<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES
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 THE QUARTERLY PERIOD ENDED APRIL 19, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: NO. 333-8379
------------------------
KEEBLER CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<CAPTION>
DELAWARE 36-1894790
<S> <C>
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
677 LARCH AVE., ELMHURST, IL 60126
(Address of principal executive offices)
630-833-2900
(Registrant's telephone number, including area code)
NOT APPLICABLE.
(Former name, former address and former fiscal year,
if changed since last report)
------------------------
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 / /
NUMBER OF SHARES OF COMMON STOCK, $1.00 PAR VALUE, OUTSTANDING AS OF THE CLOSE
OF BUSINESS ON MAY 23, 1997: 1,000,000.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
KEEBLER CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
APRIL 19, December 28,
1997 1996
------------ -------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.......................................................... $ 862 $ 11,404
Trade accounts and notes receivable, net........................................... 129,026 137,150
Recoverable income taxes........................................................... 2,311 --
Inventories, net:
Raw materials.................................................................... 23,156 25,296
Package materials................................................................ 11,152 9,842
Finished goods................................................................... 92,651 76,054
Other............................................................................ 1,600 1,473
------------ -------------
128,559 112,665
Deferred income taxes.............................................................. 55,929 55,929
Other.............................................................................. 18,234 19,337
------------ -------------
Total current assets............................................................. 334,921 336,485
PROPERTY, PLANT, AND EQUIPMENT, NET.................................................. 480,258 486,080
TRADEMARKS AND TRADENAMES, NET....................................................... 156,815 158,033
GOODWILL, NET........................................................................ 47,902 48,280
PREPAID PENSION...................................................................... 42,936 43,359
ASSETS HELD FOR SALE................................................................. 3,178 6,785
OTHER ASSETS......................................................................... 18,113 22,502
------------ -------------
Total assets $ 1,084,123 $ 1,101,524
------------ -------------
------------ -------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
2
<PAGE>
KEEBLER CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
APRIL 19, December 28,
1997 1996
------------ -------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Revolving Loan facility............................................................ $ 32,816 $ --
Current maturities of long-term debt............................................... 21,270 18,570
Trade accounts payable............................................................. 97,366 96,754
Other liabilities and accruals..................................................... 189,767 186,586
Plant and facility closing costs and severance..................................... 9,942 19,860
------------ -------------
Total current liabilities........................................................ 351,161 321,770
LONG-TERM DEBT....................................................................... 361,955 412,705
OTHER LIABILITIES:
Deferred income taxes.............................................................. 64,957 64,957
Postretirement/postemployment obligations.......................................... 57,487 56,382
Plant and facility closing costs and severance..................................... 16,124 16,124
Deferred compensation.............................................................. 18,194 18,205
Other.............................................................................. 18,176 20,708
------------ -------------
Total other liabilities.......................................................... 174,938 176,376
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock ($1 par value; 1,000,000 shares authorized and issued)................ 1,000 1,000
Additional paid-in capital......................................................... 172,568 172,568
Retained earnings.................................................................. 22,501 17,105
------------ -------------
Total shareholders' equity....................................................... 196,069 190,673
------------ -------------
Total liabilities and shareholders' equity....................................... $ 1,084,123 $ 1,101,524
