SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For quarter ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-14946
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ARMOR ALL PRODUCTS CORPORATION
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(Exact Name of Registrant as specified in its charter)
DELAWARE 33-0178217
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(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
6 Liberty, Aliso Viejo, California 92656
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(Address of principal executive offices) (Zip Code)
(714) 362-0600
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(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
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Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at June 30, 1995
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Common stock, $0.01 par value 21,282,135 shares
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
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Pages
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Consolidated Balance Sheets
June 30, 1995 and March 31, 1995 3
Consolidated Statements of Income
Three months ended June 30, 1995 and 1994 4
Consolidated Statements of Cash Flows
Three months ended June 30, 1995 and 1994 5
Financial Notes 6 - 7
Financial Review 8
PART II. OTHER INFORMATION
===========================
Item
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4 Submission of Matters to a Vote
of Security Holders 9
6 Exhibits and Reports on Form 8-K 9
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<PAGE>
PART 1. FINANCIAL INFORMATION
==============================
ARMOR ALL PRODUCTS CORPORATION
CONSOLIDATED BALANCE SHEETS
(unaudited)
June 30, March 31,
1995 1995
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(in thousands)
ASSETS
------
Current Assets
Cash and cash equivalents $ 34,664 $ 22,249
Accounts receivable 39,072 84,865
Inventories 16,162 12,695
Deferred taxes 752 956
Prepaid expenses 13,394 801
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Total current assets 104,044 121,566
Property 9,180 9,373
Goodwill 26,240 26,522
Patents and Trademarks 15,095 15,389
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Total assets $154,559 $172,850
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current Liabilities
Accounts payable $ 9,004 $ 17,385
Payable to McKesson 1,683 2,595
Accrued selling expenses 4,983 8,590
Accrued compensation 1,554 2,513
Income and other taxes payable 1,530 5,429
Dividends payable 3,404 3,404
Other liabilities 2,563 3,468
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Total current liabilities 24,721 43,384
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Deferred Income Taxes 478 481
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Stockholders' Equity
Common stock 213 213
Other 61,294 61,157
Unearned compensation - restricted stock (882) (980)
Retained earnings 69,391 69,338
Cumulative translation adjustment (656) (743)
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Total stockholders' equity 129,360 128,985
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Total liabilities and
stockholders' equity $154,559 $172,850
======= =======
See accompanying financial notes.
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<PAGE>
ARMOR ALL PRODUCTS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Three Months Ended
June 30
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1995 1994
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(in thousands except
per share amounts)
REVENUES $ 50,224 $ 56,568
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COSTS AND EXPENSES:
Cost of sales 24,394 24,001
Selling, general and administrative 19,508 21,116
Amortization of intangibles 613 623
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Total costs and expenses 44,515 45,740
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OPERATING INCOME 5,709 10,828
Interest income 251 270
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INCOME BEFORE INCOME TAXES 5,960 11,098
Income taxes 2,503 4,739
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NET INCOME $ 3,457 $ 6,359
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EARNINGS PER COMMON SHARE $ .16 $ .30
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DIVIDENDS PER COMMON SHARE $ .16 $ .16
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WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 21,276 21,171
======= =======
See accompanying financial notes.
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<PAGE>
ARMOR ALL PRODUCTS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Three Months Ended
June 30
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1995 1994
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(in thousands)
Operating Activities
Net income $ 3,457 $ 6,359
Adjustments to reconcile net
income to net cash provided
by operating activities
Depreciation and amortization 1,077 1,007
Deferred income taxes 201 400
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Total 4,735 7,766
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Effect of changes in
Accounts receivable 45,793 31,209
Inventories (3,467) (283)
Prepaid expenses (12,593) (7,266)
Accounts payable (8,381) 1,358
Accrued selling expenses (3,607) (1,622)
Accrued compensation (959) (992)
Income and other taxes payable (3,899) 343
Other liabilities (905) 617
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Total 11,982 23,364
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Net cash provided by
operating activities 16,717 31,130
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Investing Activities
Capital expenditures (174) (301)
Other 51 61
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Net cash used by investing activities (123) (240)
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Financing Activities
Payable to McKesson ( 912) (510)
Issuance of common stock 137 125
Dividends paid (3,404) (3,386)
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Net cash used by financing activities (4,179) (3,771)
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Net increase in cash and cash equivalents 12,415 27,119
Cash and cash equivalents
at beginning of period 22,249 26,251
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Cash and cash equivalents at end of period $ 34,664 $ 53,370
======= =======
See accompanying financial notes.
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<PAGE>
ARMOR ALL PRODUCTS CORPORATION
FINANCIAL NOTES
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements present the
financial position and results of operations of Armor All
Products Corporation and its subsidiaries (the "Company"). In
the opinion of the Company, these unaudited consolidated
financial statements include all adjustments necessary for a
fair presentation of its financial position as of June 30,
1995 and the results of its operations and its cash flows for
the three-month periods ended June 30, 1995 and 1994. Such
adjustments were of a normal recurring nature.
The results of operations for the three-month periods ended
June 30, 1995 and 1994 are not necessarily indicative of the
results for the full years. It is suggested that these
consolidated financial statements be read in conjunction with
the consolidated financial statements and related notes
thereto included in the Company's Annual Report to
Shareholders for the year ended March 31, 1995. That report
has previously been filed with the Securities and Exchange
Commission as an exhibit to the Annual Report on Form 10-K.
