UNITED STATES
SECURITIES & EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended May 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-5858
UNIVAR CORPORATION
A Delaware I.R.S. Employer
Corporation No. 91-0816142
6100 Carillon Point
Kirkland, Washington 98033
Telephone No. (206) 889-3400
Indicate by a 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 ____
On June 20, 1995 the Registrant had outstanding 21,652,084 shares
(excluding treasury shares) of common stock of $0.33-1/3 par value,
which is the Registrant's only class of common stock.
UNIVAR CORPORATION and Subsidiaries
INDEX TO FORM 10-Q
PAGE NO.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
May 31, 1995 and February 28, 1995 3
Consolidated Statements of Operations
Three Months Ended May 31, 1995 and 1994 4
Condensed Consolidated Statements of Cash Flows
Three Months Ended May 31, 1995 and 1994 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 9
SIGNATURES 10
UNIVAR CORPORATION and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited) (See Notes)
(000's) May 31, 1995 February 28, 1995
Assets
Current Assets:
Cash and cash equivalents $25,423 $19,516
Receivables - net 305,087 243,899
Inventories 156,232 133,282
Other current assets 12,456 10,551
------- -------
Total current assets 499,198 407,248
Real Properties Held for
Sale
and Long Term Receivables 30,074 28,780
Property, Plant and 208,684 208,355
Equipment - net
Other Assets 28,960 28,820
-------- --------
$766,916 $ 673,203
======== =========
Liabilities and
Shareholders' Equity
Current Liabilities:
Bank overdrafts $ 18,223 $ 19,584
Notes payable 48,489 36,284
Current portion of long- 671 3,978
term debt
Accounts payable 297,103 222,675
Accrued liabilities 50,417 48,119
--------- --------
Total current 414,903 330,640
liabilities
Long-term Debt 122,565 122,086
Other Long-term Liabilities 46,378 44,314
Shareholders' Equity
Common stock 8,006 8,006
Additional paid-in capital 107,814 107,799
Retained earnings 80,564 74,428
Cumulative translation
adjustment -2,652 -4,909
Treasury stock -10,610 -9,087
Deferred stock
compensation expense -52 -74
-------- --------
Total shareholders' 183,070 176,163
equity
-------- --------
$766,916 $673,203
======== ========
UNIVAR CORPORATION and Subsidiaries
Consolidated Statements of Operations (Unaudited) (See Notes)
Three Months Ended
May 31,
(000's except share data) 1995 1994
Sales $552,932 $503,335
Cost of Sales 475,003 432,075
-------- --------
Gross Margin 77,929 71,260
Gross Margin Percentage 14.1% 14.2%
Operating Expenses 61,626 61,052
Reengineering Costs - 3,467
------- -------
Income from Operations 16,303 6,741
Other Income (Expense):
Interest expense -3,431 -2,941
Other income-net 548 50
------- -------
Income Before Provision for
Taxes and
Minority Interest 13,420 3,850
Provision for Taxes on 5,650 1,968
Income
------- -------
Income before Minority 7,770 1,882
Interest
Minority Interest in Univar - 385
Europe
------- -------
Net Income $ 7,770 $ 1,497
======= =======
Net Income per Share $ 0.36 $ 0.08
======= ======
Dividends per Share $ 0.075 $ 0.075
======= =======
Weighted Average Number of 21,793 20,060
Shares Outstanding ======= =======
UNIVAR CORPORATION and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited) (See Notes)
Three Months Ended
May 31,
(000's) 1995 1994
Cash Flows Provided (Used) by
Operating Activities:
Net Income $7,770 $1,497
Adjustments to reconcile
net income to net cash
provided by operating activities:
Depreciation and 7,388 6,870
amortization
Other -194 1,525
Changes in assets and
liabilities:
Accounts receivable -55,076 -50,663
Inventories -18,857 -11,024
Accounts payable 66,234 49,301
Other current assets -285 287
Other current
liabilities 2,083 -166
-------- --------
Net Cash Provided (Used) by 9,063 -2,373
Operating Activities
-------- --------
Cash Flows Used by Investing
Activities:
Investment activity -1,249 321
Additions to property, -4,507 -4,243
plant, and equipment
Changes in other assets -455 98
-------- --------
Net Cash Used by Investing -6,211 -3,824
Activities
-------- --------
Cash Flows Provided by
Financing Activities:
Short-term borrowing - net 8,426 5,200
Common stock activity -39 37,432
Long-term debt incurred 0 393
Reduction in long-term debt -3,491 -28,440
Payment of dividends -3,270 -2,947
-------- --------
Net Cash Provided by 1,626 11,638
Financing Activities
-------- --------
Effect of exchange rate 1,429 125
changes on cash
-------- --------
Net Cash Provided 5,907 5,566
Cash and Cash Equivalents at 19,516 15,530
Beginning of Period
-------- --------
Cash and Cash Equivalents at $25,423 $ 21,096
End of Period ======= ========
UNIVAR CORPORATION and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. Basis of presentation
The accompanying unaudited condensed consolidated financial
statements were prepared in accordance with generally accepted
accounting principles for interim financial information pursuant to
the rules and regulations of the Securities and Exchange Commission
and instructions to Form 10-Q. While these statements reflect all
adjustments (which consist of normal recurring accruals) which are,
in the opinion of management, necessary to a fair presentation of
the results for the interim periods presented, they do not include
all of the information and disclosures required by generally
accepted accounting principles for complete financial statements.
These statements should be read in conjunction with the financial
statements and notes thereto included in the Annual Report of the
Registrant for the fiscal year ended February 28, 1995, and filed
as Item 8 to Form 10-K, Commission File No. 1-5858.
Results of operations for interim periods are not necessarily
indicative of the results that may be expected for the year ending
February 29, 1996.
