SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
X of the Securities Exchange Act of 1934.
For the quarterly period ended September 30, 1995 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 01912
VACU-DRY COMPANY
(Exact name of registrant as specified in its charter)
California 94-1069729
(State of incorporation) (IRS Employer
Identification #)
7765 Healdsburg Ave., Sebastopol, California 95472
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 707/829-4600
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:____
As of September 30, 1995, there were 1,701,910 shares of common stock, no par
value, outstanding.
<PAGE>
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
The financial statements herein presented for the quarters ended September
30, 1995 and 1994, reflect all the adjustments that in the opinion of
management are necessary for the fair presentation of the financial position
and results of operations for the period then ended. All adjustments during
the periods presented, are of a normal recurring nature.
Liquidity and Capital Resources
Because the Company's operations are seasonal in nature, the Company's liquid
resources fluctuate during the year in a way that changes very little from
year to year. The inventory and accounts payable balances are normally at
their lowest level as of the end of the fiscal year and their highest level
as of the end of the second quarter. This seasonal increase in the accounts
payable balance results in a temporary increase in the Debt to Equity ratio.
Normally during the first quarter of the fiscal year the inventory levels
increase as a result of the beginning of the production season for apples.
Adverse weather conditions earlier this year resulted in a poor local apple
crop and a late start in production. As a result of this late start, the
inventory level did not increase in the first quarter of the current fiscal
year. The net working capital increased from $3,775,000 as of June 30, 1995
to $3,882,000 as of September 30, 1995. These levels are very comparable
with September 30, 1994 of $3,875,000. The increase in the Borrowings Under
the Line of Credit from September 30, 1994 to September 30, 1995 of
$1,185,000 was a result of an increase in the accounts receivable balance
of $1,182,000 during the same period. The Borrowings Under the Line of Credit
will decline as the accounts receivable balance decreases.
The Company's liquidity resources are obtained from external and internal
sources. The Company's largest external source is a revolving line of credit
provided by a bank at the Bank's prime rate. The Company has a revolving line
of credit limit of $4,000,000 secured by inventory and accounts receivable.
As of September 30, 1995, the Company had $2,237,000 of available funds under
this revolving line of credit. During the prior fiscal year the revolving
line of credit limit was increased to $4,000,000. The current availablity of
$2,237,000 compares with $2,422,000 of available funds (on a $3,000,000
limit) as of September 30, 1994. As of September 30, 1995, the Company was
in compliance with all of the covenants and restrictions related to its
outstanding debt. The most significant source of internal liquidity is the
Company's net working capital. One source of long term liquidity is the sale
of the idle production facility, although the Company is not relying on the
sale of this facility as a source of liquidity, the Company's short and long-
term liquidity would materially increase upon such a sale. The Company has
leased the majority of the idle facility on a short and long-term basis.
<PAGE>
-2-
The Company has established a capital expenditure budget of approximately
$537,000 for the 1995-1996 fiscal year. The Company anticipates financing
these assets through internally generated funds and possibly the use of debt
financing. At this time the Company has not leased the area occupied by
Product Development at the idle facility and thus to conserve cash the
Company is deferring this relocation until this area is either leased or the
entire facility is sold. The capital expenditure budget will be used to
refurbish existing equipment and to purchase some new equipment.
The Board of Directors have suspended the quarterly cash dividend and stock
repurchase plan.
Results of Operations
Net sales increased $255,000 or 4% in the first quarter of fiscal 1996. The
sales increased as a result of volume rather than price.
Cost of sales as a percentage of net sales increased from 85% in 1994 to 92%
in 1995. The smaller apple crop resulted in a late start in production and
consequently less factory overhead was absorbed during the quarter. This
lack of absorption resulted in the increase to cost of sales. In comparison
with the first quarter of the past two years, the Company processed
significantly less tonnage this period and as a result we did not have the
excess absorption of overhead to set aside in the Deferred Factory Overhead
reserve. By comparison, in the first quarter of the past two years the Company
established a reserve of $150,000 each year. To achieve the same balance in
the Deferred Factory Overhead Reserve as in the past two years, the Company
will need to materially increase the absorption of overhead in the next
quarter. The Deferred Factory Overhead Reserve is normally accumulated in
the first and second quarter to offset the lower production level in the
fourth quarter. Failure to accumulate an adequate reserve would have an
adverse effect on the earnings for the fourth quarter.
