SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K/A
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AMENDMENT TO CURRENT REPORT
---------------------------
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 8, 1995
WD-40 COMPANY
(Exact name of registrant as specified in its charter)
California 0-6936-3 95-1797918
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) 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
No changes to name or address.
(Former name or former address, if changed since last report)
AMENDMENT TO CURRENT REPORT
The registrant's Current Report on Form 8-K, filed on December 22, 1995 to
report the registrant's acquisition on December 8, 1995 of the 3-In-One Oil
business from affiliates of Reckitt & Colman P.L.C., an English corporation, is
amended to provide financial statements and pro forma financial information
required by Item 7 of the report. There are no other changes to the report as
filed.
ITEM 7. Financial Statements and Exhibits.
(a) Financial statements of businesses 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 Operating 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
(b) 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
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(c) Exhibits.
None.
SIGNATURES:
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 hereunto duly authorized.
WD-40 COMPANY
(Registrant)
Date: February 15, 1996 /s/ Robert D. Gal
-----------------------------------
ROBERT D. GAL
Treasurer
(Principal Financial Officer)
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Report of Independent Accountants
To the Board of Directors of
Reckitt & Colman Inc.
We have audited the accompanying statement of assets as of December
31, 1994 and January 1, 1994 and the related statement of revenues and
direct operating expenses of the 3-in-One Oil business (the
"Statements") of Reckitt & Colman Inc. and Reckitt & Colman (Overseas)
Limited (the "Company") for each of the two years in the period ended
December 31, 1994. These statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the statement of assets
and the statement of revenues and direct operating expenses are free
of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in these
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall presentation of these statements. We
believe that our audits provide a reasonable basis for our opinion.
The accompanying statements reflect the assets and the revenues and
direct operating expenses attributable to the 3-in-One Oil business of
the Company as described in Note 3 and are not intended to be a
complete presentation of the assets or revenues and expenses of 3-in-
One Oil.
In our opinion, the statement of assets and statement of revenues and
direct operating expenses present fairly, in all material respects,
the assets as described in Note 3 as of December 31, 1994 and January
1, 1994 and the revenues and direct operating expenses as described in
Note 3 for each of the two years in the period ended December 31, 1994
of 3-in-One Oil, in conformity with generally accepted accounting
principles.
Price Waterhouse LLP
Morristown, New Jersey
February 2, 1996
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3-in-One Oil
Statement of Assets ($ in thousands)
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DECEMBER 31, JANUARY 1,
1994 1994
Inventory $ 966 $ 1,022
Property, plant and equipment 36 38
Intangible assets, net of accumulated amortization of
$4,482 in 1994 and $3,563 in 1993 18,983 19,902
--------- ---------
Total assets $ 19,985 $ 20,962
========= =========
The accompanying notes are an integral part of this statement.
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3-in-One Oil
Statement of Revenues and Direct Operating Expenses ($ in thousands)
- --------------------------------------------------------------------------------
FISCAL YEAR ENDED
DECEMBER 31, JANUARY 1,
1994 1994
Revenues $ 14,427 $ 13,936
--------- ---------
Direct operating expenses:
Cost of products sold 5,053 4,836
Marketing and brokerage costs 2,255 1,993
Amortization of intangibles 919 973
--------- ---------
8,227 7,802
--------- ---------
Excess of revenues over direct operating expenses $ 6,200 $ 6,134
========= =========
The accompanying notes are an integral part of this statement.
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3-in-One Oil
Notes to Statement of Assets and
Statement of Revenues and Direct Operating Expenses ($ in thousands)
----------------------------------------------------------------------------
1. BUSINESS AND ASSET PURCHASE AND SALE AGREEMENT
3-in-One Oil (the "Business") is a product line manufactured, sold and
distributed by Reckitt & Colman Inc. and Reckitt & Colman (Overseas)
Limited (collectively the "Company"). Effective December 8, 1995, the
Company sold 3-in-One Oil to WD-40 Company under an asset purchase and
sale agreement. The assets acquired included inventory and the rights to
manufacture, sell and distribute this product line.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fiscal Year - The Fiscal year ends on the Saturday nearest to December 31.
The periods ended December 31, 1994 (Fiscal 1994) and January 1, 1994
(Fiscal 1993) each included 52 weeks.
Inventory - Inventories are stated at the lower of cost, determined by the
first-in, first-out method, or market.
Property, Plant and Equipment - Property, plant and equipment are stated
at cost. Depreciation is recorded on a straight-line basis.
Intangibles - Intangibles primarily include customer lists, trademarks and
goodwill. Intangibles are amortized using straight-line and accelerated
amortization methods over useful lives ranging from 5 to 40 years.
