<PAGE>
<PAGE>
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 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 1-9050
--------------------------------
HUDSON FOODS, INC.
- --------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 71-0427616
- ---------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1225 Hudson Road, Rogers, Arkansas 72756
- --------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(501) 636-1100
- --------------------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
- ----------------------------------------------------------------
(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 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 No
---- ----
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of April 26, 1994 Hudson Foods, Inc. had 7,755,418 shares of
$0.01 par value Class A Common Stock outstanding and 8,502,052
shares of $0.01 par value Class B Common Stock outstanding.<PAGE>
<PAGE>
PART 1 FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS
HUDSON FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
April 2, October 2,
1994 1993
As restated.
(See note 2)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,352 $ 3,891
Receivables, net 61,873 57,452
Inventory:
Field inventory 39,926 35,247
Feed, eggs and other 20,046 21,318
Finished products 65,953 59,932
Other 18,505 7,275
________ ________
Total current assets 209,655 185,115
________ ________
Property, plant and equipment, net
of accumulated depreciation of
$110,873 & $101,337 207,648 205,613
Excess cost of investment, net 15,525 15,807
Other assets 10,327 9,968
________ ________
Total assets $443,155 $416,503
======== ========
The accompanying notes are an integral part of the condensed consolidated
financial statements
/TABLE
<PAGE>
<PAGE>
PART 1 FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS
HUDSON FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
April 2, October 2,
1994 1993
As restated.
(See note 2)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 22,300 $ --
Current portion of long-term debt 5,054 5,085
Accounts payable 29,875 31,555
Accrued liabilities 33,481 33,198
Deferred income taxes 11,466 11,466
________ ________
Total current liabilities 102,176 81,304
________ ________
Long-term obligations 86,438 88,985
________ ________
Deferred income taxes & deferred gain 70,425 72,312
________ ________
Stockholders' equity:
Common stock:
Class A, $.01 par value; 40,000,000 shares
authorized; issued 8,677,872 and 8,630,407
shares 87 86
Class B, $.01 par value; 40,000,000 shares
authorized; issued & outstanding
8,502,052 shares 85 85
Additional capital 88,054 87,638
Retained earnings 107,306 97,727
Treasury stock, at cost (933,854 &
958,358 Class A shares) (11,416) (11,634)
________ ________
Total stockholders' equity 184,116 173,902
________ ________
Total liabilities & stockholders' equity $443,155 $416,503
======== ========
The accompanying notes are an integral part of the condensed consolidated
financial statements
/TABLE
<PAGE>
<PAGE>
HUDSON FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
For the For the
Three Months Ended Six Months Ended
April 2, April 3, April 2, April 3,
1994 1993 1994 1993
As restated As restated
(See note 2) (See note 2)
<S> <C> <C> <C> <C>
Sales $256,327 $220,148 $506,619 $451,839
________ ________ ________ ________
Costs and expenses:
Cost of sales 222,284 192,589 434,930 395,941
Selling 18,839 16,701 38,096 30,846
General & administrative 6,122 5,132 12,596 9,943
________ ________ ________ ________
Total costs and expenses 247,245 214,422 485,622 436,730
________ ________ ________ ________
Operating income 9,082 5,726 20,997 15,109
Other expense 1,717 2,576 3,546 5,032
________ ________ ________ ________
Income before income taxes 7,365 3,150 17,451 10,077
Income tax expense 2,993 1,289 6,984 3,943
________ ________ ________ ________
Net income $ 4,372 $ 1,861 $ 10,467 $ 6,134
======== ======== ======== ========
Earnings per share:
Primary $0.26 $0.12 $0.63 $0.41
======== ======== ======== ========
Fully diluted $0.26 $0.13 $0.63 $0.43
======== ======== ======== ========
Dividends per share:
Class A common $.030 $.030 $.060 $.060
======== ======== ======== ========
Class B common $.025 $.025 $.050 $.050
======== ======== ======== ========
Weighted average number of
common and common equivalent
shares outstanding:
Primary 16,615,447 15,745,411 16,556,886 15,036,161
========== ========== ========== ==========
Fully diluted 17,458,340 16,549,439 17,430,625 16,430,536
========== ========== ========== ==========
The accompanying notes are an integral part of the condensed consolidated
financial statements
/TABLE
<PAGE>
<PAGE>
HUDSON FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
For the Six Months Ended
April 2, April 3,
1994 1993
As restated
(See note 2)
<S> <C> <C>
Operations:
Net income $10,467 $6,134
Items reflected in net income
not requiring cash:
Depreciation 10,535 10,663
Amortization 547 774
Deferred gain (1,388) (843)
Deferred income taxes (385) 308
Interest expense on 14% Debentures -- 1,227
Other (44) --
Changes in operating assets & liabilities (26,339) (8,285)
________ _______
Cash flows provided by (used for) operations (6,607) 9,978
________ _______
Investments:
Purchase of property, plant & equipment (16,483) (16,957)
Disposition of property, plant and equipment, net 3,707 21,044
Other (624) 1,762
________ ________
Cash flows provided by (used for) investments (13,400) 5,849
________ ________
Financing:
Addition (reduction) to notes payable 22,300 (7,600)
Addition to long-term obligations -- 3,370
Reduction of long-term obligations (2,578) (12,894)
Dividends (888) (821)
Exercise of stock options and other 634 433
________ ________
Cash flows provided by (used for) financing 19,468 (17,512)
________ ________
Decrease in cash (539) (1,685)
Cash and cash equivalents at beg. of period 3,891 3,949
________ ________
Cash and cash equivalents at end of period $ 3,352 $2,264
======== ========
Supplemental cash flow information:
Interest paid $3,701 $3,471
Income taxes paid $9,476 $3,650
The accompanying notes are an integral part of the condensed consolidated
financial statements
/TABLE
<PAGE>
<PAGE>
HUDSON FOODS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The financial statements for the periods ended April 2, 1994
and April 3, 1993 include, in the opinion of management, all
adjustments (none of which were other than normal recurring
accruals) necessary to present fairly the results of operations
and cash flows for such periods. Results for the three and six
month periods ended April 2, 1994 are not necessarily indicative
of the results which will be realized for the year ending October
1, 1994. The annual report for the year ended October 2, 1993
contains additional information which should be read in conjunction
with these financial statements.
2. Accounting Change-Income Taxes. Beginning in fiscal year 1994,
the Company adopted Statement of Financial Accounting Standards No.
109 (SFAS 109), "Accounting for Income Taxes," which requires that
deferred income tax liabilities and assets be recognized for
differences between the tax basis of assets and liabilities and
their financial reporting amounts, measured by using presently
enacted tax laws and rates. The Company elected to apply the
provisions of SFAS 109 retroactively to September 28, 1986. As a
result, property, plant and equipment and deferred income taxes as
of October 2, 1993 were each increased by $8,234,000 from the
amounts previously reported to recognize the difference between the
assigned values and the tax basis of assets and liabilities
previously acquired in 1986 (Corbett Enterprises, Inc.), 1987
(Thies Companies, Inc.) and 1990 (Pierre Frozen Foods, Inc.). The
adoption of SFAS 109 did not effect net income since increases in
depreciation expense, due to adjustments for prior business
combinations, were offset by the amortization of the deferred
income taxes. The statements of operations for the three and six
month periods ended April 3, 1993 have been restated to increase
cost of sales by $206,000 and $412,000, respectively, and decrease
income tax expense by a corresponding amount.
<PAGE>
<PAGE>
To the Board of Directors and Stockholders
Hudson Foods, Inc.
We have reviewed the condensed consolidated balance sheet of Hudson
Foods, Inc. and subsidiaries as of April 2, 1994, and the related
condensed consolidated statements of operations for the three month
and six month periods ended April 2, 1994, and April 3, 1993, and
the condensed consolidated statements of cash flows for the six
month periods ended April 2, 1994 and April 3, 1993. These
financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data and making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the
financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the condensed consolidated financial
statements referred to above for them to be in conformity with
generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet as of October
2, 1993, and the related consolidated statements of operations and
cash flows for the year then ended (not presented herein); and in
our report dated November 2, 1993, we expressed an unqualified
opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of October 2, 1993 is fairly stated
in all material respects in relation to the consolidated balance
sheet from which it has been derived.
As described in note 2, in fiscal 1994 the Company changed its
method of accounting for income taxes.
Coopers & Lybrand
Tulsa, Oklahoma
April 25, 1994
<PAGE>
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
Hudson Foods, Inc. is a poultry producer and food processor. The
Company's profitability is affected by finished product prices,
the price of feed grains and other factors.
The Company's selling prices for some chicken and turkey products
are influenced by industry commodity market prices. However,
since many factors are involved in pricing, commodity market
prices should only be used as a general indicator of the
Company's selling prices.
For the first six months of fiscal 1994, average commodity
broiler and turkey market prices were up 3 cents per pound and 4
cents per pound, respectively, from the averages for the first
six months of fiscal 1993.
Inflation has not materially affected sales or cost of sales
during the current and prior year.
<PAGE>
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
SECOND QUARTER OF FISCAL 1994 COMPARED WITH
SECOND QUARTER OF FISCAL 1993.
