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: June 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: 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 July 31, 1995
Common Stock, par value $0.10 per share 26,082,504 shares
<PAGE>
UNIVERSAL FOODS CORPORATION
INDEX
Page No.
PART I, FINANCIAL INFORMATION:
Consolidated Condensed Balance Sheets
- June 30, 1995 and September 30, 1994. 1
Consolidated Condensed Statements of Earnings
- Three and Nine Months Ended
June 30, 1995 and 1994. 2
Consolidated Condensed Statements of Cash Flows
- Nine Months Ended June 30, 1995 and 1994. 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 6, Exhibits and Reports on Form 8-K. 7
Signatures. 8
<PAGE>
PART I
FINANCIAL INFORMATION
UNIVERSAL FOODS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
($000's Omitted)
June 30
1995 September 30
ASSETS (Unaudited) 1994
CURRENT ASSETS:
Cash and cash equivalents $ 16,872 $ 43,430
Trade accounts receivable 112,887 95,336
Inventory:
Finished and in-process products 108,758 101,046
Raw materials and supplies 61,724 55,075
Prepaid expenses and other
current assets 33,949 32,941
-------- --------
TOTAL CURRENT ASSETS 334,190 327,828
INVESTMENTS AND OTHER ASSETS 42,181 32,328
INTANGIBLES 145,762 147,789
PROPERTY, PLANT AND EQUIPMENT:
Cost:
Land and buildings 129,437 118,538
Machinery and equipment 330,282 309,847
-------- --------
459,719 428,385
Less accumulated depreciation 192,418 172,666
-------- --------
267,301 255,719
-------- --------
TOTAL ASSETS $789,434 $763,664
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings $ 18,915 $ 4,527
Accounts payable, accrued expenses
and other current liabilities 130,030 138,153
Federal and state income taxes 18,324 28,697
Current maturities on long-term debt 19,734 20,775
------- -------
TOTAL CURRENT LIABILITIES 187,003 192,152
DEFERRED INCOME TAXES 20,724 17,300
OTHER DEFERRED LIABILITIES 19,183 19,414
ACCRUED EMPLOYEE AND RETIREE BENEFITS 38,637 35,173
LONG-TERM DEBT 156,142 172,235
SHAREHOLDERS' EQUITY
Common stock 2,698 2,698
Additional paid-in capital 79,113 80,066
Earnings reinvested in the business 318,827 273,800
-------- --------
400,638 356,564
Less: Treasury stock, at cost 25,412 25,521
Other 7,481 3,653
-------- --------
367,745 327,390
-------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $789,434 $763,664
======== ========
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 Nine Months
Ended June 30, Ended June 30,
1995 1994 1995 1994
Total Revenue $207,542 $249,467 $587,090 $707,340
Operating Costs and
Expenses:
Cost of Products
Sold 138,996 168,268 386,020 470,072
Selling and
Administrative
Expenses 41,981 52,816 126,011 154,899
Unusual Item - Gain
on Sale of Frozen
Foods Business --- --- (49,560) ---
------- -------- -------- ------
Operating Income 26,565 28,383 124,619 82,369
Interest Expense 3,729 4,170 11,659 11,702
------- -------- -------- -------
Earnings Before
Income Taxes 22,836 24,213 112,960 70,667
Income Taxes 8,279 8,903 49,173 26,323
------- ------- ------- --------
Net Earnings $ 14,557 $ 15,310 $ 63,787 $ 44,344
======= ======= ======= =======
Weighted Average Number
of Common Shares
Outstanding 26,076,000 26,040,000 26,053,000 26,159,000
========== ========== ========== ==========
Net Earnings Per
Common Share $ .56 $ .59 $2.45 $1.70
===== ===== ===== =====
Dividends Per
Common Share $ .24 $ .23 $ .72 $ .69
===== ===== ===== =====
See Accompanying Notes to Consolidated Condensed Financial Statements.
