SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q/A
Quarterly Report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 25, 1993
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 1-7605
CURTICE-BURNS FOODS, INC.
(Exact Name of Registrant as Specified in its Charter)
New York 16-0845824
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification
Number)
90 Linden Place, P.O. Box 681, Rochester, NY 14603
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (716) 383-
1850
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 twelve
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
Indicate the number of shares outstanding of each of the
issuer's classes of common stock as of January 14, 1994.
Common Stock
Class A - 6,582,878
Class B - 2,060,702
Page 1 of 12<PAGE>
<PAGE>
<TABLE>
Part I. FINANCIAL INFORMATION
Item I - FINANCIAL STATEMENTS
The interim financial statements contained herein are unaudited, but in the
opinion of the management of the Company include all adjustments (consisting
only of normal recurring adjustments) necessary for a fair presentation of
the results of operations for these periods. The results of operations for
the interim periods are not necessarily indicative of the results of
operations for the full year.
Curtice Burns Foods, Inc.
Consolidated Statement of Income and Retained Earnings
(Dollars in Thousands except per share amounts)
<CAPTION>
Three Months Ended Six Months Ended
12/25/93 12/25/92 12/25/93 12/25/92
<S> <C> <C> <C><C>
Net sales $ 243,246 $ 239,784 $ 453,336 $ 455,523
Costs and expenses:
Cost of sales 169,377 166,611 322,428 322,162
Restructuring (gain)/loss (8,114) 2,152 (8,114) 2,152
Selling, administrative and general
expenses 57,078 58,537 103,367 109,752
Interest expense
Interest expense on Pro-Fac related
borrowings 4,190 4,419 8,314 8,557
Interest expense on other debt 998 928 1,752 1,724
Less capitalized interest (33) -- (57) --
Total interest expense 5,155 5,347 10,009 10,281
Total costs and expenses 223,496 232,647 427,690 444,347
Earnings before dividing with Pro-Fac 19,750 7,137 25,646 11,176
Pro-Fac share of earnings 9,700 3,381 12,473 5,213
Income before taxes 10,050 3,756 13,173 5,963
Provision for taxes 3,326 1,603 5,265 2,473
Net income $ 6,724 $ 2,153 7,908 3,490
Retained earnings at beginning of period 53,541 82,882
Cash dividends declared (2,764) (2,747)
Retained earnings at end of period $ 58,685 $ 83,625
Net income per share $.78 $.25 $.92 $.41
Dividends declared per share $.16 $.16 $.32 $.32
Average number of shares outstanding 8,638,290 8,586,126 8,636,790 8,584,962
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
Curtice Burns Foods, Inc.
Consolidated Balance Sheet
<CAPTION>
December 25, June 26, December 25,
Dollars in Thousands Except Share Amounts 1993 1993 1992
ASSETS <C> <C> <C>
Current Assets:
Cash $ 9,944 $ 6,516 $ 7,509
Accounts receivable trade 72,052 63,160 64,459
Accounts receivable, other 7,742 8,151 5,933
Income taxes refundable -- -- 1,619
Current deferred taxes receivable 7,561 7,561 7,212
Inventories -
Finished goods 147,293 110,772 157,190
Raw materials and supplies 51,173 58,704 65,280
Total inventories 198,466 169,476 222,470
Prepaid manufacturing expense -- 7,164 --
Prepaid expenses and other current assets 7,571 4,920 5,116
Total current assets 303,336 266,948 314,318
Net property, plant and equipment leased from
Pro-Fac 147,509 173,513 176,180
Other property, plant and equipment, net 21,971 18,939 20,968
Goodwill and other intangibles, net 25,725 26,546 50,116
Other assets 7,948 7,783 6,610
Total Assets $506,489 $493,729 $568,192
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S>
Current Liabilities: <C> <C> <C>
Notes Payable $ 17,000 $ -- $ 40,000
Accounts payable 53,326 64,663 44,361
Due to Pro-Fac 39,241 9,113 43,002
Accrued employee compensation 8,867 11,843 10,748
Other accrued expenses 38,887 30,334 25,402
