-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, WnDgg2+PvAilft6B8vsuroRUMh3eGfP1ppYaeBh4Yba5ayLWZQMaibm87A/QS9Cp Tf7IR4zGYEqt+8AgySUVew== 0000102588-95-000017.txt : 19950516 0000102588-95-000017.hdr.sgml : 19950516 ACCESSION NUMBER: 0000102588-95-000017 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950515 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: 95538757 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 VACU-DRY CO 10Q 3/31/95 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 March 31, 1995 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: __X__ NO:____ As of March 31, 1995, there were 1,704,495 shares of common stock, no par value, outstanding. PART I FINANCIAL INFORMATION Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The financial statements herein presented for the quarters ended March 31, 1995 and 1994, 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 increase in the inventory from the June 30, 1994 balance was funded primarily by the increase in the borrowing under the line credit. The net working capital as of March 31, 1995 of $3,445,000 declined $722,000 from the June 30, 1994 balance of $4,167,000 . The net working capital of $3,445,000 as of March 31, 1995 compares to $3,445,000 as March 31, 1994. The decline in net working capital was a result of the cash needed to fund the operating activities and capital expenditures during the nine month period. The source of this cash was from borrowings under the line of credit agreement with the bank. 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 $4,000,000 secured by inventory and accounts receivable. As of March 31, 1995, the Company had $1,075,000 of available funds under this revolving line of credit. As a result of the increase in the inventory balances during the year, the revolving line of credit limit was increased during the quarter to $4,000,000. This compares with $2,198,000 of available funds (on a $3,000,000 limit) as of March 31, 1994. As of March 31, 1995, 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 source of long term liquidity is the sale of the idle production facility, although the Company is not relying on 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. The Company has leased a portion of the idle facility on a short and long term basis. The Company has undertaken an aggressive program with a prominent real estate company to sell or lease this idle facility. -2- The Company has established a capital expenditure budget of approximately $1,418,000 for the 1994-1995 fiscal year. Approximately $175,000 of this total is needed to relocate Product Development and thus finalize the consolidation of the two production facilities. At this time the Company has not leased the area occupied by Product Development at the idle facility and thus to conserve cash the Company is deferring this relocation until this area is either sold or leased. The balance of the capital expenditure budget will be used to refurbish existing equipment and to purchase new equipment. The Company has expended $813,000 through March 31, 1995, of the budgeted annual amount for capital additions. These expenditures were financed by borrowings on the revolving line of credit. The balance of the budget will be funded as the Company generates cash from the reduction of inventories. Results of Operations Quarter ended Net sales decreased $2,316,000 or 34% in the third quarter ended March 31, 1995. This decline was the result of decreased demand and discontinued items by our customers, and an extremely competitive market. Cost of sales as a percentage of net sales increased from 83% in 1994 to 102% in 1995. The lower sales in the quarter and the resultant decrease in the production volume accounted for the negative gross profit. The gross profit on the sales for the quarter were approximately equal to the net overhead expenses for the period. Selling, general and administrative expenses decreased $194,000 or 28% in the third quarter ended March 31, 1995. This decrease is a result of the difference between years in the