<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED APRIL 30, 1997
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 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 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 by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
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.
Outstanding at
Class June 2, 1997
- --------------------------------------- ----------------------------
COMMON STOCK, $.01 PAR VALUE 6,876,140
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
<S> <C> <C>
ITEM 1. FINANCIAL STATEMENTS:
CONSOLIDATED CONDENSED BALANCE SHEETS - 3
April 30, 1997 and July 31, 1996
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS - 4
Three and Nine Month Periods ended
April 30, 1997 and 1996
CONSOLIDATED CONDENSED STATEMENTS OF RETAINED 5
DEFICIT AND ADDITIONAL PAID-IN CAPITAL -
Nine Month Period Ended April 30, 1997
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS - 6
Nine Month Periods Ended
April 30, 1997 and 1996
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 10
CONDITION AND RESULTS OF OPERATIONS
PART II. OTHER INFORMATION
SIGNATURES 13
EXHIBIT INDEX 14
</TABLE>
<PAGE> 3
DEP CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
April 30, July 31,
ASSETS 1997 1996
------------ ----------
<S> <C> <C>
Current assets:
Cash and cash equivalents .......................................................... $ 13,642,000 $11,118,000
Accounts receivable, net ........................................................... 13,521,000 15,750,000
Inventories at lower of cost (first-in, first-out) or market:
Raw materials .................................................................... 4,790,000 4,719,000
Finished goods ................................................................... 9,069,000 7,280,000
------------ -----------
13,859,000 11,999,000
Other current assets ............................................................... 2,091,000 3,339,000
------------ -----------
Total current assets ............................................................. 43,113,000 42,206,000
Property and equipment, net ......................................................... 13,386,000 14,086,000
Intangibles, net .................................................................... 27,839,000 32,651,000
Other assets ........................................................................ 1,720,000 895,000
------------ -----------
$ 86,058,000 $89,838,000
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Liabilities not subject to compromise:
Current portion long-term debt .................................................... $ 1,885,000 $ 144,000
Accrued expenses .................................................................. 8,745,000 8,488,000
Accounts payable .................................................................. 9,295,000 3,211,000
------------ -----------
Total current liabilities ........................................................ 19,925,000 11,843,000
Liabilities subject to compromise ................................................... -- 68,858,000
Long-term debt, net of current portion .............................................. 61,899,000 3,597,000
Other non-current liabilities ....................................................... 2,288,000 2,258,000
------------ -----------
Total liabilities ................................................................ 84,112,000 86,556,000
Stockholders' equity:
Preferred stock, par value $.01; authorized 3,000,000; none outstanding ........... -- --
Class A common stock: issued 3,232,559 at July 31, 1996 ........................... -- 32,000
Class B common stock: issued 3,249,581 at July 31, 1996 ........................... -- 32,000
Common stock, par value $.01; authorized 15,000,000 shares; issued
7,107,140 at April 30, 1997 .................................................... 71,000 --
Additional paid-in capital ........................................................ 13,397,000 12,141,000
Retained deficit .................................................................. (10,355,000) (7,743,000)
Foreign currency translation adjustment ........................................... (162,000) (175,000)
------------ -----------
2,951,000 4,287,000
Less: treasury stock, at cost, 231,000 shares of common stock at April 30, 1997 and
115,500 shares each of Class A and Class B common stock at July 31, 1996........ (1,005,000) (1,005,000)
------------ -----------
1,946,000 3,282,000
------------ -----------
$ 86,058,000 $89,838,000
============ ===========
</TABLE>
See notes to consolidated condensed financial statements
3
<PAGE> 4
DEP CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
April 30, April 30,
------------------------------ ------------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales .......................... $ 28,571,000 $ 29,568,000 $ 85,693,000 $ 86,309,000
Cost of sales ...................... 11,252,000 11,115,000 33,406,000 32,041,000
------------ ------------ ------------ ------------
Gross profit ....................... 17,319,000 18,453,000 52,287,000 54,268,000
Selling, general and
administrative expenses .......... 16,304,000 17,464,000 49,579,000 51,846,000
