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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, 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 December 31, 1994
Common Stock, par value $0.10
per share 26,013,582 shares
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<PAGE>
UNIVERSAL FOODS CORPORATION
INDEX
Page No.
PART I, FINANCIAL INFORMATION:
Consolidated Condensed Balance Sheets
- December 31, 1994 and September 30, 1994. 1
Consolidated Condensed Statements of Earnings
- Three Months Ended December 31, 1994
and 1993. 2
Consolidated Condensed Statements of Cash Flows
- Three Months Ended December 31, 1994 and 1993. 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
<PAGE>
PART I
FINANCIAL INFORMATION
<PAGE>
UNIVERSAL FOODS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
($000's Omitted)
December 31
1994 September 30
ASSETS (Unaudited) 1994
CURRENT ASSETS:
Cash and cash equivalents $ 55,700 $ 43,430
Trade accounts receivable 90,415 95,336
Inventories:
Finished and in-process products 103,225 101,046
Raw materials and supplies 51,954 55,075
Prepaid expenses and other
current assets 30,769 32,941
-------- --------
TOTAL CURRENT ASSETS 332,063 327,828
INVESTMENTS AND OTHER ASSETS 37,233 32,328
INTANGIBLES 143,377 147,789
PROPERTY, PLANT AND EQUIPMENT:
Cost:
Land and buildings 121,094 118,538
Machinery and equipment 311,141 309,847
-------- --------
432,235 428,385
Less accumulated depreciation 178,337 172,666
-------- --------
253,898 255,719
-------- --------
TOTAL ASSETS $766,571 $763,664
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings $ 24,568 $ 4,527
Accounts payable, accrued expenses and
other liabilities 115,077 138,153
Federal and state income taxes 15,656 28,697
Current maturities on long-term debt 19,464 20,775
-------- --------
TOTAL CURRENT LIABILITIES 174,765 192,152
DEFERRED INCOME TAXES 17,191 17,300
OTHER DEFERRED LIABILITIES 18,314 19,414
ACCRUED EMPLOYEE AND RETIREE BENEFITS 36,387 35,173
LONG-TERM DEBT 171,106 172,235
SHAREHOLDERS' EQUITY:
Common stock 2,698 2,698
Additional paid-in capital 79,832 80,066
Earnings reinvested in the business 303,125 273,800
-------- --------
385,655 356,564
Less: Treasury stock, at cost 26,836 25,521
Other 10,011 3,653
-------- --------
348,808 327,390
-------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $766,571 $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 Ended
December 31
1994 1993
Total revenue $187,724 $220,791
Cost of products sold 122,371 144,159
-------- --------
Gross profit 65,353 76,632
Selling and administrative expenses 42,229 49,966
Unusual item - gain on sale of
Frozen Foods business (49,560) ---
-------- -------
Operating income 72,684 26,666
Interest expense 3,968 3,530
-------- --------
Earnings before income taxes 68,716 23,136
Income taxes 33,134 8,676
-------- --------
Net earnings $ 35,582 $ 14,460
======== ========
Weighted average number of
common shares outstanding 26,061,000 26,409,000
========== ==========
Net earnings per common share $1.37 $.55
===== ====
Dividends per common share $.24 $.23
==== ====
See Accompanying Notes to Consolidated Condensed Financial Statements.
<PAGE>
UNIVERSAL FOODS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
($000's Omitted)
(Unaudited)
Three Months Ended
December 31
1994 1993
Net cash used in operating activities $ (30,216) $ (4,054)
Cash flows from investing activities:
Acquisition of property, plant and
equipment (9,150) (11,631)
Proceeds from disposition of business
and sale of property, plant and
equipment and other productive assets 41,609 480
Increase (decrease) in investments 173 (154)
------- -------
Net cash provided by (used in)
investing activities 32,632 (11,305)
Cash flows from financing activities:
Proceeds from additional borrowings 28,856 53,320
Reductions in debt (11,255) (11,207)
Other shareholders' equity transactions 269 (58)
Purchase of treasury stock (1,759) (11,097)
Dividends paid (6,257) (6,087)
------- -------
Net cash provided by financing
activities 9,854 24,871
Net increase in cash and cash
equivalents 12,270 9,512
Cash and cash equivalents at beginning
of period 43,430 11,356
-------- --------
Cash and cash equivalents at end
of period $ 55,700 $ 20,868
======== ========
Supplemental Disclosure of Cash
Flow Information:
Cash paid during the period for:
Interest $ 6,179 $ 2,883
Income taxes 34,254 3,081
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 December 31, 1994 and September
30, 1994, and the results of operations and cash flows for the three
month periods ended December 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 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 three months ended December 31, 1994 and 1993, the Company
repurchased 65,000 and 355,700 shares of common stock, respectively,
for an aggregate price of $1,759,000 and $11,097,000, respectively.
5. For the three months ended December 31, 1994, depreciation and
amortization were $7,771,000 and $1,644,000, respectively. For the
three months ended December 31, 1993, depreciation and amortization
were $9,099,000 and $1,416,000, respectively.
