<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 JANUARY 31, 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 1/31/96
------------------------------------ --------------
<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
<TABLE>
<CAPTION>
Part I. Financial Information Page
-----
<S> <C> <C>
ITEM 1. FINANCIAL STATEMENTS:
CONSOLIDATED CONDENSED BALANCE SHEETS - 3
January 31, 1996 and July 31, 1995
CONSOLIDATED CONDENSED STATEMENTS OF INCOME - 4
Three and Six Month Periods Ended
January 31, 1996 and 1995
CONSOLIDATED CONDENSED STATEMENTS OF RETAINED 5
EARNINGS AND ADDITIONAL PAID-IN CAPITAL -
Six Month Period Ended January 31, 1996
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS - 6
Six Month Periods Ended
January 31, 1996 and 1995
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 7
ITEM 2. MANAGEMENT'S DISCUSSION OF RESULTS OF OPERATIONS 9
AND FINANCIAL CONDITION
Part II. Other Information 12
SIGNATURE 14
</TABLE>
2
<PAGE> 3
DEP CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
January 31, July 31,
ASSETS 1996 1995
----------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents............................................ $ 2,226,000 $ 4,611,000
Accounts receivable, net............................................. 14,406,000 18,811,000
Inventories at lower of cost (first-in, first-out) or market:
Raw materials .................................................... 4,858,000 4,233,000
Finished goods.................................................... 9,000,000 8,838,000
----------- -----------
13,858,000 13,071,000
Income taxes receivable............................................. 0 1,779,000
Other current assets................................................ 2,539,000 2,463,000
----------- -----------
Total current assets.............................................. 33,029,000 40,735,000
Property and equipment, net.......................................... 14,731,000 15,423,000
Intangibles, net..................................................... 33,365,000 34,156,000
Other assets......................................................... 2,786,000 3,590,000
----------- -----------
$83,911,000 $93,904,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion long-term debt...................................... $56,130,000 $61,100,000
Accrued expenses.................................................... 6,325,000 7,920,000
Accounts payable ................................................... 6,041,000 7,397,000
----------- -----------
Total current liabilities......................................... 68,496,000 76,417,000
Long-term debt, net of current portion............................... 3,672,000 3,744,000
Other non-current liabilities........................................ 2,699,000 2,516,000
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 January 31, 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 January 31, 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)........................................ (1,975,000) 215,000
Foreign currency translation adjustment............................ (181,000) (173,000)
----------- -----------
Less: treasury stock, at cost, 115,500 shares each of 10,049,000 12,232,000
Class A and Class B common stock................................. (1,005,000) (1,005,000)
----------- -----------
9,044,000 11,227,000
----------- -----------
$83,911,000 $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 Six Months Ended
January 31, January 31,
--------------------------- ---------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales............................................ $27,813,000 $31,011,000 $56,741,000 $62,352,000
Cost of sales........................................ 10,501,000 11,244,000 20,926,000 22,365,000
----------- ----------- ----------- -----------
Gross profit......................................... 17,312,000 19,767,000 35,815,000 39,987,000
Selling, general and
administrative expenses............................ 17,385,000 19,855,000 34,573,000 38,484,000
----------- ----------- ----------- -----------
Income (loss) from operations........................ (73,000) (88,000) 1,242,000 1,503,000
Other income (expense):
Interest, net...................................... (1,694,000) (1,543,000) (3,560,000) (2,972,000)
Other.............................................. 123,000 16,000 128,000 (81,000)
----------- ----------- ----------- -----------
(1,571,000) (1,527,000) (3,432,000) (3,053,000)
----------- ----------- ----------- -----------
Loss before income taxes ............................ (1,644,000) (1,615,000) (2,190,000) (1,550,000)
Income taxes (credit) ............................... 163,000 (836,000) 0 (805,000)
----------- ----------- ----------- -----------
Net loss............................................. ($1,807,000) ($779,000) ($2,190,000) ($745,000)
=========== =========== =========== ===========
Net loss per share :................................. ($0.29) ($0.12) ($0.35) ($0.12)
=========== =========== =========== ===========