------------ ------------ ------------ ------------
Income from operations ............. 1,015,000 989,000 2,708,000 2,422,000
Other income (expense):
Interest, net .................... (1,574,000) (1,680,000) (5,289,000) (5,240,000)
Other ............................ (42,000) (27,000) (22,000) 101,000
------------ ------------ ------------ ------------
(1,616,000) (1,707,000) (5,311,000) (5,139,000)
------------ ------------ ------------ ------------
Loss before reorganization items and
income taxes ..................... (601,000) (718,000) (2,603,000) (2,717,000)
Reorganization items ............... 12,000 261,000 9,000 452,000
Income taxes ....................... - - - -
------------ ------------ ------------ ------------
Net loss ........................... $ (613,000) $ (979,000) $ (2,612,000) $ (3,169,000)
------------ ------------ ------------ ------------
Net loss per share ................. $ (0.09) $ (0.16) $ (0.39) $ (0.51)
============ ============ ============ ============
Weighted average shares
outstanding ...................... 6,876,140 6,251,140 6,643,842 6,250,110
============ ============ ============ ============
</TABLE>
See notes to consolidated condensed financial statements
4
<PAGE> 5
DEP CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF ADDITIONAL
PAID-IN CAPITAL AND RETAINED DEFICIT
NINE MONTHS ENDED APRIL 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Additional Retained
Paid-in Capital Deficit
--------------- -----------
<S> <C> <C>
Balance at beginning of period ......... $12,141,000 $ (7,743,000)
Net loss ............................... - (2,612,000)
Issuance of stock ...................... 1,256,000 -
----------- ------------
Balance at end of period ............... $13,397,000 $(10,355,000)
=========== ============
</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,
--------------------------
Operating Activities: 1997 1996
---------- ----------
<S> <C> <C>
Net loss ................................................................... $(2,612,000) $(3,169,000)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization ............................................ 2,398,000 3,847,000
Other - 1997 includes S.C. Johnson forgiveness of indebtedness ........... (1,242,000) 389,000
Changes in operating assets and liabilities:
Accounts receivable ..................................................... 2,128,000 3,521,000
Inventories ............................................................. (1,854,000) 570,000
Income taxes receivable ................................................. - 1,779,000
Other assets ............................................................ 1,251,000 (1,900,000)
Accounts payable ........................................................ 185,000 2,117,000
Accrued expenses ........................................................ (252,000) 362,000
---------- ----------
Net cash provided by operating activities .................................. 2,000 7,516,000
Investing Activities:
Purchases of property and equipment ........................................ (538,000) (178,000)
Proceeds from settlement of litigation relating to acquisition of trademarks 3,900,000 -
Other, net ................................................................. 181,000 (292,000)
---------- ----------
Net cash provided by (used in) investing activities ......................... 3,543,000 (470,000)
Financing Activities:
Decrease in lines of credit and long-term debt,
including change in current portion ..................................... (1,034,000) (3,276,000)
Other ...................................................................... - 15,000
---------- ----------
Net cash used in financing activities ....................................... (1,034,000) (3,261,000)
---------- ----------
Increase in cash and cash equivalents ....................................... 2,511,000 3,785,000
Effect of exchange rate changes on cash ..................................... 13,000 (1,000)
Cash and cash equivalents at beginning of period ............................ 11,118,000 4,611,000
---------- ----------
Cash and cash equivalents at end of period .................................. $13,642,000 $ 8,395,000
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest ................................................................ $ 3,791,000 $ 4,110,000
========== ==========
Income tax payments (refunds) ........................................... $ 4,000 $(1,959,000)
========== ==========
</TABLE>
See notes to consolidated condensed financial statements
6
<PAGE> 7
DEP CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. GENERAL
In the opinion of the Company, the accompanying unaudited consolidated
condensed financial statements contain all adjustments (consisting of only
normal recurring accruals) necessary to fairly present the financial position as
of April 30, 1997, and the results of operations and statements of cash flows
for the three and nine month periods ended April 30, 1997.
The results of operations for the three and nine month periods ended
April 30, 1997, 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, 1996.
NOTE 2. EARNINGS (LOSS) PER SHARE
Earnings (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.
