-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SD3TR7yaUev0jRpUXzfkbiRfW8yvrC2wW1Zw+XqXPy60UJBiod0mj4JOUk9KQF83 vhm7LMuiyk+ZlBEoDRmviQ== 0000898430-96-002357.txt : 19960603 0000898430-96-002357.hdr.sgml : 19960603 ACCESSION NUMBER: 0000898430-96-002357 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960229 FILED AS OF DATE: 19960531 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: WD 40 CO CENTRAL INDEX KEY: 0000105132 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS CHEMICAL PRODUCTS [2890] IRS NUMBER: 951797918 STATE OF INCORPORATION: CA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-06936 FILM NUMBER: 96574963 BUSINESS ADDRESS: STREET 1: 1061 CUDAHY PL CITY: SAN DIEGO STATE: CA ZIP: 92110 BUSINESS PHONE: 6192751400 MAIL ADDRESS: STREET 1: 1061 CUDAHY PLACE CITY: SAN DIEGO STATE: CA ZIP: 92110 10-Q/A 1 AMENDMENT NO. 1 TO FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------------------- FORM 10-Q/A QUARTERLY REPORTS UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended February 29, 1996 Commission File No. 0-6936-3 WD-40 COMPANY (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) California 95-1797918 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 1061 Cudahy Place, San Diego, California 92110 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 619/275-1400 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 --------- -------- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Common Stock as of April 12, 1996 7,712,853 --------- PART I Financial Information --------------------- Item 1. Financial Statements WD-40 CONSOLIDATED CONDENSED BALANCE SHEET ------------------------------------ ASSETS ------
February 29, 1996 August 31, 1995 ----------------- --------------- (Unaudited) Current assets: Cash and cash equivalents $ 2,716,000 $11,090,000 Short-term investments 13,227,000 Trade accounts receivable, less allowance for cash discounts and doubtful accounts of $659,000 and $476,000 26,042,000 17,088,000 Product held at contract packagers 2,787,000 2,307,000 Inventories 2,971,000 2,570,000 Other current assets 2,403,000 3,298,000 ----------- ----------- Total current assets 36,919,000 49,580,000 Property, plant and equipment, net 3,651,000 3,467,000 Long-term investments 4,211,000 4,378,000 Goodwill, net 14,861,000 Other assets 1,717,000 2,154,000 ----------- ----------- $61,359,000 $59,579,000 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Current liabilities: Accounts payable & accrued liabilities $ 6,567,000 $ 4,749,000 Accrued payroll & related expenses 1,264,000 2,619,000 Income taxes payable 2,911,000 3,053,000 Current portion of long-term debt 706,000 659,000 ----------- ----------- Total current liabilities 11,448,000 11,080,000 ----------- ----------- Long-term debt 2,427,000 3,132,000 Deferred income tax 193,000 Deferred employee benefits 884,000 862,000 ----------- ----------- 3,504,000 3,994,000 ----------- ----------- Shareholders' equity: Common stock, no par value, 9,000,000 shares authorized - shares issued and outstanding of 7,710,263 and 7,703,155 6,231,000 6,083,000 Paid-in capital 321,000 321,000 Retained earnings 39,846,000 38,251,000 Cumulative translation adjustment 9,000 (150,000) ----------- ----------- Total shareholders' equity 46,407,000 44,505,000 ----------- ----------- Commitments and contingencies (Note 3) $61,359,000 $59,579,000 =========== ===========
(See accompanying notes to consolidated condensed financial statements) 2 WD-40 COMPANY CONSOLIDATED CONDENSED STATEMENT OF INCOME ------------------------------------------ (UNAUDITED)
Three Months Ended Six Months Ended ------------------ ---------------- February 29 February 28 February 29 February 28 ----------- ----------- ----------- ----------- 1996 1995 1996 1995 ---- ---- ---- ---- Net sales $35,080,000 $29,389,000 $62,692,000 $59,158,000 Cost of product sold 15,100,000 12,297,000 26,786,000 24,933,000 ----------- ----------- ----------- ----------- Gross profit 19,980,000 17,092,000 35,906,000 34,225,000 ----------- ----------- ----------- ----------- Operating expenses: Selling, general & administrative 6,997,000 6,044,000 12,769,000 12,012,000 Advertising & sales promotions 3,216,000 2,357,000 5,254,000 5,080,000 Amortization of goodwill 167,000 167,000 ----------- ----------- ----------- ----------- Income from operations 9,600,000 8,691,000 17,716,000 17,133,000 Other income (expense): Interest, net 177,000 213,000 415,000 629,000 Other, net 106,000 4,000 148,000 (35,000) ----------- ----------- ----------- ----------- Income before income taxes 9,883,000 8,908,000 18,279,000 17,727,000 Provision for income taxes 4,000,000 3,300,000 7,131,000 6,600,000 ----------- ----------- ----------- ----------- Net income $ 5,883,000 $ 5,608,000 $11,148,000 $11,127,000 =========== =========== =========== =========== Earnings per share $ .77 $ .73 $ 1.45 $ 1.45 =========== =========== =========== =========== Average number of shares outstanding 7,707,585 7,701,793 7,706,043 7,697,780 =========== =========== =========== ===========
