<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED APRIL 30, 1996
COMMISSION FILE #0-12862
DEP CORPORATION
A DELAWARE CORPORATION - I.R.S. NO. 95-2040819
2101 EAST VIA ARADO, RANCHO DOMINGUEZ, CA 90220
(310) 604-0777
Indicate by check mark whether the company (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 company was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, exclusive of treasury stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Outstanding at
Class April 30, 1996
- -------------------------------------------------------------------------------
<S> <C>
CLASS A COMMON STOCK, $.01 par value 3,117,059
CLASS B COMMON STOCK, $.01 par value 3,134,081
</TABLE>
Index to Exhibits appears on page 15
1
<PAGE> 2
DEP CORPORATION
INDEX
Part I. Financial Information Page
ITEM 1. FINANCIAL STATEMENTS:
CONSOLIDATED CONDENSED BALANCE SHEETS - 3
April 30, 1996 and July 31, 1995
CONSOLIDATED CONDENSED STATEMENTS OF INCOME - 4
Three and Nine Month Periods Ended April 30, 1996
and 1995
CONSOLIDATED CONDENSED STATEMENTS OF RETAINED 5
EARNINGS AND ADDITIONAL PAID-IN CAPITAL -
Three and Nine Month Periods Ended April 30, 1996
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS - 6
Nine Month Periods Ended April 30, 1996 and 1995
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 9
CONDITION AND RESULTS OF OPERATIONS
Part II. Other Information 13
SIGNATURE 14
2
<PAGE> 3
DEP CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
April 30, July 31,
ASSETS 1996 1995
<S> <C> <C>
--------- --------
Current assets:
Cash and cash equivalents..................................................... $ 8,395,000 $ 4,611,000
Accounts receivable, net...................................................... 15,132,000 18,811,000
Inventories at lower of cost (first-in, first-out) or market:
Raw materials .............................................................. 5,097,000 4,233,000
Finished goods.............................................................. 7,402,000 8,838,000
------------ -----------
12,499,000 13,071,000
Income taxes receivable....................................................... - 1,779,000
Other current assets.......................................................... 4,363,000 2,463,000
------------ -----------
Total current assets........................................................ 40,389,000 40,735,000
Property and equipment, net.................................................... 14,301,000 15,423,000
Intangibles, net............................................................... 33,009,000 34,156,000
Other assets................................................................... 2,474,000 3,590,000
------------ -----------
$ 90,173,000 $93,904,000
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Liabilities not subject to compromise
Current portion long-term debt............................................... $ 140,000 $61,100,000
Accrued expenses............................................................. 7,601,000 7,920,000
Accounts payable............................................................. 2,539,000 7,397,000
------------ -----------
Total current liabilities.................................................. 10,280,000 76,417,000
Liabilities subject to compromise.............................................. 65,449,000 -
Long-term debt, net of current portion......................................... 3,635,000 3,744,000
Other non-current liabilities.................................................. 2,740,000 2,516,000
------------ -----------
Total liabilities........................................................... 82,104,000 82,677,000
Stockholders' equity:
Preferred stock, par value $.01; authorized
3,000,000 shares; none outstanding........................................ . - -
Class A common stock, par value $.01; authorized 14,000,000 shares;
issued and outstanding 3,232,559 at April 30, 1996 and
3,232,559 at July 31, 1995................................................ 32,000 32,000
Class B common stock, par value $.01; authorized 7,000,000 shares;
issued and outstanding 3,249,581 at April 30, 1996 and
3,243,340 at July 31, 1995................................................ 32,000 32,000
Additional paid-in capital................................................... 12,141,000 12,126,000
Retained earnings (deficit).................................................. (2,954,000) 215,000
Foreign currency translation adjustment...................................... (177,000) (173,000)
------------ -----------
9,074,000 12,232,000
Less: treasury stock, at cost, 115,500 shares each of
Class A and Class B common stock........................................... (1,005,000) (1,005,000)
