<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended September 30, 1999
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _________________
to _________________
Commission File No. 1-7200
Wynn's International, Inc.
(Exact name of Registrant as specified in its charter)
Delaware 95-2854312
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
500 North State College Blvd., Ste. 700, Orange, CA 92868
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (714) 938-3700
______________________________________________________________________________
Former name, former address & former fiscal year, if changed since last report.
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
At November 1, 1999, Registrant had 18,656,106 shares of common stock
outstanding.
<PAGE>
WYNN'S INTERNATIONAL, INC.
I N D E X
---------
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I - Financial Information
Item 1 - Financial Statements:
Consolidated Condensed Balance Sheets -
September 30, 1999 (unaudited) and
December 31, 1998 2
Unaudited Consolidated Condensed Statements
of Income - Three Months and Nine Months Ended
September 30, 1999 and 1998 3
Unaudited Consolidated Condensed Statements
of Cash Flows - Nine Months Ended
September 30, 1999 and 1998 4
Notes to Unaudited Consolidated Condensed
Financial Statements 5-7
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-13
Part II - Other Information
Item 1 - Legal Proceedings 14
Item 6 - Exhibits and Reports on Form 8-K 15
Signatures 16
</TABLE>
<PAGE>
WYNN'S INTERNATIONAL, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
September 30
1999 December 31
(unaudited) 1998
------------ -----------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 61,880 $ 46,511
Accounts receivable, less $1,052 allowance for
doubtful accounts ($904 at December 31, 1998) 69,418 64,880
Inventories:
Finished goods 21,673 21,922
Raw materials and work in process 10,849 12,425
-------- --------
32,522 34,347
Prepaid expenses and other current assets
(including deferred tax assets of $10,867 at
September 30, 1999 and $12,162 at
December 31, 1998) 20,282 18,144
-------- --------
Total current assets 184,102 163,882
Property, plant and equipment, at cost less
accumulated depreciation and amortization 56,000 50,197
Other assets 12,341 11,517
-------- --------
$252,443 $225,596
======== ========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Accounts payable $ 20,239 $ 23,360
Taxes based on income 2,003 100
Product warranty program and vehicle
service contract reserves 33,120 19,094
Accrued liabilities 28,520 23,871
-------- --------
Total current liabilities 83,882 66,425
Deferred taxes based on income 6,616 7,607
Other liabilities 11,333 10,714
Commitments and contingencies
Stockholders' equity:
Preferred stock, $1 par value;
500,000 shares authorized, none issued - -
Common stock, $0.01 par value;
40,000,000 shares authorized, 21,898,335
shares issued 219 219
Capital in excess of par value 21,405 24,286
Retained earnings 178,139 160,170
Accumulated other comprehensive income (6,256) (5,100)
Unearned compensation (53) (56)
Common stock held in treasury 3,229,729 shares,
at cost (3,095,809 at December 31, 1998) (42,842) (38,669)
-------- --------
Total stockholders' equity 150,612 140,850
-------- --------
$252,443 $225,596
======== ========
</TABLE>
See accompanying notes
2
<PAGE>
WYNN'S INTERNATIONAL, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
------------------- -------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Net sales $ 91,120 $ 79,835 $272,428 $251,233
Interest income 787 569 l,965 1,764
-------- -------- -------- --------
91,907 80,404 274,393 252,997
-------- -------- -------- --------
Costs and expenses:
Cost of sales 55,648 49,485 165,607 153,336
Selling, general & admini-
strative 25,513 21,469 74,498 67,021
Interest expense 17 61 60 192
-------- -------- -------- --------
81,178 71,015 240,165 220,549
-------- -------- -------- --------
Income before taxes based on
income 10,729 9,389 34,228 32,448
