<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 JANUARY 31, 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 March 7, 1997
---------------------------- --------------
Common Stock, $.01 par value 6,876,140
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
--------------------- ----
<S> <C>
ITEM 1. FINANCIAL STATEMENTS:
CONSOLIDATED CONDENSED BALANCE SHEETS - 3
January 31, 1997 and July 31, 1996
CONSOLIDATED CONDENSED STATEMENTS OF INCOME - 4
Three and Six Month Periods ended
January 31, 1997 and 1996
CONSOLIDATED CONDENSED STATEMENTS OF RETAINED 5
EARNINGS AND ADDITIONAL PAID-IN CAPITAL -
Six Month Period Ended January 31, 1997
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS - 6
Six Month Periods Ended
January 31, 1997 and 1996
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 10
CONDITION AND RESULTS OF OPERATIONS
PART II. OTHER INFORMATION
-----------------
SIGNATURES 15
EXHIBIT INDEX 16
</TABLE>
2
<PAGE> 3
DEP CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
January 31, July 31,
1997 1996
-------------- ----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents...............................................................$ 12,182,000 $ 11,118,000
Accounts receivable, net................................................................ 15,851,000 15,750,000
Inventories at lower of cost (first-in, first-out) or market:
Raw materials ........................................................................ 5,771,000 4,719,000
Finished goods........................................................................ 8,237,000 7,280,000
-------------- ----------------
14,008,000 11,999,000
Other current assets.................................................................... 2,506,000 3,339,000
Total current assets.................................................................. 44,547,000 42,206,000
-------------- ----------------
Property and equipment, net.............................................................. 13,720,000 14,086,000
Intangibles, net......................................................................... 28,075,000 32,651,000
Other assets............................................................................. 1,804,000 895,000
-------------- ----------------
$ 88,146,000 $ 89,838,000
============== ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Liabilities not subject to compromise:
Current portion long-term debt.........................................................$ 1,891,000 $ 144,000
Accrued expenses....................................................................... 9,411,000 8,488,000
Accounts payable ...................................................................... 9,682,000 3,211,000
-------------- ----------------
Total current liabilities............................................................. 20,984,000 11,843,000
Liabilities subject to compromise........................................................ - 68,858,000
Long-term debt, net of current portion................................................... 62,272,000 3,597,000
Other non-current liabilities............................................................ 2,316,000 2,258,000
-------------- ----------------
Total liabilities..................................................................... 85,572,000 86,556,000
Stockholders' equity:
Preferred stock, par value $.01; authorized 3,000,000; none outstanding................ - -
Class A common stock : issued and outstanding 3,232,559 at July 31, 1996............... - 32,000
Class B common stock : issued and outstanding 3,249,581 at July 31, 1996............... - 32,000
Common stock, par value $.01; authorized 15,000,000 shares; issued
and outstanding 7,107,140 at January 31, 1997....................................... 71,000 -
Additional paid-in capital............................................................. 13,397,000 12,141,000
Retained deficit....................................................................... (9,742,000) (7,743,000)
Foreign currency translation adjustment................................................ (147,000) (175,000)
-------------- ----------------
3,579,000 4,287,000
Less: treasury stock, at cost, 231,000 shares of common stock at January 31,
1997 and 115,500 shares each of Class A and Class B common stock at July 31, 1996... (1,005,000) (1,005,000)
-------------- ----------------
2,574,000 3,282,000
-------------- ----------------
$ 88,146,000 $ 89,838,000
============== ================
</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,
------------------------------- ------------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales.................... $29,109,000 $27,813,000 $57,122,000 $56,741,000
Cost of sales................ 11,366,000 10,501,000 22,154,000 20,926,000
----------- ----------- ----------- -----------
Gross profit................. 17,743,000 17,312,000 34,968,000 35,815,000
Selling, general and
administrative expenses.... 16,225,000 17,293,000 33,266,000 34,382,000
----------- ----------- ----------- -----------
Income from operations....... 1,518,000 19,000 1,702,000 1,433,000
Other income (expense):
Interest, net.............. (1,758,000) (1,694,000) (3,717,000) (3,560,000)
Other...................... 2,000 123,000 13,000 128,000
----------- ----------- ----------- -----------
(1,756,000) (1,571,000) (3,704,000) (3,432,000)
----------- ----------- ----------- -----------
Loss before reorganization items and
income taxes............... (238,000) (1,552,000) (2,002,000) (1,999,000)
Reorganization items ........ (302,000) 92,000 (3,000) 191,000
Income taxes ................ -- 163,000 -- --
----------- ----------- ----------- -----------
