 2.99; provided, however, if Executive voluntarily terminates
his employment with Corporation, except after (i) any material adverse
change in Executive's duties, location of employment or benefits, or (ii)
any material adverse change to Executive in the application of the formula
of the Corporate Management Incentive Compensation Plan or any modification
in Corporation's accounting methods or practices materially adverse to
Executive, including the assessment of a management fee, then the Severance
Payment shall be equal to the highest annual compensation (including salary
and bonuses under the Corporate Management Incentive Compensation Plan or
any successor annual incentive compensation plan) paid or payable by
Corporation to Executive for services rendered in any one of the three
calendar years ending with the year of such termination.
(c) In addition, if Executive's employment with Corporation so
terminates within two (2) years after such a change in control of
Corporation:
(i) any bonus awards previously made to Executive and not
previously paid immediately shall vest upon such termination and shall
be paid;
(ii) Executive's participation in, and terminating distributions
and vested rights under, any applicable retirement plan, profit
sharing plan and stock incentive plan of Corporation or any of its
subsidiaries shall be governed by the terms of those respective plans;
and
(iii) In the event of termination of employment under the
circumstances described in subsection (a) of this Section 15, the
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arrangements provided for by this Section 15, by any stock option or
other agreement between Corporation and Executive in effect at the
time and by any other applicable plan of Corporation shall constitute
the entire obligation of Corporation to Executive and performance
thereof shall constitute full settlement of any claim that Executive
might otherwise assert against Corporation on account of such
termination, provided, however, that this provision and this Agreement
shall have no impact on the obligations of Corporation under that
certain Indemnification Agreement dated August 4, 1993 between
Corporation and Executive.
(d) Notwithstanding any provision in this Agreement to the contrary,
in the event that any payment or benefit received or to be received by
Executive in connection with a change in control of Corporation or the
termination of Executive's employment, whether payable pursuant to the
terms of this Agreement or any other plan, arrangement or agreement with
Corporation (collectively the "Total Payments"), would not be deductible
(in whole or part) as a result of Section 280G of the Code, the Severance
Payment shall be reduced until no portion of the Total Payments is not
deductible as a result of Section 280G of the Code, or the Severance
Payment is reduced to zero. For purposes of this limitation, (i) no
portion of the Total Payments, the receipt or enjoyment of which Executive
shall have effectively waived in writing prior to the date of payment of
the Severance Payment, shall be taken into account, (ii) no portion of the
Total Payments shall be taken into account which, in the opinion of tax
counsel selected by Corporation's independent auditors and acceptable to
Executive, does not constitute a "parachute payment" within the meaning of
Section 280G(b)(2) of the Code, (iii) the Severance Payment shall be
reduced only to the extent necessary so that the Total Payments (excluding
payments referred to in clause (i) or (ii)) in
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<PAGE>
their entirety constitute reasonable compensation for services actually
rendered within the meaning of Section 280G(b)(4) of the Code, in the
opinion of the tax counsel referred to in clause (ii); and (iv) the value
of any non-cash benefit or any deferred payment or benefit included in the
Total Payments shall be determined by Corporation's independent auditors in
accordance with the principles of Sections 280G(d)(3) and (4) of the Code.
16. CANCELLATION OF PRIOR EMPLOYMENT AGREEMENT. Corporation and Executive
agree that the Prior Employment Agreement hereby is canceled as of the date
hereof and shall be of no further force and effect.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
CORPORATION:
WYNN'S INTERNATIONAL, INC.
By /s/ James Carroll
-------------------------------
James Carroll
Chairman of the Board and Chief
Executive Officer
EXECUTIVE:
/s/ Gregg M. Gibbons
----------------------------------
Gregg M. Gibbons
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Exhibit 10.8
AMENDMENT 1996-1
WYNN'S INTERNATIONAL, INC.
STOCK-BASED INCENTIVE AWARD PLAN
WHEREAS, Wynn's International, Inc. (the "Company") maintains the Wynn's
International, Inc. Stock-Based Incentive Award Plan (the "Plan); and
WHEREAS, the Company has the right to amend the Plan, and the Company
desires to amend the Plan to reflect recent resolutions adopted by the Board of
Directors;
NOW, THEREFORE, the Plan is hereby amended, effective as of December 11,
1996, as follows:
1. Section 1.1(g) of the Plan is amended to read as follows:
"(g) 'Board of Directors' shall mean the Board of Directors of the
Corporation."
2. Section 1.1(j) of the Plan is amended to read as follows:
"(j) 'Committee' means a committee appointed by the Board to
administer this Plan, which committee shall be comprised only of two or
more directors or such greater number of directors as may be required under
applicable law, each of whom (i) in respect of any transaction at a time
when the affected Participant may be subject to Section 162(m) of the Code,
shall be an "outside director" within the meaning of Section 162(m) of the
Code and (ii) in respect of any transaction at a time when the affected
Participant
<PAGE>
may be subject to Section 16 of the Securities and Exchange Act of 1934
("Exchange Act"), shall be a "Non-Employee Director" within the meaning of
Rule 16b-3(b)(3) under the Exchange Act."
3. Section 1.1(n) of the Plan is amended to read as follows:
"(n) Reserved."
4. Section 1.1(t) of the Plan is amended by replacing the reference to
"422A" contained therein with "422."
5. Section 2.4 of the Plan is amended by adding the following sentence at
the end thereof:
"The maximum number of shares subject to Options and Stock
Appreciation Rights that are granted during any calendar year to any
individual shall be limited to 100,000 shares, subject to adjustments
contemplated by Section 7.2."
6. Section 2.5 of the Plan is amended to read as follows:
"2.5 Grants of Awards
Awards may be granted either by (i) the Board of Directors, or (ii)
the Committee. The grant of an Award is made on the Award Date."
7. Sections 3.5(b) and 4.1 of the Plan are amended by replacing the
references to "422A" contained therein with "422."
8. Section 4.2(b) of the Plan is amended to read as follows:
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"(b) Notwithstanding any other provision of this Plan, the Committee
may impose, by rule and in Award Agreements, such conditions upon a Stock
Appreciation Right and the related Option and upon their exercises
(including, without limitation, conditions limiting the time of exercise to
specified periods) as may be required to satisfy applicable regulatory
requirements."
9. The second sentence of Section 7.4(a) of the Plan is amended to read
as follows:
"Acceleration of Awards shall comply with applicable regulatory
requirements, including, without limitation Section 422 of the Code."
10. Section 7.7 of the Plan is amended by modifying the second paragraph
contained therein to read as follows:
"Notwithstanding any other provision of this Plan, the Committee may
impose such conditions on the payment of any withholding obligation as may
be required to satisfy applicable regulatory requirements."
11. The first sentence of Section 7.8(b) of the Plan is amended to read as
follows:
"Any amendment that would (i) materially increase the benefits
accruing to Participants under this Plan, (ii) materially increase the
aggregate number of securities that may be issued under this Plan, or (iii)
materially modify the requirements as to eligibility for participation in
this Plan, shall be subject to stockholder approval only to the extent then
required by Section 422 of the Code or applicable law, or deemed necessary
or advisable by the Board."
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<PAGE>
IN WITNESS WHEREOF, the Company has caused its duly authorized officer to
execute this Amendment to the Plan on this 11th day of December, 1996.
WYNN'S INTERNATIONAL, INC.
By: /s/ Gregg M. Gibbons
---------------------------------
Vice President-Corporate Affairs,
General Counsel and Secretary
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Exhibit 10.9
WYNN'S INTERNATIONAL, INC.
1997 CORPORATE MANAGEMENT INCENTIVE PLAN
SECTION 1. The purpose of this 1997 Corporate Management Incentive Plan
(the "1997 Plan") is to provide a reward for performance and an incentive for
the future endeavors of the Corporate Management Employees who contribute to the
success of the enterprise by their ability, industry, loyalty, or exceptional
service, through making them participants in that success.
SECTION 2.
(a) Wynn's International, Inc. (the "Company") shall establish a reserve
for bonus payments for Corporate Management Employees for the year 1997 (the
"Corporate Bonus Pool") with a corresponding charge to income for the year 1997
in an amount which the independent public accountants of the Company verify and
report to be equal to ten percent (10%) of the amount by which the Consolidated
Pretax Earnings of the Company exceed an eighteen percent (18%) return on
Beginning Equity, provided, however, that (i) the maximum amount of the
Corporate Bonus Pool shall be One Million Six Hundred Seventy-Five Thousand
Dollars ($1,675,000), and (ii) no amounts shall be earned hereunder if the
Consolidated Pretax Earnings of the Company for the year ended December 31, 1997
are less than Thirty-One Million Six Hundred Seventy Thousand Dollars
($31,670,000).
(b) Before the payment of bonus awards for the year 1997, the independent
accountants of the Company shall verify and report to the Board of Directors of
the Company (the "Board") the total amount of the Corporate Bonus Pool and bonus
awards to be paid therefrom shall not exceed the Corporate Bonus Pool as
verified and reported by the independent public accountants. Bonus awards under
the 1997 Plan shall be charged to income for 1997.
SECTION 3.
(a) The term "Consolidated Pretax Earnings" as used in the 1997 Plan shall
mean, for calendar year 1997, the Company's income before taxes based on income
as shown on the Consolidated Statements of Income section of the Company's 1997
Consolidated Financial Statements after making adequate provision for the
Corporate Bonus Pool in the 1997 Consolidated Financial Statements.
(b) The term "Beginning Equity" shall mean the total stockholders' equity
of the Company and subsidiaries at December 31, 1996, as reported in the
Consolidated Balance Sheets section of the Company's 1997 Consolidated Financial
Statements.
(c) The term "1997 Consolidated Financial Statements" as used in the 1997
Plan shall mean those financial statements of the Company and its subsidiaries
contained
<PAGE>
in the Company's annual report to stockholders for the year ended December 31,
1997 and upon which an opinion has been expressed by the independent public
accountants of the Company.
(d) The term "Corporate Management Employee" shall mean any person
employed as Chairman and Chief Executive Officer, President and Chief Operating
Officer, Vice President-Finance and Chief Financial Officer, Vice
President-Corporate Affairs, General Counsel and Secretary, Assistant General
Counsel and Assistant Secretary, Treasurer and Controller, Assistant Secretary,
Tax Manager, Employee Benefits and Risk Manager, and any other management
employees of the Company designated by the Chief Executive Officer.
SECTION 4. Full power and authority to construe, interpret, and
administer the 1997 Plan shall be vested in the Board as from time to time
constituted pursuant to the By-Laws of the Company. Decisions of the Board
shall be final, conclusive, and binding. The Board shall rely upon and be bound
by the amount of Consolidated Pretax Earnings, Beginning Equity and the
Corporate Bonus Pool, all as verified and reported by the independent public
accountants of the Company. The foregoing shall include, but shall not be
limited to, all determinations by the Board as to (i) the eligibility of a
Corporate Management Employee for consideration for a bonus, and (ii) the
amount, if any, of the bonus award paid to a Corporate Management Employee. Any
person who accepts any benefit hereunder agrees to accept as final, conclusive,
and binding, the determinations of the Board.
SECTION 5. The Board shall have discretion with respect to the
determination of individual bonus awards to the executive officers of the
Company. Individual bonus awards to other Corporate Management Employees shall
be at the discretion of the Chief Executive Officer of the Company. The total
Corporate Bonus Pool shall be distributed to the 1997 Plan participants, subject
to the following two limitations. First, the total Corporate Bonus Pool shall
not be distributed if such distribution would cause the limits on the maximum
amounts payable to executive officers set forth Section 6 to be exceeded.
Second, regardless of whether such limits on bonus awards to executive officers
are reached, the balance of the Corporate Bonus Pool need not be distributed to
Corporate Management Employees who are not executive officers. The
recommendations for bonus awards under the 1997 Plan for executive officers of
the Company shall be made to the Compensation Committee of the Board (the
"Committee") by the Chief Executive Officer under such procedure as may from
time to time be approved by the Board, except that no such recommendations shall
be made with respect to the Chief Executive Officer, but such bonus shall be
dealt with exclusively by the Committee under such procedures as it may
determine. Nothing contained herein shall entitle any Corporate Management
Employee to any bonus award or to a bonus award for any specific amount, as a
matter of right, for services rendered in 1997.
SECTION 6. Notwithstanding the provisions of Sections 2 and 5, the
Committee shall have the authority to recommend to the Board, and the Board
shall have the power
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<PAGE>
to authorize in accordance with the recommendations of the Committee, the
payment of additional bonus awards to any or all executive officers for
outstanding performance in 1997, provided, however, that the amount of any such
additional bonus award, together with any amounts paid pursuant to Sections 2
and 5, shall not exceed one hundred percent (100%) of such executive officer's
base salary in 1997.
SECTION 7. Bonus awards under the 1997 Plan will be paid to each
recipient no later than March 15, 1998 in one installment in cash, restricted
stock of the Company, or any combination thereof. Any award of the Company's
restricted stock is subject to the approval of the Committee.
SECTION 8. Upon termination of a Corporate Management Employee's
employment during the calendar year 1997 other than by death, such participant
shall not be entitled as a matter of right to any bonus award for services
rendered in 1997, provided, however, the Board may award a bonus as a matter of
discretion pursuant to Section 9 below.
SECTION 9. Notwithstanding Section 8 above, a Corporate Management
Employee whose employment terminates during the year or who is granted a leave
of absence during the year, and who at the time of such termination of
employment or granting of leave is eligible for consideration of a bonus, may,
at the discretion of the Board, and under such rules as the Board may from time
to time approve, be awarded a bonus with respect to the period of his/her
services during the year 1997.
SECTION 10. Upon the death of a Corporate Management Employee during
1997, there shall be paid (as a death benefit and in lieu of any payment
pursuant to Section 5 which would otherwise have been payable after the death of
such Corporate Management Employee) to such beneficiaries as the Corporate
Management Employee shall have designated in writing and on forms prescribed by
and filed with the Board, or, if no such designation of beneficiaries has been
made, to such Corporate Management Employee's legal representatives or to the
persons entitled thereto as determined by a court of competent jurisdiction, an
amount equal to the bonus award, if any, that would have been paid to the
deceased Corporate Management Employee had such participant remained employed by
the Company through December 31, 1997. Any bonus which may be awarded to such
deceased participant shall be paid at the time awards are paid to other
participants pursuant to the 1997 Plan.
SECTION 11. The 1997 Plan and all determinations made and actions taken
pursuant hereto shall be governed by the laws of the State of Delaware and
construed accordingly.
SECTION 12. The 1997 Plan is effective as of January 1, 1997.
