UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
Amendment No. 1
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 2, 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 0-7803
D O S K O C I L C O M P A N I E S I N C O R P O R A T E D
(Exact Name of Registrant as Specified in its Charter)
Delaware 13-2535513
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2601 NW Expressway, Suite 1000W, Oklahoma City, Oklahoma 73112
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (405)879-5500
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 for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13, or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
YES X NO
On May 13, 1994, the number of shares outstanding of the
registrant's common stock, $.01 par value, was 7,940,168.
<PAGE>
DOSKOCIL COMPANIES INCORPORATED
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Three Months ended April 2, 1994 compared with Three Months ended
April 3, 1993. Net sales increased $11.6 million, or 8.0%,
to $156.2 million for the first three months of 1994 over net
sales of $144.6 million for the first three months of 1993.
Volume increases generated approximately $6.7 million of the net
sales increase and increases in selling price per pound
contributed approximately $4.9 million of the overall increase.
Sales volume in the Foodservice and Deli Divisions increased
over the same period in fiscal 1993. Selling price per pound
increased primarily due to the pass through of increased raw
material costs.
In the first quarter of 1994, gross profit increased $2.6
million, or 10.8%, to $26.7 million from $24.1 million for
the first quarter of 1993. Gross margin for the first quarter of
1994 was higher as a percentage of net sales than the first
quarter of 1993 due primarily to certain cost reduction programs
instituted in 1993.
During the first quarter of 1994, the Company's selling
expenses increased $1.8 million, or 12.6%, over the 1993
period's amount of $14.3 million. Selling expenses increased
primarily due to marketing costs associated with increased
volume of sales and new product introductions in the Retail
Division. General and administrative expenses totaled
approximately $6.6 million in both the first quarters of 1994 and
1993. Amortization of intangible assets, which is a
noncash element of operating expenses, was approximately $1.5
million in both the 1994 and the 1993 periods.
Interest and financing costs increased $0.6 million, or
20%, to $3.6 million for the first quarter of 1994 from $3.0
million for the first quarter of 1993. This increase is due to
the higher fixed interest rates on the Company's long term
financing entered into in the second quarter of 1993 compared to
the variable rates on debt outstanding in the first quarter
of 1993.
The provision for income taxes for the first quarter of
1994 was a benefit of $0.8 million primarily because, for
financial reporting purposes, the Company generated losses during
the period, the benefit of which is expected to be realized
in the current fiscal year. The effective tax rate was
calculated based on the projected taxable income for the full
fiscal year and the anticipated changes for fiscal 1994 in the
deferred tax assets and related valuation allowance and the
deferred tax liabilities. No such benefit was recognized in the
first quarter of 1993.
Liquidity and Capital Resources
Management believes that cash flow from operations for the
full fiscal year combined with the borrowing capacity
available under the Company's revolving working capital facility
will be sufficient to meet the Company's operating and debt
service cash requirements for the foreseeable future. Management
anticipates that the purchase price and working capital
needs of the Frozen Specialty Foods acquisition discussed below,
will be financed by borrowings under a new senior secured
credit facility. The balance outstanding under the current
revolving working capital facility at April 2, 1994 was $10.0
million and $30.0 million was available for borrowing at that
date.
On March 17, 1994 the Company entered into a stock purchase
agreement with International Multifoods Corporation ("IMC") with
respect to the Frozen Specialty Foods division ("Frozen Specialty
Foods") of IMC. Pursuant to the stock purchase agreement, the
Company will purchase all of the issued and outstanding capital
stock of International Multifoods Foodservice Corp. ("IMFC") from
IMC for approximately $138 million, subject to certain conditions
and customary purchase price adjustments (the "IMFC
Acquisition"). The Company has received a commitment from
Chemical Bank, subject to completion of documentation and other
requirements, to provide a $186 million senior secured credit
facility for this transaction and to refinance the existing
credit facility. Frozen Specialty Foods, with estimated revenues
for the fiscal year ended February 26, 1994 of approximately $185
million, is a processor and marketer of prepared frozen food
products primarily for the foodservice and consumer markets.
Completion of the transaction is expected in the second quarter
of fiscal 1994.
Based upon a very preliminary assessment, the Company believes that
the integration of the newly acquired operations may result in
certain realignment and/or restructuring of its existing operations.
In connection with such integration and realignment and/or
restructuring of existing operations, the Company may incur
certain restructuring charges and it may result in an impairment
of the "Reorganization value in excess of amounts allocable to
identifiable assets" and/or the goodwill related to the acquired
operations. Because the Company is in the early stage of developing
the plan of integration, it is not possible to quantify restructuring
or impairment provision, if any, which may ultimately be required.
Cash Flows and Capital Expenditures
First three months of 1994. For the first quarter of 1994, net
cash used by operating activities was approximately $0.7
million. Decreases in cash resulted primarily from net decreases
in accounts payable and accrued liabilities of $7.3 million
due primarily to semiannual interest payments, payments related
to prior plant closings and seasonal decreases in marketing
programs. These decreases were offset partially by decreases in
accounts receivable and inventories, responsible for increases of
cash of $2.9 million and $1.0 million, respectively. The
remaining increases in cash were principally provided by the
results of operations during the quarter after adding back
noncash items of depreciation, amortization and the provision for
postretirement medical benefits and subtracting the deferred
benefit for income taxes.
Expenditures for additions to property, plant and equipment
were approximately $2.7 million for the first quarter of 1994.
Of this total, approximately $1.2 million of these expenditures
were attributable to construction of additional capacity and the
remainder for replacements and modifications to existing
facilities. The source of the funds for these expenditures was
primarily from the receipt of escrowed funds related to
construction in progress and increased borrowings under the 1993
Credit Agreement.
First three months of 1993. For the first quarter of 1993, net
cash used by operating activities was approximately $2.9
million. Decreases in cash resulted primarily from increases
during the period in receivables, responsible for a decrease in
cash of $3.2 million, and inventories, responsible for a decrease
in cash of $3.7 million. These decreases were offset somewhat by
increases in accounts payable and accrued liabilities, resulting
in an increase in cash of $1.4 million. The remaining increases
in cash were provided by the results of operations during the
period after adding back noncash items of depreciation,
amortization and the provision for postretirement benefits other
than pensions.
Expenditures for additions to property, plant and equipment
were approximately $2.6 million during the first quarter of 1993.
Approximately $1.3 million of these expenditures were
attributable to the construction of additional capacity at
the Company's South Hutchinson production facility to support
growth of the Foodservice Division. In addition, expenditures
of approximately $1.3 million were for replacement of and
modifications to existing systems and production lines.
During the first quarter of 1993, the Company issued 2.0
million shares of common stock to JLL at $15.00 per share.
The proceeds from this transaction, net of related expenses, were
used to reduce bank borrowings. The Company made repayments
during the quarter of $0.6 million on other long-term debt,
including capital lease obligations. During the quarter, the
Company increased net borrowings under the Existing Credit
Agreement by $8.0 million. The resulting net increase in cash
from these financing activities totaled $6.3 million.
<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.
DOSKOCIL COMPANIES INCORPORATED
Dated: July 22, 1994 By:/s/ Bryant P. Bynum
__________________________
Bryant P. Bynum
Vice President-Finance,
Corporate Planning and
Treasurer