Net income (loss)............ $64,000 ($1,807,000) ($1,999,000) ($2,190,000)
=========== =========== =========== ===========
Net income (loss) per share.. $0.01 ($0.29) ($0.31) ($0.35)
=========== =========== =========== ===========
Weighted average shares outstanding 6,804,245 6,251,140 6,527,693 6,251,140
=========== =========== =========== ===========
</TABLE>
See notes to consolidated condensed financial statements
4
<PAGE> 5
DEP CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF RETAINED EARNINGS
AND ADDITIONAL PAID-IN CAPITAL
SIX MONTHS ENDED JANUARY 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Additional Retained
Paid-in Capital Deficit
--------------- --------------------
<S> <C> <C>
Balance at beginning of period.............$ 12,141,000 $ (7,743,000)
Net loss................................... - (1,999,000)
Issuance of stock.......................... 1,256,000 -
--------------- --------------------
Balance at end of period...................$ 13,397,000 $ (9,742,000)
=============== ====================
</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,
----------------------------------
1997 1996
--------------- ----------------
<S> <C> <C>
Operating Activities:
Net loss......................................................................... $ (1,999,000) $ (2,190,000)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization.................................................. 1,661,000 2,447,000
Other - 1997 includes S. C. Johnson foregiveness of indebtedness............... (1,263,000) 301,000
Changes in operating assets and liabilities:
Accounts receivable........................................................... (156,000) 4,284,000
Inventories................................................................... (1,999,000) (789,000)
Income taxes receivable....................................................... - 1,779,000
Other assets.................................................................. 838,000 (76,000)
Accounts payable.............................................................. 131,000 (1,595,000)
Accrued expenses.............................................................. 847,000 (1,356,000)
--------------- ----------------
Net cash provided by (used in) operating activities.............................. (1,940,000) 2,805,000
Investing Activities:
Purchases of property and equipment.............................................. (460,000) (168,000)
Proceeds from settlement of litigation relating to acquisition of trademarks..... 3,900,000 -
Other, net....................................................................... 196,000 8,000
--------------- ----------------
Net cash provided by (used in) investing activities............................... 3,636,000 (160,000)
Financing Activities:
Decrease in lines of credit and long-term debt,
including change in current portion........................................... (655,000) (5,042,000)
Other............................................................................ 0 15,000
--------------- ----------------
Net cash used in financing activities............................................. (655,000) (5,027,000)
--------------- ----------------
Increase (decrease) in cash and cash equivalents.................................. 1,041,000 (2,382,000)
Effect of exchange rate changes on cash........................................... 23,000 (3,000)
Cash and cash equivalents at beginning of period.................................. 11,118,000 4,611,000
--------------- ----------------
Cash and cash equivalents at end of period........................................ $ 12,182,000 $ 2,226,000
=============== ================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest...................................................................... $ 2,189,000 $ 3,561,000
=============== ================
Income tax payments (refunds)................................................. $ 3,000 $ (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 January 31, 1997, and the results of operations and statements of cash
flows for the three and six month periods ended January 31, 1997.
The results of operations for the three and six month periods ended
January 31, 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. 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.
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) that on the Effective Date 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.)
7
<PAGE> 8
NOTE 3. 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 4. NET INCOME (LOSS) PER SHARE
Net income (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. REORGANIZATION ITEMS
Reorganization items consisted of the following:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
January 31 January 31
-------------------------- --------------------------
1997 1996 1997 1996
----------- --------- ----------- ----------
<S> <C> <C> <C> <C>
Professional fees (credit) $(302,000) $92,000 $127,000 $191,000
Interest income - - (130,000) -
----------- ---------- ---------- -----------
$(302,000) $92,000 $ (3,000) $191,000
========== ======= ========== ========
</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 three month period ended January 31, 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 January 31, 1997, the Credit Facility, among other things,
provides that the Company will repay approximately $60,459,000 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 January 31, 1997, the principal due under the Credit Facility
aggregates $60,459,000 with scheduled payments as follows:
<TABLE>
<S> <C>
Remainder of fiscal year 1997 $ 688,000
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 2.)