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Exhibit 10.10
EXECUTIVE DEFERRED COMPENSATION AGREEMENT
WHEREAS, Wynn's International, Inc. (the "Company") and James Carroll (the
"Executive") have entered into a series of deferred compensation agreements
(which are set forth in Exhibit A hereto and are referred to herein as the
"Prior Agreements") whereby the Executive elected to defer certain portions of
his compensation from the Company (such compensation deferrals and accrued
interest thereon as provided for under the terms of the Prior Agreements are
referred to herein as the "Deferrals"); and
WHEREAS, the Deferrals amounted to $1,465,141.26 as of December 31, 1996;
and
WHEREAS, the Company and the Executive desire to restate the Prior
Agreements and provide that the Deferrals shall be administered, paid, and
construed in accordance with this Agreement; and
WHEREAS, the Executive has no ability to demand payment of the Deferrals at
the present time pursuant to this Agreement and the Prior Agreements; and
WHEREAS, the Company desires to establish a grantor trust in order to fund
its obligations pursuant to this Agreement, such grantor trust to be actually
funded upon a change in control of the Company or, if earlier, upon the
commencement of payments to the Executive pursuant to the terms of this
Agreement, and such grantor trust to remain subject to the general creditors of
the Company should the Company become bankrupt or insolvent; and
WHEREAS, the Company desires to obtain a general receipt or release of all
claims the Executive (or his spouse or estate) may have against the Company
prior to the time any payments under this Agreement commence; and
WHEREAS, the Company believes that the adoption of this Agreement is in the
best interests of the Company to facilitate the recordkeeping and other
administrative tasks associated with the Deferrals and in order to facilitate
the payment of the Deferrals when such payments become due;
NOW, THEREFORE, it is hereby declared as follows:
1. AMOUNT OF DEFERRALS.
The Deferrals under this Agreement shall be the Executive's
compensation deferrals under the Prior Agreements, plus any interest thereon
through December 31, 1996.
<PAGE>
2. CREDITING OF EARNINGS.
The Executive's Deferrals shall bear interest from January 1, 1997 at
the lesser of (i) the rate of 15% per annum, or (ii) the prime rate as quoted by
Bank of America, NT&SA on the last business day of each calendar quarter.
3. VESTING.
The Executive shall be 100% vested in his Deferrals (and interest
thereon) at all time.
4. DISTRIBUTION.
(a) The Deferrals (and interest thereon) shall be paid to the
Executive in the form of quarterly (January 1, April 1, July 1, October 1) cash
installments over a period of ten years. Installments shall be in substantially
equal amounts. The unpaid declining balance of the Deferrals shall continue to
bear interest as set forth in Section 2.
(b) Payment of the Deferrals (and interest thereon) shall
commence as of the first day of the calendar quarter commencing after the later
of (i) the occurrence or event which results in the Executive no longer serving
as the chief executive officer of the Company (including, but not limited to,
the death, disability, resignation, retirement, or termination of the
Executive), or (ii) the date of execution of this Agreement.
(c) In the event that the Executive dies prior to the time all
amounts have been paid pursuant to the terms of this Agreement, payment of such
amounts shall be made at the time and in the form set forth above to the
Executive's spouse (as of his date of death, if she is then living). If the
Executive has no living spouse at such time, payment shall be made at the time
and in the manner set forth above to the Executive's estate.
5. ARBITRATION.
The Company or the Executive (or, following the Executive's death, his
spouse or estate) may, if he or she so desires, submit any claim for payment
under this Agreement or any dispute regarding the interpretation of this
Agreement to arbitration. The "right to select arbitration" does not impose
upon any party a requirement to submit a dispute for arbitration. Any party
may, in lieu of arbitration, bring an action in appropriate civil court. Each
party retains the right to select arbitration, even if a civil action
(including, without limitation, an action for declaratory relief) is brought by
the other. If arbitration is selected by one party after a civil action
concerning a dispute has been brought by another party, the
2
<PAGE>
Company and the Executive (and his spouse or estate) shall take such actions as
are necessary or appropriate, including dismissal of the civil action, so that
the arbitration can be timely heard. Once arbitration is commenced, it may not
be discontinued without the unanimous consent of all the parties thereto.
During the lifetime of the Executive, only the Company and the Executive can use
the arbitration procedure set forth in this section.
(a) Any claim for arbitration may be submitted as follows: if
the Company or the Executive (or, following the Executive's death, his spouse or
estate) disagrees with an interpretation of this Agreement by the other party,
or disagrees with the calculation of his or her benefit under this Agreement,
such claim may be filed in writing with an arbitrator of said party's choice who
is selected by the method described in the next four sentences. The first step
of the selection shall consist of the party submitting such dispute to
arbitration submitting in writing a list of five potential arbitrators to the
other party. Each of the five arbitrators must be either (i) a member of the
National Academy of Arbitrators located in the State of California or (ii) a
retired California Superior Court or Appellate Court judge. Within fifteen days
after receipt of the list from the party submitting the dispute to arbitration,
the other party shall select one of the five arbitrators as the arbitrator of
the dispute in question. If such party fails to select an arbitrator in a
timely manner, the party submitting the dispute to arbitration then shall
designate one of the five arbitrators as the arbitrator of the dispute in
question.
(b) The arbitration hearing shall be held in the County of
Orange, California within thirty (30) days (or as soon thereafter as possible)
after the selection of the arbitrator. No continuance of said hearing shall be
allowed without the mutual consent of all the parties thereto. Absence from or
nonparticipation at the hearing by any party shall not prevent the issuance of
an award. Hearing procedures that will expedite the hearing may be ordered at
the arbitrator's discretion, and the arbitrator may close the hearing in his
sole discretion when he or she decides he or she has heard sufficient evidence
to justify issuance of an award.
(c) The arbitrator's award shall be rendered as expeditiously as
possible and in no event later than thirty (30) days after the close of the
hearing. In the event the arbitrator finds that the Executive (or, following
the Executive's death, his spouse or estate) is entitled to the benefits he
claimed, the arbitrator shall order the Company to pay or deliver such benefits,
in the amounts and at such time as the arbitrator determines. The award of the
arbitrator shall be final and binding on the parties. The Company shall
thereupon pay or deliver to the Executive (or his spouse or estate) immediately
the amount that the arbitrator orders to be paid or delivered in the manner
described in the award. The award may be enforced in any appropriate court as
soon as possible after its rendition. If
3
<PAGE>
any action is brought to confirm the award, no appeal shall be taken by any
party from any decision rendered in such action.
(d) If the arbitrator determines either that the Executive (or,
following the Executive's death, his spouse or estate) is entitled to the
claimed benefits or that the claim by such party was made in good faith, the
arbitrator shall direct the Company to pay to such party, and the Company agrees
to pay to such party in accordance with such order, an amount equal to such
party's expenses in pursuing the claim, including attorneys' fees.
6. QUARTERLY STATEMENTS.
The Executive (or, in the event of the Executive's death, his spouse
or estate) shall receive a statement with respect to his Deferrals on a
quarterly basis as of each March 31, June 30, September 30 and December 31.
Such statement shall set forth the balance of the Deferrals held by the Company
for the Executive's account for the quarter then ending, and any interest
credited or payments made with respect to such Deferrals during that quarter.
7. UNSECURED GENERAL CREDITOR.
(a) The Executive and his beneficiaries (including his spouse
and his estate), heirs, successors, and assigns shall have no legal or equitable
rights, claims, or interest in any specific property or assets of the Company.
No assets of the Company shall be held in any way as collateral security for the
fulfilling of the obligations of the Company under this Plan. Any and all of
the Company's assets shall be, and remain, the general unpledged, unrestricted
assets of the Company. The Company's obligation under this Plan shall be merely
that of an unfunded and unsecured promise of the Company to pay money in the
future, and the rights of the Executive and his beneficiaries shall be no
greater than those of unsecured general creditors.
(b) Notwithstanding the foregoing, within ninety (90) days of
the event or occurrence which triggers payment of the benefits hereunder
pursuant to Section 4(b), or, if earlier, within thirty (30) days of an Event,
the Company shall fund a grantor trust for the benefit of the Executive (or his
spouse or estate). Such grantor trust shall be funded by the Company within
such ninety (90) day period in an amount equal to the Deferrals (and any
interest thereon). The trustee of the grantor trust shall be permitted to
invest the trust assets solely in obligations of the United States government
with maturities of three (3) years or less. The grantor trust shall provide
that the assets held in the trust are held for the sole purpose of paying
amounts hereunder, subject only to the general creditors of the Company should
the Company become bankrupt or insolvent. In the event of bankruptcy or
insolvency, the Executive (or his spouse or estate) shall have no greater right
with
4
<PAGE>
respect to such trust assets than that of a general, unsecured creditor of the
Company.
(c) An "Event" shall mean, for purposes of the foregoing
paragraph, the earliest to occur of the following:
(i) Approval by the shareholders of the Company of the
dissolution or liquidation of the Company; or
(ii) Approval by the shareholders of the Company of an
agreement to merge or consolidate, or otherwise reorganize, with or into
one or more entities which are not Subsidiaries (a "Subsidiary" shall mean
any corporation or other entity a majority of whose voting stock or voting
power is beneficially owned directly or indirectly by the Company), as a
result of which less than 50% of the outstanding voting securities of the
surviving or resulting entity are, or are to be, owned by the former
shareholders of the Company (excluding from the term "former shareholders"
a shareholder who is, or as a result of the transaction becomes, an
"affiliate," as that term is used in the Securities Exchange Act of 1934,
as amended from time to time (the "Exchange Act"), and the rules
promulgated thereunder, or any party to such merger, consolidation or
reorganization); or
(iii) Approval by the shareholders of the Company of the
sale of substantially all of the Company's business and/or assets to a
person or entity which is not a Subsidiary; or
(iv) A Change in Control. A "Change in Control" shall
mean a change in control of a nature that would be required to be reported
in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act");
provided that, without limitation, such a change in control of Corporation
shall be deemed to have occurred if (A) any "person" (as such term is used
in Sections 13(d) and 14(d)(2) of the Exchange Act) is or becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 40% or
more of the combined voting power of the Company's then outstanding
securities; or (B) during any period of two consecutive years, individuals
who at the beginning of such period constitute the Board of Directors of
the Company (the "Board") cease for any reason to constitute at least a
majority thereof, unless the election of each new Board member was approved
by a vote of at least two-thirds of the directors then still in office who
were members of the Board at the beginning of such period.
5
<PAGE>
8. NO EMPLOYMENT CONTRACT.
Nothing contained in this Agreement (or in any other documents related
to this Plan) shall confer upon the Executive any right to continue in the
employ or other service of the Company or constitute any contract or agreement
of employment or other service, nor shall interfere in any way with the right of
the Company to change the Executive's compensation or other benefits or to
terminate the employment of the Executive, with or without cause, but nothing
contained in this Agreement or any document related hereto shall adversely
affect any independent contractual right of the Executive without his specific
consent thereto.
9. RESTRICTION AGAINST ASSIGNMENT.
The Company shall pay all amounts payable hereunder only to the person
or persons designated by this Agreement and not to any other person or
corporation. No portion of such amounts shall be liable for the debts,
contracts, or engagements or the Executive, his beneficiary, or successors in
interest, nor shall such amounts be subject to execution by levy, attachment, or
garnishment or by any other legal or equitable proceeding, nor shall any such
person have any right to alienate, anticipate, commute, pledge, encumber, or
assign any benefits or payments hereunder in any manner whatsoever. If the
Executive, beneficiary or successor in interest is adjudicated bankrupt or
purports to anticipate, alienate, sell, transfer, assign, pledge, encumber or
charge any distribution or payment from this Agreement, voluntarily or
involuntarily, the Company, in its discretion, may cancel such distribution or
payment (or any part thereof) to or for the benefit of the Executive,
beneficiary or successor in interest in such manner as the Company shall direct.
10. WITHHOLDING.
The Company shall satisfy any state or federal income or other tax
withholding obligation arising upon payment of any amount hereunder. The
Executive (or his spouse or estate) shall pay or provide for payment in cash of
the amount of any taxes which the Company may be required to withhold with
respect to the benefits hereunder or the Company, in its discretion, may elect
to reduce the amount of any payment in order to satisfy such obligation.
11. GOVERNING LAW.
This Agreement shall be construed, governed and administered in
accordance with the laws of the State of California.
6
<PAGE>
12. RECEIPT OR RELEASE.
Any payment to the Executive (or his spouse or estate) in accordance
with the provisions of this Agreement shall, to the extent thereof, be in full
satisfaction of any and all claims, be they known or unknown at such time, such
party may have against the Company pursuant to this Agreement. The Company may
require the Executive (or his spouse or estate), as a condition precedent to the
commencement of payments pursuant to Section 4(b), to execute a receipt and
release to such effect.
13. INCAPACITY.
In the event that any amount becomes payable to a person who, in the
sole judgment of the Company, is considered by reason of physical or mental
condition to be unable to give a valid receipt therefor, the Company may direct
that such payment be made to any person found by the Company, in its sole
judgment, to have assumed the care of such person. Any payment or delivery made
pursuant to such determination shall constitute a full release and discharge of
the Company.
14. HEADINGS, ETC. NOT PART OF AGREEMENT.
Headings and subheadings in this Agreement are inserted for
convenience of reference only and are not to be considered in the construction
of the provisions hereof.
15. PAYMENT OF TAXABLE AMOUNTS.
Should any amount held hereunder be includable in the gross income of
the Executive (or his spouse or estate) for federal income tax purposes, the
Company shall distribute such amount to the Executive (or his spouse or estate)
as soon as administratively practicable.
16. PRIOR AGREEMENTS.
This Agreement specifically supersedes any contrary provision in the
Prior Agreements.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in the
County of Orange, California on the 18th day of February, 1997.
WYNN'S INTERNATIONAL, INC.
By: /s/ Gregg M. Gibbons
------------------------------------
Its: Vice President-Corporate Affairs
-----------------------------------
JAMES CARROLL
/s/ James Carroll
---------------------------------------
8
<PAGE>
EXHIBIT A
DEFERRED COMPENSATION AGREEMENTS
Date of Agreement Amount Deferred
----------------- ---------------
November 30, 1990 $50,000.00
February 15, 1993 $136,666.68
April 23, 1993 $244,707.00
August 5, 1994 $440,000.00
November 28, 1995 $356,250.00
<PAGE>
Exhibit 10.12
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (the "Agreement") is made as of
__________________, 19_____ by and between Wynn's International, Inc., a
Delaware corporation (the "Company"), and ___________________________ (the
"Indemnitee"), an officer of the Company.
R E C I T A L S
A. The Indemnitee is currently serving or has agreed to serve as an
officer of the Company and in such capacity has rendered or will render valuable
services to the Company.
B. The Company has investigated the availability and sufficiency of
liability insurance and Delaware statutory indemnification provisions to provide
its directors and officers with adequate protection against various legal risks
and potential liabilities to which such individuals are subject due to their
position with the Company and has concluded that such insurance and statutory
provisions may provide inadequate and unacceptable protection to certain
individuals requested to serve as its directors and officers.
C. In order to induce and encourage highly experienced and capable
persons such as the Indemnitee to continue to serve as an officer of the
Company, the Board of Directors has determined, after due consideration and
investigation of the terms and provisions of this Agreement and the various
other options available to the Company and the Indemnitee in lieu hereof, that
this Agreement is reasonable and prudent and in the best interests of the
Company and its stockholders.
A G R E E M E N T
NOW, THEREFORE, in consideration of the continued services of the
Indemnitee and in order to induce the Indemnitee to serve as an officer, the
Company and the Indemnitee do hereby agree as follows:
1. DEFINITIONS. As used in this Agreement:
(a) The term "Proceeding" shall include any threatened, pending or
completed action, suit or proceeding, whether brought in the name of the
Company or otherwise and whether of a civil, criminal or administrative or
investigative nature, by reason of the fact that the Indemnitee is or was
an officer of the Company, or is or was serving at the request of the
Company as a director, officer, employee or agent of
<PAGE>
another enterprise, whether or not he is serving in such capacity at the
time any liability or expense is incurred for which indemnification or
reimbursement is to be provided under this Agreement.