Provision for taxes based on
income 3,863 3,265 12,322 11,681
-------- -------- -------- --------
Net income $ 6,866 $ 6,124 $ 21,906 $ 20,767
======== ======== ======== ========
Earnings per share of common
stock:
Basic $.37 $.32 $1.17 $1.08
==== ==== ===== =====
Diluted $.36 $.31 $1.15 $1.05
==== ==== ===== =====
Cash dividend per common share $.07 $.06 $.21 $.18
==== ==== ==== ====
</TABLE>
See accompanying notes
3
<PAGE>
WYNN'S INTERNATIONAL, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30
-----------------------
1999 1998
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 21,906 $ 20,767
Adjustments:
Depreciation and amortization 6,540 6,143
Provision for uncollectible accounts 362 222
Amortization of stock compensation 37 12
Gain on sale of property, plant & equipment (30) (20)
Provision (benefit) for deferred income taxes 407 (1,304)
Change in operating assets and liabilities:
Accounts receivable (net) (4,900) (7,266)
Inventories 1,825 (3,015)
Prepaid expenses and other current assets (3,433) (576)
Other assets (1,113) (404)
Accounts payable (3,121) 632
Product warranty program and vehicle
service contract reserves 14,026 2,883
Taxes based on income 1,867 44
Accrued liabilities 5,778 (1,530)
Other liabilities 619 648
-------- --------
Net cash provided by operating activities 40,770 17,236
-------- --------
Cash flows from investing activities:
Additions to property, plant and equipment (12,220) (7,079)
Other - net 80 48
-------- --------
Net cash used in investing activities (12,140) (7,031)
-------- --------
Cash flows from financing activities:
Dividends paid (5,066) (4,479)
Proceeds from exercise of stock options 2,450 1,044
Purchase of treasury stock (9,502) (9,003)
-------- --------
Net cash used in financing activities (12,118) (12,438)
-------- --------
Effect of exchange rate changes (1,143) (24)
-------- --------
Net increase (decrease) in cash and cash
equivalents 15,369 (2,257)
-------- --------
Cash and cash equivalents at beginning of year 46,511 43,266
-------- --------
Cash and cash equivalents at September 30 $ 61,880 $ 41,009
======== ========
</TABLE>
See accompanying notes
4
<PAGE>
WYNN'S INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND 1998
1) The accompanying unaudited consolidated condensed financial statements
include all adjustments which in the opinion of management are necessary
for a fair presentation of the information for the interim period herein
reported. These unaudited consolidated condensed financial statements
should be read in conjunction with the consolidated financial statements
included in the 1998 Annual Report to Stockholders.
2) The results of operations for the nine months ended September 30, 1999
are not necessarily indicative of results of operations for the year
ending December 31, 1999. Accounting measurements at interim dates
inherently involve greater imprecision than at year-end, which is due, in
part, to increased reliance on the use of estimates at interim dates.
3) Cash payments for interest and income taxes are as follows:
<TABLE>
<CAPTION>
Nine Months
Ended September 30
-------------------------
1999 1998
----------- -----------
<S> <C> <C>
Interest $ 47,000 $ 57,000
Income taxes 10,031,000 12,941,000
</TABLE>
4) Cash equivalents with a fair value of $17,862,000 and $2,182,000 at
September 30, 1999 and December 31, 1998, respectively, are held in a
separate trust account in conjunction with a vehicle service contract
insurance agreement (the "Agreement") between the Company and a certain
risk retention group that insures the liability of the Company and its
dealers with respect to various vehicle service contract programs
marketed by the Company. Funds in the trust account are to be used
primarily for the benefit of holders of the Company's various vehicle
service contracts, and any residual funds and all investment income or
loss accrue to the benefit of the Company. The funds are managed by the
Company under guidelines approved by both parties to the Agreement.