2. LIFO inventory
The LIFO method of pricing is used for approximately 61% of
the Registrant's inventory. Because an actual valuation of
inventory under the LIFO method can be made only at the end of each
fiscal year based on the inventory levels and costs at that time,
interim financial results are based on estimated LIFO adjustments
and are subject to final fiscal year-end LIFO inventory amounts.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Net earnings for the first fiscal quarter were $7.8 million. Last year,
first quarter net income of $1.5 million included $2.1 million, net of
tax, in costs related to the Corporation's program to reengineer its
U.S. operations. Excluding these non-recurring costs, comparable income
for the first quarter last year was $3.6 million.
Total sales for the quarter were $552.9 million, an increase of 9.9%
over the first quarter last year. In the United States, sales increased
by 1.3%. Foreign operations in markets served by Univar demonstrated
very strong growth for the first quarter. Canadian sales were up more
than 21%, and in Europe, a combination of strong growth and favorable
currency exchange rates resulted in sales growth of more than 31%.
Gross margin dollars increased by 9.4% for the quarter. The gross margin
percentage decreased slightly to 14.1% compared with 14.2% for the first
quarter last year. The decrease in margin percentage is due to an
increase of lower margin agricultural, bulk and commodity chemical sales
in Canada. Margin percentage in the U.S. increased while margin
percentage in Europe remained constant compared with last year's first
quarter.
Total operating expenses for the quarter were $61.6 million, compared
with $64.5 million for the first quarter last year. Expenses for the
first quarter this year were lower as a result of reversing $1.5 million
in unearned executive incentive compensation related to last year. In
the first quarter last year, total expenses included $3.5 million
related to the corporation's program to reengineer its U.S. operations.
Excluding these non-recurring reductions and costs, operating expenses
increased by 2.8% to $63.1 million, or 11.4% of sales, compared with
$61.1 million, or 12.1% of sales in the first quarter last year. As a
percentage of sales, operating expenses decreased in each of the
corporation's operations, worldwide.
The Corporation is involved in certain elective and required
environmental programs. The following table shows additions to and
expenditures charged against the Corporation's environmental accruals
for the current and prior year comparable quarters.
Three months ended
May 31,
(000's) 1995 1994
Beginning $17.0 $15.5
balance
Expense 1.4 1.5
provisions
Expenditures -1.0 -0.7
----- ----
Ending balance $17.4 $16.3
===== =====
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS, continued
Taxes were provided at an effective rate of 42.1% compared with a
provision rate of 51.1% for the first quarter last year. The average
effective tax rate is impacted by the proportion of taxable income
generated in Canada where the marginal tax rate is 44% compared with 38%
in the U.S. The proportion of taxable income from Canadian operations
decreased significantly for the first quarter this year compared to last
year.
Liquidity and Capital Resources
Working capital at the end of the first quarter was $84.3 million, up
from $74.5 million at the prior year-end. Over the same period, the
current ratio decreased to 1.20:1 compared with 1.23:1 The change in
working capital is due in part to seasonal fluctuations in working
capital components related to agricultural sales.
Cash flow used by operations totaled $9.1 million for the quarter,
compared to $2.4 million for the first quarter last year. The
fluctuation for the quarter reflects changes in components of working
capital which are consistent with the significant increase in sales.
The Corporation has domestic and foreign short-term credit lines
totaling $124.3 million, of which $75.7 million was available at quarter-
end. The Corporation also had access to funds up to $210 million under
a medium-term revolving credit agreement with a group of banks, of which
$110 million was available at quarter-end. Subsequent to quarter-end,
the Corporation completed its negotiations with a group of banks to
establish a $90 million multi-currency revolving credit agreement. This
agreement provides for the credit needs of the Corporation's non-U.S.
subsidiaries. In conjunction with the signing of the new agreement,
capacity under the existing U.S. revolving credit agreement was reduced
to $195 million, and is anticipated to be further reduced during the
third quarter. The Corporation believes its internally generated cash,
together with its access to bank lines, will be adequate to fund planned
capital expenditures, investments, and to support working capital
requirements.
Capital Expenditures
During the first quarter of this fiscal year, additions to property,
plant, and equipment totaled $4.5 million, compared with $4.2 million
for the prior year quarter. Current quarter additions consisted
primarily of normal replacement and upgrading of fixed assets and
construction expenditures for refurbishing warehouse and office
facilities. The Corporation utilized available cash to fund the capital
expenditures.
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
There have been no reports on Form 8-K filed, or required to be filed,
during the quarter for which this report is filed.
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 thereunto duly authorized.
UNIVAR CORPORATION
Date: June 29,1995 By: \ JAMES W.BERNARD
James W. Bernard
President and Chief Executive Officer
(Duly Authorized Officer)
Date: June 29, 1995 By: \ GARY E. PRUITT
Gary E. Pruitt
Vice President - Finance and Treasurer
(Principal Financial and Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS FOR THE PERIOD ENDED MAY 31, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-END> MAY-31-1995
<CASH> 25,423,000
<SECURITIES> 0
<RECEIVABLES> 306,975,000
<ALLOWANCES> (1,888,000)
<INVENTORY> 156,232,000
<CURRENT-ASSETS> 12,456,000
<PP&E> 376,262,000
<DEPRECIATION> (167,578,000)
<TOTAL-ASSETS> 766,916,000
<CURRENT-LIABILITIES> 414,903,000
<BONDS> 0
<COMMON> 8,006,000
0
0
<OTHER-SE> 175,064,000
<TOTAL-LIABILITY-AND-EQUITY> 766,916,000
<SALES> 552,932,000
<TOTAL-REVENUES> 552,932,000
<CGS> 475,003,000
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