-----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, U+77u+gH3JPp1Np1oNbyJSSPMkGtVeVKQLaOSwKDwR4P7l7VzWxuLBHlk4yVHXSZ qkgdmnD76Qyc5FGFWoN54g== 0000897069-96-000132.txt : 19960517 0000897069-96-000132.hdr.sgml : 19960517 ACCESSION NUMBER: 0000897069-96-000132 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNIVERSAL FOODS CORP CENTRAL INDEX KEY: 0000310142 STANDARD INDUSTRIAL CLASSIFICATION: FOOD & KINDRED PRODUCTS [2000] IRS NUMBER: 390561070 STATE OF INCORPORATION: WI FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07626 FILM NUMBER: 96567126 BUSINESS ADDRESS: STREET 1: 433 EAST MICHIGAN ST CITY: MILWAUKEE STATE: WI ZIP: 53202 BUSINESS PHONE: 4142716755 MAIL ADDRESS: STREET 1: PO BOX 737 CITY: MILWAUKEE STATE: WI ZIP: 53201 10-Q 1 UNIVERSAL FOODS CORPORATION UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q [X] (Mark One) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: March 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: 1-7626 UNIVERSAL FOODS CORPORATION (Exact name of registrant as specified in its charter) Wisconsin 39-0561070 (State or other jurisdiction of (I.R.S. Employer Identification incorporation or organization) Number) 433 East Michigan Street, Milwaukee, Wisconsin 53202 (Address of principal executive offices) Registrant's telephone number, including area code: (414) 271-6755 NONE (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 such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for at least the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of Common Stock as of the latest practicable date. Class Outstanding at March 31, 1996 Common Stock, par value $0.10 per share 25,802,245 shares UNIVERSAL FOODS CORPORATION INDEX Page No. PART I, FINANCIAL INFORMATION: Consolidated Condensed Balance Sheets - March 31, 1996 and September 30, 1995. 1 Consolidated Condensed Statements of Earnings - Three and Six Months Ended March 31, 1996 and 1995. 2 Consolidated Condensed Statements of Cash Flows - Six Months Ended March 31, 1996 and 1995. 3 Notes to Consolidated Condensed Financial Statements. 4 Management's Discussion and Analysis of Results of Operations, Financial Condition and Forward Looking Information. 5 PART II, OTHER INFORMATION: Item 6, Exhibits and Reports on Form 8-K. 7 Signatures. 8 PART I FINANCIAL INFORMATION UNIVERSAL FOODS CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS ($000's Omitted) March 31 1996 September 30 ASSETS (Unaudited) 1995 CURRENT ASSETS: Cash and cash equivalents $ 3,539 $ 8,717 Trade accounts receivable 107,900 105,847 Inventory: Finished and in-process products 110,881 119,885 Raw materials and supplies 59,003 59,135 Prepaid expenses and other current assets 38,328 32,780 -------- -------- TOTAL CURRENT ASSETS 319,651 326,364 INVESTMENTS AND OTHER ASSETS 46,221 42,164 INTANGIBLES 146,447 148,654 PROPERTY, PLANT AND EQUIPMENT: Cost: Land and buildings 138,931 139,177 Machinery and equipment 325,854 308,204 -------- -------- 464,785 447,381 Less accumulated depreciation 201,160 187,693 -------- -------- 263,625 259,688 -------- -------- TOTAL ASSETS $775,944 $776,870 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Short-term borrowings $ 1,993 $ 7,108 Accounts payable, accrued expenses and other liabilities 118,442 133,637 Federal and state income taxes 22,484 20,755 Current maturities on long-term debt 5,664 21,100 -------- -------- TOTAL CURRENT LIABILITIES 148,583 182,600 DEFERRED INCOME TAXES 14,369 14,514 OTHER DEFERRED LIABILITIES 19,290 19,198 ACCRUED EMPLOYEE AND RETIREE BENEFITS 39,066 38,100 LONG-TERM DEBT 193,906 160,678 SHAREHOLDERS' EQUITY Common stock 2,698 2,698 Additional paid-in capital 78,375 78,955 Earnings reinvested in the business 329,903 314,883 -------- -------- 410,976 396,536 Less: Treasury stock, at cost 36,813 24,770 Other 13,433 9,986 -------- -------- 360,730 361,780 -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $775,944 $776,870 ======== ======== See Accompanying Notes to Consolidated Condensed Financial Statements. UNIVERSAL FOODS CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS ($000's Omitted Except Per Share Amounts) (Unaudited) Three Months Six Months Ended March 31 Ended March 31 1996 1995 1996 1995 Revenue $200,034 $191,824 $393,480 $379,548 Operating Costs and Expenses: Cost of Products Sold 132,198 124,653 258,665 247,024 Selling and Administrative Expenses 41,978 41,801 83,973 84,030 Unusual Item - Gain on Sale of Frozen Foods Business --- --- --- (49,560) ------- ------- ------- -------- Operating Income 25,858 25,370 50,842 98,054 Interest Expense 3,475 