SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) April 18, 1995
THE QUAKER OATS COMPANY
(Exact name of Registrant as specified in its charter)
New Jersey 1-12 36-1655315
(state or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.
incorporation)
Quaker Tower, P.O. Box 049001, Chicago, Illinois 60604-9001
(Address of principal executive offices)
312-222-7111
(Registrant's telephone number, including area code)
Item 5. Other Events
The Company has included below certain unaudited pro forma combined financial
information related to significant acquisitions and divestitures that have
closed in fiscal 1995 or are currently pending.
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The following unaudited pro forma combined financial information should be
read in conjunction with historical financial statements contained in the
Company's Annual Report on Form 10-K; the Company's Quarterly Report on Form
10-Q as of December 31, 1994; the unaudited pro forma financial information
of the Company and Snapple Beverage Corp. contained in Form 8-K/A filed on
February 17, 1995 to amend Form 8-K filed on December 19, 1994; and the
unaudited pro forma financial information of the Company and the North
American pet food business contained in Form 8-K filed on March 29, 1995.
The Snapple acquisition was completed on December 6, 1994. The North
American pet food divestiture was completed on March 14, 1995.
The European pet food divestiture has not yet
been completed and is subject to certain conditions precedent. There can be
no assurance that the divestiture will close. The following pro forma
information is presented for illustrative purposes only and is not necessarily
indicative of the operating results or financial position that would have
occurred had the acquisition of Snapple and the dispositions of the North
American and European pet food businesses been consummated in accordance with
the assumptions set forth below, nor is it necessarily indicative of future
operating results or financial position.
Basis of Presentation
The unaudited pro forma combined balance sheet information presents certain
financial position information assuming the Snapple acquisition and the pet
food dispositions occurred on June 30, 1994 and assuming the pet food
dispositions occurred on December 31, 1994. Snapple is included in the Quaker
balance sheet as of December 31, 1994. The unaudited pro forma combined
income statements for the year ended June 30, 1994 and for the six months
ended December 31, 1994 present the consolidated results of operations
assuming that the acquisition and dispositions occurred as of July 1, 1993.
Two-for-one Stock Split-up
Per share information and average number of common shares outstanding have
been restated to reflect the November 1994 two-for-one stock split-up.
Balance Sheet Information Pro Forma Adjustments
The following notes describe the historical and pro forma adjustments found
on the accompanying balance sheet information schedule.
(1) The adjustments included in the North American pet food columns reflect
the assets sold and liabilities assumed, including inventory, fixed assets,
advertising and merchandising reserves and vacation accruals. Amounts in
these columns also reflect other items that are affected by the sale of the
North American pet food business, specifically writing-off intangibles,
and adjusting pension and postretirement accruals for preliminary actuarial
adjustments. Deferred taxes have been reclassified to current liabilities.
(2) This amount reflects the write-off of the historical cost of certain
fixed assets ($8 million) that will be disposed
and recording of goodwill ($1,589.5 million), based on the preliminary
purchase price allocation, for the Snapple acquisition.
(3) This amount represents recording of certain liabilities related to the
Snapple acquisition.
(4) This amount includes the addition of short-term debt ($1.4 billion) for
part of the borrowings obtained to acquire Snapple, offset by the estimated
after-tax proceeds ($525 million) on the divestiture of the North American
pet food business, which are assumed to be used to pay down short-term debt.
(5) This remaining portion of the borrowings obtained to acquire Snapple
have been classified as long-term, reflecting the Company's intent and ability
to refinance this short-term debt on a long-term basis.
(6) This amount includes the estimated after-tax gain ($322.0) on the
divestiture of the North American pet food business offset by the elimination
of Snapple's historical equity ($196.5 million).
(7) The adjustments included in the European pet food columns reflect the
assets sold and liabilities assumed, including accounts receivable, inventory,
prepaid
assets, fixed assets, accounts payable, and other current and non-current
liabilities. Amounts in these columns also reflect other items that are
affected by the sale of the European pet food business, specifically
writing-off intangibles. Deferred taxes have been reclassified to current
liabilities.
(8) This amount represents the estimated after-tax proceeds on the
divestiture of the European pet food business, which are assumed to be used
to pay down short-term debt.
(9) This amount represents the estimated after-tax gain on the divestiture
of the European pet food business.
(10) This amount represents the estimated after-tax proceeds on the
divestiture of the North American pet food business.
(11) This amount represents the estimated after-tax gain on the divestiture
of the North American pet food business.
(12) The amounts in this column represent the historical assets, liabilities
and equity of Snapple Beverage Corp. as of June 30, 1994.
Income Statement Information Pro Forma Adjustments
The following notes describe the historical and pro forma adjustments found
on the accompanying income statement information schedule.
(1) These columns include the historical net sales and net income for
Snapple. The net sales and net income for the December 31 period include
historical Snapple activity prior to the acquisition (from July 1, 1994
through December 5, 1994). Activity for Snapple from December 6, 1994
through December 31, 1994 is included in Quaker net sales and net income.
(2) The pro forma adjustments included in the North American pet food columns
reflect the direct activity of the business, including net sales and direct
cost of sales, advertising and merchandising expenses, and other general
direct expenses of the business. Pretax income has been tax effected at the
Company's effective tax rates for those periods.
