-----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, W1poU8WEIFQUhd6DmOURaFCroljykQym9Y7wPOvisFfzN8hvf7gaqA1GZIa33Lby ax7x1RSEBxT/4okpmEgnyA== 0000897069-97-000338.txt : 19970814 0000897069-97-000338.hdr.sgml : 19970814 ACCESSION NUMBER: 0000897069-97-000338 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970813 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNIVERSAL FOODS CORP CENTRAL INDEX KEY: 0000310142 STANDARD INDUSTRIAL CLASSIFICATION: BEVERAGES [2080] 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: 97658752 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 FORM 10-Q ========================================================================= UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: June 30, 1997 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 July 31, 1997 Common Stock, par value $0.10 per share 25,655,962 shares ======================================================================== UNIVERSAL FOODS CORPORATION INDEX Page No. PART I, FINANCIAL INFORMATION: Consolidated Condensed Balance Sheets - June 30, 1997 and September 30, 1996. 1 Consolidated Condensed Statements of Earnings - Three and Nine Months Ended June 30, 1997 and 1996. 2 Consolidated Condensed Statements of Cash Flows - Nine Months Ended June 30, 1997 and 1996. 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) June 30, 1997 September 30, ASSETS (Unaudited) 1996 CURRENT ASSETS: Cash and cash equivalents $ 78 $3,395 Trade accounts receivable 116,547 105,850 Inventories: Finished and in-process products 116,204 122,775 Raw materials and supplies 59,276 51,418 Prepaid expenses and other current assets 38,701 41,166 ------- ------- TOTAL CURRENT ASSETS 330,806 324,604 INVESTMENTS AND OTHER ASSETS 54,731 45,920 INTANGIBLES 173,628 141,487 PROPERTY, PLANT AND EQUIPMENT: Cost: Land and buildings 136,412 135,972 Machinery and equipment 384,410 343,793 ------- ------- 520,822 479,765 Less accumulated depreciation 227,460 211,304 ------- ------- 293,362 268,461 ------- ------- TOTAL ASSETS $852,527 $780,472 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Short-term borrowings $ 1,345 $ 2,919 Accounts payable and accrued expenses 104,339 127,637 Salaries, wages and withholdings from employees 12,079 11,579 Income taxes 21,557 14,207 Current maturities of long-term debt 4,724 5,810 ------- ------- TOTAL CURRENT LIABILITIES 144,044 162,152 DEFERRED INCOME TAXES 12,674 12,770 OTHER DEFERRED LIABILITIES 20,589 19,123 ACCRUED EMPLOYEE AND RETIREE BENEFITS 38,217 38,592 LONG-TERM DEBT 264,741 196,869 SHAREHOLDERS' EQUITY Common stock 2,698 2,698 Additional paid-in capital 77,020 78,177 Earnings reinvested in the business 359,672 333,290 ------- ------- 439,390 414,165 Less: Treasury stock, at cost 45,770 49,892 Other 21,358 13,307 ------- ------- 372,262 350,966 ------- ------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $852,527 $780,472 ======== ======== 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 Nine Months Ended June 30 Ended June 30 1997 1996 1997 1996 Revenue $209,725 $200,776 $608,035 $594,256 Operating costs and expenses: Cost of products sold 140,315 132,928 406,206 391,593 Selling and administrative expenses 39,723 39,925 119,318 123,898 ------- ------- ------- ------- Total operating costs and expenses 180,038 172,853 525,524 515,491 ------- ------- ------- ------- Operating income 29,687 27,923 82,511 78,765 Interest expense 4,651 4,071 12,433 11,452 ------- ------- ------- ------- Earnings before income taxes 25,036 23,852 70,078 67,313 Income taxes 8,288 8,131 23,827 23,560 ------- ------- ------- ------- Net earnings $ 16,748 $ 15,721 $ 46,251 $ 43,753 ======== ======== ======== ======== Weighted average number of common shares outstanding 25,507 25,716 25,468 25,919 ====== ====== ====== ====== Net earnings per common share $ .66 $ .61 $1.82 $1.69 ===== ===== ===== ===== Dividends per common share $ .26 $ .25 $ .78 $ .75 ===== ===== ===== ===== See accompanying notes to Consolidated Condensed Financial Statements. UNIVERSAL FOODS CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS ($000's Omitted) (Unaudited) Nine Months Ended June 30 1997 1996 Net cash provided by operating activities $ 49,724 $ 61,695 -------- -------- Cash flows from investing activities: Acquisition of property, plant and equipment (51,348) (34,074) Acquisition of new businesses (net of cash acquired) (44,492) (529) Other items, net (5,509) (6,405) -------- -------- Net cash used in investing activities (101,349) (41,008) Cash flows from financing activities: Proceeds from additional borrowings 69,253 98,801 Reductions in debt (4,041) (85,679) Proceeds from options exercised and other equity transactions 2,959 1,605 Purchase of treasury stock --- (19,965) Dividends paid (19,863) (19,444) -------- -------- Net cash provided by (used in) financing activities 48,308 (24,682) Net decrease in cash and cash equivalents (3,317) (3,995) Cash and cash equivalents at beginning of period 3,395 8,717 -------- -------- Cash and cash equivalents at end of period $ 78 $ 4,722 ======== ======== Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ 11,826 $ 11,099 Income taxes 15,259 20,830 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 June 30, 1997 and September 30, 1996, the results of operations for the three and nine month periods ended June 30, 1997 and 1996 and cash flows for the nine month periods ended June 30, 1997 and 1996. 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, 1996, 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 actually incurred. 4. During the nine months ended June 30, 1996, the Company repurchased 588,670 shares of common stock for an aggregate price of $21,808,000. 5. For the nine months ended June 30, 1997, depreciation and amortization were, $25,163,000 and $3,540,000, respectively. For the nine months ended June 30, 1996, depreciation and amortization were $23,978,000 and $3,591,000, respectively. 