-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P6MJDWYCE4h/fnySv3bVDdwUbDRTFVPrXHRKGSMdUldXMMSoTJSfHkHMkkCgRBUj N038f9L1keBWz7XaA9LDlg== 0000102588-97-000006.txt : 19970222 0000102588-97-000006.hdr.sgml : 19970222 ACCESSION NUMBER: 0000102588-97-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970214 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: VACU DRY CO CENTRAL INDEX KEY: 0000102588 STANDARD INDUSTRIAL CLASSIFICATION: CANNED, FROZEN & PRESERVED FRUIT, VEG & FOOD SPECIALTIES [2030] IRS NUMBER: 941069729 STATE OF INCORPORATION: CA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-01912 FILM NUMBER: 97531971 BUSINESS ADDRESS: STREET 1: 7765 HEALDSBURG AVE STREET 2: P O BOX 2418 CITY: SEBASTOPOL STATE: CA ZIP: 95473-2418 BUSINESS PHONE: 7078294600 MAIL ADDRESS: STREET 1: P O BOX 2418 STREET 2: 7765 HEALDSBURG AVENUE CITY: SEBASTOPOL STATE: CA ZIP: 95473-2418 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) X of the Securities Exchange Act of 1934. For the quarterly period ended December 31, 1996 or 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 01912 VACU-DRY COMPANY (Exact name of registrant as specified in its charter) California 94-1069729 (State of incorporation) (IRS Employer Identification #) 7765 Healdsburg Ave., Sebastopol, California 95472 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 707/829-4600 Not-Applicable _____________________________________________________________________________ (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) 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 such reports), and (2) has been subject to such filing requirements for the past 90 days. YES: ____ NO:__X__ As of December 31, 1996, there were 1,638,715 shares of common stock, no par value, outstanding. Part 1 - FINANCIAL INFORMATION Item 1. Financial Statements VACU-DRY COMPANY CONDENSED STATEMENT OF EARNINGS (UNAUDITED) Six Months Six Months Three Months Three Months Ended Ended Ended Ended 12/31/96 12/31/95 12/31/96 12/31/95 REVENUES: Net sales $12,339,000 $13,251,000 $6,296,000 $6,772,000 Other 355,000 343,000 207,000 283,000 ___________ ___________ __________ __________ Total revenue $12,694,000 $13,594,000 $6,503,000 $7,055,000 COST & EXPENSES: Cost of sales 10,816,000 11,927,000 5,232,000 5,993,000 Selling, general & administrative 1,080,000 925,000 586,000 488,000 Interest 93,000 169,000 49,000 73,000 ___________ ___________ __________ __________ Total cost & expenses $11,989,000 $13,021,000 $5,867,000 $6,554,000 EARNINGS BEFORE INCOME TAXES 705,000 573,000 636,000 501,000 PROVISION FOR INCOME TAXES 282,000 235,000 254,000 206,000 ________ ________ ________ ________ NET EARNINGS $423,000 $338,000 $382,000 $295,000 ======== ======== ======== ======== EARNINGS PER COMMON SHARE $.26 $.20 $.23 $.17 ==== ==== ==== ==== WEIGHTED AVERAGE COMMON SHARES AND EQUIVALENTS 1,655,509 1,700,015 1,635,898 1,701,957 See notes to interim financial statements VACU-DRY COMPANY Balance Sheets (Unaudited) (Dollars in thousands)
CURRENT ASSETS: 12/31/96 12/31/95 6/30/96 CURRENT LIABILITIES: 12/31/96 12/31/95 6/30/96 Cash $178 $225 $214 Borrowings under line of credit -0- $1,682 $826 Accounts receivable 1,670 2,313 2,684 Current maturities of long-term debt 576 480 415 Other receivable 124 6 -0- Accounts payable 2,818 2,566 678 Inventories 6,208 6,944 3,430 Accrued payroll & related liabilities 659 633 476 Prepaid expenses 55 63 116 Accrued expenses 127 197 106 Current deferred taxes 225 303 225 Income taxes payable 209 146 32 _______ _______ ______ ------ ------ ------ Total current assets $8,460 $ 9,854 $6,669 Total current liabilities $4,389 $5,704 $2,533 ------ ------ ------ Net property, plant & LONG-TERM DEBT - Net of equipment 7,554 7,078 6,918 current maturities 2,065 1,771 1,628 ----- ----- ----- DEFERRED INCOME TAXES 843 905 748 --- --- --- SHAREHOLDERS' EQUITY; Capital stock 3,617 3,971 4,001 Retained earnings 5,100 4,581 4,677 ----- ----- ----- Total shareholders' equity 8,717 8,552 8,678 ----- ----- ----- _______ _______ _______ Total liabilities and Total Asset $16,014 $16,932 $13,587 shareholders' equity $16,014 $16,932 $13,587 ======= ======= ======= ======= ======= ======= See notes to interim