------------ -----------
8,069,000 11,227,000
------------ -----------
$ 90,173,000 $93,904,000
============ ===========
</TABLE>
See notes to consolidated condensed financial statements
3
<PAGE> 4
DEP CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
April 30, April 30,
----------------------- ----------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales..................................................... $ 29,568,000 $ 29,239,000 $ 86,309,000 $ 91,591,000
Cost of sales................................................. 11,115,000 11,518,000 32,041,000 33,883,000
------------ ----------- ----------- -----------
Gross profit.................................................. 18,453,000 17,721,000 54,268,000 57,708,000
Selling, general and administrative expense................... 17,464,000 19,869,000 51,846,000 58,353,000
Writedown in value of Agree/Halsa assets ..................... - 25,166,000 - 25,166,000
------------ ----------- ----------- -----------
Income (loss) from operations................................. 989,000 (27,314,000) 2,422,000 (25,811,000)
Other income (expense):
Interest, net............................................... (1,680,000) (1,578,000) (5,240,000) (4,550,000)
Other....................................................... (27,000) (38,000) 101,000 (119,000)
------------ ----------- ----------- -----------
(1,707,000) (1,616,000) (5,139,000) (4,669,000)
------------ ----------- ----------- -----------
Loss before reorganization items
and income tax benefit...................................... (718,000) (28,930,000) (2,717,000) (30,480,000)
Reorganization items.......................................... 261,000 - 452,000 -
Loss before income tax benefit ............................... (979,000) (28,930,000) (3,169,000) (30,480,000)
Income tax benefit ........................................... - (2,060,000) - (2,865,000)
------------ ----------- ----------- -----------
Net loss...................................................... $ (979,000) $(26,870,000) $(3,169,000) $(27,615,000)
============= ============ ============ ============
Net loss per share............................................ $ (0.16) $ (4.30) $ (0.51) $ (4.42)
============= ============ ============ ============
Weighted average shares outstanding........................... 6,251,140 6,244,900 6,250,110 6,243,841
============= ============ ============ ============
</TABLE>
See notes to consolidated condensed financial statements
4
<PAGE> 5
DEP CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF RETAINED EARNINGS
AND ADDITIONAL PAID-IN CAPITAL
NINE MONTHS ENDED APRIL 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Additional Retained
Paid-in Capital Earnings
--------------- ------------
<S> <C> <C>
Balance at beginning of period.................................... $ 12,126,000 $ 215,000
Net loss.......................................................... - (3,169,000)
Stock issued under the stock target ownership plan................ 15,000 -
-------------- -----------
Balance at end of period.......................................... $ 12,141,000 $(2,954,000)
============== ===========
</TABLE>
See notes to consolidated condensed financial statements
5
<PAGE> 6
DEP CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
April 30,
1996 1995
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss............................................................. $ (3,169,000) $ (27,615,000)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization...................................... 3,847,000 4,120,000
Writedown in value of Agree and Halsa assets....................... - 25,166,000
Other.............................................................. 389,000 (490,000)
Changes in operating assets and liabilities:
Accounts receivable............................................... 3,521,000 2,478,000
Inventories....................................................... 570,000 (1,532,000)
Income taxes receivable........................................... 1,779,000 573,000
Other assets...................................................... (1,900,000) 1,855,000
Accrued expenses.................................................. (319,000) 73,000
Accounts payable.................................................. (4,858,000) (678,000)
Accrued expenses and accounts payable subject to compromise....... 7,656,000 -
------------- -------------
Net cash provided by operating activities............................ 7,516,000 3,950,000
INVESTING ACTIVITIES:
Purchases of property and equipment, net............................. (178,000) (482,000)
Sale of trademark.................................................... - 435,000