Weighted average shares outstanding ................. 6,251,140 6,244,900 6,251,140 6,243,312
=========== =========== =========== ===========
</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
SIX MONTHS ENDED JANUARY 31, 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........................................................ - (2,190,000)
Stock issued under the stock target ownership plan.............. 15,000 -
----------- -----------
Balance at end of period........................................ $12,141,000 $(1,975,000)
=========== ===========
</TABLE>
See notes to consolidated condensed financial statements
5
<PAGE> 6
DEP CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
January 31,
OPERATING ACTIVITIES: 1996 1995
----------- -----------
<S> <C> <C>
Net loss................................................. $(2,190,000) $ (745,000)
----------- -----------
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization............................ 2,447,000 2,759,000
Other.................................................... 301,000 (340,000)
Changes in operating assets and liabilities:
Accounts receivable..................................... 4,284,000 (90,000)
Inventories............................................. (789,000) (337,000)
Income taxes receivable................................. 1,779,000 2,357,000
Other assets............................................ (76,000) 1,620,000
Accounts payable........................................ (1,595,000) (463,000)
Accrued expenses........................................ (1,356,000) (1,019,000)
----------- -----------
Net cash provided by operating activities.................. 2,805,000 3,742,000
INVESTING ACTIVITIES:
Purchases of property and equipment........................ (168,000) (358,000)
Sale of trademark.......................................... 0 435,000
Other, net................................................. 8,000 (450,000)
----------- -----------
Net cash used in investing activities...................... (160,000) (373,000)
FINANCING ACTIVITIES:
Decrease in lines of credit and long-term debt,
including change in current portion..................... (5,042,000) (226,000)
Other...................................................... 15,000 0
----------- -----------
Net cash used in financing activities....................... (5,027,000) (226,000)
----------- -----------
Increase (decrease) in cash and cash equivalents............ (2,382,000) 3,143,000
Effect of exchange rate changes on cash..................... (3,000) 8,000
Cash and cash equivalents at beginning of period............ 4,611,000 947,000
----------- -----------
Cash and cash equivalents at end of period................ 2,226,000 4,098,000
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest.............................................. 3,561,000 3,208,000
=========== ===========
Income tax refunds.................................... (1,959,000) (2,612,000)
=========== ===========
</TABLE>
See notes to consolidated condensed financial statements
6
<PAGE> 7
DEP CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1:
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 (see Note 4), contain all adjustments
(consisting of only normal recurring accruals) necessary to fairly present the
financial position as of January 31, 1996, and the results of operations and
the statements of cash flows for the three and six month periods ended January
31, 1996 and 1995.
The results of operations for the three and six month periods ended January 31,
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:
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 3:
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 4:
As of January 31, 1996 and July 31, 1995, the current portion of long-term debt
included $56,000,000 and $60,969,000, respectively, related to the Revolving
Credit and Term Loan Agreement, as amended (the "Credit Facility"), that the
Company entered into on August 6, 1993, with a group of seven banks (the "Bank
Group"), in conjunction with the acquisition of the Agree and Halsa brands. On
November 3, 1995, the Company and the Bank Group entered into a Fifth Amendment
to the Credit Facility effective as of October 30, 1995 (the "Fifth Amendment")
which provides, among other things, for the termination of the Credit Facility
on
7
<PAGE> 8
December 30, 1996, a working capital commitment of $25,000,000, an increase in
interest rates, and lower scheduled quarterly term loan payments through April
1, 1996. The $9,567,000 payment originally due on December 29, 1995, was
reduced to $500,000 with $8,300,000 due on April 15, 1996 and the remainder due
at maturity. However, based on current estimates of cash generated from
operations, management does not believe that such internally generated funds
alone will be sufficient to pay the $8,300,000 due on April 15, 1996.
Accordingly, the entire amount outstanding under the Credit Facility has been
classified as a current liability.