3. BASIS OF PRESENTATION
The accompanying statement of assets and statement of revenues and direct
operating expenses have been prepared in accordance with generally
accepted accounting principles and were derived from the historical
accounting records of the Company. Complete financial statements were not
prepared as the Company did not maintain 3-in-One Oil as a separate
business unit and has not segregated indirect operating cost information
or related assets and liabilities (other than inventory, certain property,
plant and equipment, and intangible assets) for this product line in its
accounting records. It is not practical to attempt to reconstruct and
separate the indirect operating costs and other related assets and
liabilities applicable to this product line.
The statement of assets includes the assets of the Company which are
directly related to the Business and which have been historically
segregated by the Company in its accounting records. This statement does
not include cash, accounts receivable, prepaid or other assets, accounts
payable, accrued expenses, borrowings or any other assets or liabilities.
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3-in-One Oil
Notes to Statement of Assets and
Statement of Revenues and Direct Operating Expenses ($ in thousands)
----------------------------------------------------------------------------
The statement of revenues and direct operating expenses includes the
revenues and expenses directly attributable to the manufacture, sale and
distribution of the product line comprising the Business sold, and also
includes an allocation of certain expenses directly attributable to the
manufacture, sale and distribution of the product line comprising the
Business sold which have been historically segregated by the Company in
its accounting records. This statement does not include general and
administrative costs, interest expenses, income taxes or any other
indirect expenses.
The allocated expenses include the following elements: Cash discounts of
$155 and $152 for Fiscal 1994 and Fiscal 1993, respectively, which are
included in revenues; variable manufacturing overhead of $174 and $160 for
Fiscal 1994 and Fiscal 1993, respectively, which is included in cost of
products sold; and brokerage costs of $114 and $90 for Fiscal 1994 and
Fiscal 1993, respectively, which are included in marketing and brokerage
costs and were allocated based upon sales volume. Freight costs of $343
and $354 for Fiscal 1994 and Fiscal 1993, respectively, are included in
cost of products sold and were allocated based upon the weight of the
products shipped.
Management believes that the above expense allocations are reasonable
methods of allocation for the purpose of these financial statements;
however, there can be no assurances that such allocations will be
indicative of future results of operations.
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3-in-One Oil
Statement of Assets (Unaudited)
($ in thousands)
- --------------------------------------------------------------------------------
November 25,
1995
Inventory $ 973
Property, plant and equipment 34
Intangible assets, net of accumulated amortization of $5,278 18,187
-------
Total assets $19,194
=======
The accompanying notes are an integral part of this statement.
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3-in-One Oil
Statement of Revenues and Direct Operating Expenses (Unaudited)
($ in thousands)
- --------------------------------------------------------------------------------
Eleven Months Ended
November November
25, 1995 26, 1994
Revenues $11,879 $12,982
------- -------
Direct operating expenses:
Cost of products sold 4,390 4,586
Marketing and brokerage costs 1,785 2,018
Amortization of intangibles 731 831
------- -------
6,906 7,435
------- -------
Excess of revenues over direct operating expenses $ 4,973 $ 5,547
======= =======
The accompanying notes are an integral part of this statement.
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3-in-One Oil
Notes to Unaudited Statement of Assets and Unaudited
Statement of Revenues and Direct Operating Expenses ($ in thousands)
- --------------------------------------------------------------------------------
NOTE 1 - BUSINESS AND ASSET PURCHASE AND SALE AGREEMENT
3-in-One Oil (the "Business") is a product line manufactured, sold and
distributed by Reckitt & Colman Inc. and Reckitt & Colman (Overseas) Limited
(collectively the "Company"). Effective December 8, 1995, the Company sold
3-in-One Oil to WD-40 Company under an asset purchase and sale agreement. The
assets acquired included inventory and the rights to manufacture, sell and
distribute this product line.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fiscal Year - The Fiscal year ends on the Saturday nearest to December 31. The
eleven months ended November 25, 1995 and November 26, 1994 each included 47
weeks.
Inventory - Inventories are stated at the lower of cost, determined by the
first-in, first-out method, or market.
Property, Plant and Equipment - Property, plant and equipment are stated at
cost. Depreciation is recorded on a straight-line basis.
Intangibles - Intangibles primarily include customer lists, trademarks and
goodwill. Intangibles are amortized using straight-line and accelerated
amortization methods over useful lives ranging from 5 to 40 years.