financial statements VACU-DRY COMPANY STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE SIX MONTHS ENDED DECEMBER 31, 1996 AND 1995 CASH FLOWS FROM OPERATING ACTIVITIES: 1996 1995 Net earnings $423,000 $338,000 ________ ________ Adjustments to reconcile net earnings to net cash provided by operating activities - Refund of reserve related to debt owing to the State of California -0- (110,000) Depreciation expense 525,000 464,000 Changes in certain assets & liabilities (Increase) in receivables 890,000 (485,000) (Increase) in inventories (2,778,000) (1,530,000) Decrease in prepaid assets 61,000 113,000 Increase in accounts payable 2,140,000 2,173,000 (Decrease) in accrued expenses 21,000 (194,000) Increase in accrued p/r & rel. liab. 183,000 109,000 Increase in income taxes payable 181,000 146,000 (Decrease) in deferred taxes 95,000 (7,000) __________ __________ Total adjustments 1,318,000 679,000 ___________ __________ Net cash provided by operating activities 1,741,000 1,071,000 __________ __________ CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (1,165,000) (121,000) ___________ _________ Net cash (used for) investing activities (1,165,000) (121,000) CASH FLOWS FROM FINANCING ACTIVITIES: Additional borrowings on line of credit 2,227,000 5,739,000 Payments on line of credit (3,053,000) (6,408,000) Employee purchase of Company stock 23,000 35,000 Repurchase of common stock (407,000) -0- Proceeds from long-term debt 805,000 -0- Principal payments of long-term debt (207,000) (224,000) _________ _________ Net cash used by financing activities (612,000) (858,000) _________ _________ NET INCREASE (DECREASE) IN CASH (36,000) 38,000 CASH AT THE BEGINNING OF THE YEAR 214,000 187,000 ________ ________ TOTAL CASH AT THE END OF THE PERIOD $178,000 $225,000 ======== ======== See notes to interim financial statements VACU-DRY COMPANY NOTES TO INTERIM FINANCIAL STATEMENTS SIX MONTHS ENDED DECEMBER 31, 1996 Note 1 - The Interim Financial Statements herein presented for the six months ended December 31, 1996, reflect all adjustments which are in the opinion of management necessary to a fair statement of the results of operations for the period then ended. The statements are unaudited and are not necessarily indicative of results for the full year. Reclassifications - Certain 1995 amounts were reclassified to conform to the 1996 presentation. Note 2 - Inventories - Inventories are stated at the lower of cost, using the last-in, first-out (LIFO) method or market. Inventories at December 31, 1996 and June 30, 1996, consisted of the following: 12/31/96 6/30/96 Finished goods $4,667,000 $2,757,000 Work in progress 351,000 233,000 Raw materials, & containers 1,715,000 440,000 __________ __________ $6,733,000 $3,430,000 ========== ========== Note 3 - Statement of Cash Flows - Interest and income tax payments reflected in the Consolidated Statement of Cash Flows were as follows: 1996 1995 Interest paid $ 91,000 $178,000 Income taxes paid $ 128,000 $84,000 Note 4 - Income Taxes - The effective income tax rate for 1996 is 40%, which compares to 41% for 1995. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations THIS FORM 10-Q CONTAINS FORWARD-LOOKING STATEMENTS WHICH INVOLVE RISK AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THE RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN OF THE FACTORS SET FORTH IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED JUNE 30, 1996. The financial statements herein presented for the quarters ended December 31, 1996 and 1995, reflect all the adjustments that in the opinion of management are necessary for the fair presentation of the financial position and results of operations for the period then ended. All adjustments during the periods presented, are of a normal recurring nature. Liquidity and Capital Resources Because the Company's operations are seasonal in nature, the Company's liquid resources fluctuate during the year in a way that changes very little from year to year. The inventory and accounts payable balances are normally at their lowest level as of the end of the fiscal year and their highest level as of the end of the second quarter. This seasonal increase in the accounts payable balance