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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: December 31, 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: 1-7626
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 December 31, 1993
Common Stock, par value $0.10 per share 26,107,761 shares
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UNIVERSAL FOODS CORPORATION
INDEX
Page No.
PART I, FINANCIAL INFORMATION:
Consolidated Condensed Balance Sheets
- December 31, 1993 and September 30, 1993............ 1
Consolidated Condensed Statements of Earnings
- Three Months Ended December 31, 1993
and 1992.............................................2
Consolidated Condensed Statements of Cash Flows
- Three Months Ended December 31, 1993 and 1992........3
Notes to Consolidated Condensed
Financial Statements.................................4
Management's Discussion and Analysis of Results of
Operations, Financial Condition and Forward
Looking Information..................................5
PART II, OTHER INFORMATION
Item 4, Submission of Matters to a Vote of
Security Holders.....................................7
Item 6, Exhibits and Reports on Form 8-K...............8
Signatures.............................................9
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PART I
FINANCIAL INFORMATION
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UNIVERSAL FOODS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
($000's Omitted)
December 31
1993 September 30
ASSETS (Unaudited) 1993
CURRENT ASSETS:
Cash and cash equivalents $ 20,868 $ 11,356
Trade accounts receivable 86,761 94,339
Inventories
Finished and in-process products 126,562 114,178
Raw materials and supplies 66,837 60,404
Prepaid expenses and other
current assets 40,048 31,841
------- -------
TOTAL CURRENT ASSETS 341,076 312,118
INVESTMENTS AND OTHER ASSETS 28,404 28,502
INTANGIBLES 106,229 107,381
PROPERTY, PLANT AND EQUIPMENT:
Cost:
Land and buildings 132,942 131,709
Machinery and equipment 349,294 340,446
------- -------
482,236 472,155
Less accumulated depreciation 198,470 190,163
------- -------
283,766 281,992
------- -------
TOTAL ASSETS $759,475 $729,993
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings $ 23,775 $ 14,945
Accounts payable, accrued expenses and
other liabilities 124,355 142,980
Federal and state income taxes 17,332 11,035
Current maturities on long-term debt 6,321 5,663
------- -------
TOTAL CURRENT LIABILITIES 171,783 174,623
DEFERRED INCOME TAXES 20,232 20,557
OTHER DEFERRED LIABILITIES 20,078 20,571
ACCRUED EMPLOYEE AND RETIREE BENEFITS 38,229 37,269
LONG-TERM DEBT 204,532 171,907
SHAREHOLDERS' EQUITY:
Common stock 2,698 2,698
Additional paid-in capital 80,512 79,826
Earnings reinvested in the business 255,311 246,939
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338,521 329,463
Less: Treasury stock, at cost 23,864 14,693
Other 10,036 9,704
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304,621 305,066
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $759,475 $729,993
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See accompanying Notes to Consolidated Condensed Financial Statements.
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UNIVERSAL FOODS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
($000's Omitted Except Per Share Amounts)
(Unaudited)
Three Months Ended
December 31
1993 1992
Total Revenue $220,791 $209,374
Cost of Products Sold 144,159 136,673
-------- --------
Gross Profit 76,632 72,701
Selling and Administrative Expenses 49,966 47,087
-------- --------
Operating Income 26,666 25,614
Interest Expense 3,530 3,894
-------- --------
Earnings Before Income Taxes 23,136 21,720
Income Taxes 8,676 8,199
-------- --------
Earnings Before Accounting Changes 14,460 13,521
Accounting Changes --- (23,563)
-------- --------
Net Earnings (Loss) $ 14,460 $(10,042)
Weighted Average Number of
Common Shares Outstanding 26,409,000 26,324,000
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Earnings Per Common Share:
Earnings Before Accounting Changes $ .55 $ .51
Accounting Changes --- (.90)
----- -------
Net Earnings (Loss) $ .55 $(.39)
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Dividends Per Common Share $ .23 $ .22
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See Accompanying Notes to Consolidated Condensed Financial Statements.
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UNIVERSAL FOODS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
($000's Omitted)
(Unaudited)
Three Months Ended
December 31
1993 1992
Net cash used in operating activities $ (4,054) $ (3,498)
Cash flows from investing activities:
Acquisition of property, plant (11,631) (7,308)
and equipment
Acquisition of new business --- (4,767)
Proceeds from sale of property, plant and
equipment and other productive assets 480 310
Increase in investments (154) (109)
-------- --------
Net cash used in investing activities (11,305) (11,874)
Cash flows from financing activities:
Proceeds from additional borrowings 53,320 31,201
Reductions in debt (11,207) (14,290)
Proceeds from options exercised and dividend
reinvestment (58) 408
Purchase of treasury stock (11,097) ---
Dividends paid (6,087) (5,794)
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Net cash provided by financing activities 24,871 11,525
Net increase (decrease) in cash and cash
equivalents 9,512 (3,847)
Cash and cash equivalents at beginning of period 11,356 11,030
-------- --------
Cash and cash equivalents at end of period $ 20,868 $ 7,183
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Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest $ 2,883 $ 3,482
Income taxes 3,081 1,073
See Accompanying Notes to Consolidated Condensed Financial Statements.
