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) June 8, 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.
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
fiscal 1994 Annual Report on Form 10-K; the Company's Quarterly Report on Form
10-Q as of March 31, 1995; 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; 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; and the unaudited pro forma
financial information of the Company and the European pet food business
contained in Form 8-K filed on May 4, 1995. The Snapple acquisition was
completed on December 6, 1994, the North American pet food divestiture was
completed on March 14, 1995 and the European pet food divestiture was completed
on April 24, 1995. The Company also completed divestitures of other businesses
in May and June 1995. 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 pet food, European pet food
and other 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 North
American and European pet food and other businesses dispositions occurred on
June 30, 1994 and assuming the European pet food and other businesses
dispositions occurred on March 31, 1995. The unaudited pro forma combined
income statements for the year ended June 30, 1994 and for the nine months
ended March 31, 1995 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 - Historical and Pro Forma Adjustments
The following notes describe the historical and pro forma adjustments found on
the accompanying balance sheet information schedule.
(1) The amounts in this column represent the historical assets, liabilities and
equity of Snapple Beverage Corp. as of June 30, 1994.
(2) The adjustments included in the North American pet food column reflect the
assets sold and liabilities assumed, including inventory, fixed assets,
advertising and merchandising reserves and vacation accruals. Amounts in this
column also reflects 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.
(3) 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 and the cumulative translation adjustment. Deferred
taxes have been reclassified to current liabilities.
(4) The adjustments included in the Other Businesses columns reflect the
cumulative amounts of 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 other businesses,
specifically writing-off intangibles and the cumulative translation adjustment.
Deferred taxes have been reclassified to current liabilities.
Balance Sheet Information - Historical and Pro Forma Adjustments (continued)
(5) This amount reflects the write-off of the historical cost of certain fixed
assets ($8 million) that will be disposed and recording of preliminary goodwill
and other intangibles ($1,589.5 million), based on the preliminary purchase
price allocation, for the Snapple acquisition.
(6) This amount represents recording of certain liabilities related to the
Snapple acquisition.
(7) 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, the estimated after-tax proceeds ($463.8 million) on the
divestiture of the European pet food business and the estimated after-tax
proceeds ($215.7 million) on the divestitures of the other businesses, which
are all assumed to be used to pay down short-term debt.
(8) 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.
(9) This amount includes the total of: the estimated after-tax gain ($322.0)
on the divestiture of the North American pet food business; the estimated after-
tax gain ($288.7) on the divestiture of the European pet food business; and the
estimated after-tax gain ($106.9) on the divestitures of other businesses; all
offset by the elimination of Snapple's historical equity ($196.5 million).
(10) This amount represents the estimated after-tax proceeds ($488.0 million)
on the divestiture of the European pet food business and the estimated after-
tax proceeds ($219.7 million) on the divestitures of the other businesses,
which are assumed to be used to pay down short-term debt.
(11) This amount includes the estimated after-tax gain ($287.2) on the
divestiture of the European pet food business and the estimated after-tax gain
($100.7) on the divestitures of the other businesses.
Selected Income Statement Information - Historical and Pro Forma Adjustments
The following notes describe the historical and pro forma adjustments found on
the accompanying selected 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 March 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 March 31, 1995 is included
in Quaker net sales and net income.
(2) The 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) The 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.
(4) The adjustments included in the Other Businesses columns reflect the total
direct activity of the businesses sold, 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) This amount includes: incremental amortization of preliminary Snapple
goodwill and other intangibles ($40 million) resulting from the preliminary
purchase price allocation (this is in addition to historical amortization of
intangibles which is included in the historical amounts for Snapple);
additional interest expense ($107 million) on the borrowings to acquire
Snapple; and reductions in interest expense ($33.1 million, $29.2 million and
$13.6 million) as a result of the after-tax proceeds from the North American
pet food, European pet food and other businesses dispositions, respectively,
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.