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 January 31, 1997 increased 5% to
$29,109,000, compared to $27,813,000 for the comparable period of the prior
year. The increase is due to growth of the Company's Consumer Products which
represents nearly 95% of total net sales.
Net sales of domestic Consumer Products increased $691,000 or 3% for
the three months ended January 31, 1997 primarily due to volume growth of the
L.A. Looks and Dep brands. Net sales of international Consumer Products
increased $730,000 or 20% compared to the second quarter of 1996 principally
due to the change in method of recognizing sales in Canada, partially offset by
a decrease in sales of Agree and Halsa. Prior to February 1, 1996, the
Company received a sales royalty for certain of its products sold in Canada
under a licensing agreement. Effective February 1, 1996, the Company cancelled
such license agreement and began recognizing revenues and expenses in
connection with the direct sale of all of its products in Canada.
Net sales for the six month period ended January 31, 1997 increased to
$57,122,000 from $56,741,000 in the same period of 1996 due to growth of the
Company's Consumer Products. Such increase was primarily the result of a
$1,496,000 or 19% increase in net sales of international Consumer Products due
to the increase in sales in Canada as described above, partially offset by a
$1,073,000 or 2% decrease in net sales of domestic Consumer Products.
Gross profits for the three and six months ended January 31, 1997,
were $17,743,000 and $34,968,000, respectively, compared to $17,312,000 and
$35,815,000 for the same periods of the prior year. As a percentage of net
sales, gross profits were 61% compared to 62% and 63% for the three and six
month periods, respectively, of the prior year. The increase in absolute
dollars during the three months ended January 31, 1997, was the result of
higher sales. The decrease in percentage gross profit during the three and
six months ended January 31, 1997, was 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 six month periods ended January 31, 1997, selling,
general and administrative expenses ("SG&A") were $16,225,000 and $33,266,000
respectively. This compares to $17,293,000 and $34,382,000 for the same
periods of the prior year. As a percentage of net sales, SG&A decreased to 56%
and 58%, respectively, compared with 62% and 61% for the prior year. The
decreases in the absolute dollars, as well as percentages of net sales, were a
result of (i) lower amortization expense due to the write-off of certain
intangibles and deferred charges in the fourth quarter of fiscal 1996, and (ii)
lower administrative expenses resulting from the January 1996 cost reduction
program and lower legal expenses. The lower SG&A for the six month period
ended January 31, 1997, was offset, in part, by $640,000 of expenses related to
the recall of the "basique" skin care line.
10
<PAGE> 11
For the three and six month periods ended January 31, 1997, net other
expenses were $1,756,000 and $3,704,000 respectively, compared to $1,571,000
and $3,432,000 for the same periods of the prior year. Interest expense in the
current periods increased due to a higher average principal balance outstanding
resulting from the deferral of interest during the chapter 11 proceedings. Net
other expenses for the three and six months of fiscal 1996 included a gain from
the sale of a trademark.
Reorganization items for the three months ended January 31, 1997,
reflected a $302,000 credit related to the settlement of the S.C. Johnson
litigation.
Since the Company incurred a loss for the six month period ended
January 31, 1997, and previously utilized all of its income tax carryback
benefits, there was no tax provision.
For the three and six month periods ended January 31, 1997, the
Company recorded net income of $64,000, or $.01 per share, and a net loss of
$1,999,000, or $.31 per share, respectively; compared with net losses of
$1,807,000, or $.29 per share, and $2,190,000, or $.35 per share, for the same
periods of the prior year. The net income for the current three month period
and the decrease in the loss for the current six month period was primarily the
result of lower SG&A and a reorganization item credit, offset, in part, by
lower gross margins and higher interest expense.
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 January 31, 1997, the Credit Facility, among other things,
provides that the Company will repay approximately $60,459,000 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 January 31, 1997, the Company had cash and cash equivalents of
approximately $12,200,000. The cash balance at January 31, 1997, was favorably
impacted by the deferral of $5,000,000 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 six month period ended January
31, 1997, were significantly impacted by the reclassification of "liabilities
subject to compromise" at January 31, 1997, compared to the classification used
in the July 31, 1996 balance sheet. The Company emerged from bankruptcy
effective November 4, 1997; and, therefore, liabilities are no longer
classified under the "liabilities subject to compromise" format. For the six
month period ended January 31, 1997, working capital was impacted by an
increase in inventory and a decrease in
11
<PAGE> 12
accounts payable. The increase in inventory was the result of the lower sales
volume in the three month period ended January 31, 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 offset, in part, by the
benefit to the Company of returning to pre-chapter 11 trade credit terms with
an increased number of its suppliers.