Sales increased $36.2 million for the second quarter of fiscal
1994 from the same period of fiscal 1993. The sales increase was
primarily due to higher finished product prices and volumes for
chicken, turkey, and portioned entree products and higher selling
prices for luncheon meat products.
Chicken volume increased primarily due to the Company's
entrance into new international markets.
Portioned entree volume increased primarily due to new
product lines and new customers.
Total poultry sales volume was 193.6 million dressed pounds,
representing 59.3% of total sales dollars. This compares with the
fiscal 1993 second quarter total of 181.3 million dressed pounds,
which was 60.5% of total sales dollars.
Processed meat sales volume, some of which included poultry raw
materials, was 59.7 million and 55.0 million pounds for the second
quarter of fiscal 1994 and fiscal 1993, respectively.
Cost of sales increased $29.7 million for the second quarter of
fiscal 1994 from the same period of fiscal 1993. The cost of
sales increase was primarily due to increased volume and higher
feed and ingredient costs.
Selling and general and administrative expenses as a percentage
of sales decreased to 9.7% from 9.9% for the second quarter of
fiscal 1994 and fiscal 1993, respectively. However, total selling
expenses increased due to increased commissions, rebates,
advertising, distribution, demonstration, new product development
and storage expenses primarily related to new products and
increased international sales. Also, general and administrative
expenses were up as a result of increased incentive compensation
accruals.
Other expense for the second quarter of fiscal 1994 is composed of
interest expense and interest income. Other expense for the second
quarter of fiscal 1993 is composed of interest expense, interest
income and $.5 million bond issue and premium costs resulting from
the redemption of the Company's 14% Convertible Subordinated
Debentures.
<PAGE>
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
SIX MONTHS OF FISCAL 1994 COMPARED WITH
SIX MONTHS OF FISCAL 1993.
Sales increased $54.8 million for the first six months of fiscal
1994 from the same period of fiscal 1993. The sales increase was
primarily due to higher finished product prices and volumes for
chicken and portioned entree products and higher selling prices for
luncheon meat products.
Chicken volume increased primarily due to the Company's
entrance into new international markets.
Portioned entree volume increased primarily due to new
product lines and new customers.
Total poultry sales volume was 395.0 million dressed pounds,
representing 60.1% of total sales dollars. This compares with
total poultry sales volume for the first six months of fiscal 1993
of 374.4 million dressed pounds, which was 61.6% of total sales
dollars.
Processed meat sales volume, some of which included poultry raw
materials, was 116.7 million and 107.8 million pounds for the first
six months of fiscal 1994 and fiscal 1993, respectively.
Cost of sales increased $39.0 million for the first six months of
fiscal 1994 from the same period of fiscal 1993. The cost of
sales increase was primarily due to increased volume and higher
feed and ingredient costs.
Selling and general and administrative expenses as a percentage
of sales increased to 10.0% from 9.0% for the first six months of
fiscal 1994 and fiscal 1993, respectively. Selling expenses
increased in the areas of commissions, rebates, advertising,
distribution, demonstration, new product development and storage
expenses primarily related to new products and increased
international sales. General and administrative expenses were up
as a result of incentive compensation accruals.
Other expense for the first six months of fiscal 1994 is composed
of interest expense and interest income. Other expense for the
first six months of fiscal 1993 is composed of interest expense,
interest income and $.5 million bond issue and premium costs
resulting from the redemption of the Company's 14% Convertible
Subordinated Debentures.
<PAGE>
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
At April 2, 1994, working capital was $107.5 million compared with
$103.8 million at October 2, 1993 and the current ratio was 2.05
to 1 and 2.28 to 1 at April 2, 1994 and October 2, 1993,
respectively. The net increase in working capital is mainly due
to an increase in other current assets due to insurance claim
receivables resulting from fire losses. The collection time for
insurance receivables is longer than the collection time for normal
trade receivables.
Beginning in fiscal year 1994, the Company adopted Statement of
Financial Accounting Standards No. 109 (SFAS 109), "Accounting for
Income Taxes," which requires that deferred tax liabilities and
assets be recognized for any difference between the tax basis of
assets and liabilities and their financial reporting amounts
measured by using presently enacted tax laws and rates. The
Company elected to apply the provisions of SFAS 109 retroactively
to September 28, 1986. As a result, the Company restated the
October 2, 1993 balance sheet as follows: 1) property, plant and
equipment cost increased $13.5 million, 2) accumulated
depreciation increased $5.3 million and 3) deferred income taxes
increased $8.2 million. (See note 2 of the condensed consolidated
financial statements.)
The Company's capital budget for fiscal 1994 contemplates aggregate
capital expenditures of approximately $50 million to upgrade and/or
expand current production facilities and related equipment. The
capital expenditures have been and will be financed by operations,
borrowings under the Company's credit agreement and/or lease
arrangements. Additionally, the Company also plans to build a new
chicken complex and is now researching alternative sites.
