CONFORMED
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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, 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 December 31, 1995
Common Stock, par value $0.10 per share 26,095,138 shares
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<PAGE>
UNIVERSAL FOODS CORPORATION
INDEX
Page No.
PART I, FINANCIAL INFORMATION:
Consolidated Condensed Balance Sheets
- December 31, 1995 and September 30, 1995. 1
Consolidated Condensed Statements of Earnings
- Three Months Ended December 31, 1995
and 1994. 2
Consolidated Condensed Statements of Cash Flows
- Three Months Ended December 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 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
UNIVERSAL FOODS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
($000's Omitted)
December 31
1995 September 30
ASSETS (Unaudited) 1995
CURRENT ASSETS:
Cash and cash equivalents $ 6,844 $ 8,717
Trade accounts receivable 98,066 105,847
Inventories:
Finished and in-process products 122,543 119,885
Raw materials and supplies 54,765 59,135
Prepaid expenses and other current
assets 33,718 32,780
-------- --------
TOTAL CURRENT ASSETS 315,936 326,364
INVESTMENTS AND OTHER ASSETS 42,592 42,164
INTANGIBLES 147,214 148,654
PROPERTY, PLANT AND EQUIPMENT:
Cost:
Land and buildings 138,993 139,177
Machinery and equipment 316,862 308,204
-------- --------
455,855 447,381
Less accumulated depreciation 194,698 187,693
-------- --------
261,157 259,688
-------- --------
TOTAL ASSETS $766,899 $776,870
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings $ 2,705 $ 7,108
Accounts payable, accrued expenses and
other liabilities 113,063 133,637
Federal and state income taxes 25,465 20,755
Current maturities on long-term debt 18,572 21,100
-------- -------
TOTAL CURRENT LIABILITIES 159,805 182,600
DEFERRED INCOME TAXES 14,421 14,514
OTHER DEFERRED LIABILITIES 19,449 19,198
ACCRUED EMPLOYEE AND RETIREE BENEFITS 38,672 38,100
LONG-TERM DEBT 169,695 160,678
SHAREHOLDERS' EQUITY:
Common stock 2,698 2,698
Additional paid-in capital 78,749 78,955
Earnings reinvested in the business 321,846 314,883
-------- --------
403,293 396,536
Less: Treasury stock, at cost 25,095 24,770
Other 13,341 9,986
-------- --------
364,857 361,780
-------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $766,899 $776,870
======== ========
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
1995 1994
Revenue $193,446 $187,724
Cost of products sold 126,467 122,371
------- -------
Gross profit 66,979 65,353
Selling and administrative expenses 41,995 42,229
Unusual item - gain on sale of
Frozen Foods business --- (49,560)
-------- ---------
Operating income 24,984 72,684
Interest expense 3,906 3,968
-------- --------
Earnings before income taxes 21,078 68,716
Income taxes 7,588 33,134
-------- --------
Net earnings $ 13,490 $ 35,582
======== ========
Weighted average number of
common shares outstanding 26,103,000 26,061,000
========== ==========
Net earnings per common share $.52 $1.37
==== =====
Dividends per common share $.25 $.24
==== ====
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
1995 1994
Net cash provided by (used in)
operating activities $ 13,292 $ (30,216)
Cash flows from investing activities:
Acquisition of property, plant
and equipment (10,397) (9,150)
Acquisition of new business - net of
cash acquired (529) ---
Proceeds from disposition of business
and equipment --- 41,609
Other items, net 504 173
------- -------
Net cash (used in) provided by
investing activities (10,422) 32,632
Cash flows from financing activities:
Proceeds from additional borrowings 50,032 28,856
Reductions in debt (47,717) (11,255)
Other shareholders' equity transactions 315 269
Purchase of treasury stock (846) (1,759)
Dividends paid (6,527) (6,257)
-------- -------
Net cash (used in) provided by
financing activities (4,743) 9,854
Net (decrease) increase in cash and
cash equivalents (1,873) 12,270
Cash and cash equivalents at
beginning of period 8,717 43,430
-------- --------
Cash and cash equivalents at end of period $ 6,844 $ 55,700
======== ========
Supplemental Disclosure of Cash
Flow Information:
Cash paid during the period for:
Interest $ 4,003 $ 3,979
Income taxes 3,216 34,254
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, 1995 and September 30, 1995, and
the results of operations and cash flows for the three month periods
ended December 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 financial statements for the
year ended September 30, 1995, 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, 1995 and 1994, the Company
repurchased 24,500 and 65,000 shares of common stock, respectively,
for an aggregate price of $846,000 and, $1,759,000 respectively.
5. For the three months ended December 31, 1995, depreciation and
amortization were $8,102,000 and $1,466,000, respectively. For the
three months ended December 31, 1994, depreciation and amortization
were $7,771,000 and $1,644,000, respectively.