Bonus/Profit Sharing expense. As result of the lower earnings in 1995, the Company has not reached the level of earnings required by the Bonus/Profit Sharing Plan to begin accrual of this expense. In the third quarter ended March 31, 1994 the Company expensed $179,000 related to the Bonus/Profit Sharing accrual. Interest expense increased $55,000 because of the increased borrowings under the line of credit. -3- Year-to-date Net sales decreased $5,180,000 or 23% for the nine months ended March 31, 1995. This decline was the result of a substantial reduction in sales orders to a major customer in addition to lower sales to a number of other customers. The competitive market, a mild winter (lower sales of ingredients for hot cereal products) and discontinuance of products by our customers are some the main reasons for this decrease in sales. The lower sales were partially offset by increased sales of $1,477,000 of banana and pumpkin flakes. Cost of sales as a percentage of net sales increased from 83% in 1994 to 90% in 1995. The competitive environment has adversely affected our margins in comparison with previous years. The lower sales resulted in lower production volume and consequently less overhead was absorbed. The actual overhead incurred did not decrease as result of the decreased production volume and consequently the total cost of sales increased as a percentage of net sales. Selling, general and administrative expenses decreased $288,000 or 10% in the nine month period ended March 31, 1995. Most of this decrease is composed of the difference between years in the Bonus/Profit Sharing expense. As result of the lower earnings in 1995, the Company has not reached the level of earnings required by the Bonus/Profit Sharing Plan to begin accrual of this expense. In the nine month period ended March 31, 1994, the Company accrued $320,000 of Bonus/Profit Sharing expense. Interest expense increased $100,000 because of the increase in the borrowing under the line of credit. -4- PART II OTHER INFORMATION Item 1. Legal Proceedings There are no legal proceedings pending. 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 6. Exhibits & Reports on Form 8-K a. Exhibits - none b. Reports on Form 8-K - none VACU-DRY COMPANY CONDENSED STATEMENT OF EARNINGS (UNAUDITED) Nine Months Nine Months Three Months Three Months Ended Ended Ended Ended March 31, 1995 March 31, 1994 March 31, 1995 March 31, 1994 REVENUES: Net sales $16,705,000 $21,885,000 $4,531,000 $6,847,000 Other 235,000 255,000 84,000 73,000 Total revenue $ 16,940,000 $22,140,000 $4,615,000 $6,920,000 COST & EXPENSES Cost of sales 14,984,000 18,241,000 4,629,000 5,656,000 Selling, general & administration 1,629,000 1,917,000 500,000 694,000 Interest 270,000 170,000 116,000 61,000 $16,883,000 $20,328,000 $5,245,000 $6,411,000 EARNINGS BEFORE INCOME TAXES 57,000 1,812,000 (630,000) 509,000 PROVISION FOR TAXES 20,000 720,000 (255,000) 199,000 NET EARNINGS $ 37,000 $1,092,000 $ (375,000) $ 310,000 EARNINGS PER COMMON SHARE $.02 $.66 $(.22) $.19 AVE COMMON SHARES OUSTANDING 1,701,510 1,664,029 1,702,300 1,664,029 See notes to interim financial statements VACU-DRY COMPANY Balance Sheets (Unaudited) (Dollars in thousands) CURRENT ASSETS: 3/31/95 6/30/94 CURRENT LIABILITIES: 3/31/95 6/30/94 Cash $ 195 $ 419 Borrowings under line of credit $ 2,925 $ 280 Accounts receivable 1,489 1,670 Current maturities of long-term debt 475 475 Other receivables 235 -0- Accounts payable 1,417 1,160 Inventories 7,166 4,777 Accrued payroll & related liabilities 677 596 Prepaid expenses 140 104 Accrued expenses 193 604 Current deferred taxes 451 502 Accrued interest & insurance payable 106 49 _____ _____ Accrued SAR payble 52 141 Total current assets 9,676 7,472 Deferred factory overhead 394 -0- Net property, plant & Income taxes payable -0- -0- equipment 7,632 7,457 ____ _____ Total current liabilities $6,239 $3,305 LONG-TERM DEBT - Net of current maturities 2,229 2,585 DEFERRED INCOME TAXES 810 803 SHAREHOLDERS' EQUITY: Capital stock 3,945 3,933 Retained earnings 4,085 4,303 Total shareholders' equity 8,030 8,236 ______ ______ Total liabilities and ______ ______ Total Assets $17,308 $14,929 shareholders' equity $17,308 $14,929