(See accompanying notes to consolidated condensed financial statements) 3 WD-40 COMPANY CONSOLIDATED CONDENSED STATEMENT OF CASH FLOW --------------------------------------------- (UNAUDITED)
Three Months Ended Six Months Ended ------------------------- ------------------------- February 29 February 28 February 29 February 28 ------------ ----------- ------------ ----------- 1996 1995 1996 1995 ------------ ----------- ------------ ----------- Cash flows from operating activities: Net income $ 5,883,000 $ 5,608,000 $ 11,148,000 $11,127,000 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation 167,000 166,000 332,000 335,000 Amortization of tax credit investment 83,000 83,000 166,000 166,000 Amortization of goodwill 167,000 167,000 Loss on sale of equipment 18,000 61,000 34,000 92,000 Changes in assets and liabilities: Trade accounts receivable (10,476,000) (4,168,000) (9,049,000) (4,537,000) Product held at contract packagers (920,000) 291,000 (480,000) (252,000) Inventories (634,000) 430,000 (429,000) 297,000 Other assets 58,000 (128,000) 806,000 (143,000) Accounts payable and accrued liabilities 3,239,000 2,328,000 493,000 894,000 Income taxes payable (1,384,000) (1,222,000) (5,000) 1,382,000 Deferred tax asset 900,000 (46,000) 900,000 (46,000) Long-term deferred employee benefits 19,000 29,000 23,000 64,000 ------------ ----------- ------------ ----------- Net cash (used in) provided by operating activities (2,880,000) 3,432,000 4,106,000 9,379,000 ------------ ----------- ------------ ----------- Cash flows from investing activities: Decrease (increase) in short-term investments 4,420,000 1,947,000 13,227,000 (2,529,000) Purchase of goodwill (15,047,000) (15,047,000) Decrease in deposits 1,600,000 Proceeds from sale of equipment 34,000 121,000 60,000 188,000 Capital expenditures (324,000) (404,000) (618,000) (922,000) ------------ ----------- ------------ ----------- Net cash (used in) provided by investing activities $ (9,317,000) $ 1,664,000 $ (2,378,000) $(3,263,000) ------------ ----------- ------------ -----------
(Continued on next page) 4 WD-40 COMPANY CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS ---------------------------------------------- (UNAUDITED) Continued
Three Months Ended Six Months Ended ------------------ ---------------- February 29 February 28 February 29 February 28 ------------ ----------- ------------ ----------- 1996 1995 1996 1995 ---- ---- ---- ---- Cash flows from financing activities: Proceeds from issuance of common stock $ 40,000 $ 280,000 $ 148,000 $ 335,000 Repayment of long term debt (659,000) (615,000) (659,000) (615,000) Deferred stock compensation 29,000 Dividends paid (4,778,000) (4,621,000) (9,554,000) (9,237,000) ------------ ----------- ------------ ----------- Net cash used in financing activities (5,397,000) (4,956,000) (10,065,000) (9,488,000) ------------ ----------- ------------ ----------- Effect of exchange rate changes on cash and cash equivalents 51,000 (74,000) (37,000) 85,000 ------------ ----------- ------------ ----------- (Decrease) increase in cash and cash equivalents (17,543,000) 66,000 (8,374,000) (3,287,000) Cash and cash equivalents at beginning of period 20,259,000 10,162,000 11,090,000 13,515,000 ------------ ----------- ------------ ----------- Cash and cash equivalents at end of period $ 2,716,000 $10,228,000 $ 2,716,000 $10,228,000 ============ =========== ============ ===========
