<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 NOVEMBER 30, 1997
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 1-8574
UNITED FOODS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 74-1264568
(State of Incorporation) (I.R.S. Employer Identification No.)
TEN PICTSWEET DRIVE, BELLS, TN 38006
(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code: (901) 422-7600
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
--- ---
On January 9, 1998, 2,616,139 shares of Class A Common Stock and 4,193,790
shares of Class B Common Stock of United Foods, Inc. were outstanding.
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INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
Part I: Financial Information:
Item 1: Financial Statements:
Balance Sheets 2-3
Statements of Operations 4
Statements of Cash Flows 5-6
Notes to Financial Statements 7-8
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-12
Part II: Other Information and Signatures
Item 6: Exhibits and Reports on Form 8-K 13
Signatures 14
</TABLE>
1
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PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
UNITED FOODS, INC.
BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NOVEMBER 30, FEBRUARY 28,
1997 1997
------------ -----------
Unaudited
------------
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 708 $ 3,772
Accounts Receivable, Net 19,873 17,533
Inventories (Note 3) 48,926 36,694
Prepaid Expenses and Miscellaneous 2,181 3,871
Deferred Income Taxes (Note 5) 1,278 1,255
-------- --------
Total Current Assets 72,966 63,125
-------- --------
Property and Equipment:
Land and Land Improvements 9,729 8,846
Buildings and Leasehold Improvements 21,114 21,060
Machinery, Equipment and Improvements 94,500 91,942
-------- --------
125,343 121,848
Less Accumulated Depreciation (72,415) (67,210)
-------- --------
Net Property and Equipment 52,928 54,638
-------- --------
Other Assets 1,363 1,345
-------- --------
Total Assets $127,257 $119,108
======== ========
</TABLE>
See accompanying notes to financial statements.
2
<PAGE> 4
UNITED FOODS, INC.
BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NOVEMBER 30, FEBRUARY 28,
1997 1997
------------ ------------
Unaudited
------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 25,722 $ 11,982
Accruals 8,462 5,305
Income Taxes Payable (Note 5) 21 328
Current Maturities of Long-term Debt 4,563 4,772
-------- --------
Total Current Liabilities 38,768 22,387
Long-term Debt, Less Current Maturities (Note 7) 39,285 36,244
Deferred Income Taxes (Note 5) 4,356 5,021
-------- --------
Total Liabilities 82,409 63,652
-------- --------
Stockholders' Equity:
Common Stock, Class A (Notes 6 and 8) 5,116 5,116
Common Stock, Class B, Convertible (Notes 6 and 8) 5,694 5,694
Additional Paid-in Capital 2,463 2,463
Retained Earnings 41,742 42,183
-------- --------
55,015 55,456
Less Cost of Treasury Stock (Notes 6 and 8) (10,167) --
-------- --------
Total Stockholders' Equity 44,848 55,456
-------- --------
Total Liabilities and Stockholders' Equity $127,257 $119,108
======== ========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 5
UNITED FOODS, INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED NOVEMBER 30, ENDED NOVEMBER 30,
------------------------ -------------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Gross Sales and Services Less Discounts, Returns
and Allowances $51,407 $52,669 $140,949 $144,005
Costs of Sales and Services (Note 3) 41,978 42,656 115,769 117,306
------- ------- -------- --------
Gross Profit 9,429 10,013 25,180 26,699
Selling, Administrative and General Expenses 8,180 8,180 23,078 23,151
------- ------- -------- --------
Operating Income 1,249 1,833 2,102 3,548
------- ------ -------- --------
Interest Income (Expense) - Net (1,084) (908) (2,870) (2,859)
Miscellaneous Income (Expense) - Net (Note 4) 11 -- 52 437
------- ------- -------- --------
Total Other Income and (Expense) (1,073) (908) (2,818) (2,422)
------- ------- -------- --------
Income (Loss) Before Taxes on Income (Benefit) 176 925 (716) 1,126
Taxes on Income (Benefit) (Note 5) 68 355 (275) 432
------- ------- -------- --------
Net Income (Loss) $ 108 $ 570 $ (441) $ 694
======= ======= ======== ========
Common Share and Common Share Equivalents
(Notes 6 and 8) 6,810 11,057 8,730 11,098
======= ======= ======== ========
EARNINGS (LOSS) PER COMMON SHARE AND COMMON
SHARE EQUIVALENT (NOTES 6 AND 8) $ .02 $ .05 $ (.05) $ .06
======= ======= ======== ========
Cash Dividends Per Common Share:
Class A $-0- $-0- $-0- $-0-
Class B $-0- $-0- $-0- $-0-
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 6