(b) The term "Expenses" includes, without limitation, attorneys'
fees, disbursements and retainers, accounting and witness fees, travel and
deposition costs, expenses of investigations, judicial or administrative
proceedings or appeals, amounts paid in settlement by or on behalf of the
Indemnitee, and any expenses of establishing a right to indemnification
pursuant to this Agreement or otherwise including reasonable compensation
for time spent by the Indemnitee in connection with the investigation,
defense or appeal of a Proceeding or action for indemnification for which
he is not otherwise compensated by the Company or any third party. The
term "Expenses" does not include the amount of judgments, fines, penalties
or ERISA excise taxes actually levied against the Indemnitee.
2. AGREEMENT TO SERVE. The Indemnitee agrees to continue to serve
as an officer of the Company at the will of the Company for so long as he is
duly elected or appointed or until such time as he tenders his resignation in
writing.
3. INDEMNIFICATION IN THIRD PARTY ACTIONS. The Company shall
indemnify the Indemnitee in accordance with the provisions of this section if
the Indemnitee is a party to or threatened to be made a party to or otherwise
involved in any Proceeding (other than a Proceeding by or in the name of the
Company to procure a judgment in its favor), by reason of the fact that the
Indemnitee is or was an officer of the Company, or is or was serving at the
request of the Company as a director, officer, employee or agent of another
enterprise against all Expenses, judgments, fines, penalties and ERISA excise
taxes actually and reasonably incurred by the Indemnitee in connection with the
defense or settlement of such Proceeding, to the fullest extent permitted by
Delaware law; provided that any settlement be approved in writing by the
Company.
4. INDEMNIFICATION IN PROCEEDINGS BY OR IN THE NAME OF THE COMPANY.
The Company shall indemnify the Indemnitee in accordance with the provisions of
this section if the Indemnitee is a party to or threatened to be made a party to
or otherwise involved in any Proceeding by or in the name of the Company to
procure a judgment in its favor by reason of the fact that the Indemnitee was or
is an officer of the Company, or is or was serving at the request of the Company
as a director, officer, employee or agent of another enterprise, against all
Expenses actually and reasonably incurred by the Indemnitee in connection with
the defense or settlement of such Proceeding, to the fullest extent permitted by
Delaware law.
2
<PAGE>
5. CONCLUSIVE PRESUMPTION REGARDING STANDARD OF CONDUCT. The
Indemnitee shall be conclusively presumed to have met the relevant standards of
conduct as defined by Delaware law for indemnification pursuant to this
Agreement, unless a final determination is made by a court of competent
jurisdiction that the Indemnitee has not met such standards.
6. INDEMNIFICATION OF EXPENSES OF SUCCESSFUL PARTY. Notwithstanding
any other provisions of this Agreement, to the extent that the Indemnitee has
been successful in defense of any Proceeding or in defense of any claim, issue
or matter therein, on the merits or otherwise, including the dismissal of a
Proceeding without prejudice, the Indemnitee shall be indemnified against all
Expenses incurred in connection therewith to the fullest extent permitted by
Delaware law.
7. ADVANCES OF EXPENSES. The Expenses incurred by the Indemnitee in
any Proceeding shall be paid promptly by the Company in advance of the final
disposition of the Proceeding at the written request of the Indemnitee to the
fullest extent permitted by Delaware law; provided that as long as Delaware law
requires such an undertaking, the Indemnitee shall undertake in writing to repay
such amount to the extent that it is ultimately determined that the Indemnitee
is not entitled to indemnification.
8. PARTIAL INDEMNIFICATION. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the Expenses, judgments, fines, penalties or ERISA excise taxes
actually and reasonably incurred by him in the investigation, defense, appeal or
settlement of any Proceeding but not, however, for the total amount thereof, the
Company shall nevertheless indemnify the Indemnitee for the portion of such
Expenses, judgments, fines, penalties or ERISA excise taxes to which the
Indemnitee is entitled.
9. INDEMNIFICATION PROCEDURE; DETERMINATION OF RIGHT TO
INDEMNIFICATION.
(a) Promptly after receipt by the Indemnitee of notice of the
commencement of any Proceeding, the Indemnitee will, if a claim in respect
thereof is to be made against the Company under this Agreement, notify the
Company of the commencement thereof. The omission so to notify the Company
will not relieve it from any liability which it may have to the Indemnitee
under this Agreement or otherwise.
(b) If a claim under this Agreement is not paid by the Company within
thirty (30) days of receipt of written notice, the right
3
<PAGE>
to indemnification as provided by this Agreement shall be enforceable by
the Indemnitee in any court of competent jurisdiction. The burden of
proving by clear and convincing evidence that indemnification or advances
are not appropriate shall be on the Company. Neither the failure of the
directors or stockholders of the Company or its independent legal counsel
to have made a determination prior to the commencement of such action that
indemnification or advances are proper in the circumstances because the
Indemnitee has met the applicable standard of conduct, nor an actual
determination by the directors or stockholders of the Company or its
independent legal counsel that the Indemnitee has not met such applicable
standard of conduct, shall be a defense to the action or create a
presumption that the Indemnitee has not met the applicable standard of
conduct.
(c) The Indemnitee's Expenses incurred in connection with any
proceeding concerning his right to indemnification or advances in whole or
in part pursuant to this Agreement shall also be indemnified by the Company
regardless of the outcome of such proceeding, unless a court of competent
jurisdiction determines that each of the material assertions made by the
Indemnitee in such proceeding was not made in good faith or was frivolous.
(d) With respect to any Proceeding for which indemnification is
requested, the Company will be entitled to participate therein at its own
expense and, except as otherwise provided below, to the extent that it may
wish, the Company may assume the defense thereof, with counsel satisfactory
to the Indemnitee. After notice from the Company to the Indemnitee of its
election to assume the defense of a Proceeding, the Company will not be
liable to the Indemnitee under this Agreement for any legal or other
expenses subsequently incurred by the Indemnitee in connection with the
defense thereof, other than reasonable costs of investigation or as
otherwise provided below. The Company shall not settle any Proceeding in
any manner which would impose any penalty or limitation on the Indemnitee
without the Indemnitee's written consent. The Indemnitee shall have the
right to employ his own counsel in any Proceeding but the fees and expenses
of such counsel incurred after notice from the Company of its assumption of
the defense thereof shall be at the expense of the Indemnitee, unless (i)
the employment of counsel by the Indemnitee has been authorized by the
Company, (ii) the Indemnitee shall have reasonably concluded that there may
be a conflict of interest between the Company and the Indemnitee in the
conduct of the defense of a Proceeding, or (iii) the Company shall not in
fact have employed counsel to assume the defense of a Proceeding, in each
of which cases the fees and expenses of the Indemnitee's counsel shall be
at the expense of the Company. The
4
<PAGE>
Company shall not be entitled to assume the defense of any Proceeding
brought by or on behalf of the Company or as to which the Indemnitee has
made the conclusion that there may be a conflict of interest between the
Company and the Indemnitee.
10. LIMITATIONS ON INDEMNIFICATION. No payments pursuant to this
Agreement shall be made by the Company:
(a) To indemnify or advance Expenses to the Indemnitee with respect
to Proceedings initiated or brought voluntarily by the Indemnitee and not
by way of defense, except with respect to Proceedings brought to establish
or enforce a right to indemnification under this Agreement or any other
statute or law or otherwise as required under Delaware law, but such
indemnification or advancement of Expenses may be provided by the Company
in specific cases if the Board of Directors finds it to be appropriate;
(b) To indemnify the Indemnitee for any Expenses, judgments, fines,
penalties or ERISA excise taxes for which payment is actually made to the
Indemnitee under a valid and collectible insurance policy, except in
respect of any excess beyond the amount of payment under such policy;
(c) To indemnify the Indemnitee for any Expenses, judgments, fines or
penalties sustained in any Proceeding for an accounting of profits made
from the purchase or sale by the Indemnitee of securities of the Company
pursuant to the provisions of Section 16(b) of the Securities Exchange Act
of 1934, the rules and regulations promulgated thereunder and amendments
thereto or similar provisions of any Federal, state or local statutory law;
(d) To indemnify the Indemnitee for any Expenses, judgments, fines,
penalties or ERISA excise taxes resulting from the Indemnitee's conduct
which is finally adjudged to have been willful misconduct, knowingly
fraudulent or deliberately dishonest; or
(e) If a court of competent jurisdiction shall finally determine that
any indemnification hereunder is unlawful.
11. MAINTENANCE OF LIABILITY INSURANCE.
(a) The Company hereby covenants and agrees that, as long as the
Indemnitee shall continue to serve as an officer of the Company and
thereafter so long as the Indemnitee shall be subject to any possible
Proceeding, the Company, subject to subsection (c), shall
5
<PAGE>
promptly obtain and maintain in full force and effect directors' and
officers' liability insurance ("D&O Insurance") in reasonable amounts from
established and reputable insurers.
(b) In all D&O Insurance policies, the Indemnitee shall be named as
an insured in such a manner as to provide the Indemnitee the same rights
and benefits as are accorded any other officer of the Company.
(c) Notwithstanding the foregoing, the Company shall have no
obligation to obtain or maintain D&O Insurance if the Company determines in
good faith that such insurance is not reasonably available, the premium
costs for such insurance are, in the opinion of the Company,
disproportionate to the amount of coverage provided, the coverage provided
by such insurance is so limited by exclusions that it provides an
insufficient benefit, or the Indemnitee is covered by similar insurance
maintained by a subsidiary of the Company.
12. INDEMNIFICATION HEREUNDER NOT EXCLUSIVE. The indemnification
provided by this Agreement shall not be deemed exclusive of any other rights to
which the Indemnitee may be entitled under the Certificate of Incorporation, the
Bylaws, any other agreement, any vote of stockholders or disinterested
directors, Delaware law, or otherwise, both as to action in his official
capacity and as to action in another capacity on behalf of the Company while
holding such office.
13. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon,
and shall inure to the benefit of the Indemnitee and his heirs, personal
representatives and assigns, and the Company and its successors and assigns.
14. SEPARABILITY. Each provision of this Agreement is a separate and
distinct agreement and independent of the others, so that if any provision
hereof shall be held to be invalid or unenforceable for any reason, such
invalidity or unenforceability shall not affect the validity or enforceability
of any other provision hereof. To the extent required, any provision of this
Agreement may be modified by a court of competent jurisdiction to preserve its
validity and to provide the Indemnitee with the broadest possible
indemnification permitted under Delaware law.
15. SAVINGS CLAUSE. If this Agreement or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify the Indemnitee as to Expenses, judgments,
fines, penalties or ERISA excise taxes with respect to any Proceeding to the
full extent permitted by any applicable portion of this
6
<PAGE>
Agreement that shall not have been invalidated or by any applicable provision of
Delaware law.
16. INTERPRETATION; GOVERNING LAW. This Agreement shall be construed
as a whole and in accordance with its fair meaning. Headings are for
convenience only and shall not be used in interpreting the provisions hereunder.
This Agreement shall be governed by and interpreted in accordance with the laws
of the State of Delaware.
17. AMENDMENTS. No amendment, waiver, modification, termination or
cancellation of this Agreement shall be effective unless in writing signed by
the party against whom enforcement is sought. The indemnification rights
afforded to the Indemnitee hereby are contract rights and may not be diminished,
eliminated or otherwise affected by amendments to the Company's Certificate of
Incorporation, Bylaws or other agreements, including D&O Insurance policies.
18. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
party and delivered to the other.
19. NOTICES. Any notice required to be given under this Agreement
shall be directed to Wynn's International, Inc., 500 North State College
Boulevard, Suite 700, Orange, California 92668, Attention: General Counsel, and
to Indemnitee at _________________________________________ or to such other
address as either shall designate in writing.
7
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
INDEMNITEE
-------------------------------
WYNN'S INTERNATIONAL, INC.
By:
----------------------------
Title: Chairman of the Board
8
<PAGE>
Exhibit 10.14
AMENDMENT 1996-1
WYNN'S INTERNATIONAL, INC.
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
WHEREAS, Wynn's International, Inc. (the "Company") maintains the Wynn's
International, Inc. Non-Employee Directors' Stock Option Plan (the "Plan"); and
WHEREAS, the Company has the right to amend the Plan, and the Company
desires to amend the Plan to reflect recent resolutions adopted by the Board of
Directors;
NOW, THEREFORE, the Plan is hereby amended, effective as of December 11,
1996, as follows:
1. Section 3.7(b) of the Plan is amended to read as follows:
"(b) STOCKHOLDER APPROVAL. To the extent required by law, any
amendment to this Plan or any then outstanding Option shall be subject to
stockholder approval."
2. The first sentence of Section 3.7(c) of the Plan is deleted.
3. Section 4.1 of the Plan is amended to read as follows:
<PAGE>
"(i) 'ELIGIBLE DIRECTOR' shall mean a member of the Board of
Directors of the Corporation who is not an officer or employee of the
Corporation or any Subsidiary at the time of grant of the Option."
IN WITNESS WHEREOF, the Company has caused its duly authorized officer to
execute this Amendment to the Plan on this 11th day of December, 1996.
WYNN'S INTERNATIONAL, INC.
By: /S/ GREGG M. GIBBONS
-----------------------------------
Vice President - Corporate Affairs,
General Counsel and Secretary
2
<PAGE>
EXHIBIT 11
WYNN'S INTERNATIONAL, INC.
COMPUTATION OF NET INCOME PER COMMON SHARE - PRIMARY
<TABLE>
<CAPTION>
Year ended December 31
-----------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Income from continuing operations $21,301,000 $16,701,000 $12,382,000
Discontinued operations:
Income (loss) from operations........... 16,000 (1,258,000) (561,000)
Loss on disposal........................ (879,000) -- --
----------- ----------- -----------
Net income................................ $20,438,000 $15,443,000 $11,821,000
----------- ----------- -----------
Weighted average number of shares
outstanding............................. 13,641,931 13,372,973 12,494,355
Net shares assumed issued using the
treasury stock method for stock options
outstanding during each period based on
average market price.................... 591,941 407,392 317,363
----------- ----------- -----------
Common and common equivalent
shares.................................. 14,233,872 13,780,365 12,811,718
----------- ----------- -----------
Income per common share:
Continuing operations.................. $1.50 $1.21 $.97
Discontinued operations:
Income (loss) from operations........ -- (.09) (.05)
Loss on disposal..................... (.06) -- --
----------- ----------- -----------
Net income per common share.............. $1.44 $1.12 $.92
----------- ----------- -----------
</TABLE>
II-6
<PAGE>
EXHIBIT 11
(Continued)
COMPUTATION OF NET INCOME PER COMMON SHARE -
ASSUMING FULL DILUTION
<TABLE>
<CAPTION>
Year ended December 31
-----------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Income from continuing operations $21,301,000 $16,701,000 $12,382,000
Net interest expense from convertible
bonds................................. -- 44,000 273,000
----------- ----------- -----------
Net earnings from continuing
operations for purposes of dilution.. 21,301,000 16,745,000 12,655,000
Discontinued operations:
Income (loss) from operations........ 16,000 (1,258,000) (561,000)
Net interest expense from convertible
bonds............................... -- 15,000 94,000
----------- ----------- -----------
Net earnings from discontinued
operations for purposes of
dilution.......................... 16,000 (1,243,000) (467,000)
Loss on disposal..................... (879,000) -- --
----------- ----------- -----------
Net income.............................$20,438,000 $15,502,000 $12,188,000
----------- ----------- -----------
Weighted average number of shares
outstanding........................... 13,641,931 13,372,973 12,494,355
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............ 665,464 523,488 331,995
Dilutive effect of assumed
conversion of bonds outstanding....... -- 157,137 963,171
----------- ----------- -----------
Fully diluted shares................... 14,307,395 14,053,598 13,789,521
----------- ----------- -----------
Income per common share:
Continuing operations................ $1.49 $1.19 $.92
Discontinued operations:
Income (loss) from operations...... -- (.09) (.04)
Loss on disposal................... (.06) -- --
----------- ----------- -----------
Net income........................... $1.43 $1.10 $.88
----------- ----------- -----------
</TABLE>
Note: The above calculations reflect for all periods the three-for-two stock
splits to stockholders of record in December 1996 and December 1995.
