-----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, BWN6xTz4sqVxM263Q3/+ZrsXKI6SBlXF/NsGM1jtePpOjX+GG7PMRbaNEB2WYnb2 CrV3GYvSzyPW+Upg4lAJyA== 0000950124-98-000711.txt : 19980218 0000950124-98-000711.hdr.sgml : 19980218 ACCESSION NUMBER: 0000950124-98-000711 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980213 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: SEC FILE NUMBER: 001-07626 FILM NUMBER: 98536044 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 QUARTERLY REPORT DATED 12/31/1997 1 ================================================================================ 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: December 31, 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 January 31, 1998 - -------------------------------------- ------------------------------- Common Stock, par value $0.10 per share 25,549,190 shares ================================================================================ 2 UNIVERSAL FOODS CORPORATION INDEX
PART I. FINANCIAL INFORMATION: Page No. -------- Consolidated Condensed Balance Sheets - December 31, 1997 and September 30, 1997. 1 Consolidated Condensed Statements of Earnings - Three Months Ended December 31, 1997 and 1996. 2 Consolidated Condensed Statements of Cash Flows - Three Months Ended December 31, 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 4. Submission of Matters to a Vote of Security Holders. 7 Item 6. Exhibits and Reports on Form 8-K. 8 Signatures. 9
3 PART I FINANCIAL INFORMATION 4 UNIVERSAL FOODS CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS ($000's Omitted)
December 31, 1997 September 30, ASSETS (Unaudited) 1997 ------ ------------- ---- CURRENT ASSETS: Cash and cash equivalents $ 1,743 $ 1,258 Trade accounts receivable 110,567 117,259 Inventories: Finished and in-process products 130,106 132,150 Raw materials and supplies 61,812 53,402 Prepaid expenses and other current assets 37,806 38,179 -------- -------- TOTAL CURRENT ASSETS 342,034 342,248 INVESTMENTS AND OTHER ASSETS 56,055 55,193 INTANGIBLES 179,306 181,309 PROPERTY, PLANT AND EQUIPMENT: Cost: Land and buildings 146,325 147,659 Machinery and equipment 401,623 388,402 -------- -------- 547,948 536,061 Less accumulated depreciation 235,813 227,082 -------- -------- 312,135 308,979 -------- -------- TOTAL ASSETS $889,530 $887,729 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ CURRENT LIABILITIES: Short-term borrowings $ 1,797 $ 7,971 Accounts payable and accrued expenses 119,395 135,522 Salaries, wages and withholdings from employees 11,738 13,978 Income taxes 15,064 16,151 Current maturities of long-term debt 4,904 4,905 -------- -------- TOTAL CURRENT LIABILITIES 152,898 178,527 DEFERRED INCOME TAXES 17,573 17,550 OTHER DEFERRED LIABILITIES 20,561 20,798 ACCRUED EMPLOYEE AND RETIREE BENEFITS 37,422 37,877 LONG-TERM DEBT 282,554 252,526 SHAREHOLDERS' EQUITY: Common stock 2,698 2,698 Additional paid-in capital 77,205 76,774 Earnings reinvested in the business 379,962 371,444 -------- -------- 459,865 450,916 Less: Treasury stock, at cost 52,301 45,742 Other 29,042 24,723 -------- -------- 378,522 380,451 -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $889,530 $887,729 ======== ========
See accompanying notes to consolidated condensed financial statements. -1- 5 UNIVERSAL FOODS CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (In Thousands Except Per Share Amounts) (Unaudited)
Three Months Ended December 31 ----------- 1997 1996 ---- ---- Revenue $208,889 $193,484 Operating costs and expenses: Cost of products sold 137,007 127,632 Selling and administrative expenses 43,602 40,969 ------- ------- Total operating costs and expenses 180,609 168,601 -------- -------- Operating income 28,280 24,883 Interest expense 4,966 3,687 -------- -------- Earnings before income taxes 23,314 21,196 Income taxes 8,043 7,313 -------- -------- Net earnings $ 15,271 $ 13,883 ======== ======== Weighted average number of common shares outstanding: Basic 25,491 25,428 ====== ====== Diluted 25,773 25,600 ====== ====== Net earnings per common share: Basic $ .60 $ .55 ====== ====== Diluted $ .59 $ .54 ====== ====== Dividends per common share $ .265 $ .260 ====== ======
See accompanying notes to consolidated condensed financial statements. -2- 6 UNIVERSAL FOODS CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS ($000's Omitted) (Unaudited)