Accrued manufacturing expense 2,900 -- 2,781
Income taxes payable 2,970 9,046 --
Current portion of obligations under
Pro-Fac capital leases 21,184 21,184 21,940
Current portion of obligations under
other capital leases 1,687 1,687 1,247
Current portion of Pro-Fac long-term debt 14,000 16,000 14,000
Current portion of other long-term debt 2,796 2,656 2,588
Total current liabilities 202,858 166,526 206,069
Long-term debt due Pro-Fac 76,262 78,648 68,877
Long-term debt due others 4,802 6,389 8,607
Obligations under Pro-Fac capital leases 126,325 152,329 154,240
Obligations under other capital leases 1,773 1,773 1,933
Deferred income taxes 10,484 9,362 19,624
Other non-current liabilities 3,016 3,027 3,358
Commitments and Contingencies
Shareholders' Equity:
Class A common - $.99 par value;
10,125,000 shares authorized;
6,581,467, 6,568,518 and 6,545,909
outstanding, respectively 6,516 6,503 6,480
Class B common - $.99 par value;
4,050,000 shares authorized;
2,060,702, 2,060,702 and 2,060,731
outstanding, respectively 2,040 2,040 2,040
Additional paid-in capital 13,728 13,591 13,339
Retained earnings 58,685 53,541 83,625
Total Shareholders' Equity 80,969 75,675 105,484
Total Liabilities and Shareholders' Equity $506,489 $493,729 $568,192
<FN>
The accompanying notes are an integral part of these financial statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
Curtice Burns Foods, Inc.
Consolidated Statement of Cash Flows
<CAPTION>
Dollars in Thousands Six Months Ended
<S> December 25, 1993 December 25, 1992
Cash Flows From Operating Activities: <C> <C>
Net income $ 7,908 $ 3,490
Adjustments to reconcile net income to net
cash provided by operating activities -
Amortization of goodwill and other
intangibles 854 1,337
Depreciation and amortization of capital
assets 11,128 11,617
Deferred tax provision 1,122 --
Change in assets and liabilities
Accounts receivable (8,483) (6,778)
Inventories (28,990) (47,526)
Income taxes payable/refundable (6,076) 952
Accounts payable and accrued expenses 4,304 (6,783)
Due to Pro-Fac 11,028 7,235
Other assets and liabilities (2,860) (2,494)
Net cash used in operating activities (10,065) (38,950)
Cash Flows From Investing Activities:
Purchase of property, plant and equipment (9,956) (2,110)
Disposal of Pro-Fac assets 21,800 63
Net cash from/(used in) investing activities 11,844 (2,047)
Cash Flows From Financing Activities:
Due to Pro-Fac 14,714 9,000
Proceeds from issuance of short-term debt 17,000 40,000
Proceeds from issuance of Pro-Fac long-term debt -- 7,577
Payments on other long-term debt (1,447) (494)
Payments on Pro-Fac capital leases (26,004) (11,181)
Proceeds from sale of stock under stock
option plans 150 225
Cash dividends paid (2,764) (2,747)
Net cash provided by financing activities 1,649 42,380
Net change in cash 3,428 1,383
Cash at beginning of period 6,516 6,126
Cash at end of period $ 9,944 $ 7,509
Supplemental Disclosure of Cash Flow Information:
Cash paid/(received) during the year for -
Interest (net of amount capitalized) $ 9,986 $ 9,961
Income taxes, net $ 10,977 $ 1,518
Supplemental Schedule of Non-Cash Investing and
Financing Activities:
Capital lease obligations incurred $ 4,604 $ 63
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<PAGE>
Note 1. AGREEMENT WITH PRO-FAC COOPERATIVE, INC. ("Pro-Fac")
The Company has a contractual relationship with Pro-Fac under an Agreement
consisting of four sections: Operations Financing, Marketing, Facilities
Financing and Management, which extends to 1997, and provides for two
successive five-year renewals at the option of the Company.
The provisions of the Agreement include the financing of certain assets
utilized in the business of the Company and provide a sharing of income and
losses between Curtice Burns and Pro-Fac. Should the Company terminate the
Agreement, the Company has the option of purchasing those assets financed
by Pro-Fac at their book value at that time.