UNITED FOODS, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE NINE
MONTHS ENDED NOVEMBER 30,
-------------------------
1997 1996
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) $ (441) $ 694
Adjustments to reconcile net income to net cash
provided by operations:
Depreciation and amortization 5,551 5,915
Provision for losses on accounts receivable 132 122
Gain on disposal of property and equipment (50) (55)
Adjustments to property held for disposal -- (212)
Deferred income taxes (688) (584)
Change in assets and liabilities:
Accounts and notes receivable (2,594) (3,940)
Inventories (12,232) (8,661)
Prepaid expenses and miscellaneous 1,690 1,058
Other assets (18) 284
Accounts payable and accruals 16,865 14,132
Income taxes (307) 352
------- -------
Net cash provided by operations 7,908 9,105
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (3,729) (675)
Proceeds from sale of property and equipment 92 552
------- -------
Net cash used by investing activities (3,637) (123)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings 608 --
Payments of long-term debt (3,512) (3,085)
Revolving credit borrowings increase (decrease) 5,736 (5,691)
Purchase of treasury stock (10,167) --
------- -------
Net cash used by financing activities (7,335) (8,776)
------- -------
NET INCREASE (DECREASE) IN CASH FOR THE PERIOD (3,064) 206
CASH AND CASH EQUIVALENTS, beginning of period 3,772 1,029
------- -------
CASH AND CASH EQUIVALENTS, end of period $ 708 $ 1,235
======= =======
</TABLE>
See accompanying notes to financial statements
5
<PAGE> 7
UNITED FOODS, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
(CONCLUDED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE NINE
MONTHS ENDED NOVEMBER 30,
--------------------------
1997 1996
-------- -------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the nine months for:
Interest $2,446 $3,100
Income taxes $744 $841
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Capital expenditures of $32, $0, $0
and $160 are included in accounts payable
at November 30, 1997, February 28,
1997, November 30, 1996 and February 29,
1996, respectively.
</TABLE>
See accompanying notes to financial statements.
6
<PAGE> 8
UNITED FOODS, INC.
NOTES TO FINANCIAL STATEMENTS
1. The interim financial statements should be read in conjunction with the
Company's Annual Report on Form 10-K for the year ended February 28, 1997.
Significant accounting policies and other disclosures normally provided
have been omitted since such items are disclosed therein.
In the opinion of the Company, the accompanying unaudited financial
statements contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly its financial position as of November
30, 1997 and its results of operations for the three and nine months ended
November 30, 1997 and 1996 and cash flows for the nine months ended
November 30, 1997 and 1996.
2. The results of operations for the nine months ended November 30, 1997 and
1996 are not necessarily indicative of the results to be expected for the
fiscal year.
3. Inventories are summarized as follows:
<TABLE>
<CAPTION>
NOVEMBER 30, 1997 FEBRUARY 28, 1997
----------------- -----------------
<S> <C> <C>
Finished products $43,472,000 $30,807,000
Raw materials 2,369,000 2,525,000
Growing crops 2,464,000 2,111,000
Merchandise and supplies 621,000 1,251,000
----------- -----------
$48,926,000 $36,694,000
=========== ===========
</TABLE>
Substantially all of the Company's inventories are valued at the lower of
cost (first-in, first-out) or market at each fiscal year end. However, due
to the seasonality of vegetable processing, the gross profit method, at the
estimated annual rate, is used to determine frozen vegetable cost of goods
sold in interim financial statements.
4. Miscellaneous income in the amount of $437,000 for the nine months ended
November 30, 1996 consists of $212,000 to restore the carrying value of
certain property held for disposal to its original cost, based on its fair
market value. Further, miscellaneous income includes the recognition of a
claim in the amount of $167,000 and net gains on the sale of plant,
property and equipment.
5. Taxes on income consist of the current and deferred taxes required to be
recognized for the periods presented in accordance with the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes".
6. Each share of Class B Common Stock is convertible into one share of Class A
Common Stock at the holder's election. Holders of the Class A Common Stock
are entitled to a preference dividend of $.025 per share for any quarter
and each preceding quarter of the Company's fiscal year before the holders
of the Class B Common Stock are entitled to any regular cash dividend.