During the three month period ended January 31, 1997, intangibles on
the Company's balance sheet decreased $4,219,000. 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.
12
<PAGE> 13
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.
In the Clinique Laboratories, Inc. ("Clinique") trademark infringement
litigation, Clinique is continuing to pursue the claims alleged in the
complaint related to the Company's test market of a new skin care line of
products under the name "basique simplified skin care." Such litigation is in
the discovery stage.
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.
Pursuant to the Plan of Reorganization, during the three month period
ended January 31, 1997, the Company issued to its Lender Group, on a pro rata
basis, 625,000 shares of the Company's Common Stock. Such shares were issued
pursuant to the exemption from registration provided by Section 1145 of the
United States Bankruptcy Code.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
13
<PAGE> 14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's 1996 Annual Meeting of Stockholders held on February
7, 1997, the following actions were taken:
The following Class III directors were elected for terms of office
expiring in 1999:
<TABLE>
<CAPTION>
Votes For Votes Withheld
--------- --------------
<S> <C> <C>
Robert Berglass 5,994,805 30,072
Grant W. Johnson 6,009,253 15,624
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
11 Statement re: Computation of Per Share Earnings (Loss)
27 Financial Data Schedule
</TABLE>
b) Reports on Form 8-K
1. The Company filed a Form 8-K on November 7,
1996, setting forth under Item 3 that on
October 23, 1996, the United States Bankruptcy
Court confirmed the Company's Second Amended
Plan of Reorganization.
2. The Company filed a Form 8-K on December 20,
1996, setting forth under Item 5 that on
December 19, 1996, the Company and S.C.
Johnson had reached an out-of-court settlement
of all pending litigation between the Company
and S.C. Johnson.
14
<PAGE> 15
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.
March 17, 1997 DEP CORPORATION
/s/ Grant W. Johnson
-------------------------------------
Grant W. Johnson
Senior Vice President,
Principal Financial Officer
and Chief Accounting Officer
15
<PAGE> 16
EXHIBIT INDEX
<TABLE>
<CAPTION>
Description Exhibit No.
----------- -----------
<S> <C>
Computation of Per Share Earnings (Loss) 11
Financial Data Schedule 27
</TABLE>
16
<PAGE> 1
DEP CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF
COMPUTATION OF PER SHARE EARNINGS (LOSS)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
January 31, January 31,
---------------------- -----------------------
1997 1996 1997 1996
------ -------- -------- --------
<S> <C> <C> <C> <C>
Net income (loss)............. $64 ($1,807) ($1,999) ($2,190)
===== ====== ====== ======
Shares:
Adjusted weighted average
shares outstanding 6,804 6,251 6,528 6,251
===== ====== ====== ======
Net income (loss) per share... $0.01 ($0.29) ($0.31) ($0.35)
===== ====== ====== ======
</TABLE>
Exhibit 11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED CONDENSED BALANCE SHEET AT JANUARY 31, 1997 AND
CONSOLIDATED CONDENSED STATEMENT OF INCOME FOR THE SIX MONTHS 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-31-1997
<PERIOD-START> AUG-01-1996
<PERIOD-END> JAN-31-1997
<CASH> 12,182,000
<SECURITIES> 0
<RECEIVABLES> 15,851,000<F1>
<ALLOWANCES> 0
<INVENTORY> 14,008,000
<CURRENT-ASSETS> 44,547,000
<PP&E> 13,720,000<F2>
<DEPRECIATION> 0
<TOTAL-ASSETS> 88,146,000
<CURRENT-LIABILITIES> 20,984,000
<BONDS> 62,272,000
0
0
<COMMON> 71,000<F3>
<OTHER-SE> 2,503,000
<TOTAL-LIABILITY-AND-EQUITY> 88,146,000
<SALES> 57,122,000
<TOTAL-REVENUES> 0
<CGS> 22,154,000
<TOTAL-COSTS> 55,420,000
<OTHER-EXPENSES> (16,000)<F4>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,717,000
<INCOME-PRETAX> (2,002,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,999,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,999,000)
<EPS-PRIMARY> (.31)
<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 A CREDIT OF $3,000 RELATED TO REORGANIZATION ITEMS.
</FN>
</TABLE>