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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
December 31, 1993 and September 30, 1993, and the results of
operations and cash flows for the three month periods ended
December 31, 1993 and 1992. 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 three months ended December 31, 1993, the Company
repurchased 355,700 shares of common stock for an aggregate
price of $11,097,000.
6. For the three months ended December 31, 1993, depreciation and
amortization were $9,099,000 and $1,416,000, respectively. For
the three months ended December 31, 1992, depreciation and
amortization were $7,811,000 and $1,361,000, 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 the
financial position of DGF will be 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. 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 fiscal 1993 first
quarter Earnings Before Accounting Changes by $1,007,000, net
of tax, or $.04 per share.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS, FINANCIAL CONDITION
AND FORWARD LOOKING INFORMATION
RESULTS OF OPERATIONS:
Revenue from operations was $220,791,000 during the three
months ended December 31, 1993, compared with $209,374,000 a
year ago. Revenue for the quarter increased 5.5% over the
comparable prior year results.
Gross profit margins remained unchanged at 34.7% of revenue,
during the three months ended December 31, 1993 compared with
the same period last year.
Selling and administrative expenses remained relatively flat at
22.6% of revenue during the three months ended December 31,
1993 compared to 22.5% for the same period last year.
Interest expense in the first quarter decreased to $3,530,000
from $3,894,000 during the same period last year. This
decrease is primarily due to lower interest rates, offset by
slightly higher average outstanding debt.
The income tax provision for the first three 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 2.0:1 for the period ended
December 31, 1993, compared with 1.8:1 for the period ended
September 30, 1993. Net working capital increased $31,798,000
to $169,293,000 at December 31, 1993 from $137,495,000 at
September 30, 1993.
Net cash used in operating activities was $4,054,000 for the
quarter ended December 31, 1993. Depreciation and amortization
were $9,099,000 and $1,416,000 for the quarter, respectively.
Net cash used in investing activities was $11,305,000 for the
three months ended December 31, 1993. Included in investing
activities are capital additions of $11,631,000. 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 in-process
include an expansion of the confection room at the Flavor
Division's Amboy plant and rearrangement and upgrade of the
packaging systems at the Pasco Frozen Foods plant. Current
capital expenditures are in excess of the prior year first
quarter additions of $7,308,000 due to the timing of the
completion of certain major projects.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS, FINANCIAL CONDITION
AND FORWARD LOOKING INFORMATION
(Continued)
FINANCIAL CONDITION: (Continued)
Net cash provided by financing activities was $24,871,000 for
the quarter ended December 31, 1993. Included in financing
activities are proceeds from additional borrowings of
$53,320,000 and reductions of debt of $11,207,000. Dividends
of $6,087,000 were paid in the first quarter.
FORWARD LOOKING INFORMATION:
Net earnings before accounting changes increased 6.9% for the
first three months of Fiscal 1994 compared with Fiscal 1993.
The Company expects that there will continue to be steady
growth over prior year quarterly earnings for the remainder of
Fiscal 1994 as division volumes and revenue remain strong and
profitability in the flavor and frozen potato industry
improves.
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PART II
OTHER INFORMATION
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Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of Universal Foods
Corporation was held on Thursday, January 27, 1994. At the
meeting the following matters were voted upon by the
Shareholders.
26,462,615 shares were entitled to vote at the meeting, and
23,999,644 shares (90.69%) were voted.
The following persons were elected to a three year term as
Directors of the Company:
For Against
John F. Bergstrom 23,804,094 195,550
Leon T. Kendall 23,838,516 161,128
Charles S. McNeer 23,840,732 158,912
Kenneth P. Manning 23,852,073 147,571
The following person was elected to fulfill the remaining
one year of Mr. Walter H. Drew's term as a Director of the
Company:
For Against
Essie Whitelaw 23,775,790 223,854
Mr. Drew resigned from the Board for personal reasons.
Broker non-votes for the election of Directors was 138,570.
The following persons continued in office as Directors in
accordance with their previous election:
Michael E. Batten
James L. Forbes
Dr. Olan D. Forker
Dr. Carol I. Waslien Ghazaii
James H. Keyes
John L. Murray
Guy A. Osborn
William U. Parfet
The Shareholders ratified the appointment of Deloitte &
Touche, certified public accountants, as the independent
auditors of the Company for 1994. Of the 26,462,615 shares
entitled to vote at the meeting, 23,792,657 shares voted
for ratification, 50,911 shares voted against ratification
and 156,076 shares abstained. There were 138,570 Broker
non-votes.
The Shareholders also approved the 1994 Employees Stock
Plan. 22,161,907 shares of the 24,462,615 shares entitled
to vote at the meeting voted for approval, 1,626,704 shares
voted against the plan and 211,033 shares abstained.
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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 December 31, 1993.
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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.
UNIVERSAL FOODS CORPORATION
Date: February 9, 1994 By: /s/ Terrence M. O'Reilly
Terrence M. O'Reilly, Vice President,
Secretary and General Counsel
Date: February 9, 1994 By: /s/ Geoffrey J. Hibner
Geoffrey J. Hibner, Vice President -
Finance
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