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 March 31, 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 March 31, 1995, there were 1,704,495 shares of common stock, no par
value, outstanding.
<PAGE>
PART I
FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
The financial statements herein presented for the quarters ended March 31,
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.
The increase in the inventory from the June 30, 1994 balance was funded
primarily by the increase in the borrowing under the line credit. The net
working capital as of March 31, 1995 of $3,445,000 declined $722,000 from the
June 30, 1994 balance of $4,167,000 . The net working capital of $3,445,000
as of March 31, 1995 compares to $3,445,000 as March 31, 1994. The decline
in net working capital was a result of the cash needed to fund the operating
activities and capital expenditures during the nine month period. The source
of this cash was from borrowings under the line of credit agreement with the
bank.
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 March 31, 1995, the Company had $1,075,000 of available funds under
this revolving line of credit. As a result of the increase in the inventory
balances during the year, the revolving line of credit limit was increased
during the quarter to $4,000,000. This compares with $2,198,000 of available
funds (on a $3,000,000 limit) as of March 31, 1994. As of March 31, 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 a portion of the idle facility on a short and
long term basis. The Company has undertaken an aggressive program with a
prominent real estate company to sell or lease this idle facility.
<PAGE>
-2-
The Company has established a capital expenditure budget of approximately
$1,418,000 for the 1994-1995 fiscal year. Approximately $175,000 of this
total is needed to relocate Product Development and thus finalize the
consolidation of the two production facilities. 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 sold or leased. The balance of the capital expenditure budget
will be used to refurbish existing equipment and to purchase new equipment.
The Company has expended $813,000 through March 31, 1995, of the budgeted
annual amount for capital additions. These expenditures were financed by
borrowings on the revolving line of credit. The balance of the budget will be
funded as the Company generates cash from the reduction of inventories.
Results of Operations
Quarter ended
Net sales decreased $2,316,000 or 34% in the third quarter ended March 31,
1995. This decline was the result of decreased demand and discontinued items
by our customers, and an extremely competitive market.
Cost of sales as a percentage of net sales increased from 83% in 1994 to 102%
in 1995. The lower sales in the quarter and the resultant decrease in the
production volume accounted for the negative gross profit. The gross profit
on the sales for the quarter were approximately equal to the net overhead
expenses for the period.
Selling, general and administrative expenses decreased $194,000 or 28% in the
third quarter ended March 31, 1995. This decrease is a result of the
difference between years in the Bonus/Profit Sharing expense. As result of
the lower earnings in 1995, the Company has not reached the level of earnings
required by the Bonus/Profit Sharing Plan to begin accrual of this expense.
In the third quarter ended March 31, 1994 the Company expensed $179,000
related to the Bonus/Profit Sharing accrual.
Interest expense increased $55,000 because of the increased borrowings under
the line of credit.
-3-
Year-to-date
Net sales decreased $5,180,000 or 23% for the nine months ended March 31,
1995. This decline was the result of a substantial reduction in sales orders
to a major customer in addition to lower sales to a number of other
customers. The competitive market, a mild winter (lower sales of ingredients
for hot cereal products) and discontinuance of products by our customers are
some the main reasons for this decrease in sales. The lower sales were
partially offset by increased sales of $1,477,000 of banana and pumpkin
flakes.
Cost of sales as a percentage of net sales increased from 83% in 1994 to 90%
in 1995. The competitive environment has adversely affected our margins in
comparison with previous years. The lower sales resulted in lower production
volume and consequently less overhead was absorbed. The actual overhead
incurred did not decrease as result of the decreased production volume and
consequently the total cost of sales increased as a percentage of net sales.
Selling, general and administrative expenses decreased $288,000 or 10% in the
nine month period ended March 31, 1995. Most of this decrease is composed of
the difference between years in the Bonus/Profit Sharing expense. As result
of the lower earnings in 1995, the Company has not reached the level of
earnings required by the Bonus/Profit Sharing Plan to begin accrual of this
expense. In the nine month period ended March 31, 1994, the Company accrued
$320,000 of Bonus/Profit Sharing expense.
Interest expense increased $100,000 because of the increase in the borrowing
under the line of credit.