results in a temporary increase in the Debt to Equity ratio. The inventory levels as of December 31, 1996 and 1995 are very comparable when you take into consideration the differences between periods in the LIFO reserves. The net working capital as of December 31, 1996, 1995 and June 30, 1996 are very comparable. The decline in the accounts receivable balance as of December 31, 1996 was only temporary and was a result of the lower sales in the month of December. The Company increased its long-term debt by $805,000 as of the end of December 1996. The Company's liquidity resources are obtained from external and internal sources. The Company's largest external source is a revolving line of credit provided by a bank at the Bank's prime rate. The Company has a revolving line of credit limit of $3,500,000 secured by inventory and accounts receivable. As of December 31, 1996, the Company did not have any borrowings outstanding on the line of credit. As of December 31, 1995 the Company had $1,818,000 of available funds under the line of credit. As of December 31, 1996, the Company was in compliance with all of the covenants and restrictions related to its outstanding debt. The most significant source of internal liquidity is the Company's net working capital. One additional possible source of long term liquidity could be the sale of the idle production facility. Although the Company is not relying on or pursuing the sale of this facility as a source of liquidity, the Company's short and long-term liquidity would materially increase upon such a sale. In regard to this facility, there is some indication that in late 1997 certain leases may not be renewed. Advance planning to locate new tenants is already underway. The Company continues to lease a portion of its operating facility and is in negotiations with the primary tenant to increase its square footage. The Company has established a capital expenditure budget of approximately $1,813,000 for the fifteen month period April 1,1996 - June 30, 1997. To date, capital expenditures of $1,165,000 have been made. These funds are being primarily used to purchase new and refurbish existing equipment. The Company anticipates financing these assets through internally generated funds and through the use of debt financing. As of December 31, 1996, the Company borrowed $805,000 of long-term debt to finance a portion of the $1,813,000 capital budget. The note for $805,000 is dated December 31, 1996 with a term of 60 months, at a variable interest rate equal to the average weekly yield of 30 day Commercial Paper, plus 2.10% and is secured by specific machinery and equipment. During the first quarter ended September 30, 1996, the Company repurchased 80,000 shares of common stock at a cost of $407,000. This repurchase was to offset the dilution caused by stock issuances under the Company's stock purchase plan and under outstanding options. The Company has no present intentions to repurchase more stock in the current fiscal year. Results of Operations Quarter Net sales decreased $476,000 or 7% in the second quarter of fiscal 1996 compared to 1995. The adverse sales impact of the lost Confoco business was only partially offset by higher dried apple sales. Other revenue decreased $76,000 as a result of a non-recurring refund in 1995 of $110,000 from a reserve related to debt owing to the State of California. Rental income increased $16,000 between quarters. In addition a refund of $40,000 from the Company's workers compensation insurance carrier was received. Cost of sales for the quarter ended December 31, 1996 decreased 5.4% from 88.5% to 83.1% of net sales. Price increases have resulted in higher gross margins for the quarter. We anticipate the margin will decrease in the third and fourth quarter as we complete our raw material purchases and feel the full impact of the increasing raw material costs. Selling, general and administrative expenses increased $98,000 or 20% in the second quarter. This increase is a result of higher expenses in the following areas: consultants for our strategic plan, travel and higher salaries(replaced our new regional sales manager). The consulting expenses of approximately $75,000 will be