6. During the second quarter of 1997 the Company acquired Tricon Colors, Inc., an ink and dye producer, at a cost of $44,492,000. The acquisition for cash has been accounted for as a purchase and, accordingly, the results of operations and the financial position of Tricon Colors, Inc. are reflected in the Consolidated Condensed Financial Statements from the date of acquisition. The preliminary allocation of purchase price resulted in goodwill of $37,923,000 which will be amortized on a straight-line basis over 40 years. On an unaudited pro forma basis the acquisition is not significant to the Company's 1997 results of operations. 7. The Financial Accounting Standards Board has issued Statement of Financial Accounting Standards No. 128, "Earnings per Share". The statement will be effective for the Company in the first quarter of fiscal 1998. The Company is currently assessing the impact of the Standard on earnings per share, but does not expect it to be material. In June 1997, the Financial Accounting Standards Board issued statements No. 130 "Reporting Comprehensive Income" and No. 131 "Disclosures about Segments of an Enterprise and Related Information". These statements will be effective for the Company in fiscal 1999. The Company is currently evaluating the impact of adopting these new pronouncements. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS, FINANCIAL CONDITION AND FORWARD LOOKING INFORMATION RESULTS OF OPERATIONS: Revenue for the three and nine months ended June 30, 1997, was $209,725,000 and $608,035,000, respectively, compared with $200,776,000 and $594,256,000 a year ago. Revenue for the three and nine months ended June 30, 1997, increased by 4.5% and 2.3%, respectively, from the prior year periods. Strong sales in the pharmaceutical, dispersion and lake categories in the Color Division and increased sales for the Asia Pacific Division were partially offset by continued weakness in the North American flavor market. Gross profit margins decreased to 33.1% for the third quarter from 33.8% for the same period last year. Gross profit margin for the first nine months decreased to 33.2% from 34.1% for the same period last year. The decrease in the gross profit margin was primarily the result of increased production costs caused by lower volumes, product mix and pricing pressures primarily in the flavor and bioproducts businesses. The Company's continued focus on operating costs resulted in a decrease in selling and administrative expenses to 18.9% of revenue for the third quarter from 19.9% for the same period last year. For the first nine months of fiscal 1997, selling and administrative expenses decreased to 19.6% of revenue from 20.8% last year. Interest expense for the third quarter increased to $4,651,000 from $4,071,000 for the same period last year and increased to $12,433,000 from $11,452,000 for the nine months ended June 30, 1997 and 1996, respectively. The increases resulted from higher average borrowings outstanding during the periods as a result of the Tricon Colors acquisition, but was slightly offset by lower average interest rates. The effective income tax rate for the quarter and nine months ended June 30, 1997, was below the 35.0% statutory rate as a result of federal income tax credits which more than offset the effect of state income taxes. FINANCIAL CONDITION: The current ratio increased to 2.3 at June 30, 1997, from 2.0 at September 30, 1996, due to a decrease of $18,108,000 in current liabilities. Net working capital increased $24,310,000 to $186,762,000 at June 30, 1997, from $162,452,000 at September 30, 1996. Net cash provided by operating activities was $49,724,000 for the nine months ended June 30, 1997, compared with $61,695,000 for the nine months ended June 30, 1996. The decrease in cash provided by operating activities in fiscal 1997 was due to increases in working capital primarily from the timing and amount of inventory purchases in the Dehydrated Products Division. Net cash used in investing activities was $101,349,000 for the nine months ended June 30, 1997, compared with $41,008,000 for fiscal 1996. The change was primarily due to the acquisition of a new business as discussed in Note 6 on page 4. Also included in investing activities are capital additions of $51,348,000 for the nine months ended June 30, 1997, and $34,074,000 for the nine months ended June 30, 1996. The increase in expenditures for the first nine months of 1997 reflects the Company's continuing commitment to automate and upgrade manufacturing processes and expand capacity. Major projects include construction of a new aroma chemical and fragrance facility in Spain and a BioProducts facility in France which began commercial production during the third quarter. Net cash provided by financing activities was $48,308,000 for the nine months ended June 30, 1997, compared with $24,682,000 used in financing activities last year. Proceeds from additional borrowings of $69,253,000 were used to fund the acquisition of a new business and capital expenditures. Dividends of $19,863,000 and $19,444,000 were paid during the first nine months of fiscal 1997 and 1996, respectively. 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 June 30, 1997. 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: August 13, 1997 By: /s/ Terrence M. O'Reilly Terrence M. O'Reilly, Vice President, Secretary and General Counsel Date: August 13, 1997 By: /s/ Michael L. Hennen Michael L. Hennen, Corporate Controller EXHIBIT INDEX Exhibit No. Description 27 Financial Data Schedule EX-27 2 UNIVERSAL FOODS CORPORATION 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 JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS SEP-30-1997 OCT-01-1996 JUN-30-1997 78 0 116,547 3,866 175,480 330,806 520,822 227,460 852,527 144,044 264,741 0 0 2,698 369,564 852,527 608,035 608,035 406,206 406,206 0 461 12,433 70,078 23,827 46,251 0 0 0 46,251 1.82 1.82
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