Other, net........................................................... (292,000) (429,000)
------------- -------------
Net cash used in investing activities................................ (470,000) (476,000)
FINANCING ACTIVITIES:
Decrease in lines of credit and long-term debt,
including change in current portion............................... (3,276,000) (2,882,000)
Other................................................................ 15,000 (11,000)
------------- -------------
Net cash used in financing activities................................. (3,261,000) (2,893,000)
------------- -------------
Increase in cash and cash equivalents................................. 3,785,000 581,000
Effect of exchange rate changes on cash............................... (1,000) 12,000
Cash and cash equivalents at beginning of period...................... 4,611,000 947,000
------------- -------------
Cash and cash equivalents at end of period............................ $ 8,395,000 $ 1,540,000
============= =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest.......................................................... $ 4,110,000 $ 4,220,000
============= =============
Income tax refunds................................................ $ (1,959,000) $ (2,598,000)
============= =============
</TABLE>
See notes to consolidated condensed financial statements
6
<PAGE> 7
DEP CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1:
On April 1, 1996 the Company filed a voluntary petition for relief under Chapter
11 of Title 11 of the United States Code (the "Chapter 11 filing") in the United
States Bankruptcy Court for the District of Delaware (the "Court") (Case No. 96-
480(HSB)). None of the Company's foreign based subsidiaries were part of the
filing. The Company is presently operating its business as a
debtor-in-possession under Chapter 11 and is subject to the jurisdiction of the
Court. On April 1, the Company also filed with the Court a proposed Plan of
Reorganization (the "Plan") and related Disclosure Statement.
The Plan provides, among other things, that pre-petition claims of the Company's
trade creditors and all other general unsecured creditors be paid in full with
interest ratably over twelve months from Plan confirmation. In addition, the
Plan calls for satisfaction in full of the claims of the secured group of
lenders (the "Lenders") under the Revolving Credit and Term Loan Agreement dated
August 6, 1993, as amended (the "Credit Facility"), but pursuant to an extended
repayment schedule with interest at 2% over the prime rate and other terms that
should enable the Company to operate successfully and with adequate working
capital. The final plan may differ significantly from the Plan currently filed
with the Court.
Before the Plan may be presented to the Court for confirmation, the Court must
approve the Disclosure Statement. A continued hearing on the Disclosure
Statement has been scheduled for July 19, 1996. If the Disclosure Statement is
approved, creditors thereafter will be requested to vote to accept or reject the
Plan, and then a hearing will be held before the Court on confirmation of the
Plan; that hearing has not yet been scheduled by the Court.
The accompanying consolidated financial statements have been prepared in
conformity with principles of accounting applicable to a going concern, which
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business. As a result of the Chapter 11 filing and
circumstances relating to this event, realization of assets, and satisfaction of
liabilities are subject to uncertainty. The Company's ability to continue as a
going concern is contingent upon, among other things, the confirmation of the
Plan by the Court, the ability to achieve satisfactory levels of profitability
and cash flow from operations to meet future obligations.
In the opinion of the Company, the accompanying unaudited consolidated condensed
financial statements, which have been prepared assuming the Company will
continue as a going concern, contain all adjustments (consisting of only normal
recurring accruals) necessary to fairly present
7
<PAGE> 8
the financial position as of April 30, 1996, and the results of operations and
the statements of cash flows for the three and nine month periods ended April
30, 1996 and 1995.
The results of operations for the three and nine month periods ended April 30,
1996 are not necessarily indicative of the results to be expected for any other
period or for the full year.
These quarterly financial statements should be read in conjunction with the
Company's audited financial statements contained in the annual report on Form
10-K for the year ended July 31, 1995.