8
<PAGE> 9
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Net sales for the three and six month periods ended January 31, 1996 were
$27,813,000 and $56,741,000, respectively, or 10% and 9% lower than net sales
of $31,011,000 and $62,352,000 for the comparable periods of the prior year and
reflected decreases in all segments of the business primarily due to lower
worldwide sales of Agree and Halsa and lower sales in China. Consumer Products
net sales for the three and six months ended January 31, 1996, decreased by 13%
and 10%, respectively. Such decreases were offset in part by increases in net
sales of private label products.
Primarily as a result of the lower sales of Agree and Halsa shampoos and
conditioners, net sales of hair care decreased 13% and 10% for the three and
six months ended January 31, 1996. Aggregate net sales of Agree and Halsa were
approximately $4,600,000 and $10,700,000, respectively, for the three and six
month periods ended January 31, 1996, or 26% and 16%, respectively lower than
the comparable periods of the prior year. For the three and six month periods
ended January 31, 1996, hair care net sales excluding Agree and Halsa decreased
9% and 8%, respectively, from the prior year periods. This decline was
primarily related to lower sales in China and the discontinuance of certain
hair care products which were marketed in fiscal 1995.
Skin care net sales decreased 7% for both the three and six month periods ended
January 31, 1996, over the comparable periods of the prior year. For the six
months ended January 31, 1996 volume growth in the Natures Family brand was
more than offset by volume decreases in Porcelana and Cuticura. All skin care
brands reflected decreases during the three month period ended January 31,
1996.
Net sales of oral care products decreased 17% for both the three and six month
periods ended January 31, 1996. Increased sales of Lavoris were offset by
decreased Topol sales for the three month period ended January 31, 1996, while
both brands experienced decreased sales for the six month period.
Net sales of international Consumer Products decreased 20% and 19%,
respectively, for the three and six months ended January 31, 1996, compared to
the prior year periods, primarily as a result of a decline in Agree and Halsa
and lower sales in China.
Gross profit for the three and six months ended January 31, 1996, was
$17,312,000 and $35,815,000, respectively, compared to $19,767,000 and
$39,987,000 for the same periods of the prior year. As a percentage of sales,
gross profits were 62% and 63%, respectively, compared to 64% for both the
three and six month periods of the prior year. The decrease in absolute
dollars was the result of lower sales volume while the decrease in the
percentage was the result of a lower proportion of higher margin products being
sold.
9
<PAGE> 10
For the three and six month periods ended January 31, 1996, selling, general,
and administrative expenses ("SG&A") were $17,385,000 and $34,573,000,
respectively. This compares to $19,855,000 and $38,484,000 for the same
periods of the prior year. As a percentage of net sales, SG&A expenses
decreased to 63% and 61%, respectively, compared with 64% and 62% for the prior
year. The decrease in absolute dollars was principally the result of lower
sales, while the percentage decrease primarily relates to lower pricing
allowances offered to the Company's domestic customers on certain brands.
For the three and six month periods ended January 31, 1996, net other expenses
were $1,571,000 and $3,432,000, respectively, as compared to $1,527,000 and
$3,053,000 for the same periods of the prior year. The increased expense was
primarily due to higher interest expense, resulting from increased interest
rates, including a $200,000 payment required by the Bank Group following the
Company's noncompliance with certain financial covenants under its Credit
Facility in the quarter ended October 31, 1995.
The Company provides interim period tax allocations based on its estimated
annual effective tax rate. The provision for the three months ended January
31, 1996 reflects the reversal of the first quarter benefit.
For the three and six month periods ended January 31, 1996, the Company
recorded net losses of $1,807,000 and $2,190,000, respectively, compared to net
losses of $779,000 and $745,000 for the same periods of the prior year. The
current period's losses increased compared to the prior periods principally due
to lower sales, higher interest expense and nonrecognition of tax benefits.
LIQUIDITY AND CAPITAL RESOURCES
All amounts due under the Credit Facility have been classified as current debt.