(See accompanying notes to consolidated condensed financial statements) 5 WD-40 COMPANY NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS FEBRUARY 29, 1996 ----------------- (UNAUDITED) NOTE 1 - BASIS OF PRESENTATION PRINCIPLES OF CONSOLIDATION The consolidated condensed financial statements include the accounts of the Company and its wholly owned subsidiaries, WD-40 Company Ltd. (U.K.), WD-40 Products (Canada) Ltd. and WD-40 Company (Australia) Pty. Ltd. All significant intercompany transactions and balances have been eliminated. The financial statements included herein have been prepared by the Company, without audit, according to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the unaudited financial information for the interim periods shown reflects all adjustments (which include only normal, recurring adjustments) necessary for a fair presentation thereof. These financial statements and notes thereto should be used in conjunction with the financial statements and notes thereto included in the Company's 1995 Annual Report to Shareholders, which statements and notes are incorporated by reference in the Company's Annual Report on Form 10-K for the year ended August 31, 1995. SHORT-TERM INVESTMENTS Effective September 1, 1994, the Company adopted Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" prospectively. Short-term investments consist of debt securities of high credit quality financial institutions, government agencies and corporate entities which are recorded at amortized cost and classified as "held-to-maturity". EARNINGS PER SHARE Earnings per share are based upon the weighted average number of shares outstanding during the period increased by the effect of dilutive stock options, when applicable, using the treasury stock method. NOTE 2 - ACQUISITION OF 3-IN-ONE OIL BUSINESS The Company completed its acquisition of the 3-IN-ONE Oil brand from affiliates of Reckitt & Colman plc on December 8, 1995. The Company paid cash in the amount of $15,000,000 for the trademarks and other intangible assets and approximately $950,000 for inventory. None of the funds required for the acquisition were borrowed. 6 NOTE 3 - COMMITMENTS AND CONTINGENCIES The Company is party to various claims, legal actions and complaints arising in the ordinary course of business. In the opinion of management, all such matters are adequately covered by insurance or will not have a material adverse effect on the Company's financial position or results of operations. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS - --------------------- SECOND QUARTER FISCAL YEAR 1996 VERSUS SECOND QUARTER FISCAL YEAR 1995 - ---------------------------------------------------------------------- Consolidated net sales for the second quarter were a record $35,080,000, an increase of 19.4% or $5,691,000 from a year ago. Strong promotional sales by all of the operating units augmented with the sales of 3-IN-ONE products commencing in December of 1995, helped to achieve these sales. Management continues to expect record net sale levels for the remainder of fiscal year 1996. Cost of product sold for the quarter was up to 43.0% of net sales versus 41.8% last year, due to the added costs associated with promotional sales and the higher cost of sales related to 3-IN-ONE products. It is anticipated that these costs as a percentage of sales will decrease as the Company assumes control of all of the manufacturing of the 3-IN-ONE product line. Selling, general and administrative expenses for the quarter increased by $953,000 primarily due to increased professional expenses as a result of the 3-IN-ONE acquisition. As a percentage of net sales, these expenses decreased to 19.9% as compared to 20.6% last year. Advertising and sales promotion expenses increased by $859,000 in support of the added sales. As a percentage of net sales these expenses were 9.2% versus 8.0% a year ago. These expenses are expected to remain within historic levels of 9% to 10% of net sales throughout the remainder of fiscal year 1996. Amortization of goodwill, an initial expense in this quarter, results from the acquisition of certain intangible assets relating to the 3-IN-ONE oil brand from affiliates of Reckitt & Colman plc. in December of 1995. Interest, net decreased $36,000 due to the reduction of short-term investments. Other income, net increased $102,000 primarily due to the increase in exchange gains from translating those U.K. sales denominated in foreign currencies to British sterling. Net income only increased $275,000 or 4.9% due to higher tax provisions. Net income as a percentage of net sales this quarter was 16.8% versus 19.1% in fiscal year 1995. 