In February 1997, Statements of Financial Accounting Standards (SFAS)
No. 128 "Earnings per Share" was issued and is effective for interim and annual
reporting periods ending after December 15, 1997. SFAS No. 128 will require the
presentation of Basic Earnings per Share and Diluted Earnings per Share in the
Company's Consolidated Statement of Operations. Basic Earnings per Share
represents income available to common shareholders divided by the weighted
average number of common shares outstanding for the period. Diluted Earnings per
Share is similar to the current presentation of fully diluted earnings per
share. SFAS No. 128 requires restatement of all prior-period earnings per share
data presented, however, management believes the adoption of SFAS No. 128 will
not have a material impact on the Company's financial position or results of
operations.
NOTE 3. REORGANIZATION
On October 23, 1996, the Company's Second Amended Plan of Reorganization
(the "Plan of Reorganization") was confirmed by the United States Bankruptcy
Court for the District of Delaware (Case No. 96-480(HSB)) (the "Bankruptcy
Court") with an effective date of November 4, 1996 (the "Effective Date"). None
of the Company's foreign subsidiaries were part of the chapter 11 filing.
7
<PAGE> 8
Among other things, the Plan of Reorganization provided that the Company
will repay approximately $62,000,000 in long-term secured indebtedness held by
the Company's senior lenders (the "Lender Group"), with interest at the prime
rate plus 2%, which indebtedness matures July 31, 2002. The Plan of
Reorganization further provided (i) on the Effective Date, for payment to the
Lender Group of $150,000 in cash, to satisfy certain post-petition interest
claims; (ii) for the issuance to the Lender Group of 625,000 shares of Common
Stock; and, (iii) for the satisfaction of unsecured creditor claims, plus 5%
interest, payable in monthly installments, commencing November 1996 and
continuing through March 15, 1998. Additionally, the Plan of Reorganization
required the Company to pledge to the Lender Group the net cash proceeds, as
defined, received by the Company in connection with the litigation between the
Company and S.C. Johnson & Son, Inc. and affiliates ("S.C. Johnson"). (See Notes
6, 7 and 8.)
NOTE 4. ACCRUED EXPENSES
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 based upon estimated annual sales.
NOTE 5. REORGANIZATION ITEMS
Reorganization items consisted of the following:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
April 30 April 30
---------------------- ------------------------
1997 1996 1997 1996
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
Professional fees .... $ 12,000 $ 280,000 $ 139,000 $ 471,000
Interest income ...... - (19,000) (130,000) (19,000)
-------- --------- --------- ---------
$ 12,000 $ 261,000 $ 9,000 $ 452,000
======== ========= ========= =========
</TABLE>
NOTE 6. COMMON STOCK
As of the Effective Date, the Company's Class A and Class B common
stock, including those shares issued to the Lender Group, were reclassified as
one class of Common Stock having the same voting rights, preferences and
privileges.
During the nine month period ended April 30, 1997, as provided in the
Plan of Reorganization, the Company issued 625,000 shares of Common Stock to the
Lender Group. The Plan of Reorganization initially envisioned the issuance of
Common Stock and warrants. However, at the Lender Group's request, and with the
Bankruptcy Court's approval, the Company issued only Common Stock. Accordingly,
no warrants have been or will be issued to the Lender Group pursuant to the Plan
of Reorganization.
8
<PAGE> 9
NOTE 7. NEW CREDIT FACILITY
On November 4, 1996, a new term loan agreement ("the Credit Facility")
between the Company and its senior lenders (the "Lender Group") became
effective. As of April 30, 1997, the Credit Facility, among other things,
provides that the Company will repay approximately $60,114,000 in long-term
secured indebtedness with interest at the prime rate plus 2%, which indebtedness
matures on July 31, 2002. The Credit Facility requires increasing quarterly
principal payments commencing in the amount of $100,000 on the Effective Date
and progressively increasing to $2,000,000 at June 30, 2002, and a balloon
payment of $35,046,000 due July 31, 2002. Under the Credit Facility the Company
is also obligated to pay the Lender Group an additional $81,000 per month for a
period of twelve months after the Effective Date, in satisfaction of the Lender
Group's professional fees and expenses incurred during the chapter 11
proceedings.