6. On January 8, 1996, the Company issued two senior notes of
$15,000,000 each, one bearing interest at 6.77%, due January 2010 and
the other bearing interest at 6.68%, amortizing in seven equal principal
payments beginning January 2005. Proceeds will be used for general
corporate purposes.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS, FINANCIAL CONDITION
AND FORWARD LOOKING INFORMATION
RESULTS OF OPERATIONS:
Revenue from operations was $193,446,000 during the three months ended
December 31, 1995, compared with $187,724,000 a year ago. The revenue
increase from the Color and Dehydrated operations was slightly offset
by lower revenues in the Flavor Division as a result of eliminating
some lower margin business.
Gross profit margins remained relatively flat at 34.6% of revenue
during the three months ended December 31, 1995 compared to 34.8% for
the same period last year.
The Company's continued focus on cost reduction resulted in a
decrease of selling and administrative expenses to 21.7% of revenue
during the three months ended December 31, 1995 compared to 22.5% for
the same period last year.
The effective income tax rate for the first three months of 1996
exceeded the 34% statutory rate primarily as a result of state income
taxes. The effective income tax rate in 1995 exceeded 34% as a result
of a higher than normal effective rate on the gain from the sale of
the Frozen Foods business and state income taxes.
FINANCIAL CONDITION:
The current ratio increased to 2.0 at December 31, 1995, compared with
1.8 at September 30, 1995. Net working capital increased $12,367,000
to $156,131,000 at December 31, 1995 from $143,764,000 at September
30, 1995.
Net cash provided by operating activities was $13,292,000 for the
quarter ended December 31, 1995 compared to $30,216,000 used in
operating activities for the quarter ended December 31, 1994. The
use of cash in fiscal 1995 is primarily attributable to the tax
payments as a result of the sale of the Frozen Foods business.
Net cash used in investing activities was $10,422,000 for the three
months ended December 31, 1995. Included in investing activities are
capital additions of $10,397,000. 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 new aroma chemical and fragrance
facility in Spain and a BioProducts facility in France.
Net cash used in financing activities was $4,743,000 for the quarter
compared with $9,854,000 provided by financing in the comparable
period last year. Proceeds from additional borrowings, including the
$40,000,000 of senior notes relating to the debt agreement entered
into in June 1995, were substantially offset by maturing obligations.
In 1995, proceeds from new borrowings exceeded repayments by
$17,601,000. Dividends of $6,527,000 were paid in the quarter.
<PAGE>
FORWARD LOOKING INFORMATION:
Net earnings from the Company's continuing operations were up 10.5% for
the first three months of fiscal 1996 compared with fiscal 1995. The
Company continues to focus on profitability improvement as product
categories are upgraded to more sophisticated flavorings and colors
for foods and other applications.
<PAGE>
PART II
OTHER INFORMATION
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 25, 1996. At the meeting the
following matters were voted upon by the Shareholders.
26,113,937 shares were entitled to vote at the meeting, and
23,692,154 shares (90.73%) were voted.
The following persons were elected to a three year term as
Directors of the Company:
For Against
James L. Forbes 23,287,741 404,413
James H. Keyes 23,292,918 399,236
Dr. Carol I. Waslien Ghazaii 23,270,035 422,119
The following persons continued in office as Directors in
accordance with their previous election:
Michael E. Batten
John F. Bergstrom
Leon T. Kendall
Kenneth P. Manning
Charles S. McNeer
Guy A. Osborn
William U. Parfet
Essie Whitelaw
The Shareholders ratified the appointment of Deloitte & Touche
LLP, certified public accountants, as the independent auditors of
the Company for 1996. Of the 26,113,937 shares entitled to vote
at the meeting, 23,561,594 shares voted for ratification, 63,358
shares voted against ratification and 67,202 shares abstained.
There were no broker non-votes at the Annual Meeting.
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, 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: February 13, 1996 By: /s/ Terrence M. O'Reilly
Terrence M. O'Reilly, Vice President,
Secretary and General Counsel
Date: February 13, 1996 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 THREE MONTHS ENDED DECEMBER 31, 1995 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-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 6,844
<SECURITIES> 0
<RECEIVABLES> 101,098
<ALLOWANCES> 3,032
<INVENTORY> 177,308
<CURRENT-ASSETS> 315,936
<PP&E> 455,855
<DEPRECIATION> 194,698
<TOTAL-ASSETS> 766,899
<CURRENT-LIABILITIES> 159,805
<BONDS> 169,695
0
0
<COMMON> 2,698
<OTHER-SE> 362,159
<TOTAL-LIABILITY-AND-EQUITY> 766,899
<SALES> 193,446
<TOTAL-REVENUES> 193,446
<CGS> 126,467
<TOTAL-COSTS> 126,467
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (237)
<INTEREST-EXPENSE> 3,906
<INCOME-PRETAX> 21,078
<INCOME-TAX> 7,588
<INCOME-CONTINUING> 13,490
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,490
<EPS-PRIMARY> .52
<EPS-DILUTED> .52
</TABLE>