5
<PAGE>
WYNN'S INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
September 30, 1999 AND 1998
5) The computation of basic and diluted earnings per share of common stock
for the three and nine months ended September 30, 1999 and 1998 is as
follows:
<TABLE>
<CAPTION>
Three Months
Ended September 30
--------------------------
1999 1998
----------- -----------
<S> <C> <C>
Net income $ 6,866,000 $ 6,124,000
=========== ===========
Weighted average number of shares
outstanding 18,715,231 19,031,979
=========== ===========
Basic earnings per common share $.37 $.32
==== ====
Weighted average number of shares
outstanding including dilutive
effect of stock options and
pending performance shares 19,019,457 19,560,959
=========== ===========
Diluted earnings per common share $.36 $.31
==== ====
<CAPTION>
Nine Months
Ended September 30
--------------------------
1999 1998
----------- -----------
<S> <C> <C>
Net income $21,906,000 $20,767,000
=========== ===========
Weighted average number of shares
outstanding 18,752,688 19,205,932
=========== ===========
Basic earnings per common share $1.17 $1.08
===== =====
Weighted average number of shares
outstanding including dilutive
effect of stock options and
pending performance shares 19,108,070 19,783,807
=========== ===========
Diluted earnings per common share $1.15 $1.05
===== =====
</TABLE>
The dilutive effect of stock options consists of net shares assumed
issued using the treasury stock method for stock options outstanding
during each period based on average market price (296,743 and 522,314 for
the three months ended and 348,344 and 570,854 for the nine months ended
September 30, 1999 and 1998, respectively). The dilutive effect of
pending performance shares consists of net shares assumed issued for
6
<PAGE>
WYNN'S INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1999 AND 1998
performance shares pending issuance based on satisfaction of vesting
requirements (7,483 and 6,666 for the three months ended and 7,038 and
7,021 for the nine months ended September 30, 1999 and 1998,
respectively).
6) Accumulated other comprehensive income on the Company's Consolidated
Condensed Balance Sheets consists of cumulative equity adjustments from
foreign currency translation. Total comprehensive income for the three
and nine months ended September 30, 1999 was $7,331,000 and $20,750,000,
respectively, and for the three and nine months ended September 30, 1998
was $6,900,000 and $20,590,000, respectively. The reported amounts for
total comprehensive income differ from net income due to foreign currency
translation adjustments. The tax effect related to foreign currency
translation adjustments is immaterial and has not been recognized as part
of Comprehensive Income or in Accumulated Other Comprehensive Income.
7) Segment information for the three and nine months ended September 30,
1999 and 1998 is as follows:
<TABLE>
<CAPTION>
Three Months Ended September 30
---------------------------------------------
Net Sales Pretax Profit (Loss)
-------------------- --------------------
(In thousands) 1999 1998 1999 1998
-------------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
Automotive and
Industrial Components $46,205 $41,750 $ 7,859 $ 6,614
Specialty Chemicals 44,915 38,085 4,630 3,596
Corporate and Other - - (1,760) (821)
------- ------- ------- -------
Consolidated Totals $91,120 $79,835 $10,729 $ 9,389
======= ======= ======= =======
<CAPTION>
Nine Months Ended September 30
----------------------------------------------
Net Sales Pretax Profit (Loss)
--------------------- ---------------------
(In thousands) 1999 1998 1999 1998
-------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Automotive and
Industrial Components $140,666 $131,659 $ 24,970 $ 22,105
Specialty Chemicals 131,762 119,574 13,740 13,366
Corporate and Other - - (4,482) (3,023)
-------- -------- -------- --------
Consolidated Totals $272,428 $251,233 $ 34,228 $ 32,448
======== ======== ======== ========
</TABLE>
7
<PAGE>
WYNN'S INTERNATIONAL, INC.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
Comparison of the three months ended September 30, 1999 and 1998
- ----------------------------------------------------------------
Net sales for the third quarter of 1999 were $91.1 million, a 14% increase
compared to sales of $79.8 million in the third quarter of 1998. Sales of
the Automotive and Industrial Components Division, which is comprised of
Wynn's-Precision, Inc. (Precision), a Lebanon, Tennessee-based supplier of
O-rings, seals and molded rubber products, and Robert Skeels & Company
(Skeels), a small regional wholesale distributor of builders hardware products,
increased 11% in the third quarter of 1999 compared to the third quarter of
1998, primarily reflecting an 11% increase in sales volume at Precision.
Precision's sales increased at its Tennessee and Virginia-based operations.