II-7
<PAGE>
EXHIBIT 13
This exhibit consists of the following portions of the 1996 Annual Report
to Stockholders of Wynn's International, Inc.: the Report of Independent
Auditors on page 17, the consolidated financial statements of Registrant on
pages 18 through 32, the Selected Financial Data section on page 12, the
Management's Discussion and Analysis of Financial Condition and Results of
Operations section on pages 13 through 17, and the information appearing
under "Common Stock Prices and Cash Dividends Per Share: 1996-1995" on page 33
and "Number of Stockholders" and "Stock Exchange Listing" on page 33.
<PAGE>
WYNN'S INTERNATIONAL, INC.
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Five years ended December 31, 1996
-----------------------------------------------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1996 1995 1994 1993 1992
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Continuing operations:
Net sales $288,531 $262,584 $234,659 $201,522 $191,223
- -------------------------------------------------------------------------------------------------------------
Income before taxes based on income 33,918 26,500 20,843 12,327 9,571
Provision for taxes based on income 12,617 9,799 8,461 5,481 4,836
- -------------------------------------------------------------------------------------------------------------
Income from continuing operations 21,301 16,701 12,382 6,846 4,735
Income (loss) from discontinued operations,
net of income tax 16 (1,258) (561) 2,135 2,518
Loss on disposal of discontinued operations,
net of income tax (879) --- --- --- ---
- -------------------------------------------------------------------------------------------------------------
Net income $ 20,438 $ 15,443 $ 11,821 $ 8,981 $ 7,253
- -------------------------------------------------------------------------------------------------------------
Earnings (loss) per share of common stock (a):
From continuing operations $1.50 $1.21 $.97 $.55 $.39
Discontinued operations:
Income (loss) from operations --- (.09) (.05) .17 .21
Loss on disposal (.06) --- --- --- ---
- -------------------------------------------------------------------------------------------------------------
Total $1.44 $1.12 $.92 $.72 $.60
- -------------------------------------------------------------------------------------------------------------
Weighted average common shares outstanding 14,233,872 13,780,365 12,811,718 12,481,377 12,140,240
- -------------------------------------------------------------------------------------------------------------
Cash dividends per common share $.2667 $.2311 $.1956 $.1867 $.1778
- -------------------------------------------------------------------------------------------------------------
Selected balance sheet items:
Current assets $154,002 $132,771 $120,000 $117,624 $124,897
Current liabilities 64,413 54,595 59,167 56,293 54,378
Working capital 89,589 78,176 60,833 61,331 70,519
Current ratio 2.39 to 1 2.43 to 1 2.03 to 1 2.09 to 1 2.30 to 1
Total assets $205,105 $177,822 $176,472 $167,799 $170,716
Long-term debt due after one year --- 75 14,948 23,389 32,518
Stockholders' equity 132,952 116,233 95,440 84,442 78,853
Book value per common share $9.72 $8.57 $7.61 $6.79 $6.48
- -------------------------------------------------------------------------------------------------------------
Number of employees--continuing operations 1,962 1,769 1,729 1,579 1,514
- -------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE:
(a) SEE NOTE 1 OF NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR CERTAIN PER
SHARE INFORMATION. ALL PER SHARE AMOUNTS HAVE BEEN ADJUSTED TO REFLECT THE
3 FOR 2 STOCK SPLITS EFFECTED IN 1996, 1995 AND 1993.
The above Selected Financial Data for the five years ended December 31, 1996 is
not reported upon herein by independent auditors. See Management's Discussion
and Analysis of Financial Condition and Results of Operations.
12
<PAGE>
WYNN'S INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF CONTINUING OPERATIONS
1996 COMPARED TO 1995--Net sales in 1996 were $288.5 million compared to $262.6
million in 1995, an increase of 10 percent. Sales increased 12 percent at the
Specialty Chemicals Division and 8 percent for the Automotive and Industrial
Components Division, which is comprised principally 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.
Sales at the Specialty Chemicals Division, principally car care products,
increased 12 percent on a worldwide basis compared to 1995. Excluding the impact
of foreign exchange rate fluctuations, total revenues in 1996 would have
increased 14 percent compared to 1995. The revenue increase was due principally
to increased sales in the U.S., Canada, the United Kingdom and Belgium. In the
U.S., revenues in 1996 increased 27 percent compared to 1995, mainly due to
strong sales of the division's product warranty programs, higher sales to the
U.S. professional market and the growth in export sales from the U.S. to Asian
distributors. The Wynn's product warranty division experienced strong revenue
growth again in 1996, with sales increasing 45 percent over 1995, principally
because of increased business with national account customers and the continued
high level of used car sales in the U.S. during the year. (See "Forward-Looking
Statements" below for a description of risk factors which could adversely affect
the product warranty division's sales growth.) Foreign subsidiary sales
increased 2 percent in 1996 over 1995, but would have increased 6 percent if
foreign exchange rates in 1996 had remained unchanged from 1995 rates. Sales
increased in France (industrial products), Canada, the United Kingdom, Belgium
and Australia, but sales decreased in the French automotive subsidiaries and in
South Africa.
Precision recorded an 8 percent increase in sales in 1996. Precision's
growth was primarily due to higher sales to the U.S. automotive original
equipment manufacturers (OEM's) and the off-road construction industry and the
introduction of new products. Precision's sales in 1996 also increased due to
the September 30, 1996 acquisition of an automotive plastic sealing business.
Excluding this acquisition, sales increased 6 percent in 1996 over 1995. Sales
of Precision's recently developed composite gasket increased in 1996 compared to
1995, and Precision expects this trend to continue as new applications are
developed and approved by major automotive OEM's. (See "Forward-Looking
Statements" below for a description of risk factors which could adversely affect
this trend.) Precision continued to receive requests in 1996 for price freezes
or price reductions from customers in a broad array of markets. Precision
expects this trend to continue in 1997. Higher revenues at Precision generally
resulted from an increase in the number of units sold as opposed to price
increases.
Skeels' sales increased 5 percent in 1996 compared to 1995, principally
due to improved economic conditions in southern California and continued efforts
to implement new sales and marketing programs.
Interest income in 1996 was $1.8 million compared to $.9 million in 1995.
The increase was due to higher cash and cash equivalent balances in 1996 than in
the prior year.
On a consolidated basis, total cost of sales in 1996 was 60.5 percent of
sales compared to 59.9 percent in 1995. The small decrease in the consolidated
gross margin was due primarily to the growth in sales of the product warranty
programs in the Specialty Chemicals Division which generally have lower gross
margins than other products of the Division. The Specialty Chemicals Division's
gross profit increased in absolute dollars due to higher sales. Precision's
gross margin was virtually the same in 1996 compared to 1995.
Selling, general and administrative ("SG&A") expenses increased to $81.7
million in 1996 from $78.3 million in 1995, but as a percentage of sales
declined from 29.8 percent in 1995 to 28.3 percent in 1996. The increase in SG&A
expenses was principally attributable to the higher sales at the Specialty
Chemicals Division and Precision, partially offset by lower corporate expenses.
Operating expenses of the Specialty Chemicals Division declined as a percentage
of sales due to the change in revenue mix, constant monitoring of costs and
lower accruals for environmental claims. Precision's operating expenses in
absolute dollars also increased over 1995 levels due to the higher revenues, but
remained approximately the same as a percentage of Precision's revenues. During
1996, corporate expenses decreased compared to 1995 levels primarily because of
lower expenses for employee severance and environmental matters. The Company
closely monitors legal and factual developments in the environmental area to
evaluate the adequacy of present reserves.
Interest expense in 1996 declined to $.2 million from $1.4 million in 1995
due to the lack of virtually any interest bearing indebtedness in 1996. During
1995 the
13
<PAGE>
WYNN'S INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Company repaid nearly all of its indebtedness and remained virtually debt free
throughout 1996.
Income before taxes from continuing operations was $33.9 million in 1996
compared to $26.5 million in 1995. In the Automotive and Industrial Components
Division, operating profits increased 6 percent in 1996 due to Precision's
higher revenue levels. Precision's profitability is sensitive to changes in
volume. Operating profits of the Specialty Chemicals Division increased 36
percent in 1996 due to increased revenues and lower operating costs as a
percentage of sales. Excluding the impact of foreign exchange rate changes, the
Specialty Chemicals Division's operating profit would have increased 40 percent
in 1996.
The effective tax rate in 1996 increased slightly to 37.2 percent compared
to the effective tax rate of 37.0 percent in 1995.
Income from continuing operations in 1996 was $21.3 million compared to
$16.7 million in 1995. The improvement in 1996 compared to 1995 was primarily
attributable to the higher operating profit at both the Specialty Chemicals
Division and Precision, the increase in interest income, and the decrease in
interest expense.
Primary earnings per share from continuing operations in 1996 was $1.50
compared to $1.21 in 1995. Fully diluted earnings per share from continuing
operations in 1996 was $1.49 compared to $1.19 in 1995. (See Note 2 of Notes to
Consolidated Financial Statements for a discussion of the 3 for 2 stock splits
in 1996 and 1995.) The increase in per share results in 1996 was due to the
increase in net income, partially offset by an increase in shares outstanding.
The number of shares outstanding increased primarily as a result of the exercise
of stock options to purchase 199,234 shares of common stock and an increase in
the number of outstanding stock options required to be included in the
outstanding shares calculation. These increases were offset by the repurchase in
1996 of 102,150 shares of the Company's common stock pursuant to a $15 million
share repurchase program authorized in December 1995.
RESULTS OF DISCONTINUED OPERATIONS
1996 COMPARED TO 1995--On May 23, 1996, the Company sold the principal operating
assets of Wynn's Climate Systems, Inc., ("WCS"), the automotive air conditioning
subsidiary which was formerly part of the Automotive and Industrial Components
Division. The buyer was Moog Automotive, Inc., a wholly-owned subsidiary of
Cooper Industries, Inc.
The results of operations for WCS and the 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 and for the twelve months ended December 31, 1995 were
$20,353,000 and $41,203,000, respectively. The loss on disposal of WCS for the
year ended December 31, 1996 includes a $2.6 million tax benefit attributable to
the deductibility of goodwill associated with the original acquisition of WCS in
1978. Such goodwill had been previously expensed for financial statement
purposes with no tax benefit.
FINANCIAL CONDITION
Working capital at December 31, 1996 was $89.6 million compared to $78.2
million at December 31, 1995. The current ratio was 2.39 to 1 at December 31,
1996 compared to 2.43 to 1 at December 31, 1995. Net assets from discontinued
operations have been included in working capital amounts at the end of each
year. The Company has adequate cash and cash equivalents and lines of credit to
meet foreseeable working capital requirements.
Cash and cash equivalents were $53.3 million at December 31, 1996 compared
to $23.1 million at December 31, 1995. The increase in cash and cash equivalents
was primarily due to the net proceeds received in connection with the
disposition of net assets of discontinued operations and cash provided by
operating activities, partially offset by the use of cash for a business
acquisition and other investing and financing activities.
On September 30, 1996, the Company purchased substantially all of the
assets of the automotive plastics business of Lawson Mardon Wheaton Inc. The
initial purchase price payable in cash was $8.8 million, subsequently reduced to
$8.3 million due to post-closing asset valuations. The business is located in
Springfield, Kentucky and manufactures plastic seals for automotive original
equipment manufacturers and Tier 1 suppliers. The acquired business had annual
sales of approximately $14 million at the time of acquisition. Operating results
from the acquired business were included in the Automotive and Industrial
Components Division beginning in the fourth quarter of 1996.
Accounts receivable increased $4.6 million to $48.3 million at December
31, 1996 from $43.8 million at December 31, 1995. This increase was principally
due to the higher sales in the fourth quarter of 1996 at Precision
14
<PAGE>
WYNN'S INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
and the Specialty Chemicals Division compared to the quarter ended December 31,
1995 and the inclusion of the receivables of the acquired business. Inventories
increased $3.7 million to $30.9 million at the end of 1996 compared to $27.3
million at December 31, 1995. The increase in inventories was due to higher
inventory levels at Precision due principally to the inclusion of the
inventories of the acquired business, partially offset by lower inventories at
the Specialty Chemicals Division. Net assets of discontinued operations
decreased $23.4 million to $.3 million at December 31, 1996 from $23.6 million
at December 31, 1995. This decrease was due to the previously reported sale of
WCS' principal operating assets in May 1996 and subsequent activities to dispose
of its remaining net assets.
Total current liabilities increased $9.8 million to $64.4 million at
December 31, 1996 from $54.6 million at December 31, 1995. The increase was
primarily due to higher accruals for product warranty programs, the amount
payable for taxes based on income and a general increase in other accrued
liabilities.
Property, plant and equipment increased $6.1 million to $44.7 million in
1996, consisting of $9.1 million in additions (principally at Precision and the
Specialty Chemicals Division), the acquisition of the sealing business, offset
by the annual depreciation charge of $6.7 million, as well as retirements and
foreign exchange adjustments.
At December 31, 1996, the Company had two separate $15.0 million unsecured
domestic committed bank lines of credit, which permit borrowings through June
1997, and one uncommitted line of credit. The Company also has a committed $4.0
million unsecured multicurrency and trade finance line of credit and various
other foreign uncommitted credit lines. At December 31, 1996, no borrowings were
outstanding under any of these lines.
The Company believes that additional lines of credit could be obtained if
necessary. Under present circumstances, neither additional lines of credit nor
additional long-term financing is required to supplement working capital
requirements.
Stockholders' equity at the end of 1996 was $133.0 million compared to
$116.2 million at the end of 1995. The increase resulted from net income of
$20.4 million, the amortization of $.4 million of unearned compensation, $1.6
million from the exercise of stock options and $.5 million of tax benefits
related to stock option exercises and stock awards, reduced by dividends of $3.6
million, $1.8 million of repurchases of the Company's common stock and an $.8
million decrease in the foreign currency translation account. Under the
Company's Stock-Based Incentive Award Plan, 135,000 and 7,500 shares of
restricted stock were issued in December 1993 and December 1996, respectively,
to the Company's Chief Executive Officer. The market value of the restricted
stock at the time of grant was recorded as unearned compensation in a separate
component of stockholders' equity and is being amortized to expense ratably over
the respective three-year and one-year vesting periods. Amortization of
approximately $.4 million was recognized in 1996.
The Company expects total capital expenditures in 1997 to be approximately
$11 million, funded from current operations. As previously announced, the
Company is continuing to explore possible niche acquisitions.
IMPACT OF CHANGING PRICES ON SALES AND INCOME
The Company attempts to minimize the impact of inflation on production and
operating costs through cost control programs and productivity improvements.
Over the past three years the inflation rate has been relatively low.