Revenues received by Pro-Fac from Curtice Burns under the Agreement for the
six months ended December 25, 1993 and December 25, 1992 include:
commercial market value of crops delivered, $55,753,000 and $56,017,000,
respectively; interest income, $8,314,000 and $8,557,000, respectively; and
additional proceeds from profit sharing provisions, $12,473,000 and
$5,213,000, respectively. In addition, Pro-Fac received from the Company
amortization and financing payments of $26,824,000 and $12,518,000 for the
six months ending December 25, 1993 and December 25, 1992, respectively.
Should the resolution of Agway's potential sale of its interest in Curtice
Burns (see Note 4) result in the Company exercising its option to purchase
from Pro-Fac the property and equipment and certain other assets used by the
Company in its business, the financing required to accomplish this
(including the repayment of debt) would be $302,737,000 as measured at the
book value on December 25, 1993. Of this amount, $129,503,000 represents
short- and long-term debt, $25,725,000 relates to intangible assets, and
$147,509,000 relates to fixed assets. This $302,737,000 at December 25,
1993 compares to $303,820,000 at June 26, 1993, which was comprised of
$103,761,000 of short- and long-term debt, $26,546,000 relating to
intangible assets and $173,513,000 relating to leased fixed assets. This
change of $1,083,000 during the six-month period is the net of increases and
decreases in the amounts attributable to short- and long-term debt and
leased assets. The decrease in leased assets is the result of assets sold
as part of business units sold (see Note 4 - Restructuring) and depreciation
exceeding additions for the period, resulting in a net decrease in the
leased asset values for which Pro-Fac holds title of $26,004,000. The net
increase in the amount attributable to short- and long-term debt of
$25,742,000 is comprised of a reduction of debt of $35,726,000 relating to
the sale proceeds of business units sold offset by additional borrowings in
the amount of $61,468,000 for the financing of the delivery and production
of raw product during the period.
In fiscal 1993 the Company wrote down assets associated with its Meat Snacks
and Hiland Potato Chip businesses (see Note 4, Restructuring Program). The
total amount of such writedown was $58,300,000, of which approximately
$29,150,000 was allocated to reduce the book value of Pro-Fac assets.
In the event of a buyout of Pro-Fac, Pro-Fac has taken the position that the
amount to be paid to Pro-Fac should include the value of assets prior to any
write down until an actual sale or disposition of the underlying assets.
Pro-Fac has asserted that such writedown should not affect amounts to be
paid for assets of Pro-Fac should Curtice Burns elect to buy out Pro-Fac and
terminate the Agreement, and has stated that Pro-Fac reserves the right to
submit the dispute to arbitration or litigation in that event. Curtice
Burns disagrees with Pro-Fac's position, and has indicated it will defend
any action by Pro-Fac and may submit the dispute to arbitration or
litigation. The Company and Pro-Fac have agreed that, in any such
arbitration or litigation, the determination of the <PAGE>
effect of the writedown in fiscal 1993 of assets associated with the
Company's Meat Snacks and Hiland Potato Chip businesses on the amount to be
paid by the Company to buyout Pro-Fac will be made as if such businesses had
not been sold.
Note 2. DEBT
Short-Term Debt
Short-term bank lines of credit are extended individually to both the
Company and Pro-Fac. They are interrelated so that both companies must
participate on a proportionate basis in the average borrowings under such
lines. At least 55 percent of such borrowing is attributable to Pro-Fac and
advanced by the Springfield Bank for Cooperatives and up to 45 percent is
attributable to the Company and advanced by a commercial bank syndicate
consisting of six banks. The combined line of credit at December 25, 1993
was $100,000,000. Such lines expire annually unless renewed. The revolving
lines of credit under such agreements have been renewed through November of
1994. Such agreements provide for adjustments in interest rates and
covenants and grant to both short-term and long-term lenders, or entitle
such lenders to obtain, liens on substantially all assets of the Company and
Pro-Fac as collateral for borrowings under such agreements. Outstanding
borrowings at December 25, 1993 were $48,100,000.