Note 2:
Liabilities subject to compromise consisted of the following at April 30, 1996:
<TABLE>
<S> <C>
Secured liabilities payable to Lenders under the Credit Facility $57,793,000
Accounts payable 6,966,000
Accrued liabilities 690,000
-----------
$65,449,000
===========
</TABLE>
Principal and interest payments on pre-petition debt related to the Credit
Facility were not made during the month preceding the Chapter 11 filing and
future principal payments will not be made without Court approval or until a
reorganization plan defining the repayment terms has been confirmed by the
Court. However, the Company has agreed to make monthly payments of $200,000
through August 1996. There is no assurance at this time that the Plan will be
confirmed. Payments on pre-petition debt and liabilities cannot be made unless
approved by the Court. As opposed to the July 31, 1995 classification, all
amounts due under the Credit Facility, and the accounts payable and accrued
expenses incurred prior to April 1, 1996, have been classified as non-current
liabilities under the caption "liabilities subject to compromise."
Note 3:
Provisions for certain expenses, including coupon redemption and cooperative
advertising, are based on full year assumptions. Such expenses are charged to
operations in the year incurred and are included in the accompanying
consolidated condensed financial statements either equally among the four fiscal
quarters or based upon estimated annual sales.
Note 4:
Net loss per share amounts are computed based on the weighted average number of
shares outstanding plus the shares that would be outstanding assuming exercise
of stock options, when dilutive, which are considered common stock equivalents.
The number of shares that would be issued upon the exercise of stock options has
been reduced by the number of shares that could have been purchased from the
proceeds at the average market price of the Company's common stock.
Note 5:
Professional fees and other expenses directly related to the Chapter 11 filing
are classified as reorganization costs and expensed as incurred. Interest income
related to the prepetition liabilities is accrued as earned and accounted for as
an offset against reorganization costs. Net reorganization items consisted of
the following:
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
------------ -----------
April 30, 1996
----------------------------------
<S> <C> <C>
Professional Fees $280,000 $471,000
Interest Income ( 19,000) ( 19,000)
-------- --------
$261,000 $452,000
======== ========
</TABLE>
8
<PAGE> 9
Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
CHAPTER 11 REORGANIZATION
On April 1, 1996 the Company filed a voluntary petition for relief under Chapter
11 of Title 11 of the United States Code (the "Chapter 11 filing") in the United
States Bankruptcy Court for the District of Delaware (the "Court") (Case No. 96-
480(HSB)). None of the Company's foreign based subsidiaries were part of the
filing. The Company is presently operating its business as a
debtor-in-possession under Chapter 11 and is subject to the jurisdiction of the
Court. On April 1, the Company also filed with the Court a proposed Plan of
Reorganization (the "Plan") and related Disclosure Statement.
The Plan provides, among other things, that pre-petition claims of the Company's
trade creditors and all other general unsecured creditors be paid in full with
interest ratably over twelve months from Plan confirmation. In addition, the
Plan calls for satisfaction in full of the claims of the secured group of
lenders (the "Lenders") under the Credit Facility, but pursuant to an extended
repayment schedule with interest at 2% over the prime rate and other terms that
should enable the Company to operate successfully and with adequate working
capital. The final plan may differ significantly from the Plan currently filed
with the Court.
Before the Plan may be presented to the Court for confirmation, the Court must
approve the Disclosure Statement. A continued hearing on the Disclosure
Statement has been scheduled for July 19, 1996. If the Disclosure Statement is
approved, creditors thereafter will be requested to vote to accept or reject the
Plan, and then a hearing will be held before the Court on confirmation of the
Plan; that hearing has not yet been scheduled by the Court.
RESULTS OF OPERATIONS
Net sales for the three month period ended April 30, 1996, were $29,568,000 or
1% higher than the net sales of $29,239,000 for the comparable period in the
prior year. For the nine month period ended April 30, 1996, net sales decreased
6% to $86,309,000 compared to $91,591,000 for the nine month period ended April
30, 1995.
Consumer Products net sales increased 3% for the three month period ended April
30, 1996 compared to the same period in the prior year. All three of the
Consumer Products classes recorded sales increases with significantly stronger
sales within the oral care class. Consumer Products net sales for the nine
months ended April 30, 1996 decreased by 6% with all classes having 5 to 7%
declines. Private label sales decreased in the current three month period due to
timing issues but increased for the nine month period ended April 30, 1996.
For the three month period ended April 30, 1996, hair care net sales increased
slightly as a result of an increase in international sales of 18% offset by a 3%
decline in domestic sales. The increase in international net sales was primarily
from sales of the Dep brand of products in
9
<PAGE> 10
Canada. Prior to February 1, 1996, the Dep brand of products in Canada were
distributed by a licensee and the Company received royalty payments equal to a
percentage of such licensee's net sales. Effective February 1, 1996, such
license agreement was cancelled and the Company now directly distributes the Dep
brand of products and recognizes the revenues from such sales. Domestic hair
care sales for the prior year's three month period ended April 30, 1995 included
a promotion which did not repeat this year.
For the nine month period ended April 30, 1996, hair care sales decreased by 7%
from the comparable period in fiscal 1995. Both domestic and international sales
were down principally due to the above mentioned 1995 promotion which did not
repeat in the current periods, and lower sales of Agree and Halsa.
Aggregate net sales of Agree and Halsa for the three and nine month periods
ended April 30, 1996, were approximately $6,000,000 and $16,700,000,
respectively, compared to approximately $5,500,000 and $18,200,000 for the same
periods of the prior year.
For the three and nine month periods ended April 30, 1996, skin care net sales
recorded a 1% increase and a 5% decline over the same periods in the prior year,
respectively. For the nine month period volume increases in the Natures Family
brand were more than offset by declines in the Porcelana and Cuticura brands.
Oral care net sales increased 22% for the three month period ended April 30,
1996 versus the same period in the prior year as both Topol and Lavoris had
increased volume. For the nine month period, net sales declined 6%, as volume
increases in Lavoris were more than offset by decreases in sales of Topol.
Net sales of international Consumer Products increased 12% for the three month
period ended April 30, 1996, compared to the same period in the prior year,
primarily as a result of the sales of the Dep product line in Canada. Net
international sales for the nine month period declined 9% primarily due to the
decreased sales of Agree/Halsa products in Canada and Australia, and lower net
sales in China.
Gross profit for the three and nine months ended April 30, 1996, was $18,453,000
and $54,268,000, respectively, compared to $17,721,000 and $57,708,000 for the
same periods of the prior year. As a percentage of sales, gross profits were 62%
and 63%, respectively, compared to 61% and 63% for the three and nine month
periods of the prior year. The increase in gross profits was the result of the
increased sales and an increased proportion of higher margin products sold. The
decrease in gross dollars for the nine month period was primarily the result of
lower sales volume.
For the three and nine month periods ended April 30, 1996, selling, general, and
administrative expenses ("SG&A") were $17,464,000 and $51,846,000, respectively.
This compares to $19,869,000 and $58,353,000 for the same periods of the prior
year. As a percentage of net sales, SG&A expenses decreased to 59% and 60%,
respectively, compared with 68% and 64% for the prior year. The decrease in
absolute dollars and percentage of net sales was principally
10
<PAGE> 11
the result of lower advertising and promotion spending in the Pacific Rim area
and lower costs emanating from the Company's expense reduction plan initiated in
February 1995 and lower sales volume for the nine month period.
For the three and nine month periods ended April 30, 1996, net other expenses,
primarily interest, were $1,707,000 and $5,139,000, respectively, as compared to
$1,616,000 and $4,669,000 for the same periods of the prior year. Interest
expense in the current three and nine month periods ended April 30, 1996,
increased 6% and 15%, respectively, due to higher interest rates.
As mentioned above, the Company filed its Chapter 11 petition on April 1, 1996,
and the three and nine month periods ended April 30, 1996, included $261,000 and
$452,000, respectively, related reorganization expenses.
Since the Company has utilized all of its income tax carryback benefits, in
accordance with generally accepted accounting principles, no tax benefit has
been provided in the current period.
Operating income (before reorganization items and write-down of Agree/Halsa)
rose to $989,000 and $2,422,000 for the current three and nine month periods,
compared to operating losses of $2,148,000 and $645,000 for the prior year
periods. Such improvement was the result of the lower SG&A expense and increased
gross profit margins in the current periods.
For the three and nine month periods ended April 30, 1996, the Company recorded
net losses of $979,000 and $3,169,000, respectively, compared to net losses of
$26,870,000 and $27,615,000 for the same periods of the prior year. Excluding
the write-down in the value of Agree/Halsa in April 1995, the reduction in the
net loss for the three month period ended April 1996 as compared to the same
period in the prior year was primarily due to higher gross profits and lower
SG&A expenses, partially offset by increased interest expense and nonrecognition
of tax benefits. For the nine month period ended April 30, 1996, the reduction
in the net loss was due to lower SG&A expenses partially offset by the lower net
sales and higher interest expense in fiscal 1996 and tax benefits recognized in
fiscal 1995.
LIQUIDITY AND CAPITAL RESOURCES
In conjunction with the Chapter 11 filing, the Court has granted the Company the
full use of its cash collateral and existing bank arrangements to conduct its
operations. The Company's suppliers have, in turn, resumed granting the Company
payment terms, most of which are commensurate with pre Chapter 11 filing terms.
In light of the Company's current projected operations and cash flow, management
believes the Company has the financial resources to maintain its current level
of operations and effectuate its Plan, as submitted to the Court, without any
additional debtor-in-possession financing. As of June 11, 1996, the Company had
cash and cash equivalents of approximately $9.8 million.
Schedules were filed with the Court setting forth the assets and liabilities of
the Company and its subsidiaries as of the filing date, April 1, 1996.
Differences between amounts shown by the
11
<PAGE> 12
Company and claims filed by creditors will be investigated and resolved. The
ultimate amount and settlement terms for such liabilities are subject to
acceptance by the Court, and accordingly, are not presently determinable.
Principal and interest payments on pre-petition debt related to the Credit
Facility were not made during the month preceding the Chapter 11 filing and
future principal payments will not be made without Court approval or until a
reorganization plan defining the repayment terms has been confirmed by the
Court. However, the Company has agreed to make monthly payments of $200,000
through August 1996. There is no assurance at this time that the Plan will be
confirmed. Payments on pre-petition debt and liabilities cannot be made unless
approved by the Court.
As opposed to the July 31, 1995 classification, all amounts due under the
Credit Facility, and the accounts payable and accrued expenses incurred prior
to April 1, 1996, have been classified as non-current liabilities under the
caption "liabilities subject to compromise." Working capital was significantly
impacted by the classification of the liabilities subject to compromise as
non-current liabilities. In addition, working capital was impacted by decreases
in accounts payable, accounts receivable and income taxes receivable and
increases in other current assets. The decrease in accounts payable was due to
the reclassification of pre-petition payables as liabilities subject to
compromise. The decrease in accounts receivable is due to lower sales volume in
the current quarter compared to the fourth quarter of fiscal year 1995. The
decrease in income taxes receivable results from the receipt of income tax
refunds relating to the prior fiscal year. The increase in other assets relates
to deposits towards inventory purchases and prepaid professional fees. The
classification of liabilities subject to compromise is the result of the
Chapter 11 filing whereby payments of the Credit Facility, pre-petition
accounts payable and accrued expenses are stayed pending Plan confirmation.
The Company believes that its current cash balances and its ongoing operating
cash flow should enable the Company to meet liquidity requirements during the
next twelve months. The Company's ability to meet its obligations as they come
due and successfully emerge from Chapter 11 is contingent upon, among other
things, the confirmation of a final plan of reorganization by the Court and its
ability to achieve satisfactory levels of profitability and cash flow from
operations.
12
<PAGE> 13
Part II. Other Information
Item 1. Legal Proceedings
See "Part I, Item 2 -- Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Chapter 11
Reorganization," which is incorporated by reference herein.
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
See "Part I, Item 1 -- Financial Statements" and Note 1 thereunder,
which are incorporated by reference herein.
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
The Company has from time to time engaged in discussions with third
parties regarding the possible acquisition by one or more of such
third parties of discrete portions of the Company's assets. The
discussions have been preliminary in nature and no agreements
regarding any such sale or sales have been reached, nor can any
assurance be given that any agreements will be reached. Any such
sale or sales, if consummated prior to the completion of the pending
Chapter 11 case, would be subject to the approval of the United
States Bankruptcy Court. However, consummation of such a sale or
sales is not in any way a condition to the approval or completion of
the Company's previously filed Plan of Reorganization.
As a result of the Chapter 11 filing, effective April 3, 1996, the
symbols for the Company's common stock traded on the NASDAQ SmallCap
Market were changed to "DPCAQ" and "DPCBQ", respectively, for the
Company's Class A and Class B Common Stock.
Pursuant to the requirements of its reorganization case under
Chapter 11, the Company will be required to file, on a monthly
basis, information regarding its financial results. Such information
is publicly available from the office of the United States Trustee
located in Philadelphia, Pennsylvania.
Item 6. Exhibits and Reports on Form 8-K:
a. Exhibits
11 Statement re: Computation of per share earnings
27 Financial Data Schedule
b. Reports
The Company filed a Form 8-K on April 2, 1996, setting forth under
Item 5 that on April 1, 1996, the Company filed a voluntary petition
for relief under Chapter 11 of Title 11 of the United States Code in
the United States Bankruptcy Court for the District of Delaware.
13
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
DEP CORPORATION
Date: June 13, 1996 /s/ Grant W. Johnson
----------------------------------------
Grant W. Johnson
Senior Vice President,
Principal Financial Officer and
Chief Accounting Officer
14
<PAGE> 15
EXHIBIT INDEX
DESCRIPTION EXHIBIT NO.
----------- -----------
Computation of Per Share Earnings 11
Financial Data Schedule 27
15
<PAGE> 1
DEP CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF
COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
April 30, April 30,
-------------------- -------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Loss...................................................... $ (979) $(26,870) $(3,169) $(27,615)
======= ======== ======= ========
Shares:
Weighted average shares outstanding.......................... 6,251 6,245 6,250 6,244
Shares issuable from assumed exercise of
outstanding options........................................ - - - -
------- ------- ------- -------
Adjusted weighted average shares outstanding.................. 6,251 6,245 6,250 6,244
======= ======= ======= =======
Loss per share................................................ $ (0.16) $ (4.30) $ (0.51) $ (4.42)
======= ======= ======= =======
</TABLE>
Exhibit 11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED BALANCE SHEET AT APRIL 30, 1996, AND CONSOLIDATED
STATEMENT OF INCOME FOR THE NINE MONTHS THEN ENDED, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-01-1995
<PERIOD-END> APR-30-1996
<CASH> 8,395,000
<SECURITIES> 0
<RECEIVABLES> 15,132,000
<ALLOWANCES> 0
<INVENTORY> 12,499,000
<CURRENT-ASSETS> 40,389,000
<PP&E> 14,301,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 90,173,000
<CURRENT-LIABILITIES> 10,280,000
<BONDS> 3,635,000
0
0
<COMMON> 64,000
<OTHER-SE> 8,005,000
<TOTAL-LIABILITY-AND-EQUITY> 90,173,000
<SALES> 86,309,000
<TOTAL-REVENUES> 0
<CGS> 32,041,000
<TOTAL-COSTS> 83,887,000
<OTHER-EXPENSES> (101,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,240,000
<INCOME-PRETAX> (3,169,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,169,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,169,000)
<EPS-PRIMARY> (0.51)
<EPS-DILUTED> 0
</TABLE>