non-recurring. Interest expense decreased $24,000 as a result of our lower average borrowings on the line of credit. Interest expense for the third quarter should increase as a result of the long-term debt borrowing of $805,000 and increased borrowings on the line of credit as a result of the higher inventory level. Year-to Date Net sales decreased $912,000 or 7% in the six months ended December 31, 1996. Sales of Confoco products last year accounted for $1,723,000 of the net sales for the six months ended December 31, 1995. In comparing the periods, if you eliminate the Confoco sales from the net sales through December 31, 1995, the sales increased $811,000 on approximately the same volume of unit sales. Other income increased $12,000 during the comparative six month period. Cost of sales as a percent of net sales decreased from 90% as of December 31, 1995 to 87.6% as of December 31, 1996. As noted in the quarter results, the higher sale prices in the second quarter resulted in a higher gross operating margin. On a comparative basis we have increased our production volume and consequently our overhead absorption through the six months ended December 31, 1996. Selling, general and administrative expenses increased $155,000 or 17% through the six months ended December 31, 1996. This increase is a result of higher expenses in the following areas: consultants for our strategic plan, travel and higher salaries(replaced our new regional sales manager). The consulting expenses of approximately $90,000 will be non-recurring next year. Interest expense decreased $76,000 as a result of our lower average borrowings on the line of credit. Interest expense for the third quarter should increase as a result of the long-term debt borrowing of $805,000 and increased borrowings on the line of credit as a result of the higher inventory level. PART II OTHER INFORMATION Item 1. Legal Proceedings There are no material legal proceedings pending. Item 2. Changes in Securities The Company's revolving line of credit agreement with its Bank dated( November 1, 1996), includes a covenant which prohibits the declaring or paying of any dividend or distribution in either cash, stock or any other property on the Company's stock now or hereafter outstanding, nor redeem, retire, repurchase or otherwise acquire shares of any class of the Company's stock now or hereafter outstanding, without the prior approval by the Bank. The Company received approval from the Bank prior to the repurchase of 80,000 shares of common stock. Item 4. Submission of Matters to a Vote of Security Holders. No matters were submitted to a vote of security holders during the period covered by this report. Item 5. Other Information Confoco Representation Agreement Effective July 1, 1996, the representation agreement with Confoco, Inc., for the sale of low moisture banana and pumpkin flakes terminated. Confoco, Inc., has consolidated the sales and marketing of its products internally. From July 1, 1995 through December 31, 1995 the Company recorded sales of $1,722,000 of Confoco products with a gross profit of $221,000. Under the Company's agreement with Confoco, for the two years from the date of termination the Company is prohibited from distributing in the United States, Canada and Mexico, banana products similar to those currently being sold. Item 6. Exhibits & Reports on Form 8-K a. Exhibits - none (27) Financial Data Schedule (by electronic filing only) b. Reports on Form 8-K - none 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. VACU-DRY COMPANY Date: February 13, 1997 (Gary L. Hess) _______________________ Gary L. Hess, President Date: February 13, 1997 (Tom Eakin) _______________________ Tom Eakin, VP, Finance
EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 10Q FOR THE QUARTER ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMTENTS. 6-MOS JUN-30-1996 DEC-31-1996 178,000 0 1,734,000 64,000 6,733,000 8,985,000 18,213,000 10,659,000 16,539,000 4,914,000 0 0 0 3,617,000 5,100,000 16,539,000 12,339,000 12,694,000 10,816,000 10,816,000 0 0 93,000 705,000 282,000 423,000 0 0 0 423,000 .26 .26 NET OF LIFO RESERVE OF $2,114,000 RETAINED EARNINGS
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