6. 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 includes
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 was $187,724,000 during the three months ended
December 31, 1994, compared with $220,791,000 a year ago. The
decrease in revenues for the quarter of 15.0% from the comparable
prior year quarter resulted from the disposition of the Company's
Frozen Foods business. Revenue from continuing operations, including
the impact from companies acquired during fiscal 1994, increased
$31,516,000, or 20.2%
Gross profit margins remained relatively flat at 34.8% of revenue
during the three months ended December 31, 1994 compared to 34.7% for
the same period last year.
Selling and administrative expenses also remained relatively flat at
22.5% of revenue during the three months ended December 31, 1994
compared to 22.6% for the same period last year.
Interest expense in the first quarter increased to $3,968,000 from
$3,530,000 during the same period last year. This increase is due to
higher interest rates and an increase in average outstanding debt.
The income tax provision for the first three months of fiscal 1995
exceeded the 34% statutory rate primarily as a result of the state
income tax provision and a higher than normal effective rate on the
sale of the Frozen Foods business.
FINANCIAL CONDITION:
The current ratio increased to 1.9 at December 31, 1994, compared with
1.7 at September 30, 1994. Net working capital increased $21,622,000
to $157,298,000 at December 31, 1994 from $135,676,000 at September
30, 1994.
Net cash used in operating activities was $30,216,000 for the quarter
ended December 31, 1994. Cash used in operating activities increased
primarily because of the tax payments related to the sale of the
Frozen Foods business.
Net cash provided by investing activities was $32,632,000 for the
three months ended December 31, 1994. The cash provided by investing
activities was also due to the receipt of $39,000,000 related to the
sale of the Frozen Foods business. Included in investing activities
are capital additions of $9,150,000. 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 construction of a wastewater pretreatment facility and
replacement of a dryer.
Current capital expenditures are below the prior year first quarter
additions of $11,631,000 due to the sale of the Frozen Foods business
and the timing of certain major projects.
Net cash provided by financing activities was $9,854,000 for the
quarter ended December 31, 1994 compared to $24,871,000 in the prior
year first quarter. The decrease is primarily due to the reduction of
proceeds from additional borrowings.
FORWARD LOOKING INFORMATION:
Net earnings from the Company's continuing operations were up 7% for
the first three months of Fiscal 1995 compared with Fiscal 1994. The
Company expects that earnings from these operations will continue to
improve over the remainder of Fiscal 1995 through volume and revenue
growth, contributions from recent acquisitions, benefits from
restructuring in the flavor and yeast businesses, and an improvement
in yeast pricing.
<PAGE>
PART II
OTHER INFORMATION
<PAGE>
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 26, 1995. At the meeting the following
matters were voted upon by the Shareholders.
26,078 875 shares were entitled to vote at the meeting, and 23,387,094
shares (89.68%) were voted.
The following persons were elected to a three year term as Directors
of the Company:
For Against
Michael E. Batten 23,175,116 211,978
Guy A. Osborn 23,122,382 264,712
William U. Parfet 23,180,512 206,582
Essie Whitelaw 23,022,305 364,789
Broker non-votes for the election of Directors was 56,536.
The following persons continued in office as Directors in accordance
with their previous election:
John F. Bergstrom
James L. Forbes
Dr. Olan D. Forker
Dr. Carol I. Waslien Ghazaii
Leon T. Kendall
James H. Keyes
Kenneth P. Manning
Charles S. McNeer
John L. Murray
The Shareholders ratified the appointment of Deloitte & Touche LLP,
certified public accountants, as the independent auditors of the
Company for 1995. Of the 26,078,875 shares entitled to vote at the
meeting, 23,172,119 shares voted for ratification, 140,759 shares
voted against ratification and 74,216 shares abstained. Broker non-
votes for the election of Deloitte & Touche LLP were 56,536.
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 December 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: February 10, 1995 By: /s/ Terrence M. O'Reilly
Terrence M. O'Reilly, Vice President,
Secretary and General Counsel
Date: February 10, 1995 By: /s/ Michael L. Hennen
Michael L. Hennen, Corporate
Controller
<PAGE>
EXHIBIT INDEX
Exhibit No. 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 PERIOD ENDED DECEMBER 31, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 55,700
<SECURITIES> 0
<RECEIVABLES> 93,591
<ALLOWANCES> 3,176
<INVENTORY> 155,179
<CURRENT-ASSETS> 332,063
<PP&E> 432,235
<DEPRECIATION> 178,337
<TOTAL-ASSETS> 766,571
<CURRENT-LIABILITIES> 174,765
<BONDS> 171,106
<COMMON> 2,698
0
0
<OTHER-SE> 346,110
<TOTAL-LIABILITY-AND-EQUITY> 766,571
<SALES> 187,724
<TOTAL-REVENUES> 187,724
<CGS> 122,371
<TOTAL-COSTS> 122,371
<OTHER-EXPENSES> (49,560)<F1>
<LOSS-PROVISION> 229
<INTEREST-EXPENSE> 3,968
<INCOME-PRETAX> 68,716
<INCOME-TAX> 33,134
<INCOME-CONTINUING> 35,582
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,582
<EPS-PRIMARY> 1.37
<EPS-DILUTED> 1.37
<FN>
<F1>Unusual Item: Gain on sale of Frozen Foods business.
</FN>
</TABLE>