At April 30, 1997, the principal due under the Credit Facility
aggregates $60,114,000 with scheduled payments as follows:
<TABLE>
<CAPTION>
<S> <C>
Remainder of fiscal year 1997 $ 343,000
Fiscal year 1998 1,725,000
Fiscal year 1999 3,500,000
Fiscal year 2000 5,250,000
Fiscal year 2001 6,750,000
Thereafter 42,546,000
</TABLE>
In addition to the scheduled payments due under the Credit Facility, as
a result of the settlement of the S.C. Johnson litigation, in January 1997 the
Company paid the Lender Group $1,107,000 which reduced long-term debt and is
reflected in the table above. (See Note 3.)
The Credit Facility also contains various financial covenant
requirements, including minimum current and fixed charge coverage ratios,
maximum capital expenditures and leverage ratios.
NOTE 8. LITIGATION SETTLEMENT
On December 19, 1996, the Company and S.C. Johnson agreed to an
out-of-court settlement in regard to all pending litigation that arose in
connection with the Company's 1993 purchase of the Agree and Halsa trademarks
from S.C. Johnson. The settlement involved the Company, its insurance carriers
and S.C. Johnson. Under the terms of such settlement the Company received net
cash proceeds from S.C. Johnson of $2,500,000, a $1,400,000 payment from the
Company's insurance carriers and forgiveness of $1,400,000 owed S.C. Johnson for
certain goods delivered following the Agree and Halsa acquisition. The total net
settlement has been recorded as a reduction of goodwill.
NOTE 9. RECLASSIFICATION
Certain reclassifications have been made to the fiscal 1996 amounts to conform
to the fiscal 1997 presentation.
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Net sales for the three months ended April 30, 1997 were $28,571,000,
compared to $29,568,000 for the comparable period of the prior year. The
decrease is due to lower unit volume of the Company's Consumer Products which
represents nearly 95% of total net sales.
Net sales of domestic Consumer Products decreased 7% for the three
months ended April 30, 1997 primarily due to lower sales of the Agree and Halsa,
Lilt and Lavoris brands. Such decrease was partially offset by volume growth of
the L.A. Looks and Dep brands. Net sales of international Consumer Products were
flat compared to the third quarter of 1996 despite lower international sales of
Agree and Halsa. For the three months ended April 30, 1997, consolidated net
sales, excluding Agree and Halsa, increased one percent compared to the prior
year period.
Net sales for the nine month period ended April 30, 1997 decreased by
$616,000 to $85,693,000 as compared to $86,309,000 in the same period for 1996
due to a $3 million decrease in worldwide net sales of Agree and Halsa. Such
decrease was partially offset by the continued growth of L.A. Looks and Dep.
For the nine months ended April 30, 1997, consolidated net sales, excluding
Agree and Halsa, increased three percent compared to the prior year period.
Gross profits for the three and nine months ended April 30, 1997, were
$17,319,000 and $52,287,000, respectively, compared to $18,453,000 and
$54,268,000 for the same periods of the prior year. As a percentage of net
sales, gross profits were 61% in each of the current periods compared to 62% and
63%, respectively, for the prior year. The decrease in absolute dollars in the
current periods was the result of lower sales. The decrease in percentage gross
profits during the three and nine months ended April 30, 1997, was primarily the
result of sales mix wherein a lower proportion of higher margin products were
sold in the current periods compared to the respective periods of the prior
year.
For the three and nine month periods ended April 30, 1997, selling,
general and administrative expenses ("SG&A") were $16,304,000 and $49,579,000,
respectively, compared to $17,464,000 and $51,846,000 for the same periods of
the prior year. As a percentage of net sales, SG&A decreased to 57% and 58%,
respectively, compared with 59% and 60% for the prior year. The decreases, in
both absolute dollars and as a percentage of net sales, were a result of (i)
lower amortization expense and (ii) lower administrative expenses resulting from
the 1996 cost reduction program and lower legal expenses. In addition, SG&A for
the nine month period ended April 30, 1997, included $640,000 of expenses
related to a recall of a test market skin care line.
For the three and nine month periods ended April 30, 1997, net other
expenses, principally interest, were $1,616,000 and $5,311,000 respectively,
compared to $1,707,000 and $5,139,000 for the same periods of the prior year.
10
<PAGE> 11
Since the Company incurred losses in all periods presented, and
previously utilized all of its income tax carryback benefits, there are no tax
provisions.