2. CASH MANAGEMENT
Pursuant to an agreement with McKesson, the Company's U.S.
operations participate daily in a cash management program
administered by McKesson. Under this arrangement, the Company
invests any excess cash in the cash management program and has
unrestricted access to such invested cash to fund
disbursements. If the Company needs additional cash above the
amount invested, such cash requirements are met through
borrowings from McKesson. All amounts invested in the cash
management program with McKesson are deposited in a separate
bank account in the Company's name, which is used for cash
management program transactions.
Included in cash and cash equivalents in the accompanying
consolidated balance sheets are the following amounts invested
in the cash management program: $30,905,000 at 6.0% on June
30, 1995 and $18,182,000 at 6.0% on March 31, 1995.
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<PAGE>
ARMOR ALL PRODUCTS CORPORATION
FINANCIAL NOTES
3. INVENTORIES
Inventories are comprised of the following:
June 30, March 31,
1995 1995
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(in thousands)
Finished goods $14,305 $10,338
Raw materials 1,857 2,357
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Total $16,162 $12,695
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4. PREPAID EXPENSES
Prepaid expenses at June 30, 1995 include $12,856,000 of
payments related to media advertising. The Company allocates
the annual media advertising expense among interim periods in
proportion to estimated annual sales volume.
5. INTEREST INCOME
Interest income is comprised of the following:
Three Months
Ended June 30
----------------
1995 1994
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(in thousands)
Interest income - McKesson $208 $231
Interest income - other 43 39
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Interest income $251 $270
=== ===
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<PAGE>
ARMOR ALL PRODUCTS CORPORATION
FINANCIAL REVIEW
Results of Operations
---------------------
Revenues decreased $6.3 million or 11% in the quarter ended June
30, 1995 in comparison with the prior year quarter. The decrease
was primarily attributable to lower shipments of automotive
division products in the United States and Canada. Shipments of
all of the Company's principal automotive product lines --
including protectants, wheel cleaners, wax and wash products --
were lower than in the prior year. This revenue decline reflects a
weakness in orders from the retail sector for the entire automotive
appearance industry, partially attributable to unusually wet and
cool spring weather in many parts of North America. In addition,
certain retailers, reacting to lower consumer demand, reduced their
purchases in order to lower their inventory levels; such actions
had a further adverse impact on the Company's first quarter
shipments. Partially offsetting the lower automotive revenues were
significantly higher shipments in the Company's home care division
due to the launch of three new products in February 1995: Armor
AlL(R) Deck Protector Waterproofing Sealer, Armor All(R)
WaterProofing Sealer and Armor All(R) Vinyl Siding Wash.
International revenues increased mainly due to higher shipments to
Japan and the United Kingdom, partially offset by the adverse
effects of the Mexican peso devaluation.
Cost of sales as a percentage of revenues was 48.6% and 42.4% in
the quarters ended June 30, 1995 and 1994, respectively. The
higher cost percentage in the current year was due to several
factors, including higher costs of a new formula for Armor All(R)
Protectant, increased raw materials costs, provisions for the
discontinuance of several products, and the absorption of fixed
costs over lower automotive volume. In addition, the higher mix of
home care products had an adverse impact since such new products
initially have lower margins due to start-up costs.
Selling, general and administrative expense as a percentage of
revenues was 38.8% and 37.3% in the quarters ended June 30, 1995
and 1994, respectively. The increase in the current quarter is
primarily due to the greater mix of home care products, which have
higher new product launch costs and other promotional expense.
Another factor was the absorption of fixed administrative costs
over a lower automotive sales volume.
Financial Resources and Liquidity
---------------------------------
The Company's working capital requirements fluctuate during the
year, traditionally peaking in the spring due to extended payment
terms offered in connection with the Company's winter sales
promotional activities. Cash inflow is strongest during the summer
months as these receivables are collected. This pattern resulted
in cash flow from operations of $16.7 million and $31.1 million in
the three-month periods ended June 30, 1995 and 1994, respectively,
as accounts receivable were reduced from March 31 levels. The
lower cash inflow in the first quarter of fiscal 1996 is primarily
due to higher payments for media advertising, changes in the timing
of payments for certain payables and accrued liabilities, increases
in inventory to support new products and promotions, and lower net
income. These factors were partially offset by higher collections
of accounts receivable due to a higher accounts receivable balance
at the beginning of the current year than at the beginning of the
prior year.
As long as the Company continues to participate in the McKesson
cash management program, McKesson will make available to the
Company the amount of cash necessary to provide the Company with
sufficient funds to meet its needs, as defined in its annual
capital and operating plans.
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<PAGE>
PART II. OTHER INFORMATION
===========================
Item 4. Submission of Matters to a Vote of Security Holders
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The Company's Annual Meeting of Stockholders was held on
July 31, 1995. The Board of Directors' nominees for director as
listed in the proxy statement were each elected to serve for a one-
year term by the following vote:
Votes
Votes For Withheld
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William A. Armstrong 19,688,705 150,777
Jon S. Cartwright 19,692,255 147,227
Kenneth M. Evans 19,692,046 147,436
David L. Mahoney 19,683,305 156,177
David E. McDowell 19,688,665 150,817
Karen Gordon Mills 19,692,255 147,227
Alan Seelenfreund 19,594,043 245,439
Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits
27 Financial Data Schedule
(b) Reports
No reports on Form 8-K were filed during the quarter
ended June 30, 1995.
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<PAGE>
S I G N A T U R E
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ARMOR ALL PRODUCTS CORPORATION
(Registrant)
Dated: August 10, 1995 By/s/Kenneth M. Evans
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Kenneth M. Evans
President and Chief Executive Officer
By/s/Mark D. Krikorian
----------------------------
Mark D. Krikorian
Vice President and Controller
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<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> JUN-30-1995
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