Nonetheless, the Company has continued to face increases in the cost of labor
and some materials, despite requests for price reductions from many customers.
Due to intense competition, the Company in 1996 generally was not able to raise
prices to its customers to pass along the cost increases experienced.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this Annual Report may be "forward-looking
statements" within the meaning of Section 27A of the Securities Exchange Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, in that they express the Company's expectations or beliefs concerning
future events. The statements include the following: the expected continued
growth of sales of the product warranty division and Precision's composite
gasket product line; the sufficiency of working capital; the availability of new
lines of credit if needed by the Company; and the anticipated level of capital
expenditures.
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; currency
15
<PAGE>
WYNN'S INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
exchange rates relative to the U.S. dollar; the impact of competitive products
and pricing; attempts by state governments to regulate the product warranty
program; termination of one or more of the product warranty division's alliances
with automobile finance companies; and general economic conditions, especially
in North America and Western Europe.
The Company's actual results thus may differ materially from the expected
results expressed or implied by the forward-looking statements.
RESULTS OF CONTINUING OPERATIONS
1995 COMPARED TO 1994--Net sales in 1995 were $262.6 million compared to $234.7
million in 1994, an increase of 12 percent. Sales increased 19 percent at the
Specialty Chemicals Division and 5 percent for the Automotive and Industrial
Components Division, which is comprised of Precision and Skeels.
Precision recorded a 5 percent increase in sales in 1995. Precision's
growth was primarily due to the relatively high U.S. automotive and off-road
construction vehicle rates, the introduction of new products and the continued
higher level of industrial activity in the U.S. Higher revenues were derived
from sales of O-rings and composite gaskets. Precision continued to receive
requests in 1995 for price freezes or price reductions from customers in a broad
array of markets. Precision expected this trend to continue in 1996. Higher
revenues at Precision generally resulted from an increase in the number of units
sold as opposed to price increases. Sales of Skeels increased 3 percent in 1995
compared to 1994.
Sales at the Specialty Chemicals Division, principally car care products,
increased 19 percent on a worldwide basis compared to 1994. Excluding the impact
of foreign exchange rate fluctuations, total revenues in 1995 would have
increased 15 percent compared to 1994. The revenue increase was due principally
to increased sales in the U.S., France and Belgium. In the U.S., revenues in
1995 increased 34 percent compared to 1994, mainly due to strong sales of the
division's product warranty programs, higher sales to the U.S. professional
market and growth in export sales from the U.S. to Latin American and Asian
distributors. The Wynn's product warranty division experienced strong revenue
growth in 1995 principally because of the development of new customers and the
general growth in sales of used cars in the U.S. during the year. Foreign
subsidiary sales increased 11 percent in 1995 over 1994. Foreign subsidiary
sales would have increased 4 percent in 1995 if foreign exchange rates had
remained unchanged from 1994 rates. Sales increased in France, Belgium, Canada
and South Africa, but decreased in Australia, Germany, Mexico and the United
Kingdom.
On a consolidated basis, total cost of sales in 1995 was 59.9 percent of
sales compared to 60.1 percent in 1994. The increase in the consolidated gross
margin was due primarily to the growth in sales at the Specialty Chemicals
Division and Precision. Precision's gross margin increased in 1995 due to the
higher sales volumes compared to the prior year. The Specialty Chemicals
Division's gross profit increased in absolute dollars due to higher sales, but
the gross margin percentage declined compared to 1994 due to a change in the
product mix within the Division.
Selling, general and administrative ("SG&A") expenses increased to $78.3
million in 1995, or 29.8 percent of sales, from $70.9 million in 1994, or 30.2
percent of sales. The increase in absolute dollars in SG&A expenses was
principally attributable to higher sales at the Specialty Chemicals Division and
Precision and higher corporate expenses. While total expenses at the Specialty
Chemicals Division increased due to this Division's growth in revenues,
operating expenses declined as a percentage of sales due to improved cost
controls and the change in revenue mix. The Division continues to accrue
reserves for environmental claims arising out of present and historical matters.
The amounts reserved in 1995 decreased compared to 1994. Precision's operating
expenses in absolute dollars also increased over 1994 levels due to the higher
revenues, but remained approximately the same as a percentage of Precision's
revenues. During 1995, corporate expenses increased over 1994 levels primarily
because of increased expenses for incentive compensation.
Interest expense in 1995 was $1.4 million, which was less than the $2.4
million of interest expense in 1994. The decrease is primarily due to the
reduction of outstanding indebtedness. In March 1995, the Company paid a $7.9
million installment on its 10.75 percent senior notes. Also in March 1995, the
holder of the Company's 9 percent convertible notes converted the remaining
$6,250,000 principal amount of such notes into 958,805 shares of the Company's
common stock.
Income before taxes from continuing operations was $26.5 million in 1995
compared to $20.8 million in 1994. Operating profits of Precision increased 11
percent in 1995 due to higher revenue levels. Precision's profitability is
sensitive to changes in volume. Operating profits of the
16
<PAGE>
WYNN'S INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Specialty Chemicals Division increased 36 percent in 1995 due to increased
revenues. Excluding the impact of foreign exchange rate changes, operating
profit would have increased 27 percent in 1995.
The effective tax rate in 1995 was 37.0 percent compared to the effective
tax rate of 40.6 percent in 1994. The lower effective tax rate in 1995 was
principally due to a reduction in the provision for unremitted foreign earnings.
Income from continuing operations in 1995 was $16.7 million compared to
$12.4 million in 1994. The improvement in 1995 compared to 1994 was primarily
attributable to the higher operating profit at Precision and the Specialty
Chemicals Division, the decrease in interest expense and the lower effective tax
rate.
Primary earnings per share from continuing operations in 1995 was $1.21
compared to $.97 in 1994. Fully diluted earnings per share in 1995 was $1.19
compared to $.92 in 1994. (See Note 2 of Notes to Consolidated Financial
Statements for a discussion of the 3 for 2 stock split in 1995.) The increase in
per share results in 1995 was due to the increase in net income, partially
offset by an increase in shares outstanding. The number of shares outstanding
increased primarily as a result of the conversion in March 1995 of $6,250,000
principal amount of the Company's 9 percent convertible notes into 958,805
shares of common stock, the exercise of stock options to purchase 71,775 shares
of common stock and an increase in the number of oustanding stock options
required to be included in the outstanding shares calculation.
RESULTS OF DISCONTINUED OPERATIONS
1995 COMPARED TO 1994--Revenues from discontinued operations declined 29 percent
to $41.2 million in 1995 compared to $58.0 million in 1994. The lower revenues
were principally due to a decline in sales to WCS' OEM customers. The loss from
discontinued operations in 1995 was $1.3 million compared to a loss of $.6
million in 1994. The increased loss was due to the lower sales and related lower
gross margin, and a lower tax benefit, partially offset by reduced operating
expenses. The effective tax rate in 1994 benefited from adjustments to certain
income tax credits.
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders, Wynn's International, Inc.
We have audited the accompanying consolidated balance sheets of Wynn's
International, Inc. as of December 31, 1996 and 1995, and the related
consolidated statements of income, stockholders' equity and cash flows for each
of the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Wynn's
International, Inc. at December 31, 1996 and 1995, and the consolidated results
of its operations and its cash flows for each of the three years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
Los Angeles, California
January 27, 1997
17
<PAGE>
WYNN'S INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year ended December 31
---------------------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1996 1995 1994
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues:
Net sales $288,531 $262,584 $234,659
Interest income 1,763 943 584
- --------------------------------------------------------------------------------------------------------
290,294 263,527 235,243
- --------------------------------------------------------------------------------------------------------
Costs and expenses:
Cost of sales 174,440 157,398 141,108
Selling, general and administrative 81,719 78,279 70,927
Interest expense 217 1,350 2,365
- --------------------------------------------------------------------------------------------------------
256,376 237,027 214,400
- --------------------------------------------------------------------------------------------------------
Income from continuing operations before taxes based on income 33,918 26,500 20,843
Provision for taxes based on income 12,617 9,799 8,461
- --------------------------------------------------------------------------------------------------------
Income from continuing operations 21,301 16,701 12,382
- --------------------------------------------------------------------------------------------------------
Discontinued operations:
Income (loss) from discontinued operations, net of income
taxes (benefits) of $14, $(691) and $(903), respectively 16 (1,258) (561)
Loss on disposal of discontinued operations, net of
income tax benefits of $4,643 (879) --- ---
- --------------------------------------------------------------------------------------------------------
Net income $ 20,438 $ 15,443 $ 11,821
- --------------------------------------------------------------------------------------------------------
Earnings (loss) per share of common stock:
Primary:
Continuing operations $1.50 $1.21 $.97
Discontinued operations:
Income (loss) from operations --- (.09) (.05)
Loss on disposal (.06) --- ---
- --------------------------------------------------------------------------------------------------------
Total $1.44 $1.12 $.92
- --------------------------------------------------------------------------------------------------------
Fully diluted:
Continuing operations $1.49 $1.19 $.92
Discontinued operations:
Income (loss) from operations --- (.09) (.04)
Loss on disposal (.06) --- ---
- --------------------------------------------------------------------------------------------------------
Total $1.43 $1.10 $.88
- --------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
18
<PAGE>
WYNN'S INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31
---------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1996 1995
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 53,304 $ 23,127
Accounts receivable, less $870 allowance for doubtful accounts
($710 in 1995) 48,347 43,766
Inventories 30,940 27,288
Prepaid expenses and other current assets (including deferred tax assets
of $12,025 in 1996 and $7,442 in 1995) 21,157 14,974
Net assets of discontinued operations 254 23,616
- ------------------------------------------------------------------------------------------------------
Total current assets 154,002 132,771
Property, plant and equipment, at cost less
accumulated depreciation and amortization 44,719 38,664
Costs in excess of fair value of net assets of
businesses acquired, less accumulated amortization of $1,829 ($1,577 in 1995) 3,194 3,041
Other assets 3,190 3,346
- ------------------------------------------------------------------------------------------------------
$205,105 $177,822
- ------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 18,137 $ 18,253
Dividends payable 916 789
Taxes based on income 3,676 2,289
Accrued liabilities:
Product warranty programs 12,434 9,175
Salaries and other compensation 9,832 9,926
Other 19,349 14,072
Long-term debt due within one year 69 91
- ------------------------------------------------------------------------------------------------------
Total current liabilities 64,413 54,595
Long-term debt due after one year --- 75
Deferred taxes based on income 7,740 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,
14,546,540 shares issued (14,347,306 in 1995) 14,547 14,348
Capital in excess of par value 10,377 8,390
Retained earnings 115,418 98,619
Equity adjustment from foreign currency translation (1,985) (1,170)
Unearned compensation (139) (373)
Common stock held in treasury 869,962 shares, at cost (781,312 in 1995) (5,266) (3,581)
- ------------------------------------------------------------------------------------------------------
Total stockholders' equity 132,952 116,233
- ------------------------------------------------------------------------------------------------------
$205,105 $177,822
- ------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
19
<PAGE>
WYNN'S INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Three years ended December 31, 1996
- -----------------------------------------------------------------------------------------------------------------------------------
EQUITY
ADJUSTMENT COMMON
COMMON STOCK CAPITAL IN FROM FOREIGN STOCK
(DOLLARS IN THOUSANDS, ----------------------- EXCESS OF RETAINED CURRENCY UNEARNED HELD IN
EXCEPT PER SHARE AMOUNTS) SHARES AMOUNT PAR VALUE EARNINGS TRANSLATION COMPENSATION TREASURY TOTAL
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1994 13,223,643 $13,224 $ 1,928 $ 76,873 $(2,814) $(1,188) $(3,581) $ 84,442
Net income --- --- --- 11,821 --- --- --- 11,821
Cash dividends of $.1956
per common share --- --- --- (2,444) --- --- --- (2,444)
Stock options exercised 54,731 55 293 --- --- --- --- 348
Tax benefits related to
stock option exercises --- --- 40 --- --- --- --- 40
Conversion of $250
convertible notes 38,352 38 212 --- --- --- --- 250
Adjustments from foreign
currency translation, net --- --- --- --- 576 --- --- 576
Amortization of unearned
compensation --- --- --- --- --- 407 --- 407
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1994 13,316,726 13,317 2,473 86,250 (2,238) (781) (3,581) 95,440
Net income --- --- --- 15,443 --- --- --- 15,443
Cash dividends of $.2311
per common share --- --- --- (3,074) --- --- --- (3,074)
Cash paid for fractional
shares at time of split --- --- (1) --- --- --- --- (1)
Stock options exercised 71,775 72 481 --- --- --- --- 553
Tax benefits related to
stock option exercises
and stock awards --- --- 146 --- --- --- --- 146
Conversion of $6,250
convertible notes 958,805 959 5,291 --- --- --- --- 6,250
Adjustments from foreign
currency translation, net --- --- --- --- 1,068 --- --- 1,068
Amortization of unearned
compensation --- --- --- --- --- 408 --- 408
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1995 14,347,306 14,348 8,390 98,619 (1,170) (373) (3,581) 116,233
Net income --- --- --- 20,438 --- --- --- 20,438
Cash dividends of $.2667
per common share --- --- --- (3,639) --- --- --- (3,639)
Purchase of treasury stock
at cost --- --- --- --- --- --- (1,767) (1,767)
Cash paid for fractional
shares at time of split --- --- (4) --- --- --- --- (4)
Stock options exercised 199,234 199 1,391 --- --- --- 37 1,627
Restricted stock issued
to employee --- --- 107 --- --- (152) 45 ---
Tax benefits related to
stock option exercises
and stock awards --- --- 493 --- --- --- --- 493
Adjustments from foreign
currency translation, net --- --- --- --- (815) --- --- (815)
Amortization of unearned
compensation --- --- --- --- --- 386 --- 386
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1996 14,546,540 $14,547 $10,377 $115,418 $(1,985) $ (139) $(5,266) $132,952
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
20
<PAGE>
WYNN'S INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31
--------------------------------
(DOLLARS IN THOUSANDS) 1996 1995 1994
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Activities:
Income from continuing operations $21,301 $16,701 $12,382
Adjustments:
Depreciation and amortization 7,405 6,840 6,090
Provision for uncollectible accounts 312 244 88
Amortization of stock compensation 386 408 407
(Gain) loss on fixed asset disposals (11) (59) 34
(Benefit) provision for deferred income taxes (3,381) (1,351) 178
Decrease (increase) in:
Accounts receivable-net (2,721) (3,649) (7,752)
Inventories (1,492) (710) (701)
Prepaid expenses and other current assets (1,127) (583) 273
Other assets (296) (290) (36)
Increase (decrease) in:
Accounts payable (116) 2,332 2,876
Product warranty program reserves 3,259 3,764 1,785
Income taxes payable 1,754 1,224 (1,243)
Accrued liabilities 4,217 2,158 4,602
- --------------------------------------------------------------------------------------------------------
Net cash provided by continuing operations 29,490 27,029 18,983
- --------------------------------------------------------------------------------------------------------
Income (loss) from discontinued operations 16 (1,258) (561)
Loss on disposal of discontinued operations (879) --- ---
Net items providing cash from (used in) discontinued operations (269) 4,630 (2,412)
- --------------------------------------------------------------------------------------------------------
Net cash provided by (used in) discontinued operations (1,132) 3,372 (2,973)
- --------------------------------------------------------------------------------------------------------
Net cash provided by all operating activities 28,358 30,401 16,010
- --------------------------------------------------------------------------------------------------------
Investing Activities:
Additions to property, plant and equipment (9,059) (6,755) (11,576)
Proceeds from sale of property, plant and equipment 93 146 459
Acquisition of business (8,255) --- ---
Net proceeds from disposition of net assets
of discontinued operations 23,631 --- ---
Other cash receipts (disbursements)-net (20) 1,319 112
- --------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities 6,390 (5,290) (11,005)
- --------------------------------------------------------------------------------------------------------
Financing Activities:
Borrowings under lines of credit-net --- (239) (570)
Payments on long-term debt (97) (16,693) (8,210)
Dividends paid (3,512) (2,899) (2,440)
Proceeds from exercise of stock options 1,627 553 348
Purchase of treasury stock (1,767) --- ---
Other cash disbursements-net (4) (1) ---
- --------------------------------------------------------------------------------------------------------
Net cash used in financing activities (3,753) (19,279) (10,872)
- --------------------------------------------------------------------------------------------------------
Effect of exchange rate changes (818) 849 916
- --------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 30,177 6,681 (4,951)
Cash and cash equivalents at beginning of year 23,127 16,446 21,397
- --------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $53,304 $23,127 $16,446
- --------------------------------------------------------------------------------------------------------
</TABLE>
Supplemental disclosure of interest and income taxes paid and noncash investing
and financing activities:
Interest paid in 1996, 1995 and 1994 was $107,000, $2,484,000 and
$3,020,000, respectively. Income taxes paid in 1996, 1995 and 1994 were
$9,615,000, $9,235,000 and $8,623,000, respectively. 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.
