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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, 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 April 30, 1995
Common Stock, par value $0.10 per share 26,076,565 shares
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<PAGE>
UNIVERSAL FOODS CORPORATION
INDEX
Page No.
PART I, FINANCIAL INFORMATION:
Consolidated Condensed Balance Sheets
- March 31, 1995 and September 30, 1994. 1
Consolidated Condensed Statements of Earnings
- Three and Six Months Ended
March 31, 1995 and 1994. 2
Consolidated Condensed Statements of Cash Flows
- Six Months Ended March 31, 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>
UNIVERSAL FOODS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
($000's Omitted)
March 31
1995 September 30
ASSETS (Unaudited) 1994
CURRENT ASSETS:
Cash and cash equivalents $ 21,916 $ 43,430
Trade accounts receivable 102,186 95,336
Inventory:
Finished and in-process products 100,928 101,046
Raw materials and supplies 61,177 55,075
Prepaid expenses and other current
assets 33,808 32,941
-------- --------
TOTAL CURRENT ASSETS 320,015 327,828
INVESTMENTS AND OTHER ASSETS 40,196 32,328
INTANGIBLES 146,178 147,789
PROPERTY, PLANT AND EQUIPMENT:
Cost:
Land and buildings 126,840 118,538
Machinery and equipment 318,695 309,847
-------- --------
445,535 428,385
Less accumulated depreciation 187,212 172,666
-------- --------
258,323 255,719
-------- --------
TOTAL ASSETS $764,712 $763,664
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings $ 10,756 $ 4,527
Accounts payable, accrued expenses
and other liabilities 119,830 138,153
Federal and state income taxes 12,196 28,697
Current maturities on long-term debt 20,318 20,775
-------- --------
TOTAL CURRENT LIABILITIES 163,100 192,152
DEFERRED INCOME TAXES 20,516 17,300
OTHER DEFERRED LIABILITIES 18,535 19,414
ACCRUED EMPLOYEE AND RETIREE BENEFITS 37,411 35,173
LONG-TERM DEBT 168,457 172,235
SHAREHOLDERS' EQUITY
Common stock 2,698 2,698
Additional paid-in capital 79,224 80,066
Earnings reinvested in the business 310,527 273,800
-------- --------
392,449 356,564
Less: Treasury stock, at cost 25,368 25,521
Other 10,388 3,653
-------- --------
356,693 327,390
-------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $764,712 $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 Six Months
Ended March 31 Ended March 31
1995 1994 1995 1994
Total Revenue $191,824 $237,082 $379,548 $457,873
Operating Costs and
Expenses:
Cost of Products Sold 124,653 157,645 247,024 301,804
Selling and
Administrative
Expenses 41,801 52,117 84,030 102,083
Unusual Item - Gain on
Sale of Frozen
Foods Business --- --- (49,560) ---
-------- -------- -------- --------
Operating Income 25,370 27,320 98,054 53,986
Interest Expense 3,962 4,002 7,930 7,532
-------- -------- -------- --------
Earnings Before
Income Taxes 21,408 23,318 90,124 46,454
Income Taxes 7,760 8,744 40,894 17,420
-------- -------- -------- --------
Net Earnings $ 13,648 $ 14,574 $ 49,230 $ 29,034
======== ========= ========= ========
Weighted Average Number
of Common Shares
Outstanding 26,023,000 26,024,000 26,042,000 26,218,000
========== ========== ========== ==========
Net Earnings Per
Common Share $ .52 $ .56 $1.89 $1.11
======= ======== ======= ========
Dividends Per
Common Share $ .24 $ .23 $ .48 $ .46
======= ======== ======= ========
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
1995 1994
Net cash (used in) provided by
operating activities $ (26,404) $ 329
--------- ---------
Cash flows from investing activities:
Acquisition of property, plant
and equipment (13,936) (25,969)
Acquisition of new businesses (net of
cash acquired) (2,978) (11,061)
Proceeds from disposition of business
and sale of property, plant and equipment
and other productive assets 41,609 480
Increase in investments (2,068) (1,970)
-------- --------
Net cash provided by (used in)
investing activities 22,627 (38,520)
Cash flows from financing activities:
Proceeds from additional borrowings 30,524 102,793
Reductions in debt (35,268) (28,056)
Proceeds from options exercised and other 1,269 183
Purchase of treasury stock (1,759) (14,118)
Dividends paid (12,503) (12,072)
-------- --------
Net cash (used in) provided by
financing activities (17,737) 48,730
Net (decrease) increase in cash and
cash equivalents (21,514) 10,539
Cash and cash equivalents at beginning
of period 43,430 11,356
-------- --------
Cash and cash equivalents at end of period $ 21,916 $ 21,895
======== ========
Supplemental Disclosure of Cash Flow
Information:
Cash paid during the period for:
Interest $ 6,831 $ 6,176
Income taxes 42,746 17,563
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, 1995 and September 30,
1994, the results of operations for the three and six month periods
ended March 31, 1995 and 1994 and cash flows for the six month
periods ended March 31, 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 six months ended March 31, 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 six months ended March 31, 1995, depreciation and
amortization were $15,018,000 and $3,193,000, respectively. For the
six months ended March 31, 1994, depreciation and amortization were
$17,761,000 and $2,906,000, respectively.
