LOS ANGELES -- May 30, 1996 -- DEP Corp. (NASDAQ
SmallCap:DPCAQ,DPCBQ) reported an improvement in operating income
and cash flow for both its third quarter and nine-month periods.
Operating income in its third fiscal quarter ended April 30,
1996, was $1 million, compared with a loss of $2.1 million for the
same period in the prior year. For the nine months, operating
income was $2.4 million in the current year, compared with a loss of
$645,000 for the comparable period last year. Last year's operating
loss figures exclude the writedown in the value of Agree and Halsa
assets.
Sales for the third quarter this year were $29.6 million,
compared with $29.2 million in the same period last year. Sales for
the nine months were $86.3 million, compared with $91.6 million for
the first nine months of the prior year.
Net losses for the current three- and nine-month periods were
$979,000 and $3.2 million, or 16 cents per share and 51 cents per
share, respectively, compared with net losses of $26.9 million and
$27.6 million, or $4.30 per share and $4.42 per share, for the prior
year's periods.
The losses for the current three- and nine-month periods include
4 cents per share and 7 cents per share, respectively, related to
reorganization expenses. The three- and nine-month periods ended
April 30, 1995, included an after-tax charge of $24.1 million, or
$3.85 per share, resulting from a writedown in the asset value of
Agree and Halsa. The current periods also were impacted by a 6
percent and 15 percent increase in interest expense over last year's
periods.
As previously reported, DEP has initiated litigation against
S.C. Johnson & Son Inc., related to the purchase of Agree and Halsa.
The U.S. District Court for the Central District recently
rescheduled the trial to commence on Sept. 6, 1996.
Robert Berglass, president and chief executive officer of DEP,
said that management is pleased with the progress being made in its
efforts to restore the company to more acceptable levels of
profitability. He said that in addition to the improved operating
results, the company continues to have positive cash flow. The
company entered its fourth quarter with more than $8 million of cash
on hand.
"Programs implemented over the past 12 months are beginning to
show results," he said. "Our cost reduction programs reduced SG&A
expenses as planned. We have also substantially tightened our
inventory levels, while continuing to maintain excellent service
levels with our retail customers."
Commenting on the quarter results, Berglass said: "The
refinement in our marketing efforts has resulted in improved sales
in our hair, skin and oral-care products. Additionally, we are
actively pursuing new customers in an effort to expand our private
label business. The result of these efforts should be that
additional volume in future periods will utilize excess
manufacturing capacity and make our operations more efficient by
reducing per-unit overhead costs."
Commenting the chapter proceedings, he said that the company is
gratified by the overwhelming support it has received from its
suppliers, retail customers and international distributors.
"We continue to have open lines of credit with virtually all of
our suppliers. We have obtained approval from the court for full
use of our cash collateral and do not anticipate having to secure
any debtor-in-possession financing," he said.
"With the support of Western International Media, the company's
media buying service, DEP has been able to continue its consumer
advertising campaigns without any interruption. The company's
promotional program of its brands has also continued, as scheduled,
with our domestic and international customers."
DEP is a consumer products company that develops, manufactures
and markets a wide variety of hair, oral and skin-care products
under 10 major brand names: Dep, L.A. Looks, Agree, Halsa, Lilt,
Topol, Lavoris, Natures Family, Porcelana and Cuticura.
DEP. CORP. AND SUBSIDIARIES
Consolidated Condensed Statements of Income
(Unaudited)
Three months ended Nine months ended
April 30, April 30,
1996 1995 1996 1995
Net sales $29,568,000 $29,239,000 $86,309,000 $91,591,000
Gross profit 18,453,000 17,721,000 54,268,000 57,708,000
Selling, general
and administrative
expense 17,464,000 19,869,000 51,846,000 58,353,000
Income (loss) from
operations before
writedown and
reorganization 989,000 (2,148,000) 2,422,000 (645,000)
Writedown in value
of Agree/Halsa assets -- 25,166,000 -- 25,166,000
Reorganization items 261,000 -- 452,000 --
Interest expense 1,680,000 1,578,000 5,240,000 4,550,000
Income (loss) before
income tax benefit (979,000) (28,930,000) (3,169,000) (30,480,000)
Income tax benefit -- 2,060,000 -- 2,865,000
Net income (loss) $ (979,000)$(26,870,000) $(3,169,000) $(27,615,000)
Per-share data:
Before reorganization
items and writedown
in Agree/Halsa assets (12 cents) (45 cents) (44 cents) (57cents)
Reorganization items (4 cents) -- (7 cents) --
Writedown in
Agree/Halsa assets -- $(3.85) -- $(3.85)
Net income (loss)
per share (16 cents) $(4.30) (51 cents) $(4.42)
Weighted average
shares outstanding 6,251,140 6,244,900 6,250,110 6,243,841
NEW YORK -- May 30, 1996 -- Moody's Investors
Service has assigned a rating of Baa to Orange County, California's
sale of approximately $770 million in Recovery Certificates of
Participation, Series 1996A. The financing will enable the county
to emerge from bankruptcy. Proceeds, combined with reserves on
hand, will repay $800 million in short-term debt maturing on June
30, 1996, replenish debt service reserve funds which had been
depleted during the bankruptcy for outstanding certificates of
participation, and repay vendor and employee claims. The bonds are
expected to be insured by MBIA and rated Aaa. We are providing an
underlying rating at the county's request to inform investors of our
evaluation of the transaction absent any insurance.
The investment grade rating reflects the strong legal structure
of the transaction, which insulates debt service payments to
bondholders from the remaining uncertainties regarding the county's
budgetary stress and management track record. The structure
includes a state intercept of, and superior lien on motor vehicle
license fees and certain sales taxes; these pledged revenues provide
over 1.6 times coverage of peak debt service. While the county has
significantly reduced discretionary spending and made many
management changes, it is too early to evaluate whether the county
will successfully withstand budget pressures and whether management
will operate effectively in a post- bankruptcy environment.
In addition to the strong legal structure, an important
component of the investment grade rating is the county's plan to
repay all short-term debt holders in full, to continue to make full
and timely payment on all outstanding debt, and to cure any
defaults. The county's actions in its recovery plan to fully
restore bondholders' security to its pre-bankruptcy state was an
important prerequisite for the county to attain investment grade on
this financing.
County to Issue Pension Obligation Bonds
Concurrently with recovery certificates, the county will sell
$120 million in taxable refunding pension obligation bonds, Series
1996A. The bonds will be entirely insured by MBIA and rated Aaa;
proceeds will refund the $110 million outstanding Series 1994B
bonds. We have revised the ratings on the county's 1994A pension
obligation bonds from Caa to Ba. These bonds are payable on a
parity with the current offering of the 1996A pension obligation
bonds.
Other Ratings Revised
The county's general obligation debt rating has been raised from
Caa to Ba1. We have also revised the ratings on the county's
outstanding certificates of participation, dated 7-1-86 and 1-1-91
from Caa to Ba. The rating revisions reflect the fact that the
county has improved its financial situation and will emerge from
bankruptcy, although debt service payments will not benefit from the
protection of the intercept mechanism. We have also revised the
rating on the county's certificates of participation, dated 12-1-88
from Caa to Baa. This debt is secured by the net revenues of the
county's solid waste system. The county's other outstanding
certificates are all insured and rated Aaa.
CONTACT: Barbara Flickinger
212/553-7736
or
Kathy McManus
212/553-4036
or
Renee Boicourt
212/553-7162