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 March 31, 1995
_ 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 April 30, 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 Nine and Three
Months Ended March 31, 1995 and 1994 3-4
Condensed Consolidated Balance Sheets as of
March 31, 1995 and June 30, 1994 5
Condensed Consolidated Statements of Cash
Flows for the Nine Months Ended
March 31, 1995 and 1994 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 5 - Other Information 10
SIGNATURES 11
PAGE 3
<TABLE>
<CAPTION>
STOKELY-VAN CAMP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND REINVESTED EARNINGS
(UNAUDITED)
Dollars in Millions
Nine Months Ended
March 31
1995 1994
<S> <C> <C>
Net sales $689.2 $657.6
Cost of goods sold 372.6 347.8
Gross profit 316.6 309.8
Selling, general and administrative expenses 296.7 253.4
Interest (income) - net (15.6) (8.8)
Income before income taxes and cumulative
effect of accounting change 35.5 65.2
Provision for income taxes 12.8 26.2
Income before cumulative effect of accounting change 22.7 39.0
Cumulative effect of accounting change - net of tax 1.5 ---
Net income 21.2 39.0
Dividends on preference and preferred stock (0.6) (0.6)
Reinvested Earnings - Beginning Balance 544.7 475.1
Reinvested Earnings - Ending Balance $565.3 $513.5
<FN>
See accompanying notes to the condensed consolidated financial statements.
PAGE 4
<CAPTION>
STOKELY-VAN CAMP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND REINVESTED EARNINGS
(UNAUDITED)
Dollars in Millions
Three Months Ended
March 31
1995 1994
<S> <C> <C>
Net sales $218.5 $191.3
Cost of goods sold 118.9 105.3
Gross profit 99.6 86.0
Selling, general and administrative expenses 85.6 76.3
Interest (income) - net (6.1) (3.7)
Income before income taxes 20.1 13.4
Provision for income taxes 6.7 5.2
Net income 13.4 8.2
Dividends on preference and preferred stock (0.2) (0.2)
Reinvested Earnings - Beginning Balance 552.1 505.5
Reinvested Earnings - Ending Balance $565.3 $513.5
<FN>
See accompanying notes to the condensed consolidated financial statements.
PAGE 5
<CAPTION>
STOKELY-VAN CAMP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
Dollars in Millions March 31 June 30
1995 1994
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 16.7 $ 41.1
Due from The Quaker Oats Company 435.3 402.7
Trade accounts receivable - net of allowances 88.9 113.5
Inventories:
Finished goods 59.4 70.9
Materials and supplies 13.7 16.8
Total inventories 73.1 87.7
Other current assets 19.2 20.3
Total Current Assets 633.2 665.3
Other Assets 5.6 6.6
Property, plant and equipment 242.2 203.4
Less accumulated depreciation 78.4 70.5
Property - Net 163.8 132.9
Total Assets $802.6 $804.8
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Trade accounts payable $ 46.2 $ 44.5
Accrued payroll, pension and bonus 21.2 23.5
Accrued advertising and merchandising 21.2 35.8
Income taxes payable 29.0 39.6
Other current liabilities 14.3 13.6
Total Current Liabilities 131.9 157.0
Long-term Debt 0.6 0.7
Other Liabilities 36.0 33.4
Deferred Income Taxes 2.1 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 565.3 544.7
Treasury common stock, at cost, 602,010 shares (20.9) (20.9)
Total Common Shareholders' Equity 616.7 596.1
Total Liabilities and Shareholders' Equity $802.6 $804.8
<FN>
See accompanying notes to the condensed consolidated financial statements.
PAGE 6
<CAPTION>
STOKELY-VAN CAMP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Dollars in Millions
Nine Months Ended
March 31
1995 1994
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 21.2 $ 39.0
Adjustments to reconcile net income to net
cash provided by operating activities:
Cumulative effect of accounting change 1.5 ---
Depreciation and amortization 14.4 11.4
Deferred income taxes 0.8 1.7
Loss on disposition of property and equipment 0.3 0.5
Decrease in trade accounts receivable 24.6 31.1
Decrease (increase) in inventories 14.6 (12.2)
Decrease (increase) in other current assets 1.1 (3.6)
Increase in trade accounts payable 1.7 7.3
(Decrease) increase in income taxes payable (10.6) 0.2
(Decrease) increase in other current liabilities (16.2) 14.6
Other items (3.5) (1.0)
Net Cash Provided by Operating Activities 49.9 89.0
Cash Flows from Investing Activities:
Additions to property, plant and equipment (41.0) (15.6)
Net Cash Used in Investing Activities (41.0) (15.6)
Cash Flows from Financing Activities:
Change in amount due from The Quaker Oats Company (32.6) (56.4)
Cash dividends (0.6) (0.6)
Reduction of long-term debt (0.1) (0.1)
Net Cash Used in Financing Activities (33.3) (57.1)
Net (Decrease) Increase in Cash and Cash Equivalents (24.4) 16.3
Cash and Cash Equivalents - Beginning of Year 41.1 ---
Cash and Cash Equivalents - End of Quarter $ 16.7 $ 16.3
<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)
MARCH 31, 1995
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 nine and three months ended March 31,1995
and 1994, the condensed consolidated balance sheet as of March 31, 1995, and
the condensed consolidated statements of cash flows for the nine months ended
March 31, 1995 and 1994, 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 March 31, 1995 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 March 31, 1995, 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 March 31, 1995, 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.