For the three and nine month periods ended April 30, 1997, the Company
recorded net losses of $613,000, or $.09 per share and $2,612,000, or $.39 per
share, respectively, compared with net losses of $979,000, or $.16 per share,
and $3,169,000, or $.51 per share, for the same periods of the prior year. The
decrease in the loss for the current three and nine month periods was primarily
the result of lower SG&A and reorganization item expense partially offset by
lower gross profit margins.
Liquidity and Capital Resources
On November 4, 1996, a new term loan agreement ("the Credit Facility")
between the Company and its senior lenders (the "Lender Group") became
effective. As of April 30, 1997, the Credit Facility, among other things,
provides that the Company will repay approximately $60,114,000 in long-term
secured indebtedness with interest at the prime rate plus 2%, which indebtedness
matures on July 31, 2002. The Credit Facility has increasing quarterly principal
payments commencing in the amount of $100,000 and progressively increasing to
$2,000,000 at June 30, 2002, with a balloon payment of $35,046,000 due July 31,
2002.
At April 30, 1997, the Company had cash and cash equivalents of
$13,642,000. The cash balance at April 30, 1997, was favorably impacted by the
deferral of $3,960,000 in pre- petition liabilities owed to unsecured creditors
and $3,400,000 related to interest due the Lender Group. Under the Plan of
Reorganization pre-petition unsecured creditor claims are payable, plus 5%
interest, in equal monthly installments through March 15, 1998, and the deferred
interest due the Lender Group through the Effective Date was added to the Credit
Facility's principal balance. Cash balances were also favorably impacted as a
result of the proceeds received from the settlement of litigation between the
Company and S.C. Johnson. (See "Note 8 of the Notes to Consolidated Condensed
Financial Statements.")
Changes in working capital during the nine month period ended April 30,
1997, were significantly impacted by the reclassification of "liabilities
subject to compromise" at April 30, 1997, compared to the classification used in
the July 31, 1996 balance sheet. The Company emerged from bankruptcy effective
November 4, 1996; and, therefore, liabilities are no longer classified under the
"liabilities subject to compromise" format. For the nine month period ended
April 30, 1997, working capital was impacted by an increase in inventory and a
decrease in accounts receivable and accounts payable. The increase in inventory
and decrease in accounts receivable was the result of the lower sales volume in
the three month period ended April 30, 1997, compared to the three month period
ended July 31, 1996. The decrease in accounts payable, adjusted for the effect
of the reclassification of "liabilities subject to compromise," was due to
payment of pre-petition unsecured creditor claims and the forgiveness of
$1,400,000 of indebtedness related to the settlement of the S.C. Johnson
litigation. Such accounts payable decrease was partially offset by the benefit
to the Company of returning to pre-chapter 11 trade credit terms with an
increased number of its suppliers.
During the nine month period ended April 30, 1997, intangibles on the
Company's balance sheet decreased $4,812,000. Such decrease was principally due
to the adjustment to the Agree and Halsa acquisition price as a result of the
settlement of the S.C. Johnson litigation and normal amortization.
11
<PAGE> 12
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to the Company's Annual Report on Form 10-K for the
year ended July 31, 1996, for a description of certain pending legal proceedings
involving the Company.
The bankruptcy reorganization initiated by the Company under chapter 11
of the United States Bankruptcy Code was concluded when the Company's Plan of
Reorganization became effective on November 4, 1996, as further described in the
Form 10-K.
On December 19, 1996, the Company and S.C. Johnson & Son, Inc. and
affiliates ("S.C. Johnson") agreed to an out-of-court settlement in regard to
all pending litigation that arose in connection with the Company's 1993 purchase
of the Agree and Halsa trademarks from S.C. Johnson. The settlement involved the
Company, its insurance carriers and S.C. Johnson. Under the terms of such
settlement the Company received net cash proceeds from S.C. Johnson of
$2,500,000, a $1,400,000 payment from the Company's insurance carriers and
forgiveness of $1,400,000 owed S.C. Johnson for certain goods delivered
following the Agree and Halsa acquisition. The Company values the total
settlement at $5,300,000. Under the Company's term loan agreement, net cash
proceeds of the settlement, as defined in the term loan agreement, have been
paid to the Lender Group which reduced long-term debt.
