Wynn’s Posts $1.96-Million Loss for 1985 : Auto Parts Supplier Blames Write-Offs for Year’s Red Ink

Wynn’s International Inc. on Tuesday reported a loss of $1.96 million for fiscal 1985--the second largest annual loss in the company’s 47-year history. Officials blamed the red ink on write-offs related to a recent acquisition and on further write-offs of outdated inventory.

Just one year ago, the Fullerton-based automotive parts supplier posted annual net income of $10.2 million.

Wynn’s also suffered one of its worst fourth quarters, with losses of $5.1 million for the period ended Dec. 31, compared to profits of $1.8 million the previous year.

The company’s biggest annual loss--$6.8 million--came in 1982 when it sold its specialty wheel-making division.

Despite the most recent losses, two industry analysts who carefully follow Wynn’s said they expect the company to immediately return to profitability, and one analyst even projected that Wynn’s could post “near record” profits within two years.

The optimism is based in part on the fact that Wynn’s 1985 revenues were up nearly 10%, to $236.5 million from $214.4 million and that quarterly sales were ahead nearly 32%, to $64.3 million from $48.8 million.

John F. Lillicrop, Wynn’s president and chief executive, said the large fourth-quarter and full-year losses will not result in any layoffs or management changes at the company. He said Wynn’s has “positioned” itself to return to profitability in 1986 by investing heavily in new plant equipment in 1985 and by writing off obsolete inventory.

Acquired Precision Rubber

In November, Wynn’s acquired Precision Rubber Products Corp. of Lebanon, Tenn., for $31 million and up to 70,000 common shares of stock. It is that costly purchase that led Wynn’s to take huge write-offs for the fourth quarter, Lillicrop said.

Although the write-offs have temporarily depressed earnings, they also will “help improve cash flow in 1986,” Lillicrop said. “We’re much better positioned now to take advantage of sales volume.”

Analysts concur that better times are, indeed, ahead for Wynn’s, although they say the industry recovery will be slow.

“The company is at a turning point,” said Arthur G. Davis, vice president at Cleveland-based Prescott Ball & Turben’s Sarasota, Fla., office.

“Everything suggests the possibility of Wynn’s returning to much better earnings in 1986, and it could even produce record earnings in 1987.”

Ann Knight, analyst at Paine-Webber in New York, agreed that the loss is “a one-shot thing. . . . It’s not a Wynn’s problem, it’s an industry problem.”

To help improve the company’s position in the industry, Lillicrop said, Wynn’s has slowly renamed its various divisions to better reflect the fact that they are, in fact, part of the Wynn’s family.

Recently, Wynn’s has been added to the names of three divisions that make various auto products. And Lillicrop said the company soon plans to add the Wynn’s name to its biggest division, Lone Star Manufacturing Corp., an auto air-conditioning manufacturer that sells 500,000 aftermarket air conditioners annually. Lone Star posted sales last year of $150 million.

“A lot of our customers have stated surprise to find out that these divisions are Wynn’s operations,” Lillicrop said.