The increase in sales at Precision's Tennessee operation, which
manufactures and sells primarily O-rings, was due mainly to higher sales to
automotive and off-road construction markets. The increase in sales at
Precision's Virginia operation was due to continued growth of its expanded
composite gasket product line. Sales at Skeels decreased 2% in the third
quarter of 1999 compared to the same quarter in 1998.
Sales at the Specialty Chemicals Division, principally car care products,
increased 18% in the third quarter of 1999 compared to the same quarter in
1998. Sales in the U.S. increased 31% compared to the prior year primarily
due to higher sales of the recently introduced vehicle service contract
programs launched in June 1998, higher export sales to Asian distributors
and a small increase in sales of equipment and related chemicals for
professional repair facilities. These sales increases were partially
offset by lower sales of product warranty programs and lower export sales
to Latin American distributors. Foreign subsidiary sales increased 5% in
the third quarter of 1999 compared to the prior year. Foreign subsidiary
sales increased in Australia, Belgium, Germany, New Zealand, Mexico and
South Africa.
The consolidated cost of sales in the third quarter of 1999 decreased to
61.1% of sales compared to 62.0% in the third quarter of 1998. The
increase in consolidated gross margin percentage was due to an increase in
gross margin percentage at Precision, partially offset by a decline in
gross margin percentage at the Specialty Chemicals Division. Precision's
gross margin increased in the third quarter of 1999 compared to the same
period last year due to the higher sales and improved operating
efficiencies. The Specialty Chemicals Division's gross margin percentage
decreased in the third quarter of 1999 compared to the same period last
year due to a change in sales mix and reductions in the gross margins from
sales of product warranty programs and vehicle service contracts.
Selling, general and administrative (SG&A) expenses in the third quarter of
1999 were $25.5 million (28.0% of sales) compared to $21.5 million (26.9% of
sales) for the third quarter of 1998. The increase in SG&A expenses was
primarily due to higher selling costs associated with vehicle service contract
programs at the Specialty Chemicals Division. SG&A expenses also increased at
Precision due to the higher sales volumes.
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
- -------------------------------------------------
As a percentage of sales, SG&A expenses declined at the Specialty Chemicals
Division and increased slightly at Precision. Corporate operating expenses
increased in the third quarter of 1999 compared to the third quarter of
1998 due to higher incentive compensation expenses, pension expenses,
consulting fees and other corporate items. Corporate incentive
compensation expenses were lower in the third quarter of 1998 due to lower
profits at Precision caused by the General Motors 1998 strike and lower
profits at the Specialty Chemicals Division. Pension expenses increased in
the third quarter of 1999 compared to the same period last year due to the
Company's adoption in late 1998 of a supplemental executive retirement
plan.
Income before taxes based on income increased 14% to $10.7 million in 1999
from $9.4 million in the third quarter of 1998. In the Automotive and
Industrial Components Division, Precision's pretax profit increased 20% in
the third quarter of 1999 compared to the same period last year due to the
increase in sales and productivity gains. Skeels' reported a small decline
in pretax profit in the third quarter of 1999 compared to the third quarter
of 1998. Pretax profit at the Specialty Chemicals Division increased 29%
in the third quarter of 1999 compared to the 1998 third quarter. Pretax
profit increased at the Specialty Chemicals Division's U.S. and
Belgium-based operations and due to stronger results from the Asia/Pacific
region.
The effective tax rate in the third quarter of 1999 was 36.0%, up from the
34.8% tax rate in the third quarter of 1998, but the same as the 1998 full
year tax rate of 36.0%.
Net income increased 12% to $6.9 million in the third quarter of 1999
compared to net income of $6.1 million in the third quarter of 1998 due to
the increase in pretax income, partially offset by the higher effective tax
rate. Basic income per share in the third quarter of 1999 increased 16% to
$.37 from $.32 in 1998 due to the higher net income and lower average
number of shares outstanding. The number of shares used in the calculation
of basic earnings per share decreased 2% in the third quarter of 1999
compared to the same period in 1998, primarily due to repurchases of the
Company's common stock pursuant to the Company's share repurchase program.
