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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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: March 31, 1994
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: 1-7626
UNIVERSAL FOODS CORPORATION
(Exact name of registrant as specified in its charter)
Wisconsin 39-0561070
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
433 East Michigan Street, Milwaukee, Wisconsin 53202
(Address of principal executive offices)
Registrant's telephone number, including area code: (414) 271-6755
NONE
(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 such shorter period that the
Registrant was required to file such reports) and (2) has been subject to
such filing requirements for at least 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 the latest practicable date.
Class Outstanding at March 31, 1994
Common Stock, par value $0.10 per share 26,027,105 shares
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<PAGE>
UNIVERSAL FOODS CORPORATION
INDEX
Page No.
PART I, FINANCIAL INFORMATION:
Consolidated Condensed Balance Sheets
- March 31, 1994 and September 30, 1993. 1
Consolidated Condensed Statements of Earnings
- Three and Six Months Ended
March 31, 1994 and 1993. 2
Consolidated Condensed Statements of Cash Flows
- Six Months Ended March 31, 1994 and 1993. 3
Notes to Consolidated Condensed
Financial Statements. 4
Management's Discussion and Analysis of
Operations, Financial Condition and
Forward Looking Information. 5
PART II, OTHER INFORMATION
Item 6, Exhibits and Reports on Form 8-K. 7
Signatures. 8
<PAGE>
PART I
FINANCIAL INFORMATION
<PAGE>
UNIVERSAL FOODS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
($000's Omitted)
March 31
1994 September 30
ASSETS (Unaudited) 1993
CURRENT ASSETS:
Cash and cash equivalents $ 21,895 $ 11,356
Trade accounts receivable 103,783 94,339
Inventory:
Finished and in-process products 121,138 114,178
Raw materials and supplies 56,672 60,404
Prepaid expenses and other current assets 44,305 31,841
-------- --------
TOTAL CURRENT ASSETS 347,793 312,118
INVESTMENTS AND OTHER ASSETS 30,515 28,502
INTANGIBLES 112,181 107,381
PROPERTY, PLANT AND EQUIPMENT
Cost:
Land and buildings 136,024 131,709
Machinery and equipment 366,066 340,446
-------- --------
502,090 472,155
Less accumulated depreciation 210,510 190,163
-------- --------
291,580 281,992
-------- --------
TOTAL ASSETS $782,069 $729,993
-------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings $ 57,103 $ 14,945
Accounts payable, accrued expenses and
other liabilities 114,072 142,980
Federal and state income taxes 11,667 11,035
Current maturities on long-term debt 4,744 5,663
-------- --------
TOTAL CURRENT LIABILITIES 187,586 174,623
DEFERRED INCOME TAXES 19,989 20,557
OTHER DEFERRED LIABILITIES 18,595 20,571
ACCRUED EMPLOYEE AND RETIREE BENEFITS 39,184 37,269
LONG-TERM DEBT 206,498 171,907
SHAREHOLDERS' EQUITY
Common stock 2,698 2,698
Additional paid-in capital 80,356 79,826
Earnings reinvested in the business 263,901 246,939
-------- --------
346,955 329,463
Less: Treasury stock, at cost 26,488 14,693
Other 10,250 9,704
-------- --------
310,217 305,066
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $782,069 $729,993
======== ========
See Accompanying Notes to Consolidated Condensed Financial Statements.
<PAGE>
UNIVERSAL FOODS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
($000's Omitted Except Per Share Amounts)
(Unaudited)
Three Months Six Months
Ended March 31 Ended March 31
1994 1993 1994 1993
Total Revenue $237,082 $216,663 $457,873 $426,037
Cost of Products Sold 157,645 144,688 301,804 281,361
-------- -------- -------- --------
Gross Profit 79,437 71,975 156,069 144,676
Selling and Administrative
Expenses 52,117 46,526 102,083 93,613
-------- -------- -------- --------
Operating Income 27,320 25,449 53,986 51,063
Interest Expense 4,002 3,913 7,532 7,807
-------- -------- -------- --------
Earnings Before Income Taxes 23,318 21,536 46,454 43,256
Income Taxes 8,744 8,130 17,420 16,329
-------- -------- -------- --------
Earnings Before Accounting
Changes 14,574 13,406 29,034 26,927
Accounting Changes -- -- -- 23,563
-------- -------- -------- --------
Net Earnings $ 14,574 $ 13,406 $ 29,034 $ 3,364
-------- -------- -------- --------
Weighted Average Number of
Common Shares
Outstanding 26,024,000 26,350,000 26,218,000 26,337,000
========== ========== ========== ==========
Earnings Per Common Share:
Earnings Before Ac-
counting Changes $ .56 $ .51 $ 1.11 $ 1.02
Accounting Changes -- -- -- (.90)
------ ------ ------ ------
Net Earnings $ .56 $ .51 $ 1.11 $ .12
====== ====== ====== ======
Dividends Per Common Share $ .23 $ .22 $ .46 $ .44
====== ====== ====== ======
See Accompanying Notes to Consolidated
Condensed Financial Statements.
