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 December 31, 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
January 31, 1995, 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 Six and Three Months
Ended December 31, 1994 and 1993 3-4
Condensed Consolidated Balance Sheets as of
December 31, 1994 and June 30, 1994 5
Condensed Consolidated Statements of Cash
Flows for the Six Months Ended
December 31, 1994 and 1993 6
Notes to the Condensed Consolidated Financial
Statements 7
Item 2 - Management's Discussion and Analysis of'
Financial Condition and Results of Operations 8-9
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security-Holders 10
SIGNATURES 11
PAGE 3
STOKELY-VAN CAMP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND REINVESTED EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
Dollars in Millions
Six Months Ended
December 31
1994 1993
<S> <C> <C>
Net sales $470.7 $466.3
Cost of goods sold 253.7 242.5
Gross profit 217.0 223.8
Selling, general and administrative expenses 211.1 177.1
Interest (income) - net (9.5) (5.1)
Income before income taxes and cumulative
effect of accounting change 15.4 51.8
Provision for income taxes 6.1 21.0
Income before cumulative effect of
accounting change 9.3 30.8
Cumulative effect of accounting change -
net of tax 1.5 ---
Net income 7.8 30.8
Dividends on preference and preferred stock (0.4) (0.4)
Reinvested Earnings - Beginning Balance 544.7 475.1
Reinvested Earnings - Ending Balance $552.1 $505.5
<FN>
See accompanying notes to the condensed consolidated financial statements.
PAGE 4
STOKELY-VAN CAMP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND REINVESTED EARNINGS
(UNAUDITED)
<CAPTION>
Dollars in Millions
Three Months Ended
December 31
1994 1993
<S> <C> <C>
Net sales $119.9 $118.9
Cost of goods sold 75.7 68.7
Gross profit 44.2 50.2
Selling, general and administrative expenses 72.6 65.2
Interest (income) - net (5.0) (3.0)
(Loss) before income taxes (23.4) (12.0)
(Benefit) for income taxes (9.5) (5.3)
Net (loss) (13.9) (6.7)
Dividends on preference and preferred stock (0.2) (0.2)
Reinvested Earnings - Beginning Balance 566.2 512.4
Reinvested Earnings - Ending Balance $552.1 $505.5
<FN>
See accompanying notes to the condensed consolidated financial statements.
PAGE 5
STOKELY-VAN CAMP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
Dollars in Millions December 31 June 30
1994 1994
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 12.7 $ 41.1
Due from The Quaker Oats Company 484.9 402.7
Trade accounts receivable -
net of allowances 32.9 113.5
Inventories:
Finished goods 44.9 70.9
Materials and supplies 10.6 16.8
Total inventories 55.5 87.7
Other current assets 17.6 20.3
Total Current Assets 603.6 665.3
Other Assets 3.8 6.6
Property, plant and equipment 221.5 203.4
Less accumulated depreciation 74.0 70.5
Property - Net 147.5 132.9
Total Assets $754.9 $804.8
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Trade accounts payable $ 11.5 $ 44.5
Accrued payroll, pension and bonus 23.3 23.5
Accrued advertising and merchandising 19.2 35.8
Income taxes payable 30.7 39.6
Other current liabilities 13.2 13.6
Total Current Liabilities 97.9 157.0
Long-term Debt 0.7 0.7
Other Liabilities 36.0 33.4
Deferred Income Taxes 1.5 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 552.1 544.7
Treasury common stock, at cost,
602,010 shares (20.9) (20.9)
Total Common Shareholders' Equity 603.5 596.1
Total Liabilities and Shareholders' Equity $754.9 $804.8
<FN>
See accompanying notes to the condensed consolidated financial statements.
PAGE 6
STOKELY-VAN CAMP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Dollars in Millions
Six Months Ended
December 31
1994 1993
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 7.8 $ 30.8
Adjustments to reconcile net income to net cash
provided by operating activities:
Cumulative effect of accounting change 1.5 --
Depreciation and amortization 9.0 7.5
Deferred income taxes 0.2 2.0
Loss on disposition of property and equipment -- 0.1
Decrease in trade accounts receivable 80.6 77.9
Decrease in inventories 32.2 23.9
Decrease (increase) in other current assets 2.7 (2.4)
(Decrease) in trade accounts payable (33.0) (32.6)
(Decrease) in income taxes payable (8.9) (2.6)
(Decrease) in other current liabilities (17.2) (13.7)
Other items (1.1) (2.3)
Net Cash Provided by Operating Activities 73.8 88.6
Cash Flows from Investing Activities:
Additions to property, plant and equipment (19.6) (9.8)
Net Cash Used in Investing Activities (19.6) (9.8)
Cash Flows from Financing Activities:
Change in amount due from
The Quaker Oats Company (82.2) (78.3)
Cash dividends (0.4) (0.4)
Reduction of long-term debt -- (0.1)
Net Cash Used in Financing Activities (82.6) (78.8)
Net (Decrease) in Cash and Cash Equivalents (28.4) --
Cash and Cash Equivalents - Beginning of Year 41.1 --
Cash and Cash Equivalents - End of Quarter $ 12.7 $ --
<FN>
See accompanying notes to the condensed consolidated financial statements.