Diluted earnings per share also increased 16% in the third quarter of 1999
compared to 1998 for the same reasons as the increase in basic earnings per
share. The number of shares used in the calculation of diluted earnings
per share decreased 3% in the most recent quarter compared to the third
quarter of 1998 due to the share repurchases and fewer outstanding stock
options required to be included in the diluted shares calculation.
Comparison of the nine months ended September 30, 1999 and 1998
- ---------------------------------------------------------------
Net sales for the nine months of 1999 increased 8% to $272.4 million from
$251.2 million in the same period of last year. Sales were up 7% for the
Automotive and Industrial Components Division compared to the first nine
months of 1998 due primarily to higher sales at Precision's Virginia,
Tennessee and Kentucky-based operations. Sales at Skeels increased
slightly in the first nine months of 1999 compared to the same period last
year. Sales for the Specialty Chemicals Division increased 10% in the
first nine months of 1999 compared to the same period in 1998
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
- -------------------------------------------------
primarily due to higher sales in the U.S., France, Australia, Belgium, New
Zealand, Germany and Mexico.
Total cost of sales for the first nine months of 1999 was 60.8% of sales
compared to 61.0% in the first nine months of 1998. Precision achieved
higher gross margins while the Specialty Chemicals Division's gross margin
percentage declined for the first nine months of 1999 compared to the same
period in 1998 for the reasons explained in the analysis of the third
quarter.
Selling, general and administrative expenses increased to $74.5 million
for the first nine months of 1999 from $67.0 million for the same period in
1998. The increase primarily reflects higher spending levels at the
Specialty Chemicals Division and Precision due to the higher revenues and a
change in sales mix. Corporate expenses for the first nine months of 1999
were higher than the comparable period in 1998 due to the reasons explained
in the analysis of the third quarter.
Income before taxes based on income increased to $34.2 million from $32.4
million in the first nine months of 1998. The Automotive and Industrial
Components Division experienced a 13% increase in pretax profit compared to
the first nine months of 1998 as a result of Precision's higher sales.
Skeels' pretax profit was slightly below 1998 levels. In the Specialty
Chemicals Division, pretax profit increased 3% compared to the first nine
months of last year primarily due to increases in the U.S., France and
Belgium, partially offset by lower reported pretax profit in South Africa
and Asia/Pacific regions.
Basic earnings per share rose 8% to $1.17 in the first nine months of 1999
compared to $1.08 in the same period in 1998. The increase in basic
earnings per share is attributable to the increase in net income and a 2%
decrease in the number of shares used in the calculation of basic earnings
per share. Diluted earnings per share also increased in 1999 compared to
1998 due to the higher net income and a 3% decrease in the number of
outstanding shares required to be used in the calculation of diluted
earnings per share.
FINANCIAL CONDITION
- -------------------
Working capital at the end of the third quarter was $100.2 million
compared to $97.5 million at December 31, 1998. The current ratio at the
end of the third quarter of 1999 was 2.19 to 1 compared to 2.47 to 1 at
December 31, 1998. The decline in the current ratio was caused principally
by the use of cash to repurchase shares of the Company's common stock and
by the increase in product warranty program and vehicle service contract
reserves.
Cash and cash equivalents increased $15.4 million to $61.9 million at
September 30, 1999 compared to $46.5 million at December 31, 1998. The
increase in cash and cash equivalents was primarily due to cash provided by
operating activities of $40.8 million and $2.4 million of proceeds from the
exercise of stock options, partially offset by $9.5 million used for
repurchases of the Company's common stock, dividends paid of $5.1 million
and $12.2 million of capital expenditures.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
- -------------------------------------------------
Accounts receivable increased $4.5 million to $69.4 million at September
30, 1999 from $64.9 million at December 31, 1998. This increase was
primarily due to the higher sales at Precision in the most recent quarter
compared to the fourth quarter of 1998. Inventories decreased $1.8 million
to $32.5 million at the end of the third quarter of this year compared to
$34.3 million at December 31, 1998. Inventories decreased at the Specialty
Chemicals Division due primarily to efforts to reduce overall inventory
levels at its U.S. and European-based operations. Inventories also
decreased at Precision due principally to reductions in Precision's
finished goods inventories.