Selling, general and administrative expenses decreased $190,000 or 30% in the
first quarter. This decrease is a result of numerous factors, including; the
effects of the staff reductions, lower legal fees as a result of settlement of
the pending ligitaion, decreased expenses related to the SAR plan and other
miscellaneous expense reductions.
Interest expense increased $28,000 because of the increased borrowings under
the line of credit.
<PAGE>
-3-
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
There are no legal proceedings pending.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders during
the period covered by this report.
Item 6. Exhibits & Reports on Form 8-K
a. Exhibits - none
b. Reports on Form 8-K - none<PAGE>
VACU-DRY COMPANY
CONDENSED STATEMENT OF EARNINGS
(UNAUDITED)
Three Months Three Months
Ended Ended
9/30/95 9/30/94
REVENUES:
Net sales $6,479,000 $6,224,000
Other 60,000 120,000
Total revenue $6,539,000 $6,344,000
COST & EXPENSES
Cost of sales 5,934,000 5,302,000
Selling, general &
administration 437,000 627,000
Interest 96,000 68,000
$6,467,000 $5,997,000
EARNINGS BEFORE INCOME TAXES 72,000 347,000
PROVISION FOR INCOME TAXES 29,000 139,000
NET EARNINGS $ 43,000 $ 208,000
EARNINGS PER COMMON SHARE $.03 $.12
WEIGHTED AVERAGE COMMON SHARES
OUSTANDING 1,698,072 1,699,605
See notes to interim financial statements
<PAGE>
VACU-DRY COMPANY
Balance Sheets
(Unaudited)
(Dollars in thousands)
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<C> <C> <C> <C>
CURRENT ASSETS: 9/30/95 6/30/95 CURRENT LIABILITIES: 9/30/95 6/30/95
Cash $ 215 $ 187 Borrowings under line of credit $ 1,763 $2,351
Accounts receivable 2,769 1,679 Current maturities of long-term debt 480 480
Other receivables 161 155 Accounts payable 2,045 393
Inventories 5,369 5,414 Accrued payroll & related liabilities 621 524
Prepaid expenses 264 176 Accrued expenses 261 391
Current deferred taxes 303 303 Deferred factory overhead -0- -0-
_____ _____ Income taxes payable 29 -0-
Total current assets 9,081 7,914
_____ _____
Net property, plant & Total current liabilities $5,199 $4,139
equipment 7,252 7,421
LONG-TERM DEBT - Net of
current maturities 1,985 2,105
DEFERRED INCOME TAXES 912 912
SHAREHOLDERS' EQUITY:
Capital stock 3,952 3,936
Retained earnings 4,285 4,243
Total shareholders' equity 8,237 8,179
______ ______ Total liabilities and ______ ______
Total Assets $16,333 $15,335 shareholders' equity $16,333 $15,335
See notes to interim financial statements
<PAGE>
VACU-DRY COMPANY
STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 43,000 $ 208,000
__________ __________
Adjustments to reconcile net earnings to net
cash provided by operating activities -
Depreciation expense 229,000 207,000
Changes in certain assets & liabilities
(Increase) in receivables (1,096,000) (65,000)
Decrease (increase) in inventories 45,000 (2,160,000)
(Increase) in prepared assets (88,000) (6,000)
Increase in accounts payable 1,652,000 1,413,000
Increase (decrease) in accrued expenses (131,000) 248,000
Increase in payroll & related liabilities 97,000 161,000
Increase in deferred overhead -0- 150,000
Increase in income taxes payable 29,000 101,000
__________ _________
Total adjustments 737,000 49,000
Net cash provided by (used for) operating activities 780,000 257,000
_______ ________
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (60,000) (543,000)