Due to such reclassification, the Company had a working capital deficiency of
$35,467,000 as of January 31, 1996, slightly lower than the $35,682,000
deficiency at July 31, 1995. Working capital was impacted by reductions in
accounts receivable and income taxes receivable which were offset in part by
increases in inventory and decreases in current portion of long-term debt,
accrued expenses and accounts payable. The decrease in income taxes receivable
results from the receipt of income tax refunds relating to the prior fiscal
year. The decrease in accounts receivable and increased inventory is due to
lower sales volume in the current quarter compared to the fourth quarter of
fiscal year 1995. The decrease in the current portion of long-term debt of
$4,970,000 relates to the reduction in cash balances and the cash provided by
operating activities described above. The decrease in accrued expenses is
primarily the result of the timing of promotional events, while the reduction
in accounts payable relates to the timing and recognition of SG&A and inventory
expenses.
Since the inception of the Credit Facility in August 1993, the Company has
consistently made timely payment of all principal and interest due under the
Credit Facility. In light of the Company's current projected earnings and cash
flow, management believes the Company has
10
<PAGE> 11
the financial resources to maintain its current level of operations until an
$8,300,000 principal payment becomes due on April 15, 1996. Cash generated
from operations alone will not be sufficient to pay the $8,300,000 on April 15,
1996, or the balance of the Credit Facility, which is due on December 30, 1996.
As a result, the Company has been evaluating alternatives which, if successful,
would result in the payment, the refinancing, or the restructuring of the
Credit Facility. The Company has retained legal counsel specializing in
restructurings to render advice regarding alternatives available to the
Company. In addition, the Company has retained Donaldson, Lufkin & Jenrette
Securities Corporation to assist it in exploring strategic alternatives which
include, among other things, a business combination, sale of assets, strategic
investment in the Company or a refinancing of the Credit Facility.
In the period since February 1, 1996, several members of the Bank Group have
assigned their rights and obligations with respect to 58% of the balance due
under the Credit Facility to various entities, none of which is a bank. The
Company is currently negotiating with the revised lending group to provide
long-term financing, eliminate the April 15, 1996 principal payment and provide
a reduction in interest rates. However, under the terms of the Credit
Facility, certain changes, including any postponement in the due date of any
principal or interest payments, must be approved by all lenders. There can be
no assurance that the Company will be successful in its attempt to achieve a
satisfactory refinancing of the Credit Facility or to accomplish any of the
other strategic alternatives before the April 15, 1996 or December 30, 1996
principal payment dates.
11
<PAGE> 12
Part II. Other Information
Item 1. Legal Proceedings
Dep Corporation v. S.C. Johnson & Son, Inc., United States
District Court for the Central District of California. Case
No. EDCV 94-138RT(CTx)
In a partial summary judgement decision rendered on January
18, 1996, the United States District Court ruled that the
Company is not entitled to a rescission or punitive damages in
the above referenced case. The Company continues to pursue
its contractual claims for monetary damages and other relief.
Trial is currently scheduled to commence on May 17, 1996.
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's 1995 Annual Meeting of Stockholders held on
January 9, 1996, the following actions were taken:
The following Class II Directors were elected for terms of
office expiring in 1998:
<TABLE>
<CAPTION>
Votes for Votes Withheld
---------- --------------
<S> <C> <C>
Judith R. Berglass 2,569,694 77,892
Philip I. Wilber 2,575,407 72,179
</TABLE>
A proposal by the Board of Directors to ratify an amendment to
the Dep Corporation 1992 Stock Option Plan was approved by the
stockholders. The stockholders cast 2,441,689 votes in favor
of this proposal and 162,023 against. There were 43,874
abstentions.
Item 5. Other Information
On November 2, 1995, listing of the Company's common stock was
transferred from the Nasdaq National Market to the Nasdaq
SmallCap Market as a result of the Company's non-compliance
with the NASDAQ minimum net tangible assets requirement for
the National Market. The Pacific Stock Exchange and certain
other regional exchanges have all declined to list the
Company's common stock based on the Company's net tangible
assets.
12
<PAGE> 13
As a result of the assignment of certain rights and
obligations in the Credit Facility, the current lending group
consists of City National Bank, First National Bank of Boston,
Foothill Capital Corporation, Pearl Street L.P., and PNC Bank
Corporation.