21
<PAGE>
WYNN'S INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
Wynn's International, Inc. ("Wynn's" or the "Company") and its wholly-owned
subsidiaries and one majority-owned subsidiary. All significant intercompany
transactions have been eliminated. Certain reclassifications have been made to
the prior years' amounts to conform with the 1996 presentation. 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 loss on disposal of WCS'
principal net operating assets have been classified on the statements of income
as discontinued operations. The net assets of WCS have been classified on the
balance sheets as net assets of discontinued operations and at December 31, 1996
consist primarily of accounts receivable, inventory and other accrued
liabilities. All years presented have been recast to reflect the effect of the
discontinued operations.
The preparation of financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
STOCK SPLITS
The Company effected a 3 for 2 stock split in the fourth quarter of 1996
and a similar 3 for 2 stock split in the fourth quarter of 1995. All share and
per share amounts have been adjusted retroactively for both stock splits (see
Note 2).
EARNINGS PER SHARE
Primary earnings per share is computed by dividing net income by the
weighted average number of shares outstanding during the year and assumes the
exercise of stock options. Fully diluted earnings per share is calculated by
dividing net income adjusted for the interest on the convertible debt by the
weighted average number of fully diluted shares outstanding during the year, and
assumes the conversion of the convertible debt and the exercise of stock
options. The weighted average number of shares outstanding used to calculate
earnings per share in 1996, 1995 and 1994 for primary purposes were 14,233,872,
13,780,365 and 12,811,718, respectively, and for fully diluted purposes were
14,307,395, 14,053,598 and 13,789,521, respectively. (See Note 2 for a
discussion of the stock splits effected in 1996 and 1995.)
CASH AND CASH EQUIVALENTS
The Company's policy is to invest cash in excess of operating requirements
in short-term interest bearing investments. Cash equivalents of $50,344,000 in
1996 and $20,574,000 in 1995 include commercial paper, guaranteed investment
contracts, certificates of deposit and money market accounts which have
maturities of three months or less when purchased and are stated at cost, which
approximates fair market value.
CONCENTRATIONS OF CREDIT RISK
The Company places its temporary cash investments in high credit quality
financial institutions and investment grade short-term investments and limits
the amount of credit exposure to any one entity. Substantially all of the
Company's accounts receivable are due from customers in the original equipment
and aftermarket automotive industries, both in the U.S. and internationally. The
Company performs periodic credit evaluations of its customers and generally does
not require collateral. The Company does not believe significant credit risks
exist at December 31, 1996 with respect to its temporary cash investments or
accounts receivable.
INVENTORIES
Inventories are stated at the lower of cost (principally first-in,
first-out) or market.
DEPRECIATION
Depreciation and amortization of property, plant and equipment are
calculated principally using the straight-line method over the estimated useful
lives of the respective assets (see Note 8).
COSTS IN EXCESS OF FAIR VALUE OF
NET ASSETS OF BUSINESSES ACQUIRED
Costs in excess of fair value of net assets of businesses acquired are
amortized using the straight-line method over a period of ten to forty years.
LONG-LIVED ASSETS
During 1996, the Company adopted Statement of Financial Accounting
Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of ("Statement 121"). In accordance with
Statement 121, long-lived assets and
22
<PAGE>
WYNN'S INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
certain identifiable intangibles held and used by the Company are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Based upon the Company's
analysis under Statement 121, the Company believes that no impairment of the
carrying value of its long-lived assets existed at December 31, 1996.
INCOME TAXES
The Company provides for income taxes utilizing the liability method and
provides taxes on the undistributed earnings of all foreign subsidiaries.
FOREIGN CURRENCY TRANSLATION
Gains and losses resulting from balance sheet translation of foreign
operations where a foreign currency is the functional currency are included as a
separate component of stockholders' equity.
FOREIGN EXCHANGE CONTRACTS
The Company enters into foreign exchange contracts to hedge certain
intercompany transactions with its foreign subsidiaries. These contracts reduce
currency risk from exchange rate movements. Gains and losses are deferred and
accounted for as part of the underlying transactions. The contractual amounts
and related deferred gains and losses from these contracts are immaterial.
STOCK-BASED COMPENSATION
Statement of Financial Accounting Standards No. 123, Accounting for
Stock-Based Compensation, encourages, but does not require, companies to record
compensation cost for stock-based employee compensation plans at fair value. The
Company has chosen to continue to account for stock-based compensation using the
intrinsic value method prescribed in Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees, and related Interpretations.
Accordingly, compensation cost for stock options is measured as the excess, if
any, of the quoted market price of the Company's stock at the date of the grant
over the amount an employee must pay to acquire the stock. Compensation cost for
performance shares is recorded over the vesting period from the date the
underlying stock options are exercised based on the fair market value of the
Company's stock on the option exercise date.
2. DISCONTINUED OPERATIONS; ACQUISITION; STOCK SPLITS
DISCONTINUED OPERATIONS
On May 23, 1996, the Company sold the principal operating assets of Wynn's
Climate Systems, Inc. The assets acquired by the buyer included substantially
all of WCS' property, plant and equipment and its intellectual property. The
buyer assumed certain liabilities, contracts and leases of WCS. The buyer
entered into a consignment agreement to sell, on a reasonable best-efforts
basis, WCS' inventory during the twelve months ending May 22, 1997 and to
collect on behalf of WCS all outstanding accounts receivable. As of December 31,
1996, the Company has received $26.1 million (including tax benefits of $2.5
million) of an expected total of $29.0 million (including tax benefits of $4.6
million) from the transaction.
Revenues from discontinued operations for the period January 1 to May 23,
1996 were $20,353,000 and for the twelve months ended December 31, 1995 and 1994
were $41,203,000 and $57,992,000, respectively.
ACQUISITION
On September 30, 1996, the Company purchased substantially all of the
assets of the automotive plastics business of Lawson Mardon Wheaton Inc. The
purchase price was $8,255,000. The acquisition has been accounted for using the
purchase method of accounting. The business is located in Springfield, Kentucky
and manufactures plastic seals for automotive original equipment manufacturers
and Tier 1 suppliers. The business had annual sales of approximately $14
million. Operating results from the business are included in the Automotive and
Industrial Components Division beginning in the fourth quarter of 1996.
STOCK SPLITS
On December 11, 1996, the Board of Directors authorized a 3 for 2 stock
split effected in the form of a stock dividend payable to stockholders of record
on December 23, 1996. Previously, on November 29, 1995, the Board of Directors
authorized a 3 for 2 stock split also effected in the form of a stock dividend
payable to stockholders of record on December 15, 1995. All references in the
financial statements to average number of shares outstanding and related prices,
per share amounts, convertible note and stock option plan data have been
restated retroactively to reflect both of the 3 for 2 splits.
23
<PAGE>
WYNN'S INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. FOREIGN OPERATIONS
Condensed combined financial information of Wynn's foreign subsidiaries
(the operations of which are located in Australia, Belgium, Canada, France,
Germany, Holland, Mexico, New Zealand, South Africa, Spain, United Kingdom and
Venezuela) at December 31, 1996 and 1995 and for the three years ended December
31, 1996 before eliminations of intercompany balances and profits and any
provision for taxes on repatriation of foreign earnings, is as follows:
(IN THOUSANDS) 1996 1995
- --------------------------------------------------------------------------------
Assets:
Current assets $44,099 $43,228
Property, plant and equipment 5,055 5,397
Other noncurrent assets 2,983 3,152
- --------------------------------------------------------------------------------
$52,137 $51,777
- --------------------------------------------------------------------------------
Liabilities and stockholders' equity:
- --------------------------------------------------------------------------------
Current liabilities $21,115 $21,696
Long-term debt and deferred
taxes based on income 689 1,524
Stockholders' equity 30,333 28,557
- --------------------------------------------------------------------------------
$52,137 $51,777
- --------------------------------------------------------------------------------
(IN THOUSANDS) 1996 1995 1994
- --------------------------------------------------------------------------------
Net sales $93,949 $91,946 $81,739
- --------------------------------------------------------------------------------
Net income $ 5,357 $ 4,941 $ 4,009
- --------------------------------------------------------------------------------
Transaction gains and losses resulting from changes in foreign currency
exchange rates have been charged to operations and are immaterial.
4. INVENTORIES
Inventories consist of the following at December 31, 1996 and 1995:
(IN THOUSANDS) 1996 1995
- --------------------------------------------------------------------------------
Finished goods $19,789 $17,346
Raw materials and work in process 11,151 9,942
- --------------------------------------------------------------------------------
$30,940 $27,288
- --------------------------------------------------------------------------------
5. TAXES BASED ON INCOME
The provision for taxes based on income from continuing operations
consists of the following elements for the three years ended December 31, 1996:
(IN THOUSANDS) 1996 1995 1994
- --------------------------------------------------------------------------------
Current:
Federal $ 9,535 $ 7,653 $ 4,210
State 1,488 1,412 1,104
Foreign 3,845 3,897 3,747
- --------------------------------------------------------------------------------
Total current 14,868 12,962 9,061
- --------------------------------------------------------------------------------
Deferred:
Federal (650) (2,154) (358)
State (373) (502) 126
Foreign (1,228) (507) (368)
- --------------------------------------------------------------------------------
Total deferred (2,251) (3,163) (600)
- --------------------------------------------------------------------------------
Total $12,617 $ 9,799 $ 8,461
- --------------------------------------------------------------------------------
Pretax income from continuing operations for domestic and foreign
operations for the three years ended December 31, 1996 is as follows:
(IN THOUSANDS) 1996 1995 1994
- --------------------------------------------------------------------------------
Domestic $26,444 $18,450 $14,975
Foreign 7,474 8,050 5,868
- --------------------------------------------------------------------------------
$33,918 $26,500 $20,843
- --------------------------------------------------------------------------------
A reconciliation of the statutory federal income tax rate to the effective
tax rate, as a percentage of income from continuing operations before taxes
based on income for the three years ended December 31, 1996, follows:
1996 1995 1994
- --------------------------------------------------------------------------------
Statutory federal income
tax rate 35.0% 35.0% 35.0%
State taxes, net of federal
tax benefit 2.1 2.2 2.1
Other-net 0.1 (0.2) 3.5
- --------------------------------------------------------------------------------
37.2% 37.0% 40.6%
- --------------------------------------------------------------------------------
At December 31, 1996, the Company had the following carryforwards for tax
purposes available for future utilization with the indicated expiration periods
(in thousands):
FOREIGN NET
YEAR OPERATING LOSS
- --------------------------------------------------------------------------------
2001 $ 34
2002 61
2003 39
2004 37
2005 74
2006 46
Unlimited 1,112
- --------------------------------------------------------------------------------
$1,403
- --------------------------------------------------------------------------------
24
<PAGE>
WYNN'S INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A valuation allowance of $1,617,000 has been recognized to offset these
and other deferred tax assets. The valuation allowance against deferred tax
assets decreased by $108,000 during 1996 due to a net decrease in tax attribute
carryovers.
Significant components of the Company's deferred tax assets and
liabilities as of December 31, 1996 and 1995 are as follows:
(IN THOUSANDS) 1996 1995
- --------------------------------------------------------------------------------
Deferred tax liabilities:
Foreign earnings $ 2,031 $ 3,011
Accelerated depreciation
and amortization 2,878 2,646
Pension plan 1,160 968
Other 3,780 2,938
- --------------------------------------------------------------------------------
Total deferred tax liabilities 9,849 9,563
- --------------------------------------------------------------------------------
Deferred tax assets:
Accrued expenses 12,053 8,774
Inventory valuation 2,295 1,526
Tax attributes carryover 1,403 1,511
- --------------------------------------------------------------------------------
Subtotal 15,751 11,811
Valuation allowances (1,617) (1,725)
- --------------------------------------------------------------------------------
Total deferred tax assets 14,134 10,086
- --------------------------------------------------------------------------------
Net deferred tax assets $ 4,285 $ 523
- --------------------------------------------------------------------------------
The provisions (benefits) for income taxes for discontinued operations
differ from those amounts computed by applying the statutory federal income tax
rates due principally to deductible goodwill and federal tax credits.
6. LINES OF CREDIT
The Company has two domestic committed unsecured lines of credit for $15.0
million each and various domestic and foreign uncommitted credit lines. The
lines provide for borrowings at interest rates of prime (8.25% at December 31,
1996) and/or various other prevailing rates. At December 31, 1996, the Company
had no outstanding borrowing under these lines of credit.
The Company also has a $4.0 million unsecured multicurrency and trade
finance line of credit which provides for standby and commercial letters of
credit. At December 31, 1996, there were no outstanding amounts under this
facility. This facility and the two domestic committed lines of credit permit
borrowings through June 1997.
In 1996, 1995 and 1994, the average amount of notes payable outstanding
during the year was $27,000, $1,205,000 and $602,000, respectively, and the
related average interest rate was 6.5%, 6.9% and 10.4%, respectively.
7. LONG-TERM DEBT
At December 31, 1996, the Company had $69,000 of miscellaneous long-term debt
outstanding, all of which was due within one year. At December 31, 1995, the
Company had $166,000 of miscellaneous long-term debt outstanding, of which
$75,000 was due after one year and $91,000 due within one year. Interest expense
for long-term debt amounted to $16,000 for 1996 ($995,000 for 1995 and
$1,941,000 for 1994).
8. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following at December 31,
1996 and 1995:
(IN THOUSANDS) 1996 1995
- --------------------------------------------------------------------------------
Land and land improvements $ 1,495 $ 915
Buildings 21,256 20,260
Leasehold improvements 703 733
Equipment, furniture and fixtures 65,653 56,916
- --------------------------------------------------------------------------------
89,107 78,824
Less accumulated depreciation
and amortization (44,388) (40,160)
- --------------------------------------------------------------------------------
$44,719 $38,664
- --------------------------------------------------------------------------------
Estimated useful lives used to calculate depreciation of property, plant
and equipment are as follows:
Land improvements 10 - 20 years
Buildings 10 - 40 years
Leasehold improvements 2 - 10 years
Equipment, furniture and fixtures 3 - 10 years
9. RETIREMENT PLANS
Wynn's and its domestic subsidiaries have four qualified defined benefit
retirement plans, which cover substantially all of their U.S. employees. One
plan is a compulsory noncontributory defined benefit pension plan that covers
the employees of the parent company and two domestic subsidiaries. Another plan
is a contributory defined benefit plan that covers the salaried employees of one
domestic subsidiary. Two other plans, which were collectively bargained with the
unions, cover hourly employees of one domestic subsidiary. Substantially all
domestic employees are eligible to participate in one of the plans. Benefits
under these plans are based on employees' earnings and
25
<PAGE>
WYNN'S INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. RETIREMENT PLANS (CONTINUED)
length of service with the Company. The funding policy for these plans is to
make the annual contribution required by applicable regulations, which are
intended to provide only for benefits attributed to service-to-date.
Net periodic pension costs for the three years ended December 31, 1996
included the following components:
(IN THOUSANDS) 1996 1995 1994
- --------------------------------------------------------------------------------
Service cost-benefits
earned during the
period $ 808 $ 707 $ 859
Interest cost on projected
benefit obligation 1,464 1,310 1,286
Actual return on assets (3,642) (4,496) (262)
Net amortization and
deferral 1,473 2,609 (1,659)
- --------------------------------------------------------------------------------
$ 103 $ 130 $ 224
- --------------------------------------------------------------------------------
Net periodic pension costs (income) of $47,000, $(34,000) and $(24,000)
were charged to continuing operations in 1996, 1995 and 1994, respectively, and
to discontinued operations in the amounts of $56,000, $164,000 and $248,000,
respectively.
All of the pension plans have plan assets that exceed accumulated benefit
obligations. Plan assets include government bonds and securities, money market
accounts, mutual funds, corporate bonds and corporate stocks. The following
table sets forth the plans' funded status and amounts recognized in the
Company's consolidated balance sheets at December 31, 1996 and 1995 for its U.S.
pension plans:
(IN THOUSANDS) 1996 1995
- --------------------------------------------------------------------------------
Actuarial present value of
benefit obligations:
Vested benefit obligation $(16,985) $(16,586)
- --------------------------------------------------------------------------------
Accumulated benefit
obligation $(17,893) $(17,250)
- --------------------------------------------------------------------------------
Projected benefit obligation $(20,421) $(20,253)
Plan assets at fair market value 25,049 22,544
- --------------------------------------------------------------------------------
Plan assets in excess of projected
benefit obligation 4,628 2,291
Unrecognized transition assets
amortized over various
periods of time (1,138) (1,387)
Unrecognized prior service cost 1,330 1,575
Unrecognized net gain (2,029) (180)
- --------------------------------------------------------------------------------
Prepaid pension cost $ 2,791 $ 2,299
- --------------------------------------------------------------------------------
Assumptions used as of December 31, 1996, 1995 and 1994 were:
1996 1995 1994
- --------------------------------------------------------------------------------
Discount or settlement rate 7.5% 7.5% 8.5%
Rate of increase in
compensation level 5.0% 5.0% 5.5%
Expected long-term rate
of return on assets 9.0% 9.0% 9.0%
Non-U.S. employees are generally enrolled in pension plans in their
country of domicile. The effect of the Company's foreign plans is considered to
be immaterial and has not been included in the above tables. Applicable expenses
for these plans have been included in consolidated net income. The Company
believes that these plans are adequately funded in accordance with local
actuarial principles and laws.
The Company has a defined contribution plan for all full-time U.S. based
employees with at least 12 months of consecutive service. Eligible employees are
entitled to contribute from 1% to 10% of their base pay into an investment
trust, and the Company matches, at the rate of $.50 for each $1.00 contributed,
up to 3% of the employee's base pay. In addition, eligible employees at December
31 each year receive an additional 1% of their base pay contributed by the
Company into the plan. The Company's total contributions into this plan for
1996, 1995 and 1994 were $408,000, $370,000 and $340,000, respectively.
The Company provides postretirement medical benefits for certain retired
employees at the U.S. operations of Wynn's-Precision, Inc. At January 1, 1993,
the accumulated postretirement benefit obligation (before tax benefit) was $3.2
million, which the Company elected to amortize over 20 years as part of the
annual benefit cost. The net periodic postretirement benefit costs were
$124,000, $153,000 and $281,000 in 1996, 1995 and 1994, respectively. The
Company does not prefund this benefit program. No additional benefits are being
earned with respect to this program by any active employees. The following table
sets forth the program's status and amounts recognized in the
26
<PAGE>
WYNN'S INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Company's consolidated balance sheets at December 31, 1996 and 1995:
(IN THOUSANDS) 1996 1995
- --------------------------------------------------------------------------------
Unfunded accumulated post-
retirement benefit obligation $(1,519) $(1,548)
Unrecognized net gain (resulting
from reduction in estimated
health care cost trend rates) (1,506) (1,651)
Unrecognized net transition
obligation 2,560 2,719
- --------------------------------------------------------------------------------
Accrued postretirement benefit cost $ (465) $ (480)
- --------------------------------------------------------------------------------
The weighted average discount rate used to determine the accumulated
postretirement benefit obligation for 1996 and 1995 was 7.5%. The assumed annual
health care cost trend rate was 8.5% for 1997, gradually decreasing to 4.5% in
2005 and remaining at that level thereafter. If the health care cost trend rate
were increased 1%, the accumulated postretirement benefit obligation would
increase $77,000 and the aggregate of the service and interest cost components
of the net periodic postretirement benefit cost would increase $6,000.
10. COMMITMENTS
Wynn's rents certain facilities and equipment under various noncancellable
operating leases. Rental commitments under these leases, exclusive of property
taxes and insurance, are as follows:
YEAR (IN THOUSANDS)
- --------------------------------------------------------------------------------
1997 $1,835
1998 1,045
1999 730
2000 323
2001 163
2002 and after 175
- --------------------------------------------------------------------------------
Total $4,271
- --------------------------------------------------------------------------------
Rental expenses for all operating leases were $2,236,000 in 1996
($2,027,000 in 1995 and $2,207,000 in 1994).
11. CONTINGENCIES
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 consolidated results of operations, cash flows, or the
financial position of the Company based upon information presently known to the
Company.
The Company is also involved in certain proceedings and potential
proceedings relating to environmental matters. At December 31, 1996, included in
other accrued liabilities are consolidated accrued reserves of approximately
$5.8 million relating to environmental matters. In establishing such reserves,
the Company evaluates to the extent known for each matter the nature and extent
of the underlying contamination, the estimated cost of the likely remedy, the
number and financial strength of other potentially responsible parties, and the
evidence against the various potentially responsible parties. During this
evaluation process, the Company makes its best estimate of its likely exposure
with respect to each matter based on information known to the Company at that
time. Such estimates may involve a range of exposures for each matter. The
Company provides aggregate reserves for no less than the minimum amount of the
aggregate range of outcomes established by the Company.
The Company lacks sufficient information at this time to provide an
estimate of its "reasonably possible" (as such term is defined in Statement of
Financial Accounting Standards No. 5) potential liability from all environmental
matters. In establishing reserves for environmental matters, the Company assumes
that it has appropriately evaluated key factors, such as expected remedy costs,
the likely degree of responsibility and ability to pay of other potentially
responsible parties, and the Company's probable allocable share. It is
reasonably possible that regulatory or technical developments or subsequently
developed information could cause the Company to reevaluate its present range of
outcomes and to record additional liabilities for existing enviromental matters.
However, based upon information presently known to the Company, the Company
believes that any such additional liabilities should not materially affect the
Company's consolidated annual results of operations, cash flows, or financial
position.
27
<PAGE>
WYNN'S INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. STOCK PLANS
The Company has two stock-based plans pursuant to which current grants of
options to purchase common stock of Wynn's may be made. The Stock-Based
Incentive Award Plan ("1989 Plan") authorizes the grant of nonqualified stock
options, incentive stock options, stock appreciation rights, restricted stock
and performance shares to officers and key employees of the Company. The
Non-Employee Directors' Stock Option Plan ("1994 Plan") provides for the grant
of nonqualified stock options to non-employee directors of the Company. In
addition, the 1982 Incentive Stock Option Plan ("1982 Plan"), which expired in
April 1992, authorized the grant of incentive stock options. Under the 1982
Plan, the aggregate number of options granted could not exceed 675,000 shares.
Under the 1989 and 1994 Plans, the aggregate number of stock related awards may
not exceed 1,209,375 shares. At December 31, 1996, the aggregate number of
options available for future grants was 138,217. All options granted under the
three plans have been made at prices not less than 100 percent of the fair
market value of the stock at the date of grant. Options granted under the three
plans are exercisable at various dates over a ten-year period. However, under
the three plans, no options may be exercised until at least one year after the
date of grant.
During 1996, 7,500 shares of restricted stock were awarded under the 1989
Plan. The restricted stock award vests over a one-year period. Recipients of
restricted stock grants are entitled to cash dividends and voting rights on
their respective shares. Restrictions limit the sale or transfer of shares
during the vesting period. Unearned compensation of $152,000 was recorded at the
date of the award in 1996 based on the market value of shares. Unearned
compensation, which is shown as a separate component of stockholders' equity, is
being amortized to expense over the vesting period. During 1996, $386,000 was
recorded as expense ($408,000 and $407,000 in 1995 and 1994, respectively).
The Company grants performance shares in connection with certain stock
options granted to officers and other key employees. Performance shares are
issuable to recipients of these grants who exercise the underlying stock
options, hold the shares of stock received for a three-year vesting period and
remain continuously employed by the Company during the vesting period. During
1996, 17,850 performance shares were granted under the 1989 Plan. At December
31, 1996, grants for 51,690 performance shares were outstanding. No shares of
the Company's common stock have been issued pursuant to performance share
grants. No stock appreciation rights were outstanding at December 31, 1996. The
following tabulation summarizes certain information related to options for
common stock:
WEIGHTED
AVERAGE
EXERCISE
OPTIONS PRICE
- --------------------------------------------------------------------------------
OUTSTANDING OPTIONS AT
JANUARY 1, 1994 892,237 $ 6.52
GRANTED DURING THE YEAR 244,125 9.25
SURRENDERED, FORFEITED OR EXPIRED (49,893) 8.39
EXERCISED (54,731) 6.36
- --------------------------------------------------------------------------------
OUTSTANDING AT DECEMBER 31, 1994 1,031,738 7.08
GRANTED DURING THE YEAR 65,250 9.48
SURRENDERED, FORFEITED OR EXPIRED (19,913) 7.13
EXERCISED (71,775) 7.71
- --------------------------------------------------------------------------------
OUTSTANDING AT DECEMBER 31, 1995 1,005,300 7.20
GRANTED DURING THE YEAR 91,500 16.02
SURRENDERED, FORFEITED OR EXPIRED (27,677) 12.71
EXERCISED (172,647) 7.85
- --------------------------------------------------------------------------------
OUTSTANDING AT DECEMBER 31, 1996 896,476 $ 7.80
- --------------------------------------------------------------------------------
Exercisable options outstanding at December 31, 1996, 1995 and 1994 and
the related weighted average exercise prices were 757,775, 851,951 and 750,263
and $6.84, $6.82 and $6.32, respectively.
The following tabulation summarizes certain information concerning
outstanding and exercisable options at December 31, 1996:
RANGE OF EXERCISE PRICES
- --------------------------------------------------------------------------------
$4.97 $ 8.03 $14.58
to to to
$7.30 $10.33 $20.25
- --------------------------------------------------------------------------------
Outstanding options:
Number outstanding 463,124 359,852 73,500
Weighted average
exercise price $5.45 $9.07 $16.37
Weighted average
remaining contractual
life in years 2.7 6.3 9.4
Exercisable options:
Number exercisable 463,124 294,651 --
Weighted average
exercise price $5.45 $9.02 --
If the Company had elected to recognize compensation cost based on the
fair value of the options
28
<PAGE>
WYNN'S INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
granted at the grant date as prescribed by Statement of Financial Accounting
Standards No. 123, net income and earnings per share would have been reduced to
the pro forma amounts shown below:
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1996 1995
- --------------------------------------------------------------------------------
Pro forma:
Net income $20,266 $15,328
Earnings per share:
Primary $1.42 $1.11
Fully diluted $1.42 $1.09
The fair value of each option grant was estimated on the date of grant
using the Black-Scholes option pricing model using the following weighted
average assumptions:
1996 1995
- --------------------------------------------------------------------------------
Risk free interest rate 5.38% 7.23%
Expected life in years 4.5 4.5
Expected volatility .274 .289
Expected dividend yield 1.70% 2.44%
The weighted average fair value of options granted during 1996 was $4.36
per share.
The Company has an Employee Stock Purchase Plan (the "Plan") under which
there are authorized and available for sale to employees, at a 15% discount, an
aggregate of 900,000 shares of the Company's common stock. For the Plan year
ended December 31, 1996, 27,264 shares were issued at $11.19 per share in
January 1997. At December 31, 1996, 840,149 shares were available under the Plan
for future sales to employees.
13. SHAREHOLDER RIGHTS PLAN
In March 1989, the Board of Directors adopted a Shareholder Rights Plan.
The plan provides for a dividend distribution of rights (the "Rights") with
respect to outstanding shares of common stock of the Company issued prior to the
earliest of March 3, 1999, the redemption date of the Rights or certain takeover
events. In the event the Company is acquired under certain circumstances in a
merger in which the Company is not the surviving corporation, the Rights become
rights to purchase the acquiring company's common stock at a 50% discount (the
"flip-over feature"). In the event of certain acquisitions of 25% or more of the
Company's common stock, the Rights become rights to purchase the Company's
common stock at a 50% discount (the "flip-in feature"). The flip-in feature does
not apply to tender or exchange offers for all outstanding common stock
determined by nonmanagement directors of the Company to be fair and in the best
interests of the Company and its stockholders (a "Qualified Offer"). The
flip-over feature does not apply to a merger following a Qualified Offer which
provided the same or a higher value to the remaining stockholders. The Rights
may be redeemed by the Company at a nominal price under certain circumstances.
The Rights will expire on March 3, 1999 or on such later date to which the
Rights may be extended by the Company, unless earlier redeemed.
14. BUSINESS SEGMENT AND GEOGRAPHICAL INFORMATION
Wynn's operations are principally in two industry segments: Automotive and
Industrial Components and Specialty Chemicals. Operations in the Automotive and
Industrial Components segment involve the manufacturing and marketing of O-rings
and other static and dynamic seals principally for the automotive industry. In
addition, Wynn's operations in the Builders Hardware industry, which are not
significant, are included in the Automotive and Industrial Components segment.
In years prior to 1996, the operations of the Builders Hardware industry
comprised a separate segment. Operations in the Specialty Chemicals industry
involve the development, production and marketing of a wide variety of car care
products, automotive chemicals for the consumer, specialty chemicals and
equipment for professional automotive service centers and product warranty
programs for automotive dealerships, as well as industrial coolants, specialty
fluids and cutting fluids used in metal-working. Product sales in the Specialty
Chemicals Division are made primarily through domestic and foreign distributors.
Industry segment net sales include sales to unaffiliated customers.