Class A stockholders have the right to elect a number of directors that
equal at least 25% of the members of the board of directors. In addition,
on matters requiring the classes to vote together, the Class A holders are
entitled to 1/10 vote per share and holders of Class B Common Stock are
entitled to one vote per share.
On May 19, 1997, the Company initiated a cash tender offer for up to one
million shares of its Class A and Class B Common Stock at a price of $2.50
per share. On June 17, 1997, the Company amended the cash tender offer by
extending the Expiration Date to July 3, 1997 and by increasing the number
of shares it offered to purchase from 1,000,000 shares of its Class A and
Class B Common Stock to up to 2,500,000 shares of its Class A Common Stock
and up to 1,500,000 shares of its Class B Common Stock, each at a price of
$2.50 per share. A total of approximately 2,641,299 shares of Class A
Common Stock and 1,720,932 shares of Class B Common Stock were validly
tendered and not withdrawn in response to the offer, as amended. The
purchase of shares was prorated in accordance with the terms of the offer,
as amended, for each class of common stock. The purchase, which totalled
approximately $10,167,000, including expenses, was funded with borrowings
from the Company's revolving credit facilities and available cash.
7
<PAGE> 9
7. As of November 30, 1997, the Company had working capital of $34,198,000,
which is less than the $35,000,000 minimum required by the debt covenants
contained in its $3,000,000 revolving credit facility and term note
payable which has a balance of $4,500,000. Management has received an oral
commitment from the lender that a waiver of the working capital covenant
will be provided for the fiscal quarter ended November 30, 1997. The loan
agreements are in the process of being amended to reduce the minimum
working capital requirements to $25,000,000 determined on the last day of
each fiscal quarter.
8. Earnings per share of common stock and common stock equivalents have been
computed based upon the weighted average number of shares outstanding
during the three and nine months ended November 30, 1997 and November 30,
1996. As of February 28, 1997, holders of substantially all of the
Company's common stock options had agreed not to exercise their options in
exchange for an agreed upon amount of deferred compensation and, therefore,
the assumed exercise of the common stock options is not included in the
computation of common stock equivalents for the three months ended November
30, 1997.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, Earnings per Share ("SFAS 128").
This statement simplifies the standards for computing earnings per share
("EPS") previously found in APB Opinion No. 15, "Earnings per Share", as
the presentation of primary and fully-diluted EPS is replaced with Basic
and Diluted EPS. Basic EPS excludes dilution and is computed by dividing
income available to common stockholders by the weighted average number of
common shares outstanding for the period. Diluted EPS reflects the
potential dilution that could occur if securities or other contracts to
issue common stock were exercised or converted into common stock or
resulted in the issuance of common stock that then shared in the earnings
of the entity.
SFAS 128 is effective for financial statements issued for periods ending
after December 15, 1997, and applies to entities with publicly-held common
stock or potential common stock. The Company will adopt SFAS 128 in the
financial statements issued for the year ending February 28, 1998. If the
provisions of SFAS 128 had been applied to the three and nine months ended
November 30, 1997, estimated Basic EPS and Diluted EPS would have been $.02
and $(.05), respectively.
8
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial condition and earnings
during the periods included in the accompanying balance sheets and statements of
income.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of cash are operations and external committed
credit facilities. At November 30, 1997, the Company's revolving credit
facilities totaled $21,000,000, all of which was available. The Company's
sources of liquidity are expected to meet adequately requirements for the
upcoming year and the foreseeable future; however, new financing alternatives
are constantly evaluated to determine their practicality and availability in
order to provide the Company with sufficient and timely funding at the least
possible cost. The Company's $18,000,000 and $3,000,000 revolving credit
facilities currently mature in fiscal 2001. One-year extensions of maturity
dates of the revolving credit facilities are expected to be considered by the
lenders annually. If annual extensions are not granted, the Company will then
investigate revolving credit facilities with other lenders and believes it can
replace any current revolving credit facility within its remaining 24-month
term.
Operations provided net cash of $7,908,000 during the nine months ended November
30, 1997 and $9,105,000 during the same period of the prior year. Inventory
increases used cash of $12,232,000 during the nine months ended November 30,
1997, compared with cash used of $8,661,000 during the same period of the prior
year. The inventory increases result primarily from the Company's raw vegetable
packs and deliveries of frozen finished product under the reciprocal supply
agreements, further described under "Supply Agreements", which occur primarily
during the Company's second and third fiscal quarters. The effect on operating
cash flow of the inventory increases during the nine months ended November 30,
1997 and 1996 was mitigated by an increase in accounts payable that resulted
primarily from the increase in inventories.