For the first six months of fiscal 1994 and 1993, the Company
had capital expenditures of $16.5 million and $17.0 million,
respectively. Those expenditures were primarily for upgrading
and expanding production facilities and related equipment.
The Company uses the farm price method of inventory valuation for
income tax reporting which results in current deferred income taxes
for financial reporting. The Company anticipates that it will be
able to maintain its inventory at current levels and accordingly,
does not expect a significant portion of the current deferred
income tax to be paid in the near future. At April 2, 1994,
current deferred income taxes relating to the farm price method
were $13.3 million.<PAGE>
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION (CONTINUED)
Historically, the Company's operations have been financed through
internally generated funds, borrowings, lease arrangements and
the issuance of common stock. The Company's line of credit, which
expires September 30, 1996, provides for aggregate borrowings or
letters of credit up to $100 million. The credit agreement, among
other things, limits the payment of dividends to $2.5 million in
any fiscal year and limits annual capital expenditures. It also
requires the maintenance of minimum working capital and tangible
net worth, and requires that working capital and debt-to-equity
ratios be maintained at certain levels. At April 2, 1994, the
Company had available credit lines of $70.5 million. The Company
had short-term debt borrowed under the line of $22.3 million and
had outstanding letters of credit of $7.2 million.
<PAGE>
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Not Applicable.
Item 2. Changes in Securities
Not Applicable.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Not Applicable.
Item 5. Other Information
Not Applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit Description of Exhibit Sequentially
Number Numbered Page
4a Trust indenture 8% Incorporated by
convertible subordin- reference from
ated debentures due Registration
2006 Statement No.
33-8889
4c Restated Certificate Incorporated by
of Incorporation of reference from
Hudson Foods, Inc., Registration
Section 4 Statement No.
33-15274
11 Calculation of earnings 15
per share
15 Letter regarding unaudited 16
interim financial
information
(b) Reports on Form 8-K.
Not applicable.
<PAGE>
<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.
Hudson Foods, Inc.
Date 4-29-94 Michael T. Hudson
President
Date 4-29-94 Charles B. Jurgensmeyer
Chief Financial Officer<PAGE>
<PAGE>
<PAGE>
<PAGE>
Exhibit 11 - EARNINGS PER SHARE CALCULATION
HUDSON FOODS INC. AND SUBSIDIARIES
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
APRIL 2, APRIL 3, APRIL 2, APRIL 3,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net income $4,372 $1,861 $10,467 $6,134
Interest on convertible
subordinated debentures
net of income taxes 212 244 429 956
__________ _________ _________ ________
Adjusted net income $4,584 $2,105 $10,896 $7,090
========== ========= ========= ========
Primary earnings per share:
Weighted average number of
common shares outstanding 16,222,667 15,308,247 16,194,952 14,666,132
Common stock equivalents:
Dilutive options 392,780 437,164 361,934 370,029
__________ __________ __________ __________
Weighted average number of
common and common equivalent
shares 16,615,447 15,745,411 16,556,886 15,036,161
========== ========== ========== ==========
Primary earnings per share $0.26 $0.12 $0.63 $0.41
========== ========== ========== ==========
Fully diluted earnings
per share:
Weighted average number of
common shares outstanding 16,222,667 16,112,275 16,194,952 16,060,507
Common stock equivalents:
Dilutive options 405,387 437,164 405,387 370,029
Convertible subordinated
debentures 830,286 -- 830,286 --
__________ __________ __________ __________
Weighted average number of
common and common equivalent
shares 17,458,340 16,549,439 17,430,625 16,430,536
========== ========== ========== ==========
Fully diluted earnings per
share $0.26 $0.13 $0.63 $0.43
========== ========== ========== ==========
/TABLE
<PAGE>
<PAGE>
<PAGE>
EXHIBIT 15
HUDSON FOODS, INC. AND SUBSIDIARIES
LETTER REGARDING UNAUDITED INTERIM FINANCIAL INFORMATION
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Hudson Foods, Inc.
Registration on Forms S-8
We are aware that our report dated April 25, 1994 on our review of
the interim financial information of Hudson Foods, Inc. for the
period ended April 2, 1994, and included in this Form 10-Q is
incorporated by reference in the Company's registration statement
on Form S-8 (File nos. 33-7261, 33-27738 and 33-36690). Pursuant
to Rule 436(c) under the Securities Act of 1933, this report should
not be considered a part of the registration statement prepared or
certified by us within the meaning of Sections 7 and 11 of that
Act.
Coopers & Lybrand
Tulsa, Oklahoma
April 25, 1994
<PAGE>