8 WD-40 COMPANY (U.S.) - -------------------- 1996 vs. 1995 Net sales increased $2,631,000 or 11.9%. Export sales to - ------------- Latin America and Pacific Rim were up approximately 40% and domestic sales were up 8%. Again strong promotional sales accounted for these gains. Cost of product sold as a percentage of net sales was 43.9% versus 42.7% in fiscal year 1995. This increase was due to the additional costs of the promotional packaging. Selling, general and administrative expenses increased $759,000 or 17.8% and, as a percentage of net sales, were 20.3% versus 19.3% last year. Advertising and sales promotion expenses increased by $271,000 or 15.2%. This increase is due to the promotional sales and amounted to 8.3% of net sales versus 8.1% in the second quarter of fiscal year 1995. Amortization of goodwill was an initial expense in the second quarter of fiscal year 1996. Net income decreased $499,000 or 12.3% from last year due to the increased expenses as described above. WD-40 COMPANY LTD. (U.K.) - ------------------------- 1996 vs. 1995 Net sales for the second quarter were up $1,913,000 - ------------- or 31.8% reflecting strong promotional sales in the U.K., Europe and the Middle East. Cost of product sold also increased because of the promotional packaging and was 38.8% of net sales versus 37.5% a year ago. Selling, general and administrative expenses increased $173,000 or 12.2%; however, as a percentage of net sales, were down from 23.6% last year to 20.1% this quarter. Advertising and promotional expenses were up to 12.4% of net sales versus 7.8% last year due entirely to the timing of promotions. Net income increased by $466,000 or 34.0% and came in at 23.2% of net sales versus 22.8% last year. 9 OTHER FOREIGN SUBSIDIARIES - -------------------------- 1996 vs. 1995 Net sales increased $1,147,000 or 91.5% due entirely to the - ------------- improvement of the retail economy in Canada. Cost of product sold as a percentage of net sales was 48.4% versus 48.1% last year. Net income increased $308,000 or 170% as a result of the increased sales in Canada. SIX MONTHS FISCAL YEAR 1996 VERSUS SIX MONTHS FISCAL YEAR 1995 - -------------------------------------------------------------- Consolidated net sales were $62,692,000, an increase of $3,534,000 or 6.0% over fiscal year 1995. This increase was generated primarily by increased foreign sales. Cost of product sold as a percentage of net sales was 42.7% versus 42.1% last year. This small increase was mainly due to promotional packaging. Selling, general and administrative expenses were up $757,000 or 6.3% and, as a percentage of net sales, these expenses remained flat at 20.3%. Advertising and sales promotion expenses were also up by 3.4% or $174,000; however, these expenses declined as a percentage of sales to 8.4% versus 8.6% last year. These expenses are expected to return to historic levels of 9% to 10% by fiscal year end. Amortization of goodwill was an initial expense in the second quarter of fiscal year 1996. Interest income, net decreased $214,000 mainly due to the reduction of short-term investments. Other income, net increased $183,000 due primarily to the increase in exchange gains from translating those U.K. sales denominated in foreign currencies to British sterling. Net income increased slightly from last year. 10 WD-40 COMPANY (U.S.) - -------------------- Net sales increased $719,000 as a result of higher export sales to the Pacific Rim and Latin America where sales increased approximately 30%. Domestic sales were down 2.3%, however due to strong promotional support by the trade, the second quarter rebounded by 8% compared to the first quarter. Cost of product sold as a percent of net sales increased to 43.5% versus 42.8% in 1995 primarily due to promotional packaging. Selling, general, and administrative expenses as a percentage of net sales increased to 20.9% versus 19.8% in 1995. Advertising and promotion expenses as a percentage of net sales were down slightly to 8.3% versus 8.6% of last year. Amortization of goodwill was an initial expense in the second quarter of fiscal year 1996. Net income decreased 14.4% or $1,072,000 due to increased expenses as described above. WD-40 COMPANY LTD. (U.K.) - ------------------------- Net sales increased $1,854,000 or 14.4%, due to strong promotional sales in the U.K., Europe, and the Middle East. Cost of product sold as a percentage of net sales was up to 38.8% versus 38.0% in 1995 due to promotional packaging. Selling, general and administrative expenses increased 2.5% or $71,000, and as a percentage of net sales, these expenses dropped to 20.0% versus 22.4% last year. Advertising and promotion expenses increased 24.3% or $253,000 due to the timing of promotions during the second quarter. Net income increased $918,000 or 31.2% over the previous year primarily due to the combined effect of the factors as discussed above. OTHER FOREIGN SUBSIDIARIES - -------------------------- Net sales increased 26.5% or $961,000 due to the rebound of sales in Canada. Cost of product sold as a percentage of sales decreased to 47.6% of net sales versus 49.0% in 1995. Selling, general and administrative expenses decreased to 15.6% of net sales versus 18.9% in 1995. 