Investing activities used cash of $3,637,000 for the nine months ended November
30, 1997 compared with cash used of $123,000 during the same period of the prior
year, primarily as the result of increased capital expenditures.
Financing activities used cash of $7,335,000 for the nine months ended November
30, 1997 compared with cash used of $8,776,000 during the same period of the
prior year. On May 19, 1997, the Company initiated a cash tender offer for up to
1 million shares of its Class A and Class B Common Stock at a price of $2.50 per
share. On June 17, 1997, the Company amended the cash tender offer by extending
the Expiration Date to July 3, 1997 and by increasing the number of shares it
offered to purchase from 1,000,000 shares of its Class A and Class B Common
Stock to up to 2,500,000 shares of its Class A Common Stock and up to 1,500,000
shares of its Class B Common Stock, each at a price of $2.50 per share. A total
of approximately 2,641,299 shares of Class A Common Stock and approximately
1,720,932 shares of Class B Common Stock were validly tendered and not withdrawn
in response to the offer, as amended. The purchases of shares was prorated in
accordance with the terms of the offer, as amended, for each class of common
stock. The purchase, which totaled approximately $10,167,000, including
expenses, was funded with borrowings from the Company's revolving credit
facilities and available cash. Cash provided by operations was used to reduce
borrowings under the Company's revolving credit agreements for the nine months
ended November 30, 1996.
Working capital at November 30, 1997 was $34,198,000, and was $40,738,000 at
February 28, 1997. The reduction results primarily from the decrease in cash
from $3,772,000 at February 28, 1997 to $708,000 at November 30, 1997, primarily
as the result of the stock purchase previously mentioned.
The Company's ratio of debt to equity increased to 1.84 to 1 at November 30,
1997 from 1.15 to 1 at February 28, 1997, primarily as the result of the stock
purchase and the increase in accounts payable previously mentioned.
CAPITAL EXPENDITURES
Capital expenditures for fiscal 1998 are estimated to be approximately
$4,500,000 which is approximately $3,000,000 less than depreciation expense
projected for fiscal 1998. Capital expenditures are expected to be for
additional storage capacity and normal replacement of older equipment with more
efficient and energy saving equipment. These expenditures are expected to be
funded from operations and the Company's revolving credit facilities.
9
<PAGE> 11
RESULTS OF OPERATIONS
OVERVIEW AND TRENDS
The Company's product line is made up of agricultural products which are subject
to the cyclical conditions and risks inherent in the agricultural industry. The
Company bears part of the growing risks and all of the processing and marketing
risks of these agricultural products. Weather abnormalities and excess
inventories sometimes cause substantial reductions in the annual volume of
product processed in facilities that are owned or leased by the Company. When
this happens, the unit cost of that year's production will increase
substantially, resulting in reduced profit margins for one or more years. On the
other hand, when bumper crops occur unit costs will decrease but selling prices
will, in general, be depressed.
The Company has historically been faced with very strong competition in the
marketplace from large brand name competitors, private regional U. S. vegetable
processors, and privately-owned Mexican vegetable processors. These competitive
pressures, coupled with low overall growth, have led to weak market pricing. The
Company anticipates that these conditions will continue.
In addition to general inflation and the growing, processing and marketing risks
described above, the Company faces significant costs associated with increasing
governmental regulation, the loss of land and water available for agriculture in
California and the increasing competition due to world-wide facilitation of
trade. As a result of these factors, the Company's earnings history is cyclical
and will continue to be so in the future.
The effect on the Company's operations and its ability to withstand the costs of
ongoing and developing healthcare, labeling, OSHA, EPA, taxation and other
governmental regulations is unknown.
This report may include certain forward-looking information that is based upon
management's beliefs as well as upon assumptions made by and data currently
available to management. This information, which has been, or in the future may
be, included in reliance on the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, is subject to a number of risks and
uncertainties, including but not limited to the factors discussed above. Actual
results may differ materially from those anticipated in any such forward-looking
statements. The Company disclaims any obligation to update any information
contained herein.