<PAGE>
UNIVERSAL FOODS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
($000's Omitted)
(Unaudited)
Six Months Ended March 31
1994 1993
Cash flows from operating activities:
Net earnings $ 29,034 $ 3,364
Adjustments to reconcile net earnings to
cash provided by (used in) operating
activities:
Cumulative effect of accounting changes -- 23,563
Depreciation and Amortization 20,667 18,122
Changes in operating assets and
liabilities and other adjustments (49,372) (46,084)
------- -------
Net cash provided by (used in) operating
activities $ 329 $ (1,035)
-------- --------
Cash flows from investing activities:
Acquisition of property, plant and
equipment (25,969) (16,802)
Acquisition of new business (11,061) (4,767)
Proceeds from sale of property,plant and
equipment and other productive assets 480 344
Increase in investments (1,970) (722)
-------- --------
Net cash used in investing activities (38,520) (21,947)
Cash flows from financing activities:
Proceeds from additional borrowings 102,793 49,356
Reductions in long-term debt (28,056) (18,271)
Proceeds from options exercised and
dividend reinvestment 183 199
Purchase of treasury stock (14,118) ---
Dividends paid (12,072) (11,591)
-------- --------
Net cash provided by financing
activities 48,730 19,693
Net increase (decrease) in cash and cash
equivalents 10,539 (3,289)
Cash and cash equivalents at beginning of
period 11,356 11,030
-------- --------
Cash and cash equivalents at end of period $ 21,895 $ 7,741
======== ========
Supplement Disclosure of Cash Flow
Information:
Cash paid during the period for:
Interest $ 6,176 $ 8,685
Income taxes 17,563 15,888
See Accompanying Notes to Consolidated
Condensed Financial Statements.
<PAGE>
UNIVERSAL FOODS CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. In the opinion of the Company, the accompanying unaudited
consolidated condensed financial statements contain all adjustments
(consisting of only normal recurring accruals) necessary to present
fairly the financial position as of March 31, 1994 and September 30,
1993, and the results of operations and cash flows for the three and
six month periods ended March 31, 1994 and 1993. The results of
operations for any interim period are not necessarily indicative of
the results to be expected for the full fiscal year.
2. Refer to the footnotes in the Company's annual financial statements
for the year ended September 30, 1993, for a description of the
accounting policies, which have been continued without change, and
additional details of the Company's financial condition. The details
in those notes have not changed except as a result of normal
transactions in the interim.
3. Expenses are charged to operations in the year incurred. However,
for interim reporting purposes, certain of these expenses are charged
to operations based on an estimate rather than as expenses are
actually incurred.
4. On December 15, 1993, the Company issued $20,000,000 of 6.38% senior
notes, due in four annual principal payments of $5,000,000 beginning
December 15, 2000, and $20,000,000 of 6.70% senior notes, due in nine
annual principal payments of $2,222,222 beginning December 15, 2001.
5. During the six months ended March 31, 1994, the Company repurchased
450,700 shares of common stock for an aggregate price of $14,118,000.
6. For the six months ended March 31, 1994, depreciation and
amortization were $17,761,000 and $2,906,000, respectively. For the
six months ended March 31, 1993, depreciation and amortization were
$15,442,000 and $2,680,000 respectively.
7. The Company acquired Destillaciones Garcia de la Fuente, S.A. (DGF),
a specialty flavor and fragrance company, effective January 1, 1994.
The acquisition has been accounted for as a purchase and,
accordingly, the results of operations and financial position of DGF
are reflected in the Consolidated Condensed Financial Statements from
the effective date of the acquisition. The impact of the acquisition
on the financial statements of the Company is not material.