<PAGE>
UNIVERSAL FOODS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
($000's Omitted)
(Unaudited)
Nine Months Ended
June 30,
1995 1994
Net cash provided by operating activities $ 6,514 $49,851
Cash flows from investing activities:
Acquisition of property, plant and
equipment (28,437) (40,645)
Acquisition of new businesses (net of
cash acquired) (12,633) (15,043)
Proceeds from disposition of business
and sale of property, plant and
equipment and other productive
assets 41,609 480
Increase in investments (4,418) (6,867)
------- -------
Net cash used in investing activities (3,879) (62,075)
------- -------
Cash flows from financing activities:
Proceeds from additional borrowings 53,114 135,373
Reductions in debt (63,181) (56,460)
Proceeds from options exercised
and other 1,393 502
Purchase of treasury stock (1,759) (14,118)
Dividends paid (18,760) (18,060)
------- -------
Net cash (used in) provided by
financing activities (29,193) 47,237
------- -------
Net (decrease) increase in cash
and cash equivalents (26,558) 35,013
Cash and cash equivalents at
beginning of period 43,430 11,356
------- -------
Cash and cash equivalents at
end of period $16,872 $46,369
======= =======
Supplemental disclosure of cash
flow information:
Cash paid during the period for:
Interest $10,912 $10,703
Income taxes 49,180 22,284
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 June 30, 1995 and September 30, 1994, the
results of operations for the three and nine month periods ended June
30, 1995 and 1994 and cash flows for the nine month periods ended June
30, 1995 and 1994. 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, 1994, 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. During the nine months ended June 30, 1995 and 1994, the Company
repurchased 65,000 and 450,700 shares of common stock, respectively,
for an aggregate price of $1,759,000 and $14,118,000, respectively.
5. For the nine months ended June 30, 1995, depreciation and amortization
were $22,967,000 and $4,628,000, respectively. For the nine months
ended June 30, 1994, depreciation and amortization were $25,532,000
and $4,381,000, respectively.
6. In June 1995, the Company refinanced its $55,000,000 revolving loan
agreement, replacing the facility with a $70,000,000 multicurrency
revolving loan agreement which matures in June 2000. Under the
agreement, the Company has the option to elect to have interest rates
determined based upon the LIBOR rate plus margin or the certificate of
deposit rate plus margin. A commitment fee is payable on the unused
amount of credit.
7. The Company acquired, effective April 21, 1995, at a cost of
$9,252,000, Top Foods, a dehydrated vegetable processor located in The
Netherlands. Silva-Laon, a dehydrated vegetable processor located in
France, was acquired at a cost of $3,546,000, effective March 17,
1995. On January 1, 1994, the Company acquired Destillaciones Garcia
de la Fuente, S.A. (DGF), a specialty flavor and fragrance company, at
a cost of $11,100,000. On June 8, 1994, the Company acquired Mallow
Foods in Midleton, Ireland, a leading processor of air and freeze-
dried vegetables for $3,300,000. The acquisitions have been accounted
for as purchases and, accordingly, the results of operations and
financial position are reflected in the Consolidated Condensed
Financial Statements from the effective dates of the acquisitions. On
a consolidated performa basis the acquisitions were not significant to
the Company's results of operations.
8. On December 21, 1994, the Company amended the Stock Purchase Agreement
("Agreement") with ConAgra, Inc. Under the amended Agreement ConAgra
agreed to acquire 100% of the stock of Universal Frozen Foods Company
for $202,000,000. The final purchase price of $202,000,000 included a
one-time cash payment of $39,000,000 in addition to the base
consideration of $163,000,000 that was paid August 1, 1994. The sale
of the Frozen Foods business resulted in a pre-tax gain of $49,560,000
($23,370,000 after-tax, or $.90 per share). The income tax provision
related to the gain was 52.8% as a result of non-deductible basis
differences relating to intangibles.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS, FINANCIAL CONDITION
AND FORWARD LOOKING INFORMATION
RESULTS OF OPERATIONS:
Revenue from operations for the three months and nine months ended
June 30, 1995, was $207,542,000 and $587,090,000, respectively,
compared with $249,467,000 and $707,340,000 in 1994. The decrease
in revenue for the three months and nine months ended June 30, 1995,
of 16.8% and 17.0%, respectively, from the comparable prior year
periods is a result of the sale of the Company's Frozen Foods
business. Revenue from continuing operations, including the impact
from companies acquired during fiscal 1994 and 1995, increased
$33,463,000, or 19.2%, for the quarter ended June 30, and increased
$94,667,000, or 19.2%, for the nine months ended June 30.