SUPPLY AGREEMENTS
The Company has entered into two multi-year reciprocal supply agreements with
other food processing companies. Through these agreements the Company procures
frozen vegetables to meet certain production and inventory requirements. Also,
the Company sells frozen vegetables and fresh mushrooms to the other food
processors.
REVENUES
Net sales and service revenue decreased $1,262,000 (2.4%) and $3,056,000 (2.1%)
for the three and nine month periods ended November 30, 1997, respectively, as
compared with the same periods of the prior year. Sales volume increased .1% and
.3% for the three and nine month periods, respectively. The average selling
price per pound increased .5% for the quarter and decreased .2% for the nine
months ended November 30, 1997, as compared with the same period of the prior
year. Sales allowances increased $1,838,000 (19.9%) for the quarter and
$3,631,000 (14.6%) for the nine months, as compared with the same period of the
prior year. The increase in sales allowances for the quarter and year-to-date
resulted primarily from increased promotional allowances resulting from
competitive market conditions and the Company's efforts in obtaining additional
distribution.
COST OF SALES AND SERVICES AND GROSS PROFIT
Gross profit decreased $584,000 (5.8%) and $1,519,000 (5.7%) for the three and
nine month periods ended November 30, 1997, respectively, as compared with the
same periods of the prior year. The gross margin decreased from 19.0% to 18.3%
and from 18.5% to 17.9% for the quarter and nine months, respectively. The
effect of higher promotional allowances, previously mentioned, on gross profit
and on the gross margin was partially mitigated by lower unit production costs
for the quarter and year-to-date periods. The gross profit method, at the
estimated annual gross profit rate, is used to determine cost of
10
<PAGE> 12
goods sold in interim financial statements (See Note 3 - Notes to Financial
Statements). Cost of sales and services decreased $678,000 (1.6%) for the
quarter and decreased $1,537,000 (1.3%) for the nine months as compared with the
same periods of the prior year, primarily as the result of the sales volume
changes previously mentioned, offset by lower average unit production costs for
the quarter and year-to-date periods.
SELLING, ADMINISTRATIVE AND GENERAL EXPENSES
Selling, general administrative expenses decreased $73,000 (.3%) for the nine
months ended November 30, 1997, and were substantially unchanged for the
quarter, as compared with the same periods of the prior year.
INTEREST EXPENSE
Interest expense - net increased $176,000 (19.4%) for the quarter and $11,000
(.4%) for the nine months as compared to the same periods of the prior year. The
increase during the three months ended November 30, 1997 resulted primarily from
higher average borrowings resulting from the stock purchase previously
mentioned.
MISCELLANEOUS INCOME
Miscellaneous income in the amount of $437,000 for the nine months ended
November 30, 1996 consisted of $212,000 to restore the carrying value of certain
property held for disposal to its original cost, based on its fair market value.
Further, miscellaneous income includes the recognition of a claim in the amount
of $167,000 and net gains on the sale of plant, property and equipment.
TAXES ON INCOME
Taxes on income for the three and nine months ended November 30, 1997 and 1996
consisted of current and deferred taxes provided at the estimated effective
federal and state tax rates expected to be recognized for the respective
periods.
YEAR 2000 ISSUES
The Company has conducted a review of its computer systems to identify those
which could be adversely affected by the "Year 2000" issue and is currently
reprogramming those systems using existing internal resources. Management
presently believes that these changes will be made in a timely manner and that
the Year 2000 problem will not pose significant operational problems for the
Company. Moreover, management does not expect the reprogramming costs will have
a material effect on the Company's financial condition, liquidity, or results of
operations. Additionally, it is presently management's understanding that the
significant third parties with whom the Company deals will be Year 2000
compliant in a timely manner and, therefore, it is not anticipated that this
issue will have an effect on the Company's operations or financial position.
RECENT ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings per Share ("SFAS 128"). This
statement simplifies the standards for computing earnings per share ("EPS")
previously found in APB Opinion No. 15, "Earnings per Share", as the
presentation of primary and fully-diluted EPS is replaced with Basic and Diluted
EPS. Basic EPS excludes dilution and is computed by dividing income available to
common stockholders by the weighted average number of common shares outstanding
for the period. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock that then shared
in the earnings of the entity.