NOTE 3 - BASIS OF PRESENTATION
The accompanying unaudited statement of assets and unaudited statement of
revenues and direct operating expenses have been prepared in accordance with
generally accepted accounting principles and were derived from the historical
accounting records of the Company. The interim data, in the opinion of the
Company, includes all adjustments, consisting only of normal recurring
adjustments, necessary for the fair statement of the results for the interim
periods. Complete financial statements were not prepared as the Company did not
maintain 3-in-One Oil as a separate business unit and has not segregated
indirect operating cost information or related assets and liabilities (other
than inventory, certain property, plant and equipment, and intangible assets)
for this product line in its accounting records. It is not practical to attempt
to reconstruct and separate the indirect operating costs and other related
assets and liabilities applicable to this product line.
The statement of assets includes the assets of the Company which are directly
related to the Business and which have been historically segregated by the
Company in its accounting records. This statement does not include cash,
accounts receivable, prepaid or other assets, accounts payable, accrued
expenses, borrowings or any other assets or liabilities.
The statement of revenues and direct operating expenses includes the revenues
and expenses directly attributable to the manufacture, sale and distribution of
the product line comprising the Business sold, and also includes an allocation
of certain expenses directly attributable to the manufacture, sale and
distribution of the product line comprising the Business sold which have been
historically segregated by the Company in its accounting records. This
statement does not include general and administrative costs, interest expenses,
income taxes or any other indirect expenses.
Management believes that the above expense allocations are reasonable methods of
allocation for the purpose of these financial statements; however, there can be
no assurances that such allocations will be indicative of future results of
operations.
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Introduction to Pro Forma Financial Statements
- ----------------------------------------------
The following unaudited pro forma combined financial statements give effect to
the acquisition by WD-40 Company of the assets of 3-in-One Oil in a transaction
to be accounted for as a purchase. The unaudited pro forma combined balance
sheet is based on the balance sheet of WD-40 Company as appearing in the
Company's Form 10-Q filed for the quarter ended November 30, 1995, and the
individual statement of assets of 3-in-One Oil prepared from its accounting
records at November 25, 1995, appearing elsewhere in this document, as if the
acquisition occurred on November 30, 1995. The unaudited pro forma combined
statements of income for the year ended August 31, 1995 and the quarter ended
November 30, 1995, have been based upon the individual statements of income of
WD-40 Company for the year ended August 31, 1995 and the quarter ended November
30, 1995, as appearing in the Company's Form 10-K filed for the year ended
August 31, 1995 and the Company's Form 10-Q filed for the quarter ended November
30, 1995, respectively, combined with the individual statements of income of 3-
in-One Oil, prepared from its accounting records for the comparable periods then
ended. The unaudited pro forma combined statements of income for the year ended
August 31, 1995 and the three-month period ended November 30, 1995, combine the
results of operations of WD-40 Company and 3-in-One Oil (acquired by WD-40
Company on December 8, 1995) as if the acquisition occurred on September 1,
1994. These unaudited pro forma combined financial statements should be read in
conjunction with the historical financial statements and notes thereto of WD-40
Company as appearing in the Company's Form 10-K filed for the year ended August
31, 1995 and the Company's Form 10-Q filed for the quarter ended November 30,
1995, and the financial statements and notes thereto of 3-in-One Oil for the
corresponding periods appearing elsewhere in this Form 8-K/A.
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WD-40 Company
Pro Forma Combined Balance Sheet (Unaudited)
- --------------------------------------------------------------------------------
NOVEMBER 30, 1995
--------------------------------------------------------------
WD-40 3-IN-ONE PRO FORMA
COMPANY OIL ADJUSTMENTS COMBINED
ASSETS
Current assets:
Cash and cash equivalents $20,259,000 $(15,973,000)(a) $ 4,286,000
Short-term investments 4,420,000 4,420,000
Trade accounts receivable, net 15,591,000 15,591,000
Product held at contract packagers 1,868,000 1,868,000
Inventories 2,347,000 $ 973,000 3,320,000
Other current assets 4,428,000 4,428,000
----------- ----------- -----------
Total current assets 48,913,000 973,000 33,913,000
Property, plant and equipment, net 3,544,000 34,000 (34,000)(b) 3,544,000
Long-term investments 4,294,000 4,294,000
Other assets 2,247,000 18,187,000 (3,187,000)(c) 17,247,000
----------- ----------- -----------
$58,998,000 $19,194,000 58,998,000
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $ 3,195,000 $ 3,195,000
Accrued payroll and related costs 1,410,000 1,410,000
Income taxes payable 4,301,000 4,301,000
Current portion of long-term debt 659,000 659,000
----------- ----------- -----------
Total current liabilities 9,565,000 - 9,565,000
----------- ----------- -----------
Long-term debt 3,132,000 3,132,000
Deferred income taxes 193,000 193,000
Deferred employee benefits 865,000 865,000
----------- ----------- -----------
4,190,000 4,190,000
Shareholders' equity:
Common stock 6,191,000 6,191,000
Paid-in capital 321,000 321,000
Retained earnings 38,739,000 38,739,000
Cumulative translation adjustment (8,000) (8,000)
----------- ----------- -----------
Total shareholders' equity 45,243,000 - 45,243,000
----------- ----------- -----------
$58,998,000 - $58,998,000
=========== =========== ===========
Notes to Unaudited Pro Forma Balance Sheet
- ------------------------------------------
(a) Represents the acquisition for $15,973,000 of certain of the assets of 3-
in-One Oil.