Selected Income Statement Information - Historical and Pro Forma Adjustments
(continued)
(6) This amount includes: incremental amortization of preliminary Snapple
goodwill and other intangibles ($17.5 million) resulting from the preliminary
purchase price allocation (this is in addition to historical amortization of
intangibles which is included in the historical amounts for Snapple);
additional interest expense ($46.4 million) on the borrowings to acquire
Snapple; and reductions in interest expense ($25.3 million, $23.0 million and
$10.4 million) as a result of the after-tax proceeds from the North American
pet food, European pet food and other businesses dispositions, respectively,
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 dispositions occurred as
of July 1, 1993.
<TABLE>
<CAPTION>
UNAUDITED COMBINED PRO FORMA BALANCE SHEET INFORMATION
AS OF JUNE 30, 1994
North
American European Other
Snapple Pet Food Pet Food Businesses Pro Forma Pro Forma
Quaker (1) (2) (3) (4) Adjustment Combined
<S> <C> <C> <C> <C> <C> <C> <C>
Total Assets $3,043.3 $398.9 ($247.3) ($326.0) ($95.4) (5) $1,581.5 $4,355.0
Current Assets $1,253.6 $239.4 ($ 41.7) ($176.8) ($34.2) $1,240.3
Current Liabilities $1,002.4 $105.1 ($ 15.6) ($115.3) $ 4.2 (6) $ 78.0 $1,058.8
(excluding short-
term debt)
Short-term Debt $ 256.7 $ 74.9 (7) $ 195.5 $ 527.1
Long-term Debt $ 759.5 $ 12.2 (8) $ 300.0 $1,071.7
Common Shareholders'
Equity $ 445.8 $196.5 ($ 1.0) $12.0 (9) $ 521.1 $1,174.4
<CAPTION>
AS OF MARCH 31, 1995
European Other
Pet Food Businesses Pro Forma Pro Forma
Quaker (3) (4) Adjustments Combined
<S> <C> <C> <C> <C> <C>
Total Assets $4,964.0 ($346.3) ($87.4) $4,530.3
Current Assets $1,399.5 ($190.2) ($34.6) $1,174.7
Current Liabilities $1,279.2 ($120.4) $ 7.3 $1,166.1
(excluding short-
term debt)
Short-term Debt $1,216.9 (10) ($707.7) $ 509.2
Long-term Debt $1,107.3 $1,107.3
Common Shareholders'
Equity $ 785.3 ($ 4.0) $28.6 (11) $387.9 $1,197.8
<FN>
See accompanying general and numbered notes.
<CAPTION>
UNAUDITED COMBINED SELECTED PRO FORMA INCOME STATEMENT INFORMATION
FOR THE YEAR ENDED JUNE 30, 1994
North
American European Other Pro Forma Pro Forma
Quaker Snapple Pet Food Pet Food Businesses Adjustments Combined
(1) (2) (3) (4) (5)
<S> <C> <C> <C> <C> <C> <C> <C>
Net Sales $5,955.0 $697.6 ($570.5) ($777.9) ($283.6) $5,020.6
Net Income $ 231.5 $ 80.8 ($ 38.8) ($ 19.4) ($ 26.0) ($58.5) $ 169.6
Earnings Per Share $ 1.68 $ 1.22
<CAPTION>
FOR THE NINE MONTHS ENDED MARCH 31, 1995
North
American European Other Pro Forma Pro Forma
Quaker Snapple Pet Food Pet Food Businesses Adjustments Combined
(1) (2) (3) (4) (6)
<S> <C> <C> <C> <C> <C> <C> <C>
Net Sales $4,777.8 $271.6 ($391.8) ($635.7) ($167.7) $3,854.2
Income Before
Cumulative Effect of
Accounting Change $ 461.9 $ 0.8 ($ 37.1) ($ 17.1) ($ 14.1) ($4.3) $ 390.1
Income Per Share Before
Cumulative Effect of
Accounting Change $ 3.43 $ 2.90
<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: June 30, 1995