Operating profit from segments represents net sales less operating expenses
before income taxes. Corporate expenses include normal corporate items. Certain
costs related to environmental matters that were shown as corporate expenses in
years prior to 1996 have been reallocated to the segment to which the underlying
property is most closely associated.
Identifiable assets are those assets of Wynn's that are used in the
operations of each industry segment. Corporate assets are principally cash and
cash equivalents, prepaid expenses and other receivables. Intercompany loans and
advances and the related accrued interest thereon are excluded from identifiable
assets.
Sales to the largest customer of the Automotive and Industrial Components
segment were 10.1% of consolidated net sales during 1996 (11.2% in 1995 and
11.9% in 1994).
29
<PAGE>
WYNN'S INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
14. BUSINESS SEGMENT AND GEOGRAPHICAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
SUMMARY BY INDUSTRY SEGMENTS Year Ended December 31
- ----------------------------------------------------------------------------------------------------
(IN THOUSANDS) 1996 1995 1994 1993 1992
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET SALES
Automotive and Industrial Components $140,513 $130,411 $123,792 $103,204 $ 91,601
Specialty Chemicals 148,018 132,173 110,867 98,318 99,622
- ----------------------------------------------------------------------------------------------------
Total net sales $288,531 $262,584 $234,659 $201,522 $191,223
- ----------------------------------------------------------------------------------------------------
OPERATING PROFIT
Automotive and Industrial Components $ 23,124 $ 21,828 $ 19,799 $ 12,466 $ 10,634
Specialty Chemicals 15,627 11,526 8,501 5,953 6,336
- ----------------------------------------------------------------------------------------------------
Total operating profit of segments 38,751 33,354 28,300 18,419 16,970
Corporate expenses (5,824) (5,996) (5,412) (3,482) (3,855)
Corporate interest income 1,208 492 320 366 239
Interest expense (217) (1,350) (2,365) (2,976) (3,783)
- ----------------------------------------------------------------------------------------------------
Income from continuing operations
before taxes based on income $ 33,918 $ 26,500 $ 20,843 $ 12,327 $ 9,571
- ----------------------------------------------------------------------------------------------------
IDENTIFIABLE ASSETS
Automotive and Industrial Components $ 87,859 $ 71,927 $ 69,955 $ 59,147 $ 58,252
Specialty Chemicals 68,118 62,770 53,837 49,371 53,886
- ----------------------------------------------------------------------------------------------------
Identifiable assets of segments 155,977 134,697 123,792 108,518 112,138
Corporate assets 48,874 19,509 18,665 23,157 18,643
Discontinued operations 254 23,616 34,015 36,124 39,935
- ----------------------------------------------------------------------------------------------------
Total assets $205,105 $177,822 $176,472 $167,799 $170,716
- ----------------------------------------------------------------------------------------------------
DEPRECIATION AND AMORTIZATION
Automotive and Industrial Components $ 5,628 $ 5,098 $ 4,380 $ 3,937 $ 3,603
Specialty Chemicals 1,743 1,705 1,679 1,656 1,688
Corporate 34 37 31 36 42
- ----------------------------------------------------------------------------------------------------
Total depreciation and amortization $ 7,405 $ 6,840 $ 6,090 $ 5,629 $ 5,333
- ----------------------------------------------------------------------------------------------------
CAPITAL EXPENDITURES
Automotive and Industrial Components $ 7,515 $ 5,291 $ 9,780 $ 4,365 $ 4,541
Specialty Chemicals 1,527 1,409 1,759 921 1,678
Corporate 17 55 37 17 25
- ----------------------------------------------------------------------------------------------------
Total capital expenditures $ 9,059 $ 6,755 $ 11,576 $ 5,303 $ 6,244
- ----------------------------------------------------------------------------------------------------
</TABLE>
30
<PAGE>
WYNN'S INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
14. BUSINESS SEGMENT AND GEOGRAPHICAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
SUMMARY BY GEOGRAPHICAL AREAS Year Ended December 31
- ----------------------------------------------------------------------------------------------------------
(IN THOUSANDS) 1996 1995 1994 1993 1992
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET SALES
United States:
Sales to unaffiliated customers $194,582 $170,638 $152,920 $125,180 $110,551
Intercompany sales between
geographical areas 3,846 3,855 3,802 3,730 2,708
Europe:
Sales to unaffiliated customers 59,352 57,985 48,304 44,707 50,301
Intercompany sales between
geographical areas 514 485 529 376 330
Other foreign:
Sales to unaffiliated customers 34,597 33,961 33,435 31,635 30,371
Intercompany sales between
geographical areas 2,064 1,418 1,239 832 465
Eliminate intercompany sales (6,424) (5,758) (5,570) (4,938) (3,503)
- ----------------------------------------------------------------------------------------------------------
Total net sales $288,531 $262,584 $234,659 $201,522 $191,223
- ----------------------------------------------------------------------------------------------------------
OPERATING PROFIT
United States $ 27,472 $ 22,233 $ 20,097 $ 12,047 $ 10,188
Europe 5,286 5,433 3,704 2,610 4,266
Other foreign 5,984 5,678 4,511 3,799 2,516
Eliminate change during year in
intercompany profit in inventories 9 10 (12) (37) ---
- ----------------------------------------------------------------------------------------------------------
Total operating profit of segments 38,751 33,354 28,300 18,419 16,970
Corporate expenses (5,824) (5,996) (5,412) (3,482) (3,855)
Corporate interest income 1,208 492 320 366 239
Interest expense (217) (1,350) (2,365) (2,976) (3,783)
- ----------------------------------------------------------------------------------------------------------
Income from continuing operations
before taxes based on income $ 33,918 $ 26,500 $ 20,843 $ 12,327 $ 9,571
- ----------------------------------------------------------------------------------------------------------
IDENTIFIABLE ASSETS
United States $107,689 $ 85,982 $ 82,521 $ 71,469 $ 71,840
Europe 33,881 35,270 28,896 26,262 29,559
Other foreign 17,424 15,837 15,214 13,576 13,883
Eliminate intercompany profit in inventory and
intercompany trade accounts receivable (3,017) (2,392) (2,839) (2,789) (3,144)
- ----------------------------------------------------------------------------------------------------------
Identifiable assets of segments 155,977 134,697 123,792 108,518 112,138
Corporate assets 48,874 19,509 18,665 23,157 18,643
Discontinued operations 254 23,616 34,015 36,124 39,935
- ----------------------------------------------------------------------------------------------------------
Total assets $205,105 $177,822 $176,472 $167,799 $170,716
- ----------------------------------------------------------------------------------------------------------
</TABLE>
31
<PAGE>
WYNN'S INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. QUARTERLY INFORMATION (UNAUDITED)
Quarterly information is as follows for the two years ended December 31, 1996:
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH TOTAL
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE SMOUNTS) QUARTER QUARTER QUARTER QUARTER YEAR
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1996
Net sales $71,463 $71,826 $70,611 $74,631 $288,531
Gross profit 28,896 28,643 27,734 28,818 114,091
Income from continuing operations 4,723 5,528 5,419 5,631 21,301
Income (loss) from discontinued operations 35 (1,504) 180 426 (863)
Net income 4,758 4,024 5,599 6,057 20,438
Earnings per share:
Continuing operations:
Primary $.33 $ .39 $ .38 $ .40 $1.50
Fully diluted $.33 $ .39 $ .38 $ .39 $1.49
Discontinued operations:
Primary $.01 $(.11) $ .01 $ .03 $ (.06)
Fully diluted -- $(.11) $ .01 $ .03 $ (.06)
Net income:
Primary $.34 $ .28 $ .39 $ .43 $1.44
Fully diluted $.33 $ .28 $ .39 $ .42 $1.43
- ------------------------------------------------------------------------------------------------------------
1995
Net sales $65,610 $66,802 $64,526 $65,646 $262,584
Gross profit 26,398 27,035 25,712 26,041 105,186
Income from continuing operations 3,600 4,354 4,434 4,313 16,701
Income (loss) from discontinued operations 45 (248) (567) (488) (1,258)
Net income 3,645 4,106 3,867 3,825 15,443
Earnings per share:
Continuing operations:
Primary $.27 $ .31 $ .32 $ .31 $1.21
Fully diluted $.26 $ .31 $ .32 $ .31 $1.19
Discontinued operations:
Primary $.01 $(.01) $(.04) $(.04) $(.09)
Fully diluted $.01 $(.01) $(.04) $(.04) $(.09)
Net income:
Primary $.28 $ .30 $ .28 $ .27 $1.12
Fully diluted $.27 $ .30 $ .28 $ .27 $1.10
- ------------------------------------------------------------------------------------------------------------
</TABLE>
The total of the quarterly per share amounts may not equal the total earnings
per share for the year because the calculations are based on the weighted
average number of shares outstanding during the periods.
The above tables reflect retroactively the 3 for 2 stock splits effected in 1996
and 1995 (see Note 2).
32
<PAGE>
NUMBER OF STOCKHOLDERS
There were 662 stockholders
of record at March 5, 1997.
STOCK EXCHANGE LISTING
New York Stock Exchange
Ticker Symbol: WN
COMMON STOCK PRICES AND
CASH DIVIDENDS PER SHARE: 1996-1995
The stock price and cash dividends of the Company's Common Stock for the past
two years are shown in the following table:
- --------------------------------------------------------------------------------
QUARTER 1ST 2ND 3RD 4TH
- --------------------------------------------------------------------------------
1996 High $15 3/4 $20 $19 1/2 $21 5/8
Low 12 15 1/2 15 1/4 18
Dividends $.0667 $.0667 $.0667 $.0667
- --------------------------------------------------------------------------------
1995 High $9 3/4 $10 1/2 $12 1/2 $13 3/8
Low 8 5/8 9 1/2 10 1/4 11 1/2
Dividends $.0578 $.0578 $.0578 $.0578
-------------------------------------------------------------------------
The above table reflects retroactively the 3 for 2 stock splits effected in 1996
and 1995 (see Note 2).
33
<PAGE>
EXHIBIT 21
WYNN'S INTERNATIONAL, INC.
SUBSIDIARIES OF REGISTRANT
State or other
jurisdiction of
Name incorporation
- ---- --------------
Wynn Oil Company. . . . . . . . . . . . . . . . . . . . . California
Wynn's Sales Corporation. . . . . . . . . . . . . . . . California
Wynn Marketing Company. . . . . . . . . . . . . . . . . California
Wynn's Australia Pty. Limited . . . . . . . . . . . . . Australia
Wynn's Belgium N.V. . . . . . . . . . . . . . . . . . . Belgium
Wynn's Nederland B.V. . . . . . . . . . . . . . . . . Netherlands
Wynn's Canada, Ltd. . . . . . . . . . . . . . . . . . . Canada
Wynn's Deutschland GmbH . . . . . . . . . . . . . . . . Germany
Wynn's Espana, S.A. . . . . . . . . . . . . . . . . . . Spain
Wynn's France, S.A. . . . . . . . . . . . . . . . . . . France
Wynn's Automotive France. . . . . . . . . . . . . . . France
Wynn's Automotive France Professional . . . . . . . . France
Wynn's Reseau. . . . . . . . . . . . . . . . . . . France
Wynn's Industrie. . . . . . . . . . . . . . . . . . . France
Wynn's Friction Proofing Mexico S.A. de C.V. . . . . . Mexico
Wynn Oil (N.Z.) Limited . . . . . . . . . . . . . . . . New Zealand
Wynn Oil (South Africa) (Pty) Limited . . . . . . . . . South Africa
Wynn Oil (U.K.) Limited . . . . . . . . . . . . . . . . England
Wynn Oil Venezuela, S.A. . . . . . . . . . . . . . . . Venezuela
Wynn's Export, Inc. . . . . . . . . . . . . . . . . . . . U.S. Virgin Islands
Alkid Corporation . . . . . . . . . . . . . . . . . . . . California
Robert Skeels & Company . . . . . . . . . . . . . . . . . California
Wynn's Climate Systems, Inc.. . . . . . . . . . . . . . . Texas
Lone Star Manufacturing Co., Inc. . . . . . . . . . . . Texas
Wynn's Climate Equipment Company. . . . . . . . . . . . Texas
Wynn's (UK) Limited . . . . . . . . . . . . . . . . . . . England
Wynn's Fluid Power, Inc. . . . . . . . . . . . . . . . . Delaware
Wynn's-Precision, Inc. . . . . . . . . . . . . . . . . Delaware
PRPC, Inc. . . . . . . . . . . . . . . . . . . . . . Tennessee
Wynn's-Precision Canada Ltd. . . . . . . . . . . . . Canada
Wynn's-Precision (U.K.) Ltd. . . . . . . . . . . . England
PRP Seals, Ltd. . . . . . . . . . . . . . . . . . . Canada
Dynamic Seals, Inc. . . . . . . . . . . . . . . . . . . Delaware
Except for Wynn Oil Venezuela, S.A., all of the above-named subsidiaries
are 100% owned by Registrant. Wynn Oil Venezuela, S.A. is 51% owned by
Registrant.
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report
(Form 10-K) of Wynn's International, Inc. of our report dated January 27,
1997, included in the 1996 Annual Report to Stockholders of Wynn's
International, Inc.
Our audits also included the financial statement schedule of Wynn's
International, Inc. in Item 14(a). This schedule is the responsibility of
the Company's management. Our responsibility is to express an opinion based
on our audits. In our opinion, the financial statement schedule referred to
above, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
We also consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 2-68157) pertaining to the Amended and Restated 1980
Stock Option and Appreciation Rights Plan and the 1982 Incentive Stock Option
Plan of Wynn's International, Inc., the Registration Statements
(Form S-8 Nos. 33-30296 and 33-64090) pertaining to the Wynn's International,
Inc. Stock-Based Incentive Award Plan, the Registration Statement
(Form S-8 No. 33-53917) pertaining to the Wynn's International, Inc.
Non-Employee Directors' Stock Option Plan, the Registration Statement
(Form S-8 No. 33-53921) pertaining to the Wynn's International, Inc. Employee
Stock Purchase Plan, and in the related Prospectuses of our report dated
January 27, 1997, with respect to the consolidated financial statements
incorporated herein by reference, and our report included in the preceding
paragraph with respect to the financial statement schedules included in the
Annual Report (Form 10-K) of Wynn's International, Inc. for the year ended
December 31, 1996.
ERNST & YOUNG LLP
Los Angeles, California
March 21, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS CONTAINED IN FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANICAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 53,304
<SECURITIES> 0
<RECEIVABLES> 49,217
<ALLOWANCES> 870
<INVENTORY> 30,940
<CURRENT-ASSETS> 154,002
<PP&E> 89,107
<DEPRECIATION> 44,388
<TOTAL-ASSETS> 205,105
<CURRENT-LIABILITIES> 64,413
<BONDS> 0
0
0
<COMMON> 14,547
<OTHER-SE> 118,405
<TOTAL-LIABILITY-AND-EQUITY> 205,105
<SALES> 288,531
<TOTAL-REVENUES> 290,294
<CGS> 174,440
<TOTAL-COSTS> 174,440
<OTHER-EXPENSES> 81,407
<LOSS-PROVISION> 312
<INTEREST-EXPENSE> 217
<INCOME-PRETAX> 33,918
<INCOME-TAX> 12,617
<INCOME-CONTINUING> 21,301
<DISCONTINUED> (863)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,438
<EPS-PRIMARY> 1.44
<EPS-DILUTED> 1.43
</TABLE>