Item 6. Exhibits and Reports on Form 8-K:
a. Exhibits
3.6 Amendment of Bylaws
10.22 Form Assignment and Acceptance Agreement
together with Form Consent related to the
Revolving Credit and Term Loan Agreement
dated as of August 6, 1993
11 Statement re: Computation of per share
earnings
27 Financial Data Schedule
b. Reports
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: March 15, 1996 /s/ Grant W. Johnson
--------------------------- -------------------------------
Grant W. Johnson
Senior Vice President,
Principal Financial Officer and
Chief Accounting Officer
14
<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
DESCRIPTION EXHIBIT NO.
----------- -----------
<S> <C>
Amendment of Bylaws 3.6
Form Assignment and Acceptance and Form Consent 10.22
Computation of Per Share Earnings 11
Financial Data Schedule 27
</TABLE>
15
<PAGE> 1
EXHIBIT 3.6
Amendment of Dep Corporation Bylaws
The Board of Directors, by unanimous written consent, on November 15, 1995,
adopted an amendment to Section 2.1 of Article II, of the Corporation's Bylaws
to read in full as follows:
The Board of Directors shall consist of not less than 6 nor more than
13 directors. The exact number of directors shall be fixed at 6 until
changed by the affirmative vote of a majority of the Board of Directors
or by the affirmative vote of the holders of 75% of the Corporation's
shares entitled to vote in an election of directors, voting together as
one class. Directors need not be stockholders.
<PAGE> 1
EXHIBIT 10.22
FORM ASSIGNMENT AND ACCEPTANCE
Dated ___________________________
Reference is made to the Revolving Credit and Term Loan Agreement,
dated as of _____________, ____ (the "Credit Agreement"), among
_______________, a ____________ corporation (the "Borrower"), the Lenders (as
defined in the Credit Agreement) and __________________, as Agent for the
Lenders (the "Agent"). Terms defined in the Credit Agreement and not otherwise
defined herein are used herein with as therein defined.
______________________________________ (the "Assignor") and
_________________ (the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, that interest in and
to all of the Assignor's rights and obligations under the Credit Agreement as
of the date hereof which represents the percentage interest specified on
Section 1 of Schedule 1 of the aggregate outstanding rights and obligations
under the Credit Agreement, including, without limitation, such interest in the
Assignor's Working Capital Commitment outstanding on the Effective Date (as
hereinafter defined), the Working Capital Advances owing to the Assignor
outstanding on the Effective Date (as hereinafter defined), the Term Advance
owing to the Assignor outstanding on the Effective Date, and the Notes held by
the Assignor. After giving effect to such sale and assignment, the Assignee's
Working Capital Commitment and the amount of the Working Capital Advances and
of the Term Advance owing to the Assignee will be set forth in Section 2 of
Schedule 1.
2. The Assignor (i) represents and warrants that it is the legal
and beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any adverse claim; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with any
Loan Document or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of any Loan Document or any other instrument
or document furnished pursuant thereto; and (iii) makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of any Loan Party or the performance or observance by any Loan Party of any of
its obligations under any Loan Document or any other instrument or document
furnished pursuant thereto; and (iv) attaches the Notes referred to in
paragraph 1 above and requests that the Agent exchange such Notes for a new
Term Note payable to the order of the Assignee in a principal amount equal to
the Term Advance purchased and a new Working Capital Note payable to the order
of the Assignee in a principal amount equal to the Working Capital Commitment
assumed by the Assignee pursuant hereto.
3. The Assignee (i) confirms that it has received a copy of the
Loan Documents, together with copies of the financial statements delivered to
each Lender in connection therewith and such other documents and information as
it has deemed appropriate to make its own credit
<PAGE> 2
analysis and decision to enter into this Assignment and Acceptance; (ii) agrees
that it will, independently and without reliance upon the Agent, the Assignor
or any other Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under any Loan Document; (iii) confirms that it is
an Eligible Assignee; (iv) appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under the Credit
Agreement and the other Loan Documents as are delegated to the Agent by the
terms thereof, together with such powers as are reasonably incidental thereto;
(v) agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Credit Agreement are required to be
performed by it as a Lender; (vi) specifies as its Domestic Lending Office (and
address for notices) and Eurodollar Lender Office the offices set forth beneath
its name on the signature pages hereof; and (vii) attaches the forms prescribed
by the Internal Revenue Service of the United States certifying as to the
Assignee's status for purposes of determining exemption from United States
withholding taxes with respect to all payments to be made to the Assignee under
the Credit Agreement and the Notes or such other documents as are specified in
Section 2.11 of the Credit Agreement.