Long-Term Debt
In addition to the long-term and the short-term borrowings included in the
balance sheet as due to Pro-Fac, the Company guaranteed Pro-Fac debt at
December 25, 1993 of $56,752,000 which was used primarily for financing the
fixed and intangible assets referred to in Note 1. The interest rate on
Pro-Fac borrowings was 6.3 percent at December 25, 1993. The other debt
consists of $4,837,000 due to Teachers Insurance and Annuity at 9 percent
(which debt was paid in full on January 28, 1994 with the proceeds from
borrowing under the above-described short-term bank lines of credit) and the
balance of $2,761,000 (primarily Industrial Revenue Bonds) carries rates
ranging up to 11.0 percent at December 25, 1993.
Additional Information With Respect to Borrowing Arrangements
Because Pro-Fac guarantees the debt of the Company and the Company
guarantees the debt of Pro-Fac (substantially all of which is advanced to
the Company), management and lenders use combined pro forma financial
statements to assess the financial strength of the two companies.
Specifically, the combined statement of operations, balance sheet and
statement of cash flows portray the financial results, cash flows and equity
of the Company and Pro-Fac. Management believes that combined financial
statements are useful because they provide information concerning the
Company's ability to continue present credit arrangements and/or obtain
additional borrowings in the future.
Certain borrowing agreements require that the companies maintain specified
levels with regard to working capital, current ratio, ratio of net worth to
assets, ratio of long-term debt to net worth, tangible net worth, net
income, coverage of interest and fixed charges and the incurrence of
additional debt. The companies are in compliance with restrictions and
requirements under the terms of the borrowing agreements. The revolving
lines of credit under such agreements have been renewed through November of
1994. Such renewals provide for adjustments in interest rates and covenants
and grant to both short-term and long-term lenders, or entitle such lenders
to obtain, liens on substantially all assets of the Company and Pro-Fac as
collateral for borrowings under such agreements.
Such combined financial statements are neither necessary for a fair
presentation of the financial position of the Company nor appropriate as
primary statements for the Company's shareholders or for Pro-Fac
shareholders and members because they combine earnings, assets and
liabilities and cash flows which are legally attributable to either the
Company's shareholders or to Pro-Fac shareholders and members, but not to
both. Accordingly, the condensed pro forma financial statements presented
herein are special purpose in nature and should be used only within the
context described.
<PAGE>
<TABLE>
<CAPTION>
Combined Pro Forma Condensed Statement of Operations
<CAPTION>
(Millions)
Six Months Ended
December 25, 1993 December 25, 1992
Curtice
Burns Pro-Fac Eliminations Combined Combined
<S> <C> <C> <C> <C> <C>
Sales and revenues $453.3 $ 77.2 $(77.2) $453.3 $455.5
Cost of sales 322.4 55.7 (55.7) 322.4 322.1
Restructuring (gain)/loss (8.1) -- -- (8.1) 2.2
Selling, administrative
and general expenses 103.4 .4 (.8) 103.0 109.4
Interest expense 10.0 6.3 (8.3) 8.0 8.9
Pro-Fac share of earnings 12.4 -- (12.4) -- --
Total cost and expenses 440.1 62.4 (77.2) 425.3 442.6
Income before taxes 13.2 14.8 28.0 12.9
Provision for taxes (5.3) (.8) (6.1) (3.3)
Net income $ 7.9 $ 14.0 $ 21.9 $ 9.6
<FN>
Transactions between Curtice Burns and Pro-Fac have been eliminated for purposes of this
combined statement of operations.