------------ -------------
------------ -------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
3
<PAGE>
KEEBLER CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
KEEBLER CORPORATION | UBIUS
------------------------ | -------------
SIXTEEN Twelve |
WEEKS ENDED Weeks Ended | Four Weeks
APRIL 19, April 20, | Ended January
1997 1996 | 26, 1996
----------- ----------- |-------------
<S> <C> <C> | <C>
NET SALES........................................... $ 597,034 $ 335,259 | $ 101,656
|
COSTS AND EXPENSES: |
Cost of sales..................................... 260,019 157,449 | 54,870
Selling, marketing, and administrative expenses... 308,543 165,602 | 71,427
Other............................................. 2,920 934 | 857
----------- ----------- |-------------
INCOME (LOSS) FROM CONTINUING OPERATIONS............ 25,552 11,274 | (25,498)
|
Interest (income) from affiliates................. -- -- | (875)
Interest (income)................................. (145) (130) | (3)
Interest expense to affiliates.................... -- -- | 664
Interest expense.................................. 11,770 7,855 | 98
----------- ----------- |-------------
INTEREST EXPENSE (INCOME), NET...................... 11,625 7,725 | (116)
----------- ----------- |-------------
|
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE |
INCOME TAX EXPENSE................................ 13,927 3,549 | (25,382)
Income tax expense................................ 5,839 1,966 | --
----------- ----------- |-------------
|
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE |
EXTRAORDINARY ITEM................................ 8,088 1,583 | (25,382)
|
DISCONTINUED OPERATIONS: |
Gain on disposal of the Frozen Food businesses, |
net of tax...................................... -- -- | 18,910
----------- ----------- |-------------
|
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM............. 8,088 1,583 | (6,472)
EXTRAORDINARY ITEM: |
Loss on early extinguishment of debt, net of |
tax............................................. 2,692 -- | --
----------- ----------- |-------------
NET INCOME (LOSS)................................... $ 5,396 $ 1,583 | $ (6,472)
----------- ----------- |-------------
----------- ----------- |-------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
4
<PAGE>
KEEBLER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
KEEBLER CORPORATION | UBIUS
------------------------ |-------------
SIXTEEN Twelve |
WEEKS ENDED Weeks Ended | Four Weeks
APRIL 19, April 20, |Ended January
1997 1996 | 26, 1996
----------- ----------- |-------------
<S> <C> <C> |<C>
CASH FLOWS PROVIDED FROM (USED BY) OPERATING |
ACTIVITIES |
Net income (loss)................................. $ 5,396 $ 1,583 | $ (6,472)
Adjustments to reconcile net income (loss) to cash |
from operating activities: |
Depreciation and amortization................... 17,154 10,891 | 1,973
Gain on the disposal of the Frozen Food |
businesses, net of tax........................ -- -- | (18,910)
Loss on early extinguishment of debt, net of |
tax........................................... 2,692 -- | --
(Gain) loss on sale of property, plant, and |
equipment..................................... (95) (35) | 33
Changes in assets and liabilities: |
Trade accounts and notes receivable, net........ 8,124 19,253 | 22,068
Accounts receivables/payables from affiliates, |
net........................................... -- -- | (1,941)
Inventories, net................................ (15,894) (8,058) | 4,353
Recoverable income taxes and income taxes |
payable....................................... (361) 987 | 25
Other current assets............................ 1,103 (5,258) | 1,192
Deferred debt issue costs....................... (1,250) -- | --
Trade accounts payable and other current |
liabilities................................... 2,597 15,487 | 11,550
Restructuring reserves.......................... -- -- | (14,469)
Plant and facility closing costs and |
severance..................................... (9,904) (20,272) | --
Other, net........................................ (534) (1,190) | 246
----------- ----------- |-------------
Cash provided from (used by) operating |
activities.................................. 9,028 13,388 | (352)
|
CASH FLOWS (USED BY) PROVIDED FROM INVESTING |
ACTIVITIES |
Capital expenditures.............................. (8,261) (2,012) | (3,228)
Proceeds from property disposals.................. 3,925 1,565 | 644
Disposition of the Frozen Food businesses......... -- -- | 67,749
Working capital adjustment paid by UB Investment |
(Netherlands) B.V............................... -- 32,609 | --
----------- ----------- |-------------
Cash (used by) provided from investing |
activities.................................. (4,336) 32,162 | 65,165
|
CASH FLOWS (USED BY) FINANCING ACTIVITIES |
Long-term debt borrowings......................... 109,750 -- | --
Long-term debt repayments......................... (157,800) (800) | (2,377)