Three Months Ended December 31 ------------------ 1997 1996 ---- ---- Net cash provided by operating activities $ 4,610 $ 12,171 Cash flows from investing activities: Acquisition of property, plant and equipment (14,819) (13,266) Other items, net (278) 245 -------- -------- Net cash used in investing activities (15,097) (13,021) Cash flows from financing activities: Proceeds from additional borrowings 32,473 12,813 Reduction in debt (8,620) (2,295) Purchase of treasury stock (6,832) --- Dividends (6,753) (6,610) Proceeds from options exercised and other 704 273 -------- -------- Net cash provided by financing activities 10,972 4,181 Net increase in cash and cash equivalents 485 3,331 Cash and cash equivalents at beginning of period 1,258 3,395 -------- -------- Cash and cash equivalents at end of period $ 1,743 $ 6,726 ======== ======== Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $5,956 $3,708 Income taxes 9,277 4,091
See accompanying notes to consolidated condensed financial statements. -3- 7 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 December 31, 1997 and September 30, 1997 and the results of operations and cash flows for the three month periods ended December 31, 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, 1997, for a description of the accounting policies, which have been continued without change (except as discussed in note 8), 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 three months ended December 31, 1997, the Company repurchased 165,111 shares of common stock for an aggregate price of $6,832,000. 5. For the three months ended December 31, 1997, depreciation and amortization were $9,618,000 and $1,415,000, respectively. For the three months ended December 31, 1996, depreciation and amortization were $7,813,000 and $1,197,000, respectively. 6. On December 23, 1997, the Company issued a $30,000,000 senior note bearing interest at 7.06% due December 2002. Proceeds were used to refinance existing indebtedness and for general corporate purposes. 7. The Financial Accounting Standards Board has 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. 8. In 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128 (SFAS No. 128), "Earnings per Share." SFAS No. 128 replaced the previously reported primary and fully diluted earnings per share with basic and diluted earnings per share. Unlike primary earnings per share, basic earnings per share excludes any dilutive effects of options, warrants and convertible securities. Diluted earnings per share is very similar to the previously required fully diluted earnings per share. All earnings per share amounts for all periods have been presented, and where necessary, restated to conform to SFAS No. 128 requirements. The difference between basic and diluted earnings per share is the dilutive effect of employee stock options and restricted stock. For the three months ended December 31, 1997 and 1996, respectively, weighted average shares outstanding were increased by 282,000 and 172,000 in calculating diluted earnings per share. 9. On January 6, 1998, the Company announced that it acquired the stock of Arancia Ingredientes Especiales, S.A. de C.V., a manufacturer of savory flavors and other food ingredients for cash of approximately $24.8 million. With annual revenue of approximately $16 million, this acquisition further improves access to certain markets and creates opportunities for synergies with existing flavor operations in North America. -4- 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS, FINANCIAL CONDITION AND FORWARD LOOKING INFORMATION ------------------------------------------- RESULTS OF OPERATIONS: Revenue from operations during the three months ended December 31, 1997 increased 8% to $208,889,000, compared with $193,484,000 a year ago. All divisions reported higher revenue during the first quarter as compared to the prior year. The Color division revenue increased 33% as several product categories were up significantly. In addition, strong volume gains in domestic dehydrated markets resulted in revenue growth of 11% for the Dehydrated division. Gross profit margins increased to 34.4% for the first quarter of fiscal 1997 compared with 34.0% for the same period last year primarily due to a percentage shift in Company sales to the higher margin products in the Color division. The Company's continued focus on productivity programs and cost containment resulted in a decrease of selling and administrative expenses to 20.9% of revenue during the three months ended December 31, 1997, compared to 21.2% for the same period last year. As a result of higher average borrowings outstanding, interest expense in the first quarter increased to $4,966,000 from $3,687,000 in the same period last year. FINANCIAL CONDITION: The current ratio increased to 2.2 at December 31, 1997, compared with 