</TABLE>
PAGE 7
STOKELY-VAN CAMP, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
DECEMBER 31, 1994
Note 1 - Basis of Presentation
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 six
and three months ended December 31, 1994 and 1993, the condensed
consolidated balance sheet as of December 31, 1994, and the condensed
consolidated statements of cash flows for the six months ended December
31, 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 December 31, 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 December 31, 1994, authorized shares were 500,000 and issued
and outstanding shares were 11,068. 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 December 31, 1994, authorized shares were 1,500,000, issued shares
were 753,288 and outstanding shares were 752,955.
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 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Six Months Ended December 31, 1994
Compared With Six Months Ended December 31, 1993
Net sales for the first six months of fiscal 1995 were $470.7 million,
up 1 percent over last year's $466.3 million. Volume was even with
the prior year. Volume increases in GATORADE thirst quencher in the
United States and in export sales were offset by decreases in VAN CAMP's
products. The change in sales in GATORADE relative to volume was
also affected by product mix. Price increases did not have a significant
impact on sales.
Gross profit margin decreased to 46.1 percent of sales from last year's
48.0 percent primarily as a result of increased distribution costs.
Selling, general and administrative (SG&A) expenses increased to $211.1
million, or an increase of 19 percent, mainly 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 up 1 percent from the prior year's
strong first half.
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 six months of fiscal 1995 was 39.6
percent compared to 40.5 percent in the first six months of fiscal 1994.
The decrease mainly resulted from a catch-up adjustment recorded in the
first quarter of fiscal 1994 related to the U.S. statutory tax rate increase.
Three Months Ended December 31, 1994
Compared With Three Months Ended December 31, 1993
Net sales for the second quarter of fiscal 1995 were $119.9 million, up
1 percent from last year. Volume increased 1 percent. Volume increases
in GATORADE thirst quencher in the United States were partially offset
by decreases in VAN CAMP's products. Price increases did not have a
significant impact on sales.
Gross profit margin decreased to 36.9 percent of sales from last year's 42.2
percent mainly as a result of increased distribution costs. SG&A expenses
increased to $72.6 million, or an increase of 11 percent, primarily due to
higher A&M expenditures for GATORADE thirst quencher.
The effective tax rate for the second quarter fiscal 1995 was 40.6 percent
as compared to 44.2 percent in the second quarter fiscal 1994. The change
relates mainly to the tax treatment for operations in Puerto Rico and the
second quarter loss position.
Liquidity and Capital Resources
Net cash provided by operating activities of $73.8 million and $88.6 million
for the six months ended December 31, 1994 and 1993, respectively, was
well in excess of the Company's dividends and capital expenditures. Capital
expenditures for the first six months of fiscal 1995 and 1994 were
$19.6 million and $9.8 million, respectively, with no material individual
commitments outstanding.
PAGE 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
(continued)
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
$82.2 million primarily reflecting changes in accounts receivable.
Accounting Change
Effective July 1, 1994, the Company adopted FASB Statement #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.
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 10
PART II - OTHER INFORMATION
4. Submission of Matters to a Vote of Security-Holders.
(a) The Company's Annual Meeting of Shareholders was held on
November 1, 1994. Represented at the Meeting, either in person or by
proxy, were 2,989,371 voting shares, of a total 3,000,444 voting shares
outstanding. The matters voted upon at the Meeting are described
in (c) below.
(c) To elect three directors to each serve for a one-year term or
until their successors are elected and qualified. All nominees are
named below.
- -James F. Doyle
Votes For Election - 2,989,371
- -R. Thomas Howell, Jr.
Votes For Election - 2,989,371
- -Janet K. Cooper
Votes For Election - 2,989,371
There were no votes withheld, against, abstentions or broker non-votes
with respect to the election of any nominee named above.
All other items in Part II are either inapplicable to the Company during
the quarter ended December 31, 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 11
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: February 14, 1995
Thomas L. Gettings
Thomas L. Gettings
Vice President and Corporate Controller
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<ARTICLE> 5
<MULTIPLIER> 1000000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> JUN-30-1994 JUN-30-1994
<PERIOD-END> SEP-30-1994 DEC-31-1994
<CASH> 75 13
<SECURITIES> 0 0
<RECEIVABLES> 65 35
<ALLOWANCES> 3 2
<INVENTORY> 75 56
<CURRENT-ASSETS> 679 604
<PP&E> 212 222
<DEPRECIATION> 74 74
<TOTAL-ASSETS> 826 755
<CURRENT-LIABILITIES> 155 98
<BONDS> 1 1
<COMMON> 4 4
0 0
15 15
<OTHER-SE> 614 600
<TOTAL-LIABILITY-AND-EQUITY> 826 755
<SALES> 351 471
<TOTAL-REVENUES> 351 471
<CGS> 178 254
<TOTAL-COSTS> 178 254
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 2 4
<INCOME-PRETAX> 39 15
<INCOME-TAX> 16 6
<INCOME-CONTINUING> 23 9
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 1 1
<NET-INCOME> 22 8
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
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