Revolving Loan facility, net...................... 32,816 -- | (63,300)
----------- ----------- |-------------
Cash (used by) financing activities............. (15,234) (800) | (65,677)
----------- ----------- |-------------
(Decrease) increase in cash and cash |
equivalents................................... (10,542) 44,750 | (864)
Cash and cash equivalents at beginning of |
period........................................ 11,404 2,114 | 2,978
----------- ----------- |-------------
Cash and cash equivalents at end of period...... $ 862 $ 46,864 | $ 2,114
----------- ----------- |-------------
----------- ----------- |-------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
5
<PAGE>
KEEBLER CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
THE CONSOLIDATED FINANCIAL STATEMENTS OF KEEBLER CORPORATION ("THE COMPANY")
INCLUDE THE FINANCIAL STATEMENTS OF UB INVESTMENTS US, INC. ("UBIUS"), THE
PREDECESSOR COMPANY, FOR THE FOUR WEEKS ENDED JANUARY 26, 1996, THE DATE THE
COMPANY WAS ACQUIRED BY INFLO HOLDINGS CORPORATION ("INFLO"), AND THE SUCCESSOR
COMPANY FOR THE SIXTEEN WEEKS ENDED APRIL 19, 1997 AND THE TWELVE WEEKS ENDED
APRIL 20, 1996. THE DISTINCTION BETWEEN THE PREDECESSOR COMPANY'S AND THE
SUCCESSOR COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS HAS BEEN MADE BY INSERTING
A DOUBLE LINE BETWEEN SUCH CONSOLIDATED FINANCIAL STATEMENTS. THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE FOUR WEEKS ENDED JANUARY 26, 1996 INCLUDE "THE
FROZEN FOOD BUSINESSES", DEFINED AS BERNARDI ITALIAN FOODS CO., THE ORIGINAL
CHILI BOWL, INC., AND CHINESE FOOD PROCESSING CORPORATION, ALL OF WHICH WERE
WHOLLY OWNED SUBSIDIARIES OF UBIUS PRIOR TO THEIR SALE ON DECEMBER 31, 1995.
1. BASIS OF PRESENTATION
INTERIM FINANCIAL STATEMENTS
The unaudited interim consolidated financial statements included herein were
prepared pursuant to the rules and regulations for interim reporting under the
Securities Exchange Act of 1934. Accordingly, certain information and footnote
disclosures normally accompanying the annual financial statements were omitted.
The interim consolidated financial statements and notes should be read in
conjunction with the annual audited consolidated financial statements and notes
thereto. The accompanying unaudited interim consolidated financial statements
contain all adjustments, consisting only of normal adjustments, which in the
opinion of management were necessary for a fair statement of the results for the
interim periods. Results for the interim periods are not necessarily indicative
of results for the full year.
FISCAL PERIODS PRESENTED
The Company's fiscal year consists of thirteen four-week periods (52 or 53
weeks) and ends on the Saturday nearest December 31. The first quarter consists
of four four-week periods. In 1996, the acquisition of Keebler Corporation
closed on the last day of the first four-week period. The 1996 year-to-date
information can be derived from the sum of the twelve weeks ended April 20, 1996
of Keebler Corporation and the four weeks ended January 26, 1996 of UBIUS.
RECLASSIFICATIONS
Certain reclassifications of prior period data have been made to conform with
the current period reporting.
2. ASSETS HELD FOR SALE
Subsequent to the acquisition of Sunshine Biscuits, Inc. ("Sunshine"),
management decided to close and sell the production plant in Santa Fe Springs,
California. The land and buildings, which were valued at a fair market value of
$3.6 million as of the date of acquisition, were sold on March 27, 1997. No gain
or loss was recognized from the sale of the idle facility.
6
<PAGE>
KEEBLER CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
3. DEBT COMMITMENTS
Long-term debt consisted of the following at April 19, 1997:
<TABLE>
<CAPTION>
Interest
Rate Final Maturity APRIL 19, 1997
------------ ---------------------- --------------
(IN THOUSANDS)
<S> <C> <C> <C>
Revolving Loans............................................ Floating December 28, 2002 $ 32,816
Term Note.................................................. 6.938% December 28, 2002 240,000
Senior Subordinated Notes.................................. 10.750% June 15, 2006 125,000
Other Senior Debt.......................................... various 2001-2005 18,225
--------------
416,041
Less: Current maturities................................... (54,086)
--------------
$ 361,955
--------------
--------------
</TABLE>
On April 8, 1997, the Company amended its primary credit financing facility in
order to obtain more favorable terms, fees, and interest rates. The Second
Amended and Restated Credit Agreement ("Credit Agreement") specifically provides
for available borrowings of $380.0 million consisting of a $140.0 million
Revolving Loan facility and a $240.0 million Term Note. As of April 19, 1997,
the current outstanding balance aggregated to $272.8 million of which $32.8
million represented borrowings under the Revolving Loan facility.
