-----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, C6ZRCtDaL0pEy+meNcXMMpJRJtKxdA/yQgtu6JPYz8J9mtfH0LfMVuwhXcW06hj1 ZoMSIw2QFK1vtb0I55tcrg== 0000102588-96-000020.txt : 19961118 0000102588-96-000020.hdr.sgml : 19961118 ACCESSION NUMBER: 0000102588-96-000020 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 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: 96666043 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 September 30, 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: __X__ NO:____ As of September 30, 1996, there were 1,635,867 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 THIS FORM 10-Q CONTAINS FOWARD-LOOKING STATEMENTS WHICH INVOLVE RISK AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THE RESULTS DISCUSSED IN THE FOWARD-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 September 30, 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. Normally during the first quarter of the fiscal year the inventory levels increase as a result of the beginning of the production season. As of September 30, 1996, the Company's inventory was at one of the lowest levels in years. The net working capital decreased from $4,136,000 as of June 30, 1996 to $3,262,000 as of September 30, 1996. The decrease was a result of the the capital expenditure increase of $679,000 and the repurchase of common stock of $407,000. This compares to a net working capital balance of $3,882,000 as of September 30, 1995. 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 ($4,000,000 as of September 30, 1995) secured by inventory and accounts receivable. As of September 30, 1996, the Company did not have any borrowings outstanding on the line of credit. As of September 30, 1995 the Company had $2,237,000 of available funds under the line of credit limit of $4,000,000. As of September 30, 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 possible source of long term liquidity could be 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. At this time the Company is not pursuing the sale of this facility. The Company has been successful in leasing all of the idle facility other than a portion occupied by Product development. The Company continues to lease a portion of its operating facility and is in negotiations with the primary tenant to increase their square footage. -2- The Company has established a capital expenditure budget of approximately $1,520,000 for the 1996-1997 fiscal year. These funds will primarily be 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. The Company has a commitment from a financial institution to fund $850,000 of the 1996 - 1997 capital budget. As of September 30, 1996, the Company has not borrowed any funds related to this commitment. During the first quarter ended September 30, 1996, the Company repurchased 80,000 of common stock at a cost of $407,000 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 any more stock in the current fiscal year. Results of Operations Net sales decreased $436,000 or 7% in the first quarter of fiscal 1996. This decrease was caused by the loss of the Confoco representation agreement business which was only partially offset by higher dried apple sales. Other revenue increased $88,000 as a result of higher rental income and reimbursement of a product claim. The loss of the Confoco sales reduced our gross margin on a comparative basis from 8.4% as of September 1995 to 7.6% as of September 1996. Excluding the Confoco sales from the comparative figures for September 1995, the Company's gross margin on an on going basis improved slightly from 7.1% to 7.6%. Selling, general and administrative expenses increased $57,000 or 13% in the first quarter. This change is a result of increased travel expenses and salaries as a result of hiring a regional sales manager. Interest expense decreased $52,000 as a result of the payoff of the balance on the line of credit and the interest income from investing the temporary excess cash. -3- 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) Three Months Three Months Ended Ended 9/30/96 9/30/95 ------------ ------------ REVENUES: Net sales $6,043,000 $6,479,000 Other 148,000 60,000 ---------- ---------- Total revenue $6,191,000 $6,539,000 ---------- ---------- COST & EXPENSES: Cost of sales 5,584,000 5,934,000 Selling, general & administration 494,000 437,000 Interest 44,000 96,000 ---------- ---------- $6,122,000 $6,467,000 ---------- ---------- EARNINGS BEFORE INCOME TAXES 69,000 72,000 PROVISION FOR INCOME TAXES 27,000 29,000 ---------- ----------- NET EARNINGS $ 42,000 $ 43,000 ========== =========== EARNINGS PER COMMON SHARE $.03 $.03 ==== ==== WEIGHTED AVERAGE COMMON SHARES AND EQUIVALENTS 1,675,120 1,698,072 ========= ========= See notes to interim financial statements VACU-DRY COMPANY Balance Sheets (Unaudited) (Dollars in thousands) ASSETS LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT ASSETS: 9/30/96 9/30/95 6/30/96 CURRENT LIABILITIES: 9/30/96 9/30/95 6/30/96 Cash $515 $215 $214 Borrowings under line of credit $-0- $1,763 $826 Accounts receivable 1,964 2,769 2,684 Current maturities of long-term debt 415 480 415 Other receivable 16 161 -0- Accounts payable 2,071 2,045 678 Inventories 3,802 5,369 3,430 Accrued payroll & related liabilities 640 621 476 Prepaid expenses 96 264 116 Accrued expenses 72 261 106 Current deferred taxes 225 303 225 Deferred factory overhead 150 -0- -0- _______ ______ ______ Total current assets $6,618 $9,081 $6,669 Income taxes payable 8 29 32 ______ ______ ______ Total current liabilities $3,356 $5,199 $2,533 Net property, plant & ------ ------ ------ equipment 7,335 7,252 6,918 LONG-TERM DEBT - Net of current maturities 1,525 1,985 1,628 DEFERRED INCOME TAXES 748 912 748 SHAREHOLDERS' EQUITY: Capital stock 3,605 3,952 4,001 Retained earnings 4,719 4,285 4,677 ----- ----- ----- Total shareholders' equity 8,324 8,237 8,678 _______ _______ _______ Total liabilities and ------- ------- ------- Total Assets $13,953 $16,333 $13,587 shareholders' equity $13,953 $16,333 $13,587 ======= ======= ======= ======= ======= =======
See notes to interim financial statements VACU-DRY COMPANY STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 CASH FLOWS FROM OPERATING ACTIVITIES: 1996 1995 Net earnings $42,000 $43,000 _______ _______ Adjustments to reconcile net earnings to net cash provided by operating activities - Depreciation expense 262,000 229,000 Changes in certain assets & liabilities Decrease (increase) in receivables 704,000 (1,096,000) Decrease (increase) in inventories (372,000) 45,000 Decrease (increase) in prepaid assets 20,000 (88,000) Increase in accounts payable 1,393,000 1,652,000 (Decrease) in accrued expenses (34,000) (131,000) Increase in accrued p/r & liabilities 164,000 97,000 Increase in deferred overhead 150,000 -0- Increase (decrease) in income taxes payable (24,000) 29,000 _________ _________ Total adjustments 2,263,000 737,000 _________ _________ Net cash provided by(used for) operating activities 2,305,000 780,000 _________ _________ CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (679,000) (60,000) _________ _________ Net cash (used for) investing activities (679,000) (60,000) _________ _________ CASH FLOWS FROM FINANCING ACTIVITIES: Additional borrowings under line of credit 253,000 2,713,000 Payments on line of credit (1,079,000) (3,301,000) Issuance of common stock 11,000 16,000 Repurchase of common stock (407,000) -0- Principal payments of long-term debt (103,000) (120,000) _________ __________ Net cash provided by(used for) financing activities (1,325,000) (692,000) _________ __________ NET INCREASE IN CASH 301,000 28,000 CASH AT THE BEGINNING OF THE YEAR 214,000 187,000 _________ _________ TOTAL CASH AT THE END OF THE PERIOD $515,000 $215,000 ========= ========= See notes to interim financial statements VACU-DRY COMPANY NOTES TO INTERIM FINANCIAL STATEMENTS THREE MONTHS ENDED SEPTEMBER 30, 1996 Note 1 - The Interim Financial Statements herein presented for the three months ended September 30, 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. 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 $2,113,000 at September 30, 1996 and $2,113,000 at June 30, 1996. Inventories at September 30, 1996 and June 30, 1996, consisted of the following: 9/30/96 6/30/96 Finished goods $2,694,000 $2,757,000 Work in progress 201,000 233,000 Raw materials, & containers 907,000 440,000 __________ __________ $3,802,000 $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 $45,000 $97,000 Income taxes paid $53,000 - 0 - Note 4 - Income Taxes - The effective income tax rate for 1996 is 40%, which compares to 40% for 1995. As of June 30, 1996, the Company has tax credit carryforwards of $62,000 and $99,000 available to offset future federal and state taxable income. 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: November 13, 1996 (Gary L. Hess) _______________________ Gary L. Hess, President Date: November 13, 1996 (Tom Eakin) _______________________ Tom Eakin, VP, Finance EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS JUN-30-1997 SEP-30-1996 515,000 0 2,028,000 64,000 3,802,000 6,618,000 17,244,000 10,389,000 13,953,000 3,356,000 0 0 0 3,605,000 4,719,000 13,953,000 6,043,000 6,191,000 5,584,000 5,584,000 0 0 44,000 69,000 27,000 69,000 0 0 0 42,000 .03 .03 NET OF LIFO RESERVE OF $2,113,000 RETAINED EARNINGS
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