(b) Elimination of fixed assets of 3-in-One Oil not acquired by WD-40 Company.
(c) Elimination of intangible assets of 3-in-One Oil in excess of the amount
paid by WD-40 Company.
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WD-40 Company
Pro Forma Combined Statement of Income (Unaudited)
- --------------------------------------------------------------------------------
FOR THE YEAR ENDED AUGUST 31, 1995
--------------------------------------------------------
WD-40 3-IN-ONE PRO FORMA
COMPANY OIL ADJUSTMENTS COMBINED
Net sales $116,776,000 $14,017,000 $130,793,000
Cost of product sold 50,229,000 5,065,000 55,294,000
------------ ----------- ------------
Gross profit 66,547,000 8,952,000 75,499,000
------------ ----------- ------------
Operating expenses:
Selling, general and administrative 24,092,000 - 24,092,000
Advertising and sales promotion 10,973,000 2,178,000 13,151,000
Amortization of intangibles - 859,000 $ 141,000(a) 1,000,000
------------ ----------- ------------
35,065,000 3,037,000 38,243,000
------------ ----------- ------------
Income from operations 31,482,000 5,915,000 37,256,000
------------ ----------- ------------
Interest income, net 1,118,000 - (975,000)(b) 143,000
Other income, net 53,000 - 53,000
------------ ----------- ------------
Income before income taxes 32,653,000 5,915,000 37,452,000
Provision for income taxes 12,200,000 - 1,900,000 (c) 14,100,000
------------ ----------- ------------
Net income $20,453,000 $5,915,000 $ 23,352,000
============ =========== ============
Earnings per share $ 2.66 N/A $ 3.03
============ =========== ============
Average number of shares outstanding 7,700,239 N/A 7,700,239
============ =========== ============
Notes to Unaudited Pro Forma Statement of Income
- ------------------------------------------------
(a) Recognition of additional amortization related to intangible assets,
primarily goodwill, based upon a 15-year life.
(b) Reduction of interest income at 6% related to invested funds utilized to
finance the acquisition.
(c) Recognition of federal, state and foreign income taxes at an effective rate
of 40%.
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WD-40 Company
Pro Forma Combined Statement of Income (Unaudited)
- --------------------------------------------------------------------------------
FOR THE THREE MONTHS ENDED NOVEMBER 30, 1995
--------------------------------------------------------
WD-40 3-IN-ONE PRO FORMA
COMPANY OIL ADJUSTMENTS COMBINED
Net sales $ 27,612,000 $ 3,306,000 $ 30,918,000
Cost of product sold 11,686,000 1,232,000 12,918,000
------------ ----------- ------------
Gross profit 15,926,000 2,074,000 18,000,000
------------ ----------- ------------
Operating expenses:
Selling, general and administrative 5,772,000 - 5,772,000
Advertising and sales promotion 2,038,000 474,000 2,512,000
Amortization of intangibles - 199,000 $ 51,000(a) 250,000
------------ ----------- ------------
7,810,000 673,000 8,534,000
------------ ----------- ------------
Income from operations 8,116,000 1,401,000 9,466,000
------------ ----------- ------------
Interest income, net 238,000 - (225,000)(b) 13,000
Other income, net 42,000 - 42,000
------------ ----------- ------------
Income before income taxes 8,396,000 1,401,000 9,521,000
Provision for income taxes 3,130,000 - 450,000(c) 3,580,000
------------ ----------- ------------
Net income $ 5,266,000 $ 1,401,000 $ 5,941,000
============ =========== ============
Earnings per share $ .68 N/A $ .77
============ =========== ============
Average number of shares outstanding 7,704,477 N/A 7,704,477
============ =========== ============
Notes to Unaudited Pro Forma Statement of Income
- ------------------------------------------------
(a) Recognition of additional amortization related to intangible assets,
primarily goodwill, based upon a 15-year life.
(b) Reduction of interest income at 6% related to invested funds utilized to
finance the acquisition.
(c) Recognition of federal, state and foreign income taxes at an effective rate
at 40%.
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