Any unused borrowings under the Revolving Loan facility are subject to a
commitment fee, which will vary from 0.200% - 0.375% based on the relationship
of debt to adjusted earnings.
In conjunction with the amendment to the Credit Agreement, Term Notes B and C
were extinguished by using $40.0 million of borrowings under the Revolving Loan
facility, $109.8 million of increased borrowings against Term Note A, and $3.8
million from cash resources. The Company recorded a before-tax extraordinary
charge of $4.6 million related primarily to expensing certain bank fees which
were being amortized and which were incurred at the time Term Notes B and C were
issued. The related after-tax charge was $2.7 million.
7
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
SET FORTH BELOW IS A DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE SIXTEEN WEEKS ENDED APRIL 19, 1997 AND APRIL 20, 1996. THE
SIXTEEN WEEKS ENDED APRIL 20, 1996 INCLUDE BOTH THE TWELVE WEEKS OF KEEBLER
CORPORATION UNDER CURRENT MANAGEMENT AND THE FOUR WEEKS ENDED JANUARY 26, 1996
OF UBIUS UNDER FORMER MANAGEMENT. THE FIRST FOUR WEEKS OF 1996 INCLUDE THE
FROZEN FOOD BUSINESSES WHICH WERE PRESENTED AS A DISCONTINUED OPERATION. THE
FROZEN FOOD BUSINESSES WERE SOLD BY UBIUS PRIOR TO THE ACQUISITION OF UBIUS BY
INFLO. SUBSEQUENT TO THE ACQUISITION, UBIUS CHANGED ITS NAME TO KEEBLER
CORPORATION. THE FOLLOWING DISCUSSION OF RESULTS OF OPERATIONS AND LIQUIDITY AND
CAPITAL RESOURCES SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED FINANCIAL
STATEMENTS OF KEEBLER CORPORATION AND UBIUS AND RELATED NOTES THERETO APPEARING
ELSEWHERE.
RESULTS OF OPERATIONS
MATTERS AFFECTING COMPARABILITY
The Company's results of operations for the sixteen weeks ended April 19, 1997
include the operating results of Sunshine whereas the comparable sixteen weeks
of the prior year do not as the acquisition of Sunshine occurred on June 4,
1996. The Company's results for the twelve weeks ended April 20, 1996 have been
combined with the operating results of the predecessor company for the first
four weeks ended January 26, 1996 to compare the first sixteen weeks of 1997 and
1996. Results of operations expressed as a percentage of net sales for the
sixteen weeks ended April 19, 1997 and April 20, 1996 are set forth below:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Sixteen Weeks Ended
------------------------
April 19, April 20,
1997 1996
----------- -----------
<S> <C> <C>
NET SALES.......................................................................... 100.0% 100.0%
COSTS AND EXPENSES:
Cost of sales.................................................................... 43.5 48.6
Selling, marketing, and administrative expenses.................................. 51.7 54.3
Other............................................................................ 0.5 0.4
----- -----
INCOME (LOSS) FROM CONTINUING OPERATIONS........................................... 4.3 (3.3)
INTEREST EXPENSE, NET.............................................................. 2.0 1.7
----- -----
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE................. 2.3 (5.0)
Income tax expense............................................................... 1.0 0.5
----- -----
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE EXTRAORDINARY ITEM................. 1.3 (5.5)
DISCONTINUED OPERATIONS:
Gain on disposal of the Frozen Food businesses, net of tax....................... -- 4.4
----- -----
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM............................................ 1.3 (1.1)
EXTRAORDINARY ITEM:
Loss on early extinguishment of debt, net of tax................................. (0.4) --
----- -----
NET INCOME (LOSS).................................................................. 0.9% (1.1)%
----- -----
----- -----
</TABLE>
- --------------------------------------------------------------------------------
8
<PAGE>
NET SALES. Net sales for the sixteen weeks ended April 19, 1997 were $597.0
million, an increase of $160.1 million or 36.6% over net sales for the
comparable period in 1996. The first sixteen weeks of 1996 did not include sales
of Sunshine products as the acquisition did not occur until June 1996. After
adjusting for the impact of 1997 Sunshine revenues, net sales for the first
quarter were flat compared to the first quarter of 1996. In 1997, the Company
continued to focus on shifting its sales mix to core brands, while discontinuing
or repositioning several less strategic products. Increased volume from the core
brands, along with selected price increases, offset revenue losses associated
with discontinued or de-emphasized products, or brands repositioned at higher
price points.