</TABLE>
<TABLE>
Combined Pro Forma Condensed Balance Sheet
<CAPTION>
(Millions)
December 25, 1993 December 25, 1992
Curtice
Burns Pro-Fac Eliminations Combined Combined
<S> <C> <C> <C> <C> <C>
Assets
Current assets (A)(C) $303.3 $ 77.8 $ (74.4) $306.7 $316.0
Property, plant and
equipment, net (B) 169.5 -- -- 169.5 197.2
Investment in direct
financing leases (C) 126.3 (126.3) -- --
Due from Curtice Burns (D) 76.3 (76.3) -- --
Goodwill and other intangibles 25.7 25.7 -- 51.4 100.2
Other assets 8.0 19.9 -- 27.9 24.2
Total assets $506.5 $326.0 $(277.0) $555.5 $637.6
Liabilities and Net Worth
Current liabilities (A)(C) $202.8 $ 77.8 $ (74.4) $206.2 $207.8
Lease obligations (C) 128.1 -- (126.3) 1.8 2.0
Long-term debt--
Due Pro-Fac (D) 76.3 -- (76.3) -- --
Due others (E) 4.8 133.0 -- 137.8 164.6
Other liabilities 13.5 .5 -- 14.0 23.3
Total liabilities 425.5 211.3 (277.0) 359.8 397.7
Shareholders' equity and
members' capitalization (F) 81.0 114.7 -- 195.7 239.9
Total Liabilities and
Net Worth $506.5 $326.0 $(277.0) $555.5 $637.6
<FN>
Notes to combined balance sheet:
(A) Current assets of Pro-Fac consist principally of amounts due from Curtice Burns with
respect to the Agreement described in Note 1. Such amounts are eliminated for purposes
of this balance sheet.
(B) Property, plant and equipment to which Pro-Fac holds title and leases to Curtice Burns
on a financing basis had a net book value of $147.5 million at December 25, 1993.
(C) The majority of the lease obligations of Curtice Burns are payable to Pro-Fac and amount
to $147.5 million at December 25, 1993 of which $21.2 million is payable currently. The
related Curtice Burns liability and Pro-Fac receivable are eliminated for purposes of
this balance sheet.
(D) Long-term borrowings by Curtice Burns from Pro-Fac under the Agreement are eliminated
for purposes of this balance sheet.
(E) With respect to Pro-Fac, long-term debt due others represents term loans payable to the
Springfield Bank for Cooperatives (interest rate of 6.3 percent at December 25, 1993).
(F) Shareholders' and members' capitalization of Pro-Fac at December 25, 1993 consists of
common stock, $10.5 million; retained earnings allocated to members ("retains"), $42.3
million; preferred stock, $59.5 million which originates from conversion of
"retains"--normally after five years--and which is redeemable at the option of Pro-Fac;
and earned surplus, $2.5 million.
</TABLE>
<TABLE>
Combined Pro Forma Condensed Statement of Cash Flows
<CAPTION>
(Millions)
Six Months Ended
December 25, 1993 December 25, 1992
Curtice
Burns Pro-Fac Eliminations Combined Combined
<S> <C> <C> <C> <C> <C>
Net cash (used in)/provided by
operating activities $(10.1) $ 25.1 $(10.2) $ 4.8 $(31.3)
Net cash provided by/(used in)
investing activities 11.8 .2 (1.1) 10.9 (1.0)
Net cash provided by/(used in)
financing activities 1.7 (25.3) 11.3 (12.3) 33.7
Net change in cash 3.4 -- -- 3.4 1.4
Cash at beginning of period 6.5 -- -- 6.5 6.1
Cash at end of period $ 9.9 -- -- $ 9.9 $ 7.5
Supplemental disclosure of
cash flow information
Cash paid during the period for:
Interest (net of amount
capitalized) $ 10.0 $ 6.3 $( 8.3) $ 8.0 $ 8.4
Income taxes, net $ 11.0 $ (.1) $ -- $ 10.9 $ 1.9
Supplemental Schedule of
Non-Cash Investing and
Financing Activities:
Capital lease obligations
incurred $ 4.6 $ -- $ (4.6) $ -- $ --
<FN>
Transactions between Curtice Burns and Pro-Fac have been eliminated for purposes of this
combined statement of cash flows.
</TABLE>
<PAGE>
<PAGE>
Note 3. LEASES
Lease arrangements are capitalized when such leases convey substantially all
of the risks and benefits incident to ownership. Such leases include those
assets furnished by Pro-Fac Cooperative, Inc. under the Agreement described
in Note 1. Capital leases are amortized over either the lease term or the
life of the related asset, depending upon available purchase options and
lease renewal features.