Gross profit margins increased to 33.0% of revenues during the
quarter compared with 32.5% during the same period last year. Gross
profit margins for the first nine months increased to 34.2% from
33.5%. The improvement in gross profit margin for both the quarter
and nine months ended is primarily due to product mix and the
elimination of lower margin business in the Frozen Foods division.
Selling and administrative expenses decreased to 20.2% of revenues
during the third quarter compared to 21.2% during the same period
last year. For the first nine months of fiscal 1995, selling and
administrative expenses decreased to 21.5% of revenues from 21.9%
last year.
Interest expense in the quarter decreased to $3,729,000 from
$4,170,000 in the same period last year and decreased to $11,659,000
from $11,702,000 for the nine months ended June 30, 1995 and 1994,
respectively. The slight decrease in the current quarter primarily
resulted from lower average outstanding debt, offset by higher
interest rates, compared with the same period last year.
Income tax expense for the quarter and nine months ended June 30,
1995 exceeded the 34% statutory rate primarily as a result of state
income taxes and a higher than normal effective tax rate on the sale
of the Frozen Foods business.
FINANCIAL CONDITION:
The current ratio increased to 1.8 at June 30, 1995, from 1.7 at
September 30, 1994. Net working capital increased $11,511,000 to
$147,187,000 at June 30, 1995 from $135,676,000 at September 30,
1994.
Net cash provided by operating activities was $6,514,000 for the
nine months ended June 30, 1995, compared to net cash provided of
$49,851,000 for the nine months ended June 30, 1994. Cash provided
by operating activities decreased primarily due to the tax payments
related to the sale of the Frozen Foods business.
Net cash used in investing activities was $3,879,000 for the nine
months ended June 30, 1995. Cash used in investing activities in
fiscal 1995 includes the receipt of $39,000,000 of cash from the
sale of the Frozen Foods business. Also, capital additions of
$28,437,000 and $40,645,000 for the nine months ended June 30, 1995
and 1994, respectively 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.
Included in investing activities are the acquisitions of new
businesses as described in Note 7 on page 4.
Net cash used in financing activities was $29,193,000 for the nine
months ended June 30, 1995 compared to net cash provided by
financing activities of $47,237,000 for the comparable prior year
period. The increase in cash used for financing activities result
from the sale of the Frozen Foods business providing cash for
investing activities and reducing the amounts of short term
borrowing required as of June 30.
FORWARD LOOKING INFORMATION:
Given the Company's nine month performance, management believes that
full-year results will show gains over last year's earnings from
continuing operations, but, as anticipated, will be down when
results from the Frozen Foods business are included.
<PAGE>
PART II
OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27 Financial Data Schedule
(b) No reports on Form 8-K were required to be filed during the
quarter ended June 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.
UNIVERSAL FOODS CORPORATION
Date: August 11, 19995 By: /s/ Terrence M. O'Reilly
Terrence M. O'Reilly, Vice President,
Secretary and General Counsel
Date: August 11, 1995 By: /s/ Michael L. Hennen
Michael L. Hennen, Corporate Controller
<PAGE>
EXHIBIT INDEX
Exhibit Description
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF UNIVERSAL FOODS CORPORATION AS OF
AND FOR THE NINE MONTHS ENDED JUNE 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> JUN-30-1995
<CASH> 16,872
<SECURITIES> 0
<RECEIVABLES> 116,486
<ALLOWANCES> 3,599
<INVENTORY> 170,482
<CURRENT-ASSETS> 334,190
<PP&E> 459,719
<DEPRECIATION> 192,418
<TOTAL-ASSETS> 789,434
<CURRENT-LIABILITIES> 187,003
<BONDS> 156,142
<COMMON> 2,698
0
0
<OTHER-SE> 365,047
<TOTAL-LIABILITY-AND-EQUITY> 789,434
<SALES> 587,090
<TOTAL-REVENUES> 587,090
<CGS> 386,020
<TOTAL-COSTS> 386,020
<OTHER-EXPENSES> (49,560)<F1>
<LOSS-PROVISION> 666
<INTEREST-EXPENSE> 11,659
<INCOME-PRETAX> 112,960
<INCOME-TAX> 49,173
<INCOME-CONTINUING> 63,787
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 63,787
<EPS-PRIMARY> 2.45
<EPS-DILUTED> 2.45
<FN>
<F1>Unusual Item: Gain on sale of Frozen Foods business.
</FN>
</TABLE>
