PAGE 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X Quarterly Report Pursuant to Section 13 or 15 (d) of
the Securities Exchange Act of 1934
For the quarterly period ended September 30, 1994
_ 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 1-2944
STOKELY-VAN CAMP, INC.
(Exact name of registrant as specified in its charter)
Indiana 35-0690290
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Quaker Tower
P.O. Box 049001 Chicago, Illinois 60604-9001
(Address of principal executive office) (Zip Code)
(312) 222-7111
(Registrant's telephone number, including area code)
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 for such reports), and (2) has
been subject to such filing requirements for the past 90 days.
YES XX NO ___
Registrant had 2,989,371 shares of Common Stock outstanding on
October 31, 1994, all of which were held by The Quaker Oats Company.
PAGE 2
STOKELY-VAN CAMP, INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q
Page
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Condensed Consolidated Statements of Income
and Reinvested Earnings for the Three Months
Ended September 30, 1994 and 1993 3
Condensed Consolidated Balance Sheets as of
September 30, 1994 and June 30, 1994 4
Condensed Consolidated Statements of Cash
Flows for the Three Months Ended
September 30, 1994 and 1993 5
Notes to the Condensed Consolidated Financial
Statements 6
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II - OTHER INFORMATION 8
SIGNATURES 9
<TABLE>
PAGE 3
STOKELY-VAN CAMP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND REINVESTED EARNINGS
(UNAUDITED)
<CAPTION>
Dollars in
Millions
Three Months Ended
September 30
1994 1993
<S> <C> <C>
Net sales $350.8 $347.4
Cost of goods sold 178.0 173.8
Gross profit 172.8 173.6
Selling, general and administrative expenses 138.5 111.9
Interest (income) - net (4.5) (2.1)
Income before income taxes and cumulative
effect of 38.8 63.8
accounting change
Provision for income taxes 15.6 26.3
Income before cumulative effect of accounting 23.2 37.5
change
Cumulative effect of accounting change - net 1.5 ---
of tax
Net income 21.7 37.5
Dividends on preference and preferred stock (0.2) (0.2)
Reinvested Earnings - Beginning Balance 544.7 475.1
Reinvested Earnings - Ending Balance $566.2 $512.4
<FN>
See accompanying notes to the condensed consolidated financial statements.
PAGE 4
STOKELY-VAN CAMP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
Dollars in Millions September 30 June 30
1994 1994
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $74.7 $41.1
Due from The Quaker Oats Company 446.4 402.7
Trade accounts receivable - net of allowances 61.8 113.5
Inventories:
Finished goods 61.3 70.9
Materials and supplies 13.7 16.8
Total inventories 75.0 87.7
Other current assets 21.4 20.3
Total Current Assets 679.3 665.3
Other Assets 8.2 6.6
Property, plant and equipment 212.2 203.4
Less accumulated depreciation 74.2 70.5
Property - Net 138.0 132.9
Total Assets $825.5 $804.8
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Trade accounts payable $26.7 $44.5
Accrued payroll, pension and bonus 20.6 23.5
Accrued advertising and merchandising 43.4 35.8
Income taxes payable 53.4 39.6
Other current liabilities 10.7 13.6
Total Current Liabilities 154.8 157.0
Long-term Debt 0.7 0.7
Other Liabilities 35.9 33.4
Deferred Income Taxes 1.2 2.3
Redeemable Preference and
Preferred Stock 15.3 15.3
Common Shareholders' Equity:
Common stock, $1 par value, authorized
10,000,000 shares;
issued 3,591,381 shares 3.6 3.6
Additional paid-in capital 68.7 68.7
Reinvested earnings 566.2 544.7
Treasury common stock, at cost, 602,010 shares (20.9) (20.9)
Total Common Shareholders' Equity 617.6 596.1
Total Liabilities and Shareholders' Equity $825.5 $804.8
<FN>
See accompanying notes to the condensed consolidated financial statements.