Note 4. OTHER MATTERS
Potential Change of Control of Curtice Burns
On March 23, 1993, the Company announced that Agway Inc., which owns 99
percent of Curtice Burns' Class B shares and approximately 14 percent of
Class A shares, was considering the potential sale of its interest in the
Company. At its meeting held on August 9 and 10, 1993, the Curtice Burns
Board of Directors authorized Curtice Burns' management, with the advice of
its investment bankers, to pursue strategic alternatives for Curtice Burns.
These options include negotiations with Pro-Fac and its investment banker
relative to Pro-Fac gaining control of the business; the possible sale of
the entire equity of Curtice Burns to a third party; and a possible expanded
restructuring plan and a refinancing plan which would involve Curtice Burns
exercising its option to purchase from Pro-Fac the property and equipment
and certain other assets used by Curtice Burns in its business. Under the
Agreement with Pro-Fac, title to substantially all of Curtice Burns' fixed
assets is held by Pro-Fac, and Pro-Fac provides the major portion of the
financing of Curtice Burns' operations. Under the Agreement Curtice Burns
has an option to purchase these assets from Pro-Fac at their book value.
However, as mentioned in Note 1, there presently exists a disagreement with
Pro-Fac as to how such settlement amount would be calculated. Exercise of
the option would result in the termination of the Agreement with Pro-Fac.
In such event, Curtice Burns would be required to repay all debt owed to
Pro-Fac. The Company is actively exploring these alternatives.
Restructuring Program
The Company initiated a restructuring program in fiscal 1993.
The restructuring program is based on a strategic foundation of five points:
a focus on a more limited number of product lines and businesses for which
the Company has the resources to compete and grow profitably; a
strengthening of its national sales and distribution capability so as to
better serve large regional and national customers; a drive to true low-cost
producer/distributor status, including a commitment to a unified corporate
program of information management; a continuation of the development of one
high-performance, adaptive culture for all divisions, capable of dealing
with the continuing change in the food industry; and continuing support of
the historically decentralized, autonomous division management system,
operating within these overall strategic parameters.
The first step of the restructuring program is to divest unprofitable or
declining businesses that would fit strategically with other business
portfolios. The Company divested Lucca Frozen Foods during the 1993 fiscal
year at a loss of approximately $2.7 million before dividing with Pro-Fac
and before taxes. On November 22, 1993, Curtice Burns sold certain assets
of the Hiland Potato Chip business for $2 million at closing plus
approximately $1 million to be paid in three installments over three months.
The sale of the Hiland business did not result in any gain or loss after
giving effect to the restructuring charges in fiscal 1993 (see below). In
addition, Curtice Burns announced plans to sell the <PAGE>
Meat Snacks business located in Denver, Colorado and Albany, Oregon. In the
fiscal year ended June 26, 1993, Curtice Burns incurred losses of $13.2
million from the Meat Snacks and Hiland Potato Chip businesses before
dividing such losses with Pro-Fac and before taxes. On November 19, 1993,
the Company sold the oats portion of the National Oats business for $39
million. The oats business contributed approximately $1.4 million in
fiscal 1993 before dividing with Pro-Fac and before taxes. The sale of the
oats business resulted in a $10.0 million gain. The popcorn portion of the
National Oats division was transferred to the Comstock Michigan Fruit
division. The Company has also begun to make staff reductions in selected
locations throughout the Company.
To reflect completed and contemplated effects of the restructuring program,
Curtice Burns incurred restructuring charges in fiscal 1993 of $61.0 million
(before dividing such charges with Pro-Fac and before taxes), which included
the loss incurred on the sale of the Lucca frozen entree business,
anticipated losses on the sale of the Meat Snacks and Hiland businesses, and
other costs anticipated in conjunction with the restructuring program.
Virtually all of this charge was a revaluation of assets, rather than cash
expense. A $1.9 million charge to adjust previous estimates was recorded
in the second quarter of fiscal 1994 to complete the Lucca sale transaction
and to reserve against additional operating losses on Curtice Burns Meat
Snacks prior to the sale. The Company expects additional announcements
relative to the restructuring program as planning is completed and
implementation continues. Additional charges to earnings in connection with
the overall restructuring program may be required in the remainder of fiscal
1994 as a result of decisions yet to be made.