_______ ________
Net cash used for investing activities (60,000) (543,000)
_______ ________
CASH FLOWS FROM FINANCING ACTIVITIES:
Additional borrowings under the line of credit 2,713,000 1,863,000
Payments on line of credit (3,301,000) (1,565,000)
Quarterly Dividend of $.05 per share -0- (85,000)
Employee purchase of Company stock 16,000 40,000
Principal payments of long-term debt (120,000) (119,000)
__________ __________
Net cash used by financing activities (692,000) 134,000
__________ __________
NET INCREASE (DECREASE) IN CASH 28,000 (152,000)
CASH AT THE BEGINNING OF THE YEAR 187,000 419,000
__________ __________
TOTAL CASH AT THE END OF THE PERIOD $ 215,000 $ 267,000
See notes to interim financial statements
<PAGE>
VACU-DRY COMPANY
NOTES TO INTERIM FINANCIAL STATEMENTS
THREE MONTHS ENDED SEPTEMBER 30, 1995
Note 1 - The Interim Financial Statements herein presented for the
three months ended September 30, 1995, reflect all adjustments
which are in the opinion of management necessary to a fair
statement of the results of operations for the period then
ended. The statements are unaudited and are not necessarily
indicative of results for the full year.
Note 2 - Inventories -
Inventories are stated at the lower of cost, using the last-
in, first-out (LIFO) method or market.
The excess of current cost of the inventory over LIFO cost
was $1,334,000 at September 30, 1995 and $1,334,000 at
June 30, 1995.
Inventories at September 30, 1995 and June 30, 1995, consisted
of the following:
9/30/95 6/30/95
Finished goods $4,174,000 $4,926,000
Work in progress 252,000 239,000
Raw materials, & containers 943,000 249,000
__________ __________
$5,369,000 $5,414,000
Note 3 - Statement of Cash Flows -
Interest and income tax payments reflected in the Consolidated
Statement of Cash Flows were as follows:
1995 1994
Interest paid $100,000 $68,000
Income taxes paid - 0 - - 0 -
Note 4 - Income Taxes -
The effective income tax rate for 1995 is 40%, which compares
to 40% for 1994. There were no federal or state tax operating
loss carryforwards for book or tax purposes at September 30,
1995.
<PAGE>
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.
VACU-DRY COMPANY
Date: November 13, 1995 (Donal Sugrue)
_______________________
Donal Sugrue, President
Date: November 13, 1995 (Tom Eakin)
_______________________
Tom Eakin, VP, Finance
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 10Q FOR
THE QUARTER ENDED SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> SEP-30-1995
<CASH> 215,000
<SECURITIES> 0
<RECEIVABLES> 2,930,000
<ALLOWANCES> 0
<INVENTORY> 5,369,000
<CURRENT-ASSETS> 9,081,000
<PP&E> 16,871,000
<DEPRECIATION> 9,619,000
<TOTAL-ASSETS> 16,333,000
<CURRENT-LIABILITIES> 5,199,000
<BONDS> 2,897,000<F1>
<COMMON> 3,952,000
0
0
<OTHER-SE> 4,285,000<F2>
<TOTAL-LIABILITY-AND-EQUITY> 16,333,000
<SALES> 6,479,000
<TOTAL-REVENUES> 6,539,000
<CGS> 5,934,000
<TOTAL-COSTS> 6,371,000<F3>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 96,000
<INCOME-PRETAX> 72,000
<INCOME-TAX> 29,000
<INCOME-CONTINUING> 29,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 43,000
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
<FN>
<F1>TOTAL LONG-TERM DEBT(INCLUDING DEFERRED TAXES OF $912,000)
<F2>RETAINED EARNINGS
<F3>INCLUDES S,G & A OF $437,000
</FN>
</TABLE>