SFAS 128 is effective for financial statements issued for periods ending after
December 15, 1997, and applies to entities with publicly-held common stock or
potential common stock. The Company will adopt SFAS 128 in the financial
statements issued for the year ending February 28, 1998. If the provisions of
SFAS 128 had been applied to the three and nine months ended November 30, 1997,
estimated Basic EPS and Diluted EPS would have been $.02 and $(.05),
respectively.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income ("SFAS
130"), which establishes standards for reporting and display of comprehensive
income, its components and accumulated balances. Comprehensive income is defined
to include all changes in equity except
11
<PAGE> 13
those resulting from investments by owners and distributions to owners. Among
other disclosures, SFAS 130 requires that all items that are required to be
recognized under current accounting standards as components of comprehensive
income be reported in a financial statement that is displayed with the same
prominence as other financial statements.
Also, in June 1997, the Financial Accounting Standards Board issued SFAS 131,
Disclosures about Segments of an Enterprise and Related Information ("SFAS
131"), which supersedes SFAS No. 14, Financial Reporting for Segments of a
Business Enterprise. SFAS 131 establishes standards for the way that public
companies report information about operating segments in annual financial
statements and requires reporting of selected information about operating
segments in interim financial statements issued to the public. It also
establishes standards for disclosures regarding products and services,
geographic areas and major customers. SFAS 131 defines operating segments as
components of a company about which separate financial information is available
that is evaluated by the chief operating decision maker in deciding how to
allocate resources and in assessing performance.
SFAS 130 and SFAS 131 are effective for financial statements for periods
beginning after December 15, 1997 and require comparative information for
earlier years to be restated. Because of the recent issuance of these standards,
management has been unable to evaluate fully the impact, if any, these standards
may have on future financial statement disclosures. Results of operations and
financial position, however, will be unaffected by implementation of these
standards.
12
<PAGE> 14
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) - EXHIBITS
See Exhibit Table.
(b) - REPORTS ON FORM 8-K
There were no reports on Form 8-K filed during the three months ended November
30, 1997.
13
<PAGE> 15
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.
UNITED FOODS, INC.
Date: January 14, 1998 By /s/ Carl W. Gruenewald, II
-------------------- ----------------------------------
Carl W. Gruenewald, II
Senior Vice President,
Chief Financial Officer & Treasurer
14
<PAGE> 16
UNITED FOODS, INC.
EXHIBITS TABLE
EXHIBIT EXHIBIT
NUMBER DESCRIPTION PAGE
- ------- ----------------------------------------------------------- ----
[S] [C] [C]
11 Computation of earnings per share. 16
27 Financial Data Schedule (For SEC use only).
15
<PAGE> 1
EXHIBIT 11
UNITED FOODS, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED NOVEMBER 30, ENDED NOVEMBER 30,
--------------------------- --------------------------
1997 1996 1997 1996
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
SHARES:
Weighted average number of common shares
outstanding 6,809,929 10,809,929 8,729,929 10,809,929
Effect of shares issuable under option
plan and warrants as determined by the
treasury stock method -- 246,967 -- 287,688
---------- ----------- ----------- -----------
Weighted average number of common shares
outstanding as adjusted 6,809,929 11,056,896 8,729,929 11,097,617
========== =========== =========== ===========
PER COMMON SHARE COMPUTATIONS:
Net Income (Loss) $ 108,000 $ 570,000 $ (441,000) $ 694,000
========== =========== =========== ===========
Net Income (Loss) $ .02 $ .05 $ (.05) $ .06
========== =========== =========== ===========
</TABLE>
16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF UNITED FOODS INC FOR THE THREE MONTHS ENDED NOVEMBER 30,
1997 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> FEB-28-1998
<PERIOD-END> NOV-30-1997
<CASH> 708
<SECURITIES> 0
<RECEIVABLES> 19,873
<ALLOWANCES> 0
<INVENTORY> 48,926
<CURRENT-ASSETS> 72,966
<PP&E> 125,343
<DEPRECIATION> 72,415
<TOTAL-ASSETS> 127,257
<CURRENT-LIABILITIES> 38,768
<BONDS> 39,285
0
0
<COMMON> 10,810
<OTHER-SE> 34,038
<TOTAL-LIABILITY-AND-EQUITY> 127,257
<SALES> 140,949
<TOTAL-REVENUES> 140,949
<CGS> 115,769
<TOTAL-COSTS> 115,769
<OTHER-EXPENSES> 23,078
<LOSS-PROVISION> 132
<INTEREST-EXPENSE> 2,870
<INCOME-PRETAX> (716)
<INCOME-TAX> (275)
<INCOME-CONTINUING> (441)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (441)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