PAGE 5
STOKELY-VAN CAMP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Dollars in
Millions
Three Months Ended
September 30
1994 1993
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $21.7 $37.5
Adjustments to reconcile net income to
net cash provided
by operating activities:
Cumulative effect of accounting change 1.5 --
Depreciation and amortization 4.2 3.8
Deferred income taxes (0.1) 1.1
Loss on disposition of property and -- 0.1
equipment
Decrease in trade accounts receivable 51.7 51.7
Decrease in inventories 12.7 11.0
(Increase) decrease in other current (1.1) 1.2
assets
(Decrease) in trade accounts payable (17.8) (6.3)
Increase in income taxes payable 13.8 22.5
Increase (decrease) in other current 1.8 (2.3)
liabilities
Other items (2.2) (5.0)
Net Cash Provided by Operating Activities 86.2 115.3
Cash Flows from Investing Activities:
Additions to property, plant and (8.7) (7.0)
equipment
Net Cash Used in Investing (8.7) (7.0)
Activities
Cash Flows from Financing Activities:
Change in amount due from The Quaker Oats (43.7) (108.1)
Company
Cash dividends (0.2) (0.2)
Net Cash Used in Financing Activities (43.9) (108.3)
Net Increase in Cash and Cash Equivalents 33.6 --
Cash and Cash equivalents - Beginning of 41.1 --
Year
Cash and Cash Equivalents - End of $74.7 $--
Quarter
<FN>
See accompanying notes to the condensed consolidated financial statements.
</TABLE>
PAGE 6
STOKELY-VAN CAMP, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 1994
Note 1 - Condensed Consolidated Financial Statements
The condensed consolidated financial statements include Stokely-Van Camp,
Inc. (a wholly-owned subsidiary of The Quaker Oats Company, or "Quaker")
and its subsidiaries (the "Company"). The condensed consolidated
statements of income and reinvested earnings for the three months ended
September 30, 1994 and 1993, the condensed consolidated balance sheet as
of September 30, 1994, and the condensed consolidated statements of cash
flows for the three months ended September 30, 1994 and 1993, have been
prepared by the Company without audit. In the opinion of management,
these financial statements include all adjustments necessary to present
fairly the financial position, results of operations and cash flows as of
September 30, 1994 and for all periods presented. All adjustments made
have been of a normal recurring nature. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted. The Company believes that the disclosures included
are adequate and provide a fair presentation of interim period results.
Interim financial statements are not necessarily indicative of the
financial position or operating results for an entire year. It is
suggested that these interim financial statements be read in conjunction
with the audited financial statements and the notes thereto included in
the Company's Form 10-K for the fiscal year ended June 30, 1994.
Certain previously reported amounts have been reclassified to conform
to the current presentation.
Note 2 - Redeemable Preference and Preferred Stock
5% Cumulative Convertible Second Preferred Stock
As of September 30, 1994, authorized shares were 500,000 and issued
and outstanding shares were 11,073. The voting 5% Cumulative Convertible
Second Preferred Stock ($20 par value) is convertible at the holder's
option, on a share-for-share basis, into non-voting 5% Cumulative Prior
Preference Stock ($20 par value).
5% Cumulative Prior Preference Stock
As of September 30, 1994, authorized shares were 1,500,000, issued shares
were 753,283 and outstanding shares were 752,950.
Both issues are redeemable at the Company's option for $21 per share.
Note 3 - Accounting Change
Effective July 1, 1994, the Company adopted FASB Statement #112,
"Employers' Accounting for Postemployment Benefits." The cumulative
effect of adoption was a $2.5 million pretax charge, or $1.5 million
after-tax, in the first quarter of fiscal 1995. The adoption of this
statement will not have a material effect on operating results or cash
flows in fiscal 1995 or in future years.