During fiscal 1993, the Company disposed of two other businesses,
discontinued production of private label ketchup and initiated production
consolidation efforts involving the closing of three plants. The operations
sold included its private label beverage bottling business located in
Upstate New York and the Dura-Buket operations of the Company's National
Oats division. The disposition of these non-strategic businesses did not
have a significant effect on the Company's results of operations. The
production consolidations resulted in the closing of plants in Michigan,
Colorado, and New York.
Postretirement Benefits Other Than Pensions
Generally, other than pensions, the Company does not pay retirees' benefit
costs. Isolated exceptions exist, involving less than one percent of the
total work force and less than one percent of total retirees. These
exceptions evolved from union negotiations, early retirement incentives and
existing retiree commitments from acquired companies.
In December 1990, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions" (SFAS 106). SFAS 106,
effective for fiscal years beginning after December 15, 1992, requires
employers to accrue the cost of retiree health and other postretirement
benefits during the working careers of active employees and allows the
transition obligation to be recognized in net income either immediately or
over 20 years.
The Company adopted SFAS 106 during the first quarter of fiscal 1994. The
effect of SFAS 106 resulted in a transition obligation of $2.6 million. The
transition cost is being written off over a 20-year period.
The total cost of these postretirement benefits charged to expense was
$248,000 and $54,000 for the six months ended December 25, 1993 and December
25, 1992, respectively. The fiscal 1994 amount includes the impact of the
adoption of SFAS <PAGE>
106.
New Tax Act
On August 10, 1993, President Clinton signed into law a new income tax bill
which increased corporate income tax rates from 34 percent to 35 percent.
Under the provisions of SFAS 109 the Company recorded the impact of this
rate increase during the first quarter of fiscal 1994. The impact of this
rate increase on the Company's deferred tax assets and liabilities resulted
in an increase to income tax expense of approximately $480,000.
Subsequent Events
Subsequent to quarter end, on January 3, 1994, Curtice Burns declared a
dividend of $.16 per share to Class A and Class B shareholders of record on
January 14, 1994. The dividend was paid on January 28, 1994.
On January 28, 1994, Curtice Burns repaid in full the $4,837,000 principal
amount of debt due to Teachers Insurance and Annuity, together with interest
and other amounts due thereof, with proceeds from borrowings under the
seasonal lines of credit.
<PAGE>
<PAGE>
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders
(a) The annual meeting of shareholders was held on November 12, 1993
in Rochester, New York.
(b) Election of directors to serve until the next annual meeting:
The 5,235,514 shares of Class A common stock represented by
proxies at the meeting were voted with each nominee
receiving more than 96 percent of those votes and all such
nominees were elected as follows:
Nominee For Withheld
Authority
John F. Blazin 5,102,754 132,760
Virginia M. Ford 5,102,625 132,889
David J. McDonald 5,060,760 174,754
J. William Petty 5,095,318 140,196
Carl H. Tiedemann 5,112,891 122,623
The 2,042,719 shares of Class B common stock represented by
proxies at the meeting were voted with each nominee
receiving more than 99 percent of these votes and all such
nominees were elected as follows:
Nominee For Withheld
Authority
Charles C. Brosius 2,042,719 0
Courtney B. Burdette 2,042,719 0
Robert V. Call, Jr. 2,042,719 0
Vyron M. Chapman 2,042,719 0
Roy A. Myers 2,042,719 0
John L. Norris 2,042,719 0
Donald E. Pease 2,042,719 0
Charles F. Saul 2,042,686 33
Carl D. Smith 2,042,719 0
Carleton E. Whittemore, Jr. 2,042,719 0
Christian F. Wolff, Jr. 2,042,719 0
(c) Other than the election of directors and approval of the selection of
Price Waterhouse & Co. as auditors, no other business was submitted to
a vote of security holders.
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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.
CURTICE-BURNS FOODS,
INC.
Date: BY
WILLIAM D. RICE, SENIOR
VICE
PRESIDENT AND TREASURER
(Duly Authorized Officer
and
Principal Financial
Officer)