8. On April 18, 1994 the Company announced the signing of an agreement
to sell for cash its Frozen Foods Division to ConAgra, Inc. The
agreement provides for a purchase price which reflects a premium over
book value; no other terms were disclosed. The transaction is
expected to close on June 1, 1994.
9. Effective October 1, 1992, the Company adopted the provisions of
Statement of Accounting Standards No. 106 (SFAS No. 106), "Employer's
Accounting for Postretirement Benefits Other Than Pensions" and
Statement of Accounting Standards No. 112 (SFAS No. 112), "Employer's
Accounting for Postemployment Benefits", whereby the cost of
postretirement and postemployment benefits is accrued during an
employee's active service period rather than expensed as incurred.
The after-tax transition effect of adopting SFAS No. 106 and 112 on
an immediate recognition basis, as of October 1, 1992, reduced fiscal
1993 first quarter earnings by $23,563,000, or $.90 per share. In
addition, application of SFAS No. 106 and 112 decreased the six
months ended March 31, 1993 Earnings Before Accounting Changes by
$1,532,000, net of tax, or $.06 per share.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS, FINANCIAL CONDITION
AND FORWARD LOOKING INFORMATION
RESULTS OF OPERATIONS:
Revenue from operations for the second quarter was $237,082,000, a 9%
increase from $216,663,000 reported in the comparable quarter last
year. Revenue for the first six months ended March 31, 1994, was
$457,873,000, a 7% increase from the prior year's sales of
$426,037,000.
Gross profit margins increased to 33.5% of revenues during the second
quarter compared with 33.2% during the same period last year. Gross
profit margins for the first six months increased to 34.1% from
34.0%.
Selling and administrative expenses increased slightly to 22.0% of
revenues during the second quarter compared with 21.5% during the
same period last year. For the first six months of fiscal 1994
selling and administrative expenses increased to 22.3% from 22.0%.
Interest expense in the second quarter increased to $4,002,000 from
$3,913,000 in the same period last year and decreased to $7,532,000
from $7,807,000 for the six months ended March 31, 1994 and 1993,
respectively. The increase in the current quarter primarily resulted
from higher average outstanding debt, slightly offset by lower
interest rates, compared with the same period last year. The
decrease year-to-date is primarily due to lower interest rates during
the six-month period.
The income tax provision for the second quarter and first six months
of fiscal 1994 exceeded the 34% statutory rate primarily as a result
of the state income tax provision and the non-tax deductibility of
certain expenses such as the amortization of intangibles.
FINANCIAL CONDITION:
The current ratio increased to 1.9:1 at March 31, 1994, from 1.8:1 at
September 30, 1993. Net working capital increased $22,712,000 to
$160,207,000 at March 31, 1994 from $137,495,000 at September 30,
1993.
Net cash used in investing activities was $38,520,000 for the six
months ended March 31, 1994. Included in investing activities are
capital additions of $25,969,000 year-to-date. The capital
expenditure program reflects the Company's continuing commitment to
maintain and enhance product quality, further automate and upgrade
manufacturing processes, and expand the business through internal
growth. Major projects currently underway include an expansion of
the confection room at the Flavor Division's Amboy plant and upgrade
of the software used by the North American operations of the Flavor
Division. Also included in investing activities is the acquisition
of a new business for $11,061,000. This represents the acquisition
of DGF in the second quarter as described in Note #7 on page 4.
Net cash provided by financing activities was $48,730,000 for the
six-month period. Included in financing activities are proceeds from
additional borrowings of $102,793,000 and reductions of debt of
$28,056,000 for the six months ended March 31, 1994. The net
increase in debt was used primarily to fund capital expenditures,
treasury stock purchases and the acquisition of DGF. Dividends of
$5,985,000 were paid in the second quarter.
FORWARD LOOKING INFORMATION:
Management is pleased with the Company's progress so far this year.
The Company expects continued growth in volumes, revenue, and
operating profit from its on-going businesses during the remainder of
the year.
<PAGE>
PART II
OTHER INFORMATION
<PAGE>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(b) No reports on Form 8-K were required to be filed during the
quarter ended March 31, 1994.
<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.
UNIVERSAL FOODS CORPORATION
Date: May 12, 1994 By: /s/ Terrence M. O'Reilly
Terrence M. O'Reilly,
Vice President, Secretary and
General Counsel
Date: May 12, 1994 By: /s/ Geoffrey J. Hibner
Geoffrey J. Hibner,
Vice President - Finance