PAGE 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF
OPERATIONS
Three Months Ended September 30, 1994
Compared With Three Months Ended September 30, 1993
Net sales for the first three months of fiscal 1995 were $350.8 million,
up 1 percent over last year's $347.4 million. Volume increased 2 percent
versus the prior year. Volume increases in GATORADE thirst quencher export
sales were partially offset by decreases in VAN CAMP's products. The
change in sales relative to volumes was also affected by product mix.
Price increases did not have a significant impact on sales.
Gross profit margin decreased to 49.3 percent of sales from last year's
50.0 percent primarily as a result of increased distribution costs. Selling,
general and administrative expenses increased to $138.5 million, or an
increase of 24 percent, primarily due to higher advertising and
merchandising (A&M) expenditures for GATORADE thirst quencher in a
period of competitive expansion of the category. GATORADE thirst quencher
volume in the United States was essentially even with the prior year's
strong first quarter. For the near term, we expect Gatorade thirst quencher
A&M spending to be higher than in the prior year.
The Company's reengineering programs are proceeding as planned. The
Company will continue to focus on efficiency initiatives to improve its
manufacturing, marketing, logistics and customer service processes while
lowering costs and to more effectively utilize human and financial resources.
These continuous improvement initiatives may lead to charges in future periods.
The effective tax rate for the first three months of fiscal 1995 was 40.2
percent compared to 41.2 percent in the first three months of fiscal 1994.
The decrease was primarily due to favorable tax treatment for operations in
Puerto Rico, as well as a catch-up adjustment recorded in the first quarter
of fiscal 1994 related to the U.S. statutory tax rate increase.
Liquidity and Capital Resources
Net cash provided by operating activities of $86.2 million and $115.3
million for the three months ended September 30, 1994 and 1993,
respectively, was well in excess of the Company's dividends and capital
expenditures. Capital expenditures for the first three months of fiscal
1995 and 1994 were $8.7 million and $7.0 million, respectively, with no
material individual commitments outstanding.
The Company has an investing and borrowing arrangement under which it
loans its available cash to Quaker or borrows its short-term cash
requirements from Quaker. Certain subsidiaries of the Company currently
maintain cash balances. The amount due from The Quaker Oats Company
increased $43.7 million primarily reflecting changes in accounts receivable.
Accounting Change
Effective July 1, 1994, the Company adopted FASB #112, "Employers'
Accounting for Postemployment Benefits." The cumulative effect of adoption
was a $1.5 million after-tax charge in the first quarter of fiscal 1995.
This amount was slightly higher than originally estimated at the time of
our previous filing. The adoption of this statement will not have a
material effect on operating results or cash flows in fiscal 1995 or
in future years.
PAGE 8
PART II - OTHER INFORMATION
All items in Part II are either inapplicable to the Company during the
quarter ended September 30, 1994, the answer is negative or a response
has been previously reported and an additional report of the information
need not be made, pursuant to the Instructions to Part II.
PAGE 9
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 as an officer and as chief
accounting officer.
Stokely-Van Camp, Inc.
(Registrant)
Date: November 14, 1994 Thomas L. Gettings
Thomas L. Gettings
Vice President and Corporate Controller
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<ARTICLE> 5
<MULTIPLIER> 1000000
<S> <C>
<PERIOD-TYPE> QTR-1
<FISCAL-YEAR-END> JUN-30-1994
<PERIOD-END> SEP-30-1994
<CASH> 75
<SECURITIES> 0
<RECEIVABLES> 65
<ALLOWANCES> 3
<INVENTORY> 75
<CURRENT-ASSETS> 679
<PP&E> 212
<DEPRECIATION> 74
<TOTAL-ASSETS> 826
<CURRENT-LIABILITIES> 155
<BONDS> 1
<COMMON> 4
0
15
<OTHER-SE> 614
<TOTAL-LIABILITY-AND-EQUITY> 826
<SALES> 351
<TOTAL-REVENUES> 351
<CGS> 178
<TOTAL-COSTS> 178
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2
<INCOME-PRETAX> 39
<INCOME-TAX> 16
<INCOME-CONTINUING> 23
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 1
<NET-INCOME> 22
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