GROSS PROFIT. Gross profit as a percentage of net sales was 56.5% for the first
quarter of 1997 up 5.1 percentage points over the year-earlier quarter. Changes
in the Company's sales mix, lower commodity and purchasing material prices, and
lower overhead costs contributed to improved gross profit margins. Favorable
commodity prices were principally associated with flour and oils, while lower
packaging material prices were principally associated with cartons, soft
corrugated, and flexible packaging materials. Reductions in overhead spending
were realized due to higher utilization of production capacity, cost reductions
at the bakeries, and a more efficient balancing of internal and co-packing
arrangements.
SELLING, MARKETING, AND ADMINISTRATIVE EXPENSES. Selling, marketing, and
administrative expenses increased $71.5 million, but decreased 2.6 percentage
points as a percent of net sales in the first quarter of 1997 compared to the
first quarter of 1996. Overall, selling, marketing, and administrative spending
increased due to the inclusion of the Sunshine business. The additional Sunshine
volume contributed to the higher variable trade marketing and sales force
spending in 1997. Selling, marketing, and administrative expenses were lower as
a percent of sales primarily due to higher volumes and a more efficient fixed
cost structure in the sales and distribution network.
OTHER. Other expense for the sixteen weeks ended April 19, 1997 was $2.9
million compared to $1.8 million for the sixteen weeks ended April 20, 1996.
Other expense in 1997 consisted primarily of $2.1 million of amortization of
intangibles resulting from both the Keebler and Sunshine acquisitions, and $0.7
million in bank service fees. During the first quarter of 1997, other expense
was higher as compared to the same quarter a year ago due primarily to the
amortization of intangibles resulting from the Sunshine acquisition, which did
not occur until the second quarter of 1996, and an increase in bank service fees
directly related to an overall higher debt structure due to the Sunshine
acquisition.
INCOME (LOSS) FROM CONTINUING OPERATIONS. Income from continuing operations was
$25.6 million for the sixteen weeks ended April 19, 1997, an improvement of
$39.8 million over the loss of $14.2 million from continuing operations for the
same period in 1996. The increase was due primarily to the inclusion of the
Sunshine business, increased gross profit margins, and more efficient selling
and distribution expenses. The total benefits realized more than offset the
incremental amortization and other expenses recorded as a result of the
acquisitions.
INTEREST EXPENSE. Net interest expense was $11.6 million for the first quarter
of 1997 compared to $7.6 million for the comparable period in the prior year.
The increase was primarily due to an increase in the average debt balance in the
first quarter of 1997 over the first quarter of 1996.
INCOME TAXES. The Company provided for income taxes at an effective tax rate of
42% for the sixteen weeks ended April 19, 1997. The effective tax rate exceeded
the statutory rate due to nondeductible expenses (principally amortization of
intangibles, including trademarks, tradenames, and goodwill).
DISCONTINUED OPERATIONS. The predecessor company had adopted plans to
discontinue the operations of the Frozen Food businesses, and in the first four
weeks of 1996, a gain of $18.9 million, net of income taxes, was recognized on
the disposal of the Frozen Food businesses.
9
<PAGE>
EXTRAORDINARY ITEM NET OF INCOME TAXES. An after-tax extraordinary charge of
$2.7 million on the early extinguishment of debt was recorded in the first
quarter of 1997. The charge consisted of the write-off of unamortized bank fees
associated with the extinguishment of certain term notes used to finance the
acquisition of the Company and to complete the acquisition of Sunshine. The tax
benefit on the extraordinary charge was $1.9 million.
NET INCOME (LOSS). Net income of $5.4 million for the sixteen weeks ended April
19, 1997 was up $10.3 million from the net loss of $4.9 million in the
comparable period a year ago. The improvement was primarily attributed to the
inclusion of the Sunshine business, improved gross margins, and more efficient
selling and distribution expenses.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided from operating activities was $9.0 million for the first quarter
of 1997. Net income of $5.4 million was offset by an increased investment in
inventories of $15.9 million and $9.9 million in spending on plant and facility
closing costs and severance. The increase in inventories reflected a
replenishment of stocks after the seasonal high selling period associated with
the fourth quarter and a build to meet the expected sales demand. Spending on
plant and facility closing costs and severance related to exit costs associated
with the acquisition of both Keebler Corporation and Sunshine.