<PAGE>
-4-
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)
Nine Months Nine Months Three Months Three Months
Ended Ended Ended Ended
March 31, 1995 March 31, 1994 March 31, 1995 March 31, 1994
REVENUES:
Net sales $16,705,000 $21,885,000 $4,531,000 $6,847,000
Other 235,000 255,000 84,000 73,000
Total revenue $ 16,940,000 $22,140,000 $4,615,000 $6,920,000
COST & EXPENSES
Cost of sales 14,984,000 18,241,000 4,629,000 5,656,000
Selling, general &
administration 1,629,000 1,917,000 500,000 694,000
Interest 270,000 170,000 116,000 61,000
$16,883,000 $20,328,000 $5,245,000 $6,411,000
EARNINGS BEFORE
INCOME TAXES 57,000 1,812,000 (630,000) 509,000
PROVISION FOR TAXES 20,000 720,000 (255,000) 199,000
NET EARNINGS $ 37,000 $1,092,000 $ (375,000) $ 310,000
EARNINGS PER COMMON SHARE $.02 $.66 $(.22) $.19
AVE COMMON SHARES
OUSTANDING 1,701,510 1,664,029 1,702,300 1,664,029
See notes to interim financial statements
<PAGE>
VACU-DRY COMPANY
Balance Sheets
(Unaudited)
(Dollars in thousands)
<TABLE>
<S> <C> <C> <C> <C>
CURRENT ASSETS: 3/31/95 6/30/94 CURRENT LIABILITIES: 3/31/95 6/30/94
Cash $ 195 $ 419 Borrowings under line of credit $ 2,925 $ 280
Accounts receivable 1,489 1,670 Current maturities of long-term debt 475 475
Other receivables 235 -0- Accounts payable 1,417 1,160
Inventories 7,166 4,777 Accrued payroll & related liabilities 677 596
Prepaid expenses 140 104 Accrued expenses 193 604
Current deferred taxes 451 502 Accrued interest & insurance payable 106 49
_____ _____ Accrued SAR payble 52 141
Total current assets 9,676 7,472
Deferred factory overhead 394 -0-
Net property, plant & Income taxes payable -0- -0-
equipment 7,632 7,457
____ _____
Total current liabilities $6,239 $3,305
LONG-TERM DEBT - Net of
current maturities 2,229 2,585
DEFERRED INCOME TAXES 810 803
SHAREHOLDERS' EQUITY:
Capital stock 3,945 3,933
Retained earnings 4,085 4,303
Total shareholders' equity 8,030 8,236
______ ______ Total liabilities and ______ ______
Total Assets $17,308 $14,929 shareholders' equity $17,308 $14,929
</TABLE>
See notes to interim financial statements
<PAGE>
VACU-DRY COMPANY
STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE NINE MONTHS ENDED MARCH 31, 1995 AND 1994
<TABLE>
<S> <C> <C>
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 37,000 $1,092,000
__________ __________
Adjustments to reconcile net earnings to net
cash provided by operating activities -
(Gain) on sale of equipment -0- 8,000
Depreciation expense 641,000 569,000
Changes in certain assets & liabilities
Decrease (increase) in receivables (50,000) 1,000
(Increase) in inventories (2,389,000) (3,555,000)
Decrease (increase) in prepaid assets (36,000) 334,000
Decrease (increase) in current deferred taxes 51,000 (17,000)
Increase in accounts payable 702,000 1,203,000
Increase (decrease) in accrued expenses (856,000) 366,000
Increase in accrued insurance & interest 57,000 28,000
Increase in accrued payroll & liabilities 81,000 127,000
Increase in deferred overhead 394,000 600,000
Increase in income taxes payable -0- 204,000
(Decrease) in SAR liability (89,000) (41,000)
_______ __________
Total adjustments (1,494,000) (173,000)
Net cash provided by (used for)
operating activities (1,457,000) 919,000
_________ _________
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (813,000) (1,007,000)
_________ _________
Net cash used for investing activities (813,000) (1,007,000)
_________ _________
CASH FLOWS FROM FINANCING ACTIVITIES:
Additional borrowings under line of credit 9,688,000 6,489,000
Payments on line of credit (7,043,000 (6,869,000)
Quarterly Dividend of $.05 per share (255,000) -0-
Employee purchase of Company stock 81,000 19,000
Stock buy back of Company shares (69,000) -0-
Principal payment of long-term debt (356,000) (216,000)
Borrowings on the consolidation loan -0- 640,000
__________ ________
Net cash used by financing activities 2,046,000 63,000
__________ _________
NET INCREASE (DECREASE) IN CASH (224,000) (25,000)
CASH AT THE BEGINNING OF THE YEAR 419,000 327,000
__________ _________
TOTAL CASH AT THE END OF THE PERIOD $ 195,000 $ 302,000
</TABLE>
See notes to interim financial statements
<PAGE>
VACU-DRY COMPANY
NOTES TO INTERIM FINANCIAL STATEMENTS
NINE MONTHS ENDED MARCH 31, 1995
Note 1 - The Interim Financial Statements herein presented for
the nine months ended March 31, 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 $1,233,000 at March 31, 1995 and $1,511,000 at June 30,
1994.
Inventories at March 31, 1995 and June 30, 1994, consisted
of the following:
3/31/95 6/30/94
Finished goods $6,569,000 $4,276,000
Work in progress 270,000 192,000
Raw materials, & containers 327,000 309,000
__________ __________
$7,166,000 $4,777,000
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 $281,000 $170,000
Income taxes paid $158,000 $373,000
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
March 31, 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: May 12, 1995 (Donal Sugrue)
_______________________
Donal Sugrue, President
Date: May 12, 1995 (Tom Eakin)
_______________________
Tom Eakin, VP, Finance
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
10Q FOR THE QUARTER ENDED MARCH 31, 1995, AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000102588
<NAME> VACU-DRY COMPANY
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-1-1994
<PERIOD-END> MAR-31-1995
<CASH> 195,000
<SECURITIES> 0
<RECEIVABLES> 1,724,000
<ALLOWANCES> 0
<INVENTORY> 7,166,000
<CURRENT-ASSETS> 9,676,000
<PP&E> 16,866,000
<DEPRECIATION> 9,234,000
<TOTAL-ASSETS> 17,308,000
<CURRENT-LIABILITIES> 6,239,000
<BONDS> 0
<COMMON> 3,945,000
0
0
<OTHER-SE> 4,085,000<F1>
<TOTAL-LIABILITY-AND-EQUITY> 17,308,000
<SALES> 16,705,000
<TOTAL-REVENUES> 16,940,000
<CGS> 14,984,000
<TOTAL-COSTS> 16,613,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 270,000
<INCOME-PRETAX> 57,000
<INCOME-TAX> 20,000
<INCOME-CONTINUING> 57,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 37,000
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
<FN>
<F1>RETAINED EARNINGS
</FN>
</TABLE>