11 Advertising and promotion expenses decreased to 7.6% of net sales versus 10.3% in 1995. Net income was up $176,000 or 24.5% due to the increased sales. PRICE INCREASES - --------------- The Company did not initiate any price increases during this quarter. CASH AND CASH EQUIVALENTS - ------------------------- Cash and cash equivalents decreased $17,543,000 during the three months ended February 29, 1996 primarily due to amounts paid to the affiliates of Reckitt & Colman plc. for the acquisition of certain assets relating to the 3-IN-ONE brand. Cash and cash equivalents increased $66,000 for the same period of last year. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- The current ratio of 3.2 to one on February 29, 1996 was less than the current ratio of 4.5 to one on August 31, 1995 due to the cash paid to acquire all of the worldwide 3-IN-ONE brand trademarks, other related intangible assets, and inventory. The Company's primary source of liquidity is funds provided by operations. The Company anticipates its cash flows from operations will provide sufficient funds to meet both short and long-term operating needs, as well as future dividends. Capital expenditures for the remainder of fiscal year 1996 are expected to total approximately $982,000 principally for replacement of aged vehicles and updating of computer equipment. 12 PART II OTHER INFORMATION Item 6. Other Information (a) Exhibits Exhibit No. Description - ----------- ----------- Articles of Incorporation and By-Laws. 3(a) The Restricted Articles of Incorporation dated December 6, 1988 are incorporated by reference from the Registrant's form 10-K Annual Report filed November 13, 1995, Exhibit 3(a) thereto. 3(b) The restated By-Laws dated December 1, 1988 are incorporated by reference from the Registrant's Form 10-K Annual Report filed November 13, 1995, Exhibit 3(a) thereto. (b) Reports on Form 8-K The registrant filed a report on Form 8-K on December 22, 1995 to report the acquisition on December 8, 1995 of the 3-IN-ONE business from affiliates of Reckitt & Colman plc., an English corporation. The report was subsequently amended on Form 8-K/A filed February 16, 1996 to include required financial statements and pro forma financial information. The following financial statements and pro forma financial information were filed with the report on Form 8-K/A: (1) Financial statements of the 3-IN-ONE Oil business acquired. Report of Independent Accountants Statement of Assets as of December 31, 1994 and January 1, 1994 Statement of Revenues and Direct Operating Expenses for the years ended December 31, 1994 and January 1, 1994 Notes to Statement of Assets and Statement of Revenues and Direct Operating Expenses Statement of Assets (Unaudited) as of November 25, 1995 Statement of Revenues and Direct Operation Expenses (Unaudited) for the eleven months ended November 25, 1995 and November 26, 1994 Notes to Unaudited Statement of Assets and Unaudited statement of Revenues and Direct Operating Expenses 13 (2) Pro forma financial information Introduction to Pro Forma Financial Statements Pro Forma Combined Balance Sheet (Unaudited) as of November 30, 1995 Pro Forma Combined Statement of Income (Unaudited) for the year ended August 31, 1995 Pro Forma Combined Statement of Income (Unaudited) for the three months ended November 30, 1995. SIGNATURES - ---------- Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. WD-40 COMPANY Registrant Date: April 12, 1996 /s/ Robert D. Gal ______________________________________ Robert D. Gal, Treasurer (Principal Financial Officer) 14 EX-27 2 FINANCIAL DATA SCHEDULE - ARTICLE 5
5 3-MOS AUG-31-1996 DEC-01-1995 FEB-29-1996 2,716,000 0 29,488,000 659,000 2,971,000 36,919,000 6,661,000 3,010,000 61,359,000 11,448,000 2,427,000 6,231,000 0 0 40,176,000 61,359,000 35,080,000 35,322,000 15,100,000 10,380,000 0 0 65,000 9,883,000 4,000,000 5,883,000 0 0 0 5,883,000 .77 .77
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