During the nine months ended September 30, 1999, the Company purchased
$12.2 million of new property, plant and equipment, primarily for the
Automotive and Industrial Components Division. As previously reported, the
Company anticipates that total capital expenditures in 1999 will be
approximately $16 million, which will be funded from current operations.
Stockholders' equity at September 30, 1999 was $150.6 million or $8.07 per
share compared to $140.9 million or $7.49 per share at December 31, 1998.
The increase of $9.8 million is attributable to net income of $21.9 million
and $2.4 million from the exercise of stock options, including the related
tax effect, reduced by $3.9 million of dividends declared, $9.5 million of
repurchases of the Company's common stock and a $1.1 million decrease in
the accumulated other comprehensive income account.
DEFINITIVE AGREEMENT TO ACQUIRE GOSHEN RUBBER COMPANIES, INC.
- -------------------------------------------------------------
On October 21, 1999, the Company announced the execution of a definitive
agreement to acquire Goshen Rubber Companies, Inc. (Goshen) headquartered
in Goshen, Indiana. Goshen is a privately held manufacturer of O-rings,
tetraseals(R), gaskets and other rubber, plastic and urethane products with
annual revenues of $172.6 million for its fiscal year ended June 30, 1999.
The closing of the transaction is subject to a number of customary
conditions including the completion of the Company's due diligence and the
obtaining of necessary governmental approvals. The closing is expected to
occur in mid-December of this year.
Under the terms of the definitive agreement, the Company will provide
total consideration of approximately $85.0 million at the closing to
purchase all of the outstanding stock of Goshen and to retire Goshen's
outstanding bank debt. The Company will utilize its working capital and
new borrowings to pay the purchase price and repay the outstanding bank
debt of Goshen.
The Company plans to replace its two existing unused domestic committed
unsecured lines of credit for $15.0 million each with a new single domestic
committed unsecured line of credit for $60 million. The Company believes
this new line of credit and the Company's existing cash and cash
equivalents will be sufficient to finance the Goshen acquisition and to
meet foreseeable working capital requirements. See Forward-Looking
Statements.
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
- -------------------------------------------------
YEAR 2000 MATTERS
- -----------------
The Company recognizes the need to ensure its operations will not be
adversely impacted by Year 2000 software failures. In 1996, the Company
began the necessary changeover of computer systems at its major locations,
and now believes the changes to be substantially completed. Certain
smaller foreign locations are also presently working toward timely
implementation of necessary changes. The costs incurred thus far, and
expected to be incurred in the future, are not significant. The Company is
also working with customers and vendors to determine their ability to make
the necessary conversions. Management presently expects that the necessary
corrections will be completed before the Year 2000 with no significant
effect on vendors, customers or disruption to business operations. See
Forward-Looking Statements.
The Company currently has no contingency plans in place in the event
certain necessary corrections are not fully completed by the Company or its
customers and vendors before the Year 2000. However, based on the
Company's evaluations of its own systems and its customers' and vendors'
responses to the Company's Year 2000 readiness inquiries, the Company
believes that significant contingency plans are neither practical nor
necessary at this time. See Forward-Looking Statements.
EURO CURRENCY CONVERSION
- ------------------------
The Euro currency ("Euro") was introduced on January 1, 1999, and the 11
participating European Monetary Union member countries established
irrevocable fixed conversion rates between their local currencies and the
Euro. However, the local currencies in those countries will continue to be
used as legal tender through January 1, 2002. Thereafter, the local
currencies will be canceled and Euro bills and coins will be used for cash
transactions in the participating countries. From January 1, 1999 to
December 31, 2001, companies will be allowed to transact noncash
transactions in either Euro or the local currency.
The Company and certain of its European subsidiaries are currently
evaluating the Euro conversion and the potential impact on their
operations. At the present time, the Company believes the necessary
changes and costs incurred thus far, and expected to be incurred in the
future, are not significant. See Forward-Looking Statements.