On September 17, 1996, Clinique Laboratories, Inc. ("Clinique") filed a
civil complaint against the Company, in the United States District Court,
Southern District of New York (96 Civ. 7045 (SAS)). The complaint alleged, among
other things, trademark and trade dress infringement, copyright infringement,
trademark and trade dress dilution, and unfair competition related to the
Company's test market of a new skin care line of products under the name
"basique simplified skin care ("basique")." As of April 21, 1997, the Company
and Clinique entered into an agreement settling the underlying litigation. Under
terms of the agreement, the Company agreed, among other things, not to utilize
the name basique or any other trademarks or trade dress confusingly similar to
the Clinique skin care line, and Clinique agreed to acquire the Company's right
in the basique trademark in exchange for $175,000 (which was received subsequent
to April 30, 1997), and to allow the Company to relabel the remaining basique
inventory and to sell it outside the United States.
ITEM 2. CHANGES IN SECURITIES
In connection with the Company's Plan of Reorganization, which became
effective on November 4, 1996, the Company amended its Certificate of
Incorporation to reclassify all outstanding shares of its Class A common stock
and Class B common stock into a single class of Common Stock, $.01 par value,
with each share having one vote and otherwise possessing on an equal basis all
rights afforded common stockholders under the Delaware General Corporation Law.
Such Common Stock now trades on The Nasdaq SmallCap Market tier of the Nasdaq
Stock Market under the symbol DEPC.
12
<PAGE> 13
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
Number Description
11 Statement re: Computation of Per Share Loss
27 Financial Data Schedule
b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
June 10, 1997 DEP CORPORATION
/s/ Grant W. Johnson
--------------------------------
Grant W. Johnson
Senior Vice President,
Principal Financial Officer
and Chief Accounting Officer
13
<PAGE> 14
EXHIBIT INDEX
Description Exhibit No.
----------- -----------
Computation of Per Share Loss 11
Financial Data Schedule 27
14
<PAGE> 1
EXHIBIT 11
DEP CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF
COMPUTATION OF PER SHARE LOSS
(in thousands, except per share data)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
April 30, April 30,
1997 1996 1997 1996
----------------------- ---------------------
<S> <C> <C> <C> <C>
Net loss .......................... ($ 613) ($ 979) ($ 2,612) ($3,169)
======== ======== ======== =======
Shares:
Weighted average shares outstanding 6,876 6,251 6,644 6,250
======== ======== ======== =======
Loss per share .................... ($ 0.09) ($ 0.16) ($ 0.39) ($ 0.51)
======== ======== ======== =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED CONDENSED BALANCE SHEET AT APRIL 30, 1997, AND
CONSOLIDATED STATEMENT OF OPERATIONS 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-31-1997
<PERIOD-START> AUG-01-1996
<PERIOD-END> APR-30-1997
<CASH> 13,642,000
<SECURITIES> 0
<RECEIVABLES> 13,521,000<F1>
<ALLOWANCES> 0
<INVENTORY> 13,859,000
<CURRENT-ASSETS> 43,113,000
<PP&E> 13,386,000<F2>
<DEPRECIATION> 0
<TOTAL-ASSETS> 86,058,000
<CURRENT-LIABILITIES> 19,925,000
<BONDS> 61,899,000
0
0
<COMMON> 71,000<F3>
<OTHER-SE> 1,875,000
<TOTAL-LIABILITY-AND-EQUITY> 86,058,000
<SALES> 85,693,000
<TOTAL-REVENUES> 0
<CGS> 33,406,000
<TOTAL-COSTS> 82,985,000
<OTHER-EXPENSES> 31,000<F4>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,289,000
<INCOME-PRETAX> (2,603,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,612,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,612,000)
<EPS-PRIMARY> (.39)
<EPS-DILUTED> 0
<FN>
<F1>Accounts receivable net of allowance for doubtful accounts.
<F2>Property, plant and equipment net of accumulated depreciation.
<F3>As of November 4, 1996, both Class A and Class B common stock were reclassified
as one class of Common Stock.
<F4>Includes $9,000 related to reorganization items.
</FN>
</TABLE>