6. The Company acquired Silva-Laon, a dehydrated vegetable processor, 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.
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. The impact of the acquisitions
on the financial statements of the Company is not material.
7. 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.
8. The Company acquired at a cost of $9,252,000, Top Foods, a dehydrated
vegetable processor located in The Netherlands, effective April 21,
1995. The acquisition will be accounted for as a purchase and,
accordingly, the results of operations and the financial position of
Top Foods will be reflected in the Consolidated Condensed Financial
Statements from the effective date of the acquisition. The impact of
the acquisition on the future financial statements of the Company is
not expected to be material.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS, FINANCIAL CONDITION
AND FORWARD LOOKING INFORMATION
RESULTS OF OPERATIONS:
Revenue from operations for the quarter and six months ended March
31, 1995, was $191,824,000 and $379,548,000, respectively, compared
with $237,082,000 and $457,873,000 a year ago. The decrease in
revenue for the quarter and six months ended March 31, 1995, of
19.1% and 17.1%, respectively, from the comparable prior year
periods resulted from 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
$29,688,000, or 18.3%, for the quarter ended March 31, and increased
$61,204,000, or 19.2%, for the six months ended March 31.
Gross profit margins increased to 35.0% of revenues during the
second quarter compared with 33.5% during the same period last
year. Gross profit margins for the first six months increased to
34.9% from 34.1%.
Selling and administrative expenses decreased to 21.8% of revenues
during the second quarter compared to 22.0% during the same period
last year. For the first six months of fiscal 1995, selling and
administrative expenses decreased to 22.1% of revenues from 22.3%
last year.
Interest expense in the second quarter decreased to $3,962,000 from
$4,002,000 in the same period last year and increased to $7,930,000
from $7,532,000 for the six months ended March 31, 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. The
increase year-to-date is primarily due to higher interest rates
during the six-month period.
Income tax expense for the quarter and six months ended March 31,
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 2.0 at March 31, 1995, from 1.7 at
September 30, 1994. Net working capital increased $21,239,000 to
$156,915,000 at March 31, 1995 from $135,676,000 at September 30,
1994.
Net cash used in operating activities was $26,404,000 for the six
months ended March 31, 1995, compared to net cash provided of
$329,000 for the six months ended March 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 $22,627,000 for the
six months ended March 31, 1995. Cash provided by investing
activities in fiscal 1995 includes the receipt of $39,000,000 of
cash from the sale of the Frozen Foods business. Also included in
investing activities are capital additions of $13,936,000 and
$25,969,000 for the six months ended March 31, 1995 and 1994,
respectively. 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.
Included in investing activities are the acquisitions of new
businesses as described in Note 6 on page 4.
Net cash used in financing activities was $17,737,000 for the six
months ended March 31, 1995 compared to net cash provided by
financing activities of $48,730,000 for the comparable prior year
period. The increase in cash used for financing activities
resulted from the sale of the Frozen Foods business providing cash
for investing activities and the repayment of debt.
FORWARD LOOKING INFORMATION:
Management believes the Company continues to be on track for
improvement in earnings from the Company's continuing operations in
1995. Revenue increases will come from both existing businesses
and acquisitions. Economic conditions in Mexico, where the Company
has operations, remain a concern but are expected to have a limited
impact over the remainder of the year.
<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 March 31, 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: May 12, 1995 By: /s/ Terrence M. O'Reilly
Terrence M. O'Reilly, Vice President,
Secretary and General Counsel
Date: May 12, 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 QUARTER ENDED MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-01-1995
<CASH> 21,916
<SECURITIES> 0
<RECEIVABLES> 105,562
<ALLOWANCES> 3,376
<INVENTORY> 162,105
<CURRENT-ASSETS> 320,015
<PP&E> 445,535
<DEPRECIATION> 187,212
<TOTAL-ASSETS> 764,712
<CURRENT-LIABILITIES> 163,100
<BONDS> 168,457
<COMMON> 2,698
0
0
<OTHER-SE> 353,995
<TOTAL-LIABILITY-AND-EQUITY> 764,712
<SALES> 379,548
<TOTAL-REVENUES> 379,548
<CGS> 247,024
<TOTAL-COSTS> 247,024
<OTHER-EXPENSES> (49,560)<F1>
<LOSS-PROVISION> 441
<INTEREST-EXPENSE> 7,930
<INCOME-PRETAX> 90,124
<INCOME-TAX> 40,894
<INCOME-CONTINUING> 49,230
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 49,230
<EPS-PRIMARY> 1.89
<EPS-DILUTED> 1.89
<FN>
<F1>Unusual Item: Gain on sale of Frozen Foods business.
</FN>
</TABLE>