Cash used by investing activities in the first quarter of 1997 was $4.3 million.
Capital expenditures were $8.3 million in 1997 due to the enhancements made to
existing production lines and projects designed to achieve near-term cost
savings. Proceeds from asset disposals were $3.9 million in the first sixteen
weeks of 1997 principally due to cash received on the sale of the Santa Fe
Springs plant.
Cash flows used by financing activities were $15.2 million. During the first
quarter of 1997, the Company entered into the Second Amended and Restated Credit
Agreement under which term notes of $153.6 million were extinguished. The
extinguishment was funded primarily by a $40.0 million draw down on the
Revolving Loan facility and $109.8 million of additional borrowings against
other term notes. The remaining cash used by financing activities related to
repayments on other debt and the Revolving Loan facility.
As of April 19, 1997, cash and cash equivalents were $0.9 million, long-term
debt was $362.0 million and current maturities were $54.1 million. Available
borrowings under the Company's Revolving Loan facility were $140.0 million of
which $32.8 million was outstanding as of April 19, 1997. The Company more than
adequately met all financial covenants contained in its financing agreements.
The Company expects that available cash as well as existing short-term credit
facilities will be sufficient to meet its normal operating requirements for the
foreseeable future.
FORWARD-LOOKING STATEMENTS
When used in this discussion, the words "believes" and "expects" and similar
expressions are intended to identify forward-looking statements. Such statements
are subject to certain risks and uncertainties, over which the Company may have
no control, which could cause actual results to differ materially from those
projected. Readers are cautioned not to place undue reliance on these
forward-looking statements which speak only as of the date hereof. The Company
undertakes no obligations to republish revised forward-looking statements to
reflect events or circumstances after the date thereof or to reflect the
occurrence of unanticipated events. Readers are also urged to carefully review
and consider the various disclosures made by the Company, in this report, as
well as the Company's periodic reports filed with the Securities and Exchange
Commission.
10
<PAGE>
PART II: OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------------- --------------------------------------------------------------------------------------
<C> <S>
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K
None.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
KEEBLER CORPORATION
<TABLE>
<S> <C> <C>
By: /s/ SAM K. REED
------------------------------------------
Sam K. Reed
President and Chief Executive Officer
Date: May 23, 1997
By: /s/ E. NICHOL MCCULLY
------------------------------------------
E. Nichol McCully
Sr. Vice President and Chief Financial
Officer
Date: May 23, 1997
By: /s/ JAMES T. SPEAR
------------------------------------------
James T. Spear
Vice President Finance and Corporate
Controller
Chief Accounting Officer
Date: May 23, 1997
</TABLE>
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Keebler
Corporation Consolidated Balance Sheet at April 19, 1997 and Consolidated
Statement of Operations for the sixteen weeks ended April 19, 1997 found on
pages 2 through 4 of the Company's Form 10-Q, and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-START> DEC-29-1996
<PERIOD-END> APR-19-1997
<CASH> 862
<SECURITIES> 0
<RECEIVABLES> 134,564
<ALLOWANCES> 5,538
<INVENTORY> 128,559
<CURRENT-ASSETS> 334,921
<PP&E> 540,040
<DEPRECIATION> 59,782
<TOTAL-ASSETS> 1,084,123
<CURRENT-LIABILITIES> 351,161
<BONDS> 361,955
0
0
<COMMON> 1,000
<OTHER-SE> 195,069
<TOTAL-LIABILITY-AND-EQUITY> 1,084,123
<SALES> 597,034
<TOTAL-REVENUES> 597,034
<CGS> 260,019
<TOTAL-COSTS> 568,562
<OTHER-EXPENSES> 2,920
<LOSS-PROVISION> 4,790
<INTEREST-EXPENSE> 11,625
<INCOME-PRETAX> 13,927
<INCOME-TAX> 5,839
<INCOME-CONTINUING> 8,088
<DISCONTINUED> 0
<EXTRAORDINARY> (2,692)
<CHANGES> 0
<NET-INCOME> 5,396
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