See notes to interim financial statements VACU-DRY COMPANY STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE NINE MONTHS ENDED MARCH 31, 1995 AND 1994 1995 1994 CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 37,000 $1,092,000 __________ __________ Adjustments to reconcile net earnings to net cash provided by operating activities - (Gain) on sale of equipment -0- 8,000 Depreciation expense 641,000 569,000 Changes in certain assets & liabilities Decrease (increase) in receivables (50,000) 1,000 (Increase) in inventories (2,389,000) (3,555,000) Decrease (increase) in prepaid assets (36,000) 334,000 Decrease (increase) in current deferred taxes 51,000 (17,000) Increase in accounts payable 702,000 1,203,000 Increase (decrease) in accrued expenses (856,000) 366,000 Increase in accrued insurance & interest 57,000 28,000 Increase in accrued payroll & liabilities 81,000 127,000 Increase in deferred overhead 394,000 600,000 Increase in income taxes payable -0- 204,000 (Decrease) in SAR liability (89,000) (41,000) _______ __________ Total adjustments (1,494,000) (173,000) Net cash provided by (used for) operating activities (1,457,000) 919,000 _________ _________ CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (813,000) (1,007,000) _________ _________ Net cash used for investing activities (813,000) (1,007,000) _________ _________ CASH FLOWS FROM FINANCING ACTIVITIES: Additional borrowings under line of credit 9,688,000 6,489,000 Payments on line of credit (7,043,000 (6,869,000) Quarterly Dividend of $.05 per share (255,000) -0- Employee purchase of Company stock 81,000 19,000 Stock buy back of Company shares (69,000) -0- Principal payment of long-term debt (356,000) (216,000) Borrowings on the consolidation loan -0- 640,000 __________ ________ Net cash used by financing activities 2,046,000 63,000 __________ _________ NET INCREASE (DECREASE) IN CASH (224,000) (25,000) CASH AT THE BEGINNING OF THE YEAR 419,000 327,000 __________ _________ TOTAL CASH AT THE END OF THE PERIOD $ 195,000 $ 302,000
See notes to interim financial statements VACU-DRY COMPANY NOTES TO INTERIM FINANCIAL STATEMENTS NINE MONTHS ENDED MARCH 31, 1995 Note 1 - The Interim Financial Statements herein presented for the nine months ended March 31, 1995, 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. Note 2 - Inventories - Inventories are stated at the lower of cost, using the last- in, first-out (LIFO) method or market. The excess of current cost of the inventory over LIFO cost was $1,233,000 at March 31, 1995 and $1,511,000 at June 30, 1994. Inventories at March 31, 1995 and June 30, 1994, consisted of the following: 3/31/95 6/30/94 Finished goods $6,569,000 $4,276,000 Work in progress 270,000 192,000 Raw materials, & containers 327,000 309,000 __________ __________ $7,166,000 $4,777,000 Note 3 - Statement of Cash Flows - Interest and income tax payments reflected in the Consolidated Statement of Cash Flows were as follows: 1995 1994 Interest paid $281,000 $170,000 Income taxes paid $158,000 $373,000 Note 4 - Income Taxes - The effective income tax rate for 1995 is 40%, which compares to 40% for 1994. There were no federal or state tax operating loss carryforwards for book or tax purposes at March 31, 1995. 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: May 12, 1995 (Donal Sugrue) _______________________ Donal Sugrue, President Date: May 12, 1995 (Tom Eakin) _______________________ Tom Eakin, VP, Finance EX-27 2 VACU-DRY FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 10Q FOR THE QUARTER ENDED MARCH 31, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000102588 VACU-DRY COMPANY 9-MOS JUN-30-1995 JUL-1-1994 MAR-31-1995 195,000 0 1,724,000 0 7,166,000 9,676,000 16,866,000 9,234,000 17,308,000 6,239,000 0 3,945,000 0 0 4,085,000 17,308,000 16,705,000 16,940,000 14,984,000 16,613,000 0 0 270,000 57,000 20,000 57,000 0 0 0 37,000 .02 .02 RETAINED EARNINGS
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