FORWARD-LOOKING STATEMENTS
- --------------------------
The preceding financial statements and Management's Discussion and
Analysis contain various "forward-looking statements" representing the
Company's expectations or beliefs concerning future events. The statements
include the following: Precision's ability to continue to increase revenues
and profits and improve operating efficiencies; the Company's ability to
replace its two existing lines of credit with a new line of credit that
will be sufficient to finance the Goshen acquisition and to meet
foreseeable working capital requirements; the timing and closing of the
Goshen acquisition and the impact of the acquisition on the
Company's competitive position and its future revenues and earnings; the
anticipated level of capital expenditures; the lack of impact of the Year
2000 problem on the Company's vendors,
12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
- -------------------------------------------------
customers or its business operations; the lack of the need for Year 2000
contingency plans; and the lack of impact of the Euro currency conversion
on the Company's business operations.
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; uncertainties generally associated with
acquisitions including the completion of satisfactory due diligence and
unanticipated regulatory delays; currency exchange rates relative to the
U.S. dollar; short-term domestic and international interest rates; the
impact of competitive products and pricing; attempts by state governments
to regulate the product warranty program or change existing regulation of
vehicle service contract programs; termination of one or more of the
product warranty division's alliances with automobile finance companies or
a significant slowdown in the business of these companies; regulatory or
technical developments or subsequently developed information resulting in
an increase in the Company's estimated liability for environmental matters
and related litigation; the ability of the Company and its vendors and
customers to successfully resolve any Year 2000 and Euro currency
conversion issues in their respective businesses; and general economic
conditions, especially in North America, Western Europe and Asia/Pacific
area.
The Company's actual results thus may differ materially from the expected
results expressed or implied by the forward-looking statements.
13
<PAGE>
WYNN'S INTERNATIONAL, INC.
PART II - OTHER INFORMATION
Item 1 - 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 Item 1 - "Environmental Matters" and Item 3 - "Legal
Proceedings" in the Registrant's Report on Form 10-K for the year ended
December 31, 1998.
14
<PAGE>
WYNN'S INTERNATIONAL, INC.
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
27 - Financial data schedule.
(b) Registrant has not filed any reports on Form 8-K during the quarter for
which this report is filed.
15
<PAGE>
WYNN'S INTERNATIONAL, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WYNN'S INTERNATIONAL, INC.
--------------------------------------------
(Registrant)
Date November 10, 1999 /s/ James Carroll
------------------------ -------------------------------------------
James Carroll
Chairman and Chief Executive Officer
Date November 10, 1999 /s/ Seymour A. Schlosser
------------------------ -------------------------------------------
Seymour A. Schlosser
Vice President-Finance
(Principal Financial and Accounting Officer)
16
<PAGE>
WYNN'S INTERNATIONAL, INC.
INDEX TO EXHIBITS
Exhibit
Number Description
- ------- -----------
27 Financial Data Schedule (included with EDGAR version
only)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS CONTAINED IN FORM 10-Q FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30,
1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 61,880
<SECURITIES> 0
<RECEIVABLES> 70,470
<ALLOWANCES> 1,052
<INVENTORY> 32,522
<CURRENT-ASSETS> 184,102
<PP&E> 56,000<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 252,443
<CURRENT-LIABILITIES> 83,882
<BONDS> 0
0
0
<COMMON> 219
<OTHER-SE> 150,393
<TOTAL-LIABILITY-AND-EQUITY> 252,443
<SALES> 272,428
<TOTAL-REVENUES> 274,393
<CGS> 165,607
<TOTAL-COSTS> 165,607
<OTHER-EXPENSES> 74,136
<LOSS-PROVISION> 362
<INTEREST-EXPENSE> 60
<INCOME-PRETAX> 34,228
<INCOME-TAX> 12,322
<INCOME-CONTINUING> 21,906
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,906
<EPS-BASIC> 1.17
<EPS-DILUTED> 1.15
<FN>
<F1>Property, Plant and Equipment, At Cost Less Accumulated Depreciation and
Amortization
</FN>
</TABLE>