Note 4 - Subsequent Event
On May 1, 1995, Quaker and the Company signed a definitive agreement to sell the
Van Camp's pork and beans business to Hunt-Wesson, Inc., a subsidiary of
ConAgra, Inc. The sale is subject to certain conditions precedent, including
receipt of appropriate regulatory approval. The transaction is expected to be
finalized by the end of the fiscal year.
PAGE 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Nine Months Ended March 31, 1995
Compared With Nine Months Ended March 31, 1994
Net sales for the first nine months of fiscal 1995 were $689.2 million, up
5 percent over last year's $657.6 million. Volume increased 4 percent. Volume
increases in GATORADE thirst quencher in the United States and in export sales
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 45.9 percent of sales from last year's 47.1
percent primarily as a result of increased distribution costs and product mix
changes. Selling, general and administrative (SG&A) expenses increased to
$296.7 million, or an increase of 17 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 5 percent from the prior year.
Quaker has identified the need to further realign its physical and human
resources to reduce overhead expenditures. The actions to be taken will affect
the Company and will result in a charge in the fourth quarter of fiscal 1995.
The effective tax rate for the first nine months of fiscal 1995 was 36.1 percent
compared to 40.2 percent in the first nine months of fiscal 1994. The change
relates mainly to the tax treatment for operations in Puerto Rico.
Three Months Ended March 31, 1995
Compared With Three Months Ended March 31, 1994
Net sales for the third quarter of fiscal 1995 were $218.5 million, up
14 percent from last year. Volume increased 11 percent. Volume increases in
GATORADE thirst quencher in the United States and in export sales were partially
offset by decreases in VAN CAMP's products. Price increases did not have a
significant impact on sales.
Gross profit margin increased to 45.6 percent of sales from last year's
45.0 percent primarily as a result of changes in domestic and export sales.
SG&A expenses increased to $85.6 million, or an increase of 12 percent,
primarily due to higher A&M expenditures for GATORADE thirst quencher.
The effective tax rate for the third quarter fiscal 1995 was 33.3 percent
compared to 38.8 percent in the third quarter fiscal 1994. The change relates
mainly to the tax treatment for operations in Puerto Rico.
Liquidity and Capital Resources
Net cash provided by operating activities of $49.9 million and $89.0 million for
the nine months ended March 31, 1995 and 1994, respectively, was in excess of
the Company's dividends and capital expenditures. The decrease in cash flow
from operating activities results from decreased net income and changes in
working capital. Capital expenditures for the first nine months of fiscal 1995
and 1994 were $41.0 million and $15.6 million, respectively, with no material
individual commitments outstanding.
PAGE 9
[CAPTION]
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 $32.6 million primarily
reflecting changes in accounts receivable and inventories.
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.
Subsequent Event
On May 1, 1995, Quaker and the Company signed a definitive agreement to sell the
Van Camp's pork and beans business to Hunt-Wesson, Inc., a subsidiary of
ConAgra, Inc. The sale is subject to certain conditions precedent, including
receipt of appropriate regulatory approval. The transaction is expected to be
finalized by the end of the fiscal year.
PAGE 10
[CAPTION]
PART II - OTHER INFORMATION
Item 5 Other Information
Note 4 in Part I is incorporated by reference herein.
All other items in Part II are either inapplicable to the Company
during the quarter ended March 31, 1995, 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: May 12, 1995 Thomas L. Gettings
Thomas L. Gettings
Vice President and Corporate
Controller
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<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS
<FISCAL-YEAR-END> JUN-30-1995 JUN-30-1995 JUN-30-1995
<PERIOD-END> SEP-30-1994 DEC-31-1994 MAR-31-1995
<CASH> 75 13 17
<SECURITIES> 0 0 0
<RECEIVABLES> 65 35 93
<ALLOWANCES> 3 2 4
<INVENTORY> 75 56 73
<CURRENT-ASSETS> 679 604 633
<PP&E> 212 222 242
<DEPRECIATION> 74 74 78
<TOTAL-ASSETS> 826 755 803
<CURRENT-LIABILITIES> 155 98 132
<BONDS> 1 1 1
<COMMON> 4 4 4
0 0 0
15 15 15
<OTHER-SE> 614 600 613
<TOTAL-LIABILITY-AND-EQUITY> 826 755 803
<SALES> 351 471 689
<TOTAL-REVENUES> 351 471 689
<CGS> 178 254 373
<TOTAL-COSTS> 178 254 373
<OTHER-EXPENSES> 0 0 0
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 2 4 6
<INCOME-PRETAX> 39 15 36
<INCOME-TAX> 16 6 13
<INCOME-CONTINUING> 23 9 23
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 1 1 2
<NET-INCOME> 22 8 21
<EPS-PRIMARY> 0 0 0
<EPS-DILUTED> 0 0 0
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