1.9 at September 30, 1996, due to a decrease of $25,629,000 in current liabilities. Net working capital increased $25,415,000 to $189,136,000 at December 31, 1997 from $163,721,000 at September 30, 1997. Net cash provided by operating activities was $4,610,000 for the quarter ended December 31, 1997, compared to $12,171,000 provided by operating activities for the quarter ended December 31, 1996. The decrease in cash provided by operating activities in fiscal 1998 was primarily due to the funding of fiscal 1997 contributions to benefit plans and an increase in income tax payments. Net cash used in investing activities was $15,097,000 for the three months ended December 31, 1997. Included in investing activities are capital additions of $14,819,000. The capital expenditure program reflects the Company's continuing commitment to maintain and enhance product quality, further automate and upgrade manufacturing processes, and expand the business through internal growth. Net cash provided by financing activities was $10,972,000 for the quarter, compared with $4,181,000 in the comparable period last year. Proceeds from net borrowings of $32,473,000 were used primarily to fund capital expenditures and purchase treasury stock. Dividends of $6,753,000 and $6,610,000 were paid during the first three months of fiscal 1998 and 1997, respectively. -5- 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS, FINANCIAL CONDITION AND FORWARD LOOKING INFORMATION ------------------------------------------- (Continued) FORWARD LOOKING INFORMATION: This document contains forward-looking statements that reflect management's current assumptions and estimates of future economic circumstances, industry conditions, Company's performance and financial results, in particular, earnings growth. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for such forward-looking statements. A variety of factors could cause the Company's actual results and experience to differ materially from the anticipated results. These factors and assumptions include the pace and nature of new product introduction by the Company's customers; execution of the Company's acquisition program; industry and economic factors related to the Company's international business; and the outcome of various productivity-improvement and cost-reduction efforts. -6- 10 PART II OTHER INFORMATION 11 Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Annual Meeting of Shareholders of Universal Foods Corporation was held on Thursday, January 22, 1998. At the meeting the following matters were voted upon by the Shareholders. Shares totaling 25,525,066 were entitled to vote at the meeting, and 22,626,919 shares (88.65%) were voted. The following persons were elected to a three year term as Directors of the Company: For Against --- ------- Michael E. Batten 22,301,652 325,267 James A. D. Croft 22,357,287 269,632 Guy A. Osborn 22,343,559 283,360 Essie Whitelaw 22,295,214 331,705 The following persons continued in office as Directors in accordance with their previous election: John F. Bergstrom James L. Forbes William V. Hickey Leon T. Kendall James H. Keyes Kenneth P. Manning Dr. Carol I. Waslien-Ghazaii The Shareholders ratified the appointment of Deloitte & Touche LLP, certified public accountants, as the independent auditors of the Company for fiscal 1998. Of the 25,525,066 shares entitled to vote at the meeting, 22,492,210 shares voted for ratification, 61,101 shares voted against ratification and 73,608 shares abstained. The Shareholders also approved the 1998 Employee Stock Plan. Of the 25,525,066 entitled to vote at the meeting, 21,156,680 shares voted for ratification, 1,207,159 voted against ratification and 168,650 shares abstained. There were 94,430 broker non-votes related to the 1998 Stock Option Plan. There were no broker non-votes for the other items. -7- 12 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 December 31, 1997. -8- 13 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: February 12, 1998 By: /s/ John L. Hammond --------------------------------------- John L. Hammond, Vice President, Secretary and General Counsel Date: February 12, 1998 By: /s/ Michael L. Hennen --------------------------------------- Michael L. Hennen, Corporate Controller -9- EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS SEP-30-1998 OCT-01-1997 DEC-31-1997 1,743 0 114,626 4,059 191,918 342,034 547,948 235,813 889,530 152,898 282,554 0 0 2,698 375,824 889,530 208,889 208,889 137,007 137,007 0 191 4,966 23,314 8,043 15,271 0 0 0 15,271 0.60 0.59
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