3,962 7,381 7,930 ------- ------- ------- -------- Earnings Before Income Taxes 22,383 21,408 43,461 90,124 Income Taxes 7,841 7,760 15,429 40,894 ------- ------- ------- -------- Net Earnings $ 14,542 $ 13,648 $ 28,032 $ 49,230 ======== ======== ======== ======== Weighted Average Number of Common Shares Outstanding 25,937,000 26,023,000 26,021,000 26,042,000 =========== ========== ========== ========== Net Earnings Per Common Share $ .56 $ .52 $1.08 $1.89 ===== ===== ===== ===== Dividends Per Common Share $ .25 $ .24 $ .50 $ .48 ===== ===== ===== ===== See Accompanying Notes to Consolidated Condensed Financial Statements. UNIVERSAL FOODS CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS ($000's Omitted) (Unaudited) Six Months Ended March 31 1996 1995 Net cash provided by (used in) operating activities $ 33,066 $ (26,404) -------- --------- Cash flows from investing activities: Acquisition of property, plant and equipment (21,899) (13,936) Acquisition of new businesses (net of cash acquired) (529) (2,978) Proceeds from disposition of business and sale of property, plant and equipment and other productive assets --- 41,609 Other items, net (3,409) (2,068) -------- --------- Net cash (used in) provided by investing activities (25,837) 22,627 Cash flows from financing activities: Proceeds from additional borrowings 90,896 30,524 Reductions in debt (78,517) (35,268) Proceeds from options exercised and other 1,386 1,269 Purchase of treasury stock (13,159) (1,759) Dividends paid (13,013) (12,503) -------- --------- Net cash used in financing activities (12,407) (17,737) Net decrease in cash and cash equivalents (5,178) (21,514) Cash and cash equivalents at beginning of period 8,717 43,430 -------- --------- Cash and cash equivalents at end of period $ 3,539 $ 21,916 ======== ========= Supplemental Disclosure of Cash Flow Information: Cash paid during the period for: Interest $ 7,675 $ 6,831 Income taxes 14,330 42,746 See Accompanying Notes to Consolidated Condensed Financial Statements. UNIVERSAL FOODS CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 1. In the opinion of the Company, the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of March 31, 1996 and September 30, 1995, the results of operations for the three and six month periods ended March 31, 1996 and 1995 and cash flows for the six month periods ended March 31, 1996 and 1995. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full fiscal year. 2. Refer to the footnotes in the Company's annual financial statements for the year ended September 30, 1995, for a description of the accounting policies, which have been continued without change, and additional details of the Company's financial condition. The details in those notes have not changed except as a result of normal transactions in the interim. 3. Expenses are charged to operations in the year incurred. However, for interim reporting purposes, certain of these expenses are charged to operations based on an estimate rather than as expenses are actually incurred. 4. During the six months ended March 31, 1996 and 1995, the Company repurchased 365,300 and 65,000 shares of common stock, respectively, for an aggregate price of $14,006,000 and $1,759,000, respectively. 5. For the six months ended March 31, 1996, depreciation and amortization were $16,226,000 and $2,606,000, respectively. For the six months ended March 31, 1995, depreciation and amortization were $15,018,000 and $3,193,000, respectively. 6. On January 8, 1996, the Company issued two senior notes of $15,000,000 each, one bearing interest at 6.77%, due January 2010 and the other bearing interest at 6.68%, amortizing in seven equal, annual principal payments beginning January 2005. Proceeds will be used for general corporate purposes. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS, FINANCIAL CONDITION AND FORWARD LOOKING INFORMATION RESULTS OF OPERATIONS: Revenue from operations for the three and six months ended March 31, 1996, was $200,034,000 and $393,480,000, respectively, compared with $191,824,000 and $379,548,000 a year ago. Revenue for the three and six months ended March 31, 1996 increased by 4.3% and 3.7%, respectively, as compared to the prior year periods. The revenue increase which was mostly attributable to the Color and Dehydrated operations was partially offset by lower revenues in the Flavor Division as a result of eliminating some lower margin business and weakness in selected markets. Gross profit margins decreased to 33.9% of revenues during the second quarter as compared with 35.0% during the same