4. Following the execution of this Assignment and Acceptance by
the Assignor and the Assignee, it will be delivered to the Agent for acceptance
and recording by the Agent. The effective date of this Assignment and
Acceptance shall be the date of acceptance thereof by the Agent, unless
otherwise specified on Schedule 1 hereto (the "Effective Date").
5. Upon such acceptance and recording by the Agent, as of the
Effective Date, (i) the Assignee shall be a party to the Credit Agreement and,
to the extent provided in this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording by the Agent, from and
after the Effective Date, the Agent shall make all payments under the Credit
Agreement and the Notes in respect of the interest assigned hereby (including,
without limitation, all payments of principal, interest and commitment fees
with respect thereto) to the Assignee. The Assignor and Assignee shall make
all appropriate adjustments in payments under the Credit Agreement and the
Notes for periods prior to the Effective Date directly between themselves.
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed by their respective officers thereunto duly
authorized, as of the date first above written, such execution being made on
Schedule 1 hereto.
<PAGE> 3
Schedule 1
to
Assignment and Acceptance
Dated ______________________
<TABLE>
<S> <C>
Section 1.
- ----------
Percentage Interest Assigned: ______%
Section 2.
- ----------
Assignee's Working Capital Commitment: $________________
Aggregate Outstanding Principal Amount of
Working Capital Advances owing to
the Assignee: $________________
Outstanding Principal Amount of Term
Advance owing to the Assignee: $________________
Working Capital Note payable to the order
of the Assignee
Dated: _________________
Principal amount: $________________
Term Note payable to the order of the Assignee
Dated: _________________
Principal amount: $________________
Section 3.
- ----------
Effective Date: _________________
</TABLE>
<PAGE> 4
________________________________
By:_____________________________
Title:
________________________________
By:_____________________________
Title:
________________________________
By:_____________________________
Title:
Domestic Lending Office:
________________________________
________________________________
________________________________
________________________________
Eurodollar Lending Office:
________________________________
________________________________
________________________________
________________________________
Accepted this ____________ day
of ___________________, 1996
__________________________________
By:_______________________________
Title:
<PAGE> 5
FORM CONSENT LETTER
_____________________________
_____________________________
_____________________________
_____________________________
_____________________________
Re: Assignment and Acceptance (the "Assignment and
Acceptance") dated _________________, 1996 between
___________________________ ("Assignor") and
___________________________ ("Assignee")
Ladies and Gentlemen:
Pursuant to the Assignment and Acceptance and subject to your consent, Assignor
has made an assignment to Assignee (the "Assignment") of that interest in
Assignor's rights under the Credit Agreement as is identified in the Assignment
and Acceptance (the "Interest"). The term "Credit Agreement" means the Credit
Agreement referred to in the Assignment and Acceptance. Unless otherwise
defined herein, terms used herein and defined in the Credit Agreement shall be
used herein as so defined.
In order to induce _________________________ (the "Borrower") to grant its
consent to the Assignment, the Assignee hereby represents and warrants as of
the date the Assignment is effected to, and agrees with, the Borrower as
follows: Assignee (i) has received a copy of the Credit Agreement and the
other Loan Documents, together with such financial statements and other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into the Assignment and Acceptance; (ii) is a
sophisticated purchaser and has, independently and without reliance upon the
Borrower or any representations or warranties made by the Borrower, and based
on such documents and information as it has deemed appropriate, made its own
credit decisions in entering into the Assignment and Acceptance and purchasing
the Interest; (iii) has appointed and authorized the Agent to take such action
as the Agent on its behalf and to exercise such powers and discretion under the
Credit Agreement and the other Loan Documents as are delegated to the Agent by
the Lenders by the terms thereof, together with such powers and discretion as
are reasonably incidental thereto; (iv) agrees that it will perform in
accordance with their terms, and hereby assumes for the benefit of the
Borrower, all obligations and liabilities of the Assignor under or in
connection with the Loan
<PAGE> 6
Documents to the full extent as if Assignee were a Lender signatory to the
Credit Agreement and the other Loan Documents to which Assignor is a party; (v)
specifies as its Domestic Lending Office and Eurodollar Lending Office (and as
addresses for notices) the offices set forth beneath its name on the Assignment
and Acceptance; (vi) to the extent applicable, has attached hereto four
original copies of each certificate or form required by the first sentence of
Section 2.11(e) of the Credit Agreement; (vii) has executed this letter and the
Assignment and Acceptance in the form attached here and confirms that both do
constitute the duly authorized, legal, valid and binding obligations of
Assignee, enforceable in accordance with their terms; and (viii) without
implying any characterization of the Interest as a "security" within the
meaning of any applicable securities laws, is not acquiring the Interest with a
view to, or for resale in connection with, any distribution or public offering
of all or part thereof or of any interest therein in a manner which would
violate applicable securities laws, provided that, this clause (viii) shall be
without prejudice to Assignee's rights to effect such resale in accordance with
all applicable law and the Loan Documents.
Without limiting the generality of the foregoing, Assignee specifically
acknowledges and agrees that the Borrower shall not be liable to Assignee for
any increased costs described in Section 2.09 of the Credit Agreement or for
any Taxes or Other Taxes incurred by Assignee at any time.
By signing a copy of this letter in the space provided, the Borrower accepts
the agreements of Assignee herein and consents to the purchase by Assignee of
the Assignment.
_____________________________
By: _________________________
Title:
Accepted and consenting as of
the date first above written
_____________________________
By: _________________________
Title:
<PAGE> 1
EXHIBIT 11
DEP CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF
COMPUTATION OF EARNINGS PER SHARE
(in thousands, except per share data)
(UNAUDITED)
<TABLE>
Three Months Ended Six Months Ended
January 31, January 31,
---------------------- ----------------------
1996 1995 1996 1995
------- ------ ------- ------
<S> <C> <C> <C> <C>
Net Loss.............................................. ($1,807) ($779) ($2,190) ($745)
======= ====== ======= ======
Shares:
Weighted average shares outstanding 6,251 6,245 6,251 6,243
Shares issuable from assumed exercise of
outstanding options................................ - - - -
------- ------ ------- ------
Adjusted weighted average shares outstanding.......... 6,251 6,245 6,251 6,243
======= ====== ======= ======
Loss per share........................................ ($0.29) ($0.12) ($0.35) ($0.12)
======= ====== ======= ======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED CONSENSED BALANCE SHEET AT JANUARY 31, 1996, AND
CONSOLIDATED STATEMENT OF INCOME FOR THE QUARTER THEN ENDED AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-01-1995
<PERIOD-END> JAN-31-1996
<CASH> 2,226,000
<SECURITIES> 0
<RECEIVABLES> 14,406,000<F1>
<ALLOWANCES> 0
<INVENTORY> 13,858,000
<CURRENT-ASSETS> 33,029,000
<PP&E> 14,731,000<F2>
<DEPRECIATION> 0
<TOTAL-ASSETS> 83,911,000
<CURRENT-LIABILITIES> 68,496,000
<BONDS> 3,672,000
<COMMON> 64,000<F3>
0
0
<OTHER-SE> 8,980,000
<TOTAL-LIABILITY-AND-EQUITY> 83,911,000
<SALES> 56,741,000
<TOTAL-REVENUES> 0
<CGS> 20,926,000
<TOTAL-COSTS> 55,499,000
<OTHER-EXPENSES> (128,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,560,000
<INCOME-PRETAX> (2,190,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,190,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,190,000)
<EPS-PRIMARY> (0.35)
<EPS-DILUTED> 0
<FN>
<F1>Accounts receivable net of allowance for doubtful accounts.
<F2>Property, plant and equipment net of accumulated depreciation.
<F3>Common stock includes both Class A and Class B common stock.
</FN>
</TABLE>