(3) This amount includes: amortization of Snapple goodwill ($40 million)
resulting from the preliminary purchase price allocation;
additional interest expense ($107 million) on the borrowings to acquire
Snapple; and a reduction in interest expense ($33.1 million), as a result of
the after-tax proceeds from the North American pet food disposition reducing
short-term borrowings. Interest expense has been calculated using the
short-term rates on the borrowings obtained for the Snapple acquisition.
These amounts have been tax effected as appropriate.
(4) The pro forma adjustments included in the European pet food columns
reflect the direct activity of the business, including net sales and direct
cost of sales, advertising and merchandising expenses, and other general
direct expenses of the business. Pretax income has been tax effected at
the Company's effective tax rates for those periods.
(5) These adjustments represent a reduction in interest expense, as a result
of the after-tax proceeds from the European pet food disposition reducing
short-term borrowings. These adjustments have been tax effected as
appropriate.
(6) This amount includes: amortization of Snapple goodwill ($17.5 million);
additional interest expense ($46.4 million) on the borrowings to acquire
Snapple; and a reduction in interest expense ($16.5 million), as a result of
the after-tax proceeds from the North American pet food disposition reducing
short-term borrowings. Interest expense has been calculated using the
short-term rates on the borrowings obtained for the Snapple acquisition.
These amounts have been tax effected as appropriate and include an adjustment
to reflect the estimated effective tax rate assuming the disposition occurred
as of July 1, 1993.
<TABLE>
UNAUDITED COMBINED PRO FORMA BALANCE SHEET INFORMATION
AS OF JUNE 30, 1994
<CAPTION>
North Significant
American Pro Subsidiary European Pro All
Quaker Snapple Pet Food Forma Closed Pet Foods Forma Significant
(12) (1) Adj Transactions (7) Adj Transactions
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total Assets $3,043.3 $398.9 ($247.3) (2) $1,581.5 $4,776.4 ($326.0) $4,450.4
Current Assets $1,253.6 $239.4 ($ 41.7) $1,451.3 ($176.8) $1,274.5
Current
Liabilities $1,002.4 $105.1 ($ 15.6) (3) $ 78.0 $1,169.9 ($115.3) $1,054.6
(excluding short-
term debt)
Short-term Debt $ 256.7 $ 74.9 (4) $ 875.0 $1,206.6 (8) ($463.8) $ 742.8
Long-term Debt $ 759.5 $ 12.2 (5) $ 300.0 $1,071.7 $1,071.7
Common
Shareholders'
Equity $ 445.8 $196.5 (6) $ 125.5 $ 767.8 ($ 1.0) (9) $288.7 $1,055.5
AS OF DECEMBER 31, 1994
<CAPTION>
North Pro Significant
American Forma Subsidiary European Pro All
Quaker Pet Food Adj Closed Pet Food Forma Significant
(1) Transactions (7) Adj Transactions
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total Assets $5,061.1 ($241.4) $4,819.7 ($342.0) $4,477.7
Current Assets $1,356.9 ($37.3) $1,319.6 ($190.3) $1,129.3
Current $1,042.1 ($16.6) $1,025.5 ($136.3) $889.2
Liabilities
(excluding short-
term debt)
Short-term Debt $1,931.7 (10)($525.0) $1,406.7 (8) ($462.4) $944.3
Long-term Debt $1,025.9 $1,025.9 $1,025.9
Common
Shareholders'
Equity $ 452.7 (11) $328.9 $781.6 ($ 0.5) (9) $290.5 $1,071.6
<FN>
See accompanying general and numbered notes.
UNAUDITED COMBINED SELECTED PRO FORMA INCOME STATEMENT INFORMATION
FOR THE YEAR ENDED JUNE 30, 1994
<CAPTION>
Significant
North Pro Subsidiary Pro All
Quaker Snapple American Forma Closed European Forma Significant
Pet Food Adj Transactions Pet Food Adj Transactions
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(1) (2) (3) (4) (5)
Net Sales $5,955.0 $697.6 ($570.5) $6,082.1 ($777.9) $5,304.2
Net Income $ 231.5 $ 80.8 ($38.8) ($ 84.3) $ 189.2 ($19.4) $17.5 $ 187.3
Earnings
Per Share $ 1.68 $ 1.37 $ 1.36
FOR THE SIX MONTHS ENDED DECEMBER 31, 1994
<CAPTION>
Significant
North Pro Subsidiary European Pro All
Quaker Snapple American Form Closed Pet Forma Significant
Pet Food Adj Transactions Food Adj Transactions
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(1) (2) (6) (4) (5)
Net Sales $3,144.3 $271.6 ($276.5) $3,139.4 ($422.8) $2,716.6
Income Before
Cumulative
Effect of Accounting
Change $ 95.8 $0.8 ($21.2) (29.0) $ 46.4 ($10.6) $8.7 $44.5
Income Per Share
Before Cumulative
Effect of Accounting
Change $0.70 $0.33 $0.32
<FN>
See accompanying general and numbered notes.
</TABLE>
SIGNATURE
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 hereunto duly authorized.
THE QUAKER OATS COMPANY
By Thomas L. Gettings
Thomas L. Gettings
Vice President and
Corporate Controller
Date: April 18, 1995