period last year primarily as a result of lower production volumes in the Flavor Division. Gross profit margins for the first six months decreased slightly to 34.3% of revenue as compared to 34.9% of revenue during the same period last year. The Company's continued focus on cost reduction resulted in a decrease of selling and administrative expenses to 21.0% of revenues during the second quarter compared to 21.8% during the same period last year. For the first six months of fiscal 1996, selling and administrative expenses decreased to 21.3% of revenues from 22.1% last year. Interest expense in the second quarter decreased to $3,475,000 from $3,962,000 in the same period last year and decreased to $7,381,000 from $7,930,000 for the six months ended March 31, 1996 and 1995, respectively. The decrease for the quarter resulted from lower interest rates, but was slightly offset by higher average borrowings outstanding during the quarter. The effective income tax rate for the quarter and six months ended March 31, 1996 exceeded the 34.0% statutory rate primarily as a result of state income taxes. The effective income tax rate in 1995 exceeded 34.0% as a result of a higher than normal effective tax rate on the sale of the Frozen Foods business. FINANCIAL CONDITION: The current ratio increased to 2.2 at March 31, 1996, from 1.8 at September 30, 1995 due to a decrease of $34,017,000 in current liabilities. The reduction in current liabilities is attributable to decreased short-term borrowings and current maturities on long-term debt. Net working capital increased $27,304,000 to $171,068,000 at March 31, 1996 from $143,764,000 at September 30, 1995. Net cash provided by operating activities was $33,066,000 for the six months ended March 31, 1996, compared to net cash used in operating activities of $26,404,000 for the six months ended March 31, 1995. The use of cash in fiscal 1995 is primarily attributable to the tax payments related to the sale of the Frozen Foods business. Net cash used in investing activities was $25,837,000 for the six months ended March 31, 1996, as compared with $22,627,000 provided by investing activities in fiscal 1995. The change is primarily due to the proceeds received in 1995 from the sale of the Frozen Foods business. Included in investing activities are capital additions of $21,899,000 for the six months ended March 31, 1996. The capital expenditure program reflects the Company's continuing commitment to maintain and enhance product quality, further automate and upgrade manufacturing processes, and expand capacity required by the businesses' internal growth. Major projects in-process include construction of a new aroma chemical and fragrance facility in Spain and a BioProducts facility in France. Net cash used in financing activities was $12,407,000 for the six months ended March 31, 1996. Proceeds from additional borrowings were used to refinance other long-term debt obligations and facilitate share repurchases. Dividends of $13,013,000 were also paid during the first six months. FORWARD LOOKING INFORMATION: Four of the five businesses performed well during the quarter and should continue to perform well for the remainder of the year. The Flavor business results were below expectations due to weakness in selected markets. The Company is working with customers on a variety of new product development projects to provide for future growth. During the remainder of the year, which is traditionally stronger for the Flavor business, improvement is expected. PART II OTHER INFORMATION Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibit 27 Financial Data Schedule (b) No reports on Form 8-K were required to be filed during the quarter ended March 31, 1996. 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. UNIVERSAL FOODS CORPORATION Date: May 14, 1996 By: /s/ Terrence M. O'Reilly Terrence M. O'Reilly, Vice President, Secretary and General Counsel Date: May 14, 1996 By: /s/ Michael L. Hennen Michael L. Hennen, Corporate Controller EXHIBIT INDEX Exhibit No. Description 27 Financial Data Schedule EX-27 2 UNIVERSAL FOODS CORP FINANCIAL DATA SCHEDULE
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF UNIVERSAL FOODS CORPORATION AS OF AND FOR THE PERIOD ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS SEP-30-1996 OCT-01-1995 MAR-31-1996 3,539 0 107,900 3,090 169,884 319,651 464,785 201,160 775,944 148,583 193,906 0 0 2,698 358,032 775,944 393,480 393,480 258,665 258,665 0 (110) 7,381 43,461 15,429 28,032 0